Edgar Filing: Cosan Ltd.

In accordance with Cosan’s by-laws, each common share of Cosan grants to its holder the right to one vote at general meetings of shareholders. At a general shareholders’ meeting, if called and constituted in accordance with applicable Brazilian laws, shareholders are generally empowered to take any action relating to the corporate purposes of Cosan and to pass such resolutions as they deem necessary. In order to participate and vote at a general shareholders’ meeting, a shareholder must evidence his/her/its position as a shareholder of Cosan presenting at least 2 days prior to the relevant meeting the original or a copy of (i) his/her identification document; (ii) evidence of the shares held issued by the depositary of Cosan’s shares; and (iii) a power of attorney, if the shareholder will be represented by proxy. The originals of the documents referred above must be presented before the opening of the shareholders’ meeting.

Voting

In accordance with the Brazilian corporate law, a shareholder may be represented at a shareholders’ meeting by proxy appointed within a year of the meeting, which proxy must be another shareholder, one of the directors or executive officers of Cosan, a lawyer or a financial institution. An investment fund shareholder must be represented by its investment fund officer.

Bermuda law provides that, subject to the rights contained in the bye-laws and any other rights or restrictions attached to any class of shares or series of shares, at a general meeting each member of the company is entitled to one vote for each share held by him and such votes may be given in person or by proxy.

Our bye-laws provide for different voting rights for the two different classes of shares in the company: the holders of class A common shares each have one vote per share, the holders of class B series 1 shares generally have 10 votes per share and the holders of class B series 2 common shares generally have 10 votes per share.

Our bye-laws provide that a shareholder may appoint one or more persons as his proxy to represent him to vote on his behalf in respect of some or all of his shares at any general meeting. The shareholder may also appoint a proxy or corporate representative for a specific general

161

	Brazilian corporate law and Cosan’s by-laws provide that certain actions may be taken only at shareholders’ meetings (such as amendments to the by-laws, election of directors and members of the fiscal council, share splits, mergers, spin-offs and delisting). However, according to Brazilian corporate law, neither a company’s by-laws nor actions taken at a shareholders' meeting may deprive a shareholder of the following rights: (i) the right to participate in the distribution of net income; (ii) the right to participate equally and ratably in any remaining residual assets in the event of liquidation of the company; (iii) the right to preemptive rights in the event of subscription of shares, convertible debentures and subscription bonuses, except in some specific circumstances; and (iv) the right to withdraw from the company in specific cases.	meeting and may appoint a standing proxy by serving on the company a proxy or an authorization.

Dividends	Brazilian corporate law and Cosan’s by-laws require that Cosan distributes annually to its shareholders a mandatory minimum dividend, unless Cosan’s board of directors notifies the shareholders that such distribution is not advisable in light of Cosan’s financial condition as reflected in Cosan’s financial statements in accordance with Brazilian GAAP. The mandatory dividend is equal to 25% of Cosan’s net income for the prior year (as calculated under Brazilian GAAP, subject to certain adjustments mandated by Brazilian corporate law). The mandatory dividend may be made in the form of dividends or interest on shareholders’ equity, which may be deducted by Cosan in calculating its income and social contribution tax obligations. The declaration of annual dividends, including dividends in excess of the mandatory distribution, requires approval by the vote of a majority of the holders of Cosan’s common shares and depends on numerous factors. These factors include Cosan’s results of operations, financial condition, cash requirements, future prospects, financial covenant limitations, and other factors deemed relevant by Cosan’s board of directors and shareholders. Cosan’s board of directors has adopted a dividend policy pursuant to which Cosan has distributed as dividends and/or interest on shareholders’ equity in the amount of approximately 25% of Cosan’s net income for each fiscal year. Under Brazilian corporate law, Cosan may establish income reserve accounts composed of a legal reserve, an investments reserve and/or a retained profit reserve. The balance of such income reserve accounts must not exceed the amount of Cosan’s capital stock and any excess amounts must either be	Bermuda law places a liquidity control over the declaration and payment of dividends or distributions from contributed surplus. Under Bermuda law a company may declare and pay dividends or make distributions from contributed surplus unless there are reasonable grounds for believing that the company is or would, after the payment is made, be unable to pay its liabilities as they become due or that its realizable assets would thereby be less than the aggregate of its liabilities (including its issued share capital and share premium accounts). Our bye-laws provide that the directors may declare dividends (or distributions out of the contributed surplus of the company), to be paid to the shareholders according to their rights and interests. Our bye-laws provide that, save for any rights attached to any preference shares issued by the company providing for a preferred dividend payment, any dividend payment or distribution from contributed surplus will be made to the holders of class A common shares, class B series 1 commons shares and class B series 2 commons shares on a pro-rata basis.

162

	incorporated into its capital stock or distributed as dividends. Cosan currently does not have any income reserve accounts, but may establish them in the future. Cosan has historically paid cash distributions.

Number of Directors; Qualifications	Cosan’s by-laws require that the board of directors consists of a minimum of seven and a maximum of twenty directors, 20% of whom must be independent as provided by the Novo Mercado rules. The exact number of directors is established by a vote of a majority of Cosan’s common shares at a shareholders’ meeting. Currently, the board of directors of Cosan is composed of nine members. Brazilian corporate law requires that each director owns at least one share of Cosan’s capital stock. There is no mandatory retirement age for directors.	Bermuda law prescribes that a company must be managed by not less than two directors who must be individuals. Our bye-laws provide that there must not be less than five directors of the company and not more than eleven directors of the company or such number in excess thereof as the board by resolution may from time to time determine. The quorum necessary for the transaction of the business of the board may be fixed by the board and, unless fixed at any other number, must be two individuals.

Term of Directors	The directors of Cosan are elected for a term of office of two years, being eligible for reelection.	Our bye-laws provide that the directors are categorized by classes. The classes are designed to facilitate the retirement and rotation of the directors from the board and are not reflective of different voting rights or powers or authority. Class I, II and III directors serve until the annual general meetings held in calendar years 2008, 2009 and 2010 respectively and subsequently must serve for three-year terms, each concluding at the third annual general meeting after their class of directors together were last appointed or re-elected.

Election of Directors	The directors of Cosan are appointed at the annual shareholders’ meeting. The Brazilian corporate law and the CVM regulations allow cumulative voting for directors at the request of at least 5% of the voting capital stock. This minimum percentage may vary between 5% and 10% depending on the amount of the capital stock as established by CVM regulations. If there is no request for cumulative voting, directors are elected by a majority of the common shares of Cosan present in person or represented by proxy at the shareholders’ meeting, provided that any shareholders that, individually or in blocs, hold at least 15% of the common shares have the right to select one director and his or her alternate.	No person other than a director retiring by rotation may be appointed a director at any general meeting unless nominated for election by a majority of the directors then in office (or proposed by a shareholder by notice given not less than ninety days before the first anniversary of the last annual general meeting or ten days after the notice of the general meeting at which the directors will be elected, whichever is the earlier) and elected by a majority of the aggregate voting power of the issued and outstanding shares in the company.

Filling of Vacancies in the Board of Directors	During periods of absence or temporary unavailability of the president of the board of directors of Cosan, his/her functions shall be performed by the vice-president of the board of directors, and in the event of temporary absence or unavailability of the vice-president, his/her functions shall be performed by another director appointed by the remaining directors. During periods of absence or temporary unavailability	Any one or more vacancies in the board not filled at any general meeting will be deemed casual vacancies for the purposes of the bye-laws, which provide that the board has the power to appoint an individual to be a director to fill such casual vacancies. A director appointed to fill a casual vacancy will hold that position until the next following annual general meeting and must vacate that office if not

163

	of any other director, his/her functions shall be performed by a director empowered to do so by the absent director or, in case no director is empowered for such purpose, by any director appointed by the remaining directors. In the event of any vacancy of any office of the board of directors (which is determined by the unjustified absence in more than 3 consecutive meetings or in case of death, resignation, destitution, incapacitation or evidenced impediment) the president of the board of directors of Cosan may appoint an alternate member as a substitute for the absent member until the next shareholders’ meeting in which a new member shall be appointed for a term of office that shall last until the end of the term of office of the other directors. In the event of a vacancy of the president and vice-president of the board of directors of Cosan, the remaining board members shall call a shareholders’ meeting to appoint their substitutes.	reappointed at that annual general meeting.

Quorum of Shareholders for a General Shareholders’ Meeting	As a general rule, Brazilian corporate law provides that a quorum at a shareholders’ meeting consists of shareholders representing at least 25% of a company’s issued and outstanding voting capital on the first call and, if that quorum is not reached, any percentage on the second call. If the shareholders are called to amend the by-laws, a quorum at a shareholders’ meeting consists of shareholders representing at least two-thirds of the issued and outstanding common shares on the first call and any percentage on the second call. As a general rule, the affirmative vote of shareholders representing at least the majority of the issued and outstanding common shares present in person or represented by proxy at a shareholders’ meeting is required to ratify any proposed action, and abstentions are not taken into account. However, the affirmative vote of shareholders representing one-half of the issued and outstanding common shares of Cosan is required to: (i) reduce the percentage of the mandatory dividends; (ii) change the corporate purpose; (iii) merge (fusão or incorporação) Cosan with another company; (iv) spin-off a portion of Cosan’s assets or liabilities; (v) approve the participation of Cosan in a group of companies (as defined in Brazilian corporate law); (vi) apply for cancellation of any voluntary liquidation; (vii) approve Cosan’s dissolution; (viii) approve the merger of all of Cosan’s shares into another Brazilian company so that, as a result, Cosan becomes a wholly-owned subsidiary of such company; and (ix) delisting of Cosan’s shares from the Novo Mercado.	Our bye-laws provide that for the purposes of a general meeting at least two shareholders present in person or by proxy and entitled to vote representing the holders of more than 45% of the aggregate voting power of the issued and outstanding share capital will be a quorum, provided that in the case of a meeting of a class or series of shares where such class or series of shares has only one shareholder, one shareholder present in person or by proxy will constitute the necessary quorum.

164

Notice of Shareholders’ Meetings	Notice of shareholders’ meetings of Cosan must be published at least three times in the Diário Oficial do Estado de São Paulo, the official newspaper of the State of São Paulo, and in another widely circulated newspaper, currently the newspapers Valor Econômico and the Jornal de Piracicaba. The first notice must be published no later than 15 days before the date of the meeting on the first call, and no later than 8 days before the date of the meeting on the second call. However, in certain circumstances, the CVM may require that the first notice be published 30 days in advance of the meeting. The shareholders’ meetings of Cosan take place at the headquarters in the City of Piracicaba, State of São Paulo, Brazil. Brazilian corporate law allows the shareholders of Cosan to hold meetings outside the headquarters in the event of force majeure, provided that the meetings are held in the City of Piracicaba and the relevant notice includes a clear indication of the place where the meeting will occur. The board of directors of Cosan may call a shareholders’ meetings. Shareholders’ meetings may also be called by: (i) any shareholder, if the board of directors fails to call a shareholders’ meeting within 60 days after the date they were required to do so under applicable laws and Cosan’s by-laws; (ii) shareholders holding at least 5% of the capital stock of Cosan, if the board of directors fails to call a meeting within eight days after receipt of a request to call the meeting by those shareholders indicating the proposed agenda; (iii) shareholders holding at least 5% of Cosan’s shares if the board of directors fails to call a meeting within eight days after receipt of a request to call the meeting for the creation of the fiscal council; and (iv) the fiscal council, if the board of directors fails to call an annual shareholders’ meeting. The fiscal council may also call a special shareholders’ meeting, if it believes that there are important or urgent matters to be addressed.	Bermuda law requires that shareholders be given at least 5 days’ notice of a general meeting but the accidental omission to give notice to, or the non-receipt of a notice by any person entitled to receive notice, does not invalidate the proceedings at the meeting. Our bye-laws provide that at least 10 days’ notice of an annual general meeting or a special general meeting must be given to each shareholder entitled to vote at such meeting. This notice requirement is subject to the ability to hold such meeting on shorter notice if notice is served pursuant to Bermuda law in the manner provided by the Companies Act 1981. Any action required to be taken at a meeting of shareholders (except in the case of removal of auditors or directors) may be taken without a meeting and without a vote if consent (or consents) in writing, setting forth the actions so taken, is (or are) signed by the holders of issued and outstanding shares of the company, their proxy, or corporate representative representing the percentage of votes required if the resolution had been voted on at a meeting of the shareholders.

Mandatory Public Tender Offer by a Majority Shareholder	Pursuant to the Brazilian corporate law, the CVM regulations, and the Novo Mercado rules, a mandatory public tender offer for the acquisition of Cosan’s shares is required in the following situations: (i) delisting from the Novo Mercado: the controlling shareholder of Cosan must effect a mandatory tender offer for the acquisition of all shares held by the remaining shareholders of Cosan if of Cosan delists from the Novo	Bermuda legislation provides certain compulsory acquisition procedures in sections 102 and 103 of the Companies Act 1981. Pursuant to section 102 of the Companies Act 1981 an acquiring entity may compel the acquisition of shares of shareholders dissenting to a scheme of arrangement or contract involving the transfer of shares or any class of shares of the company where the scheme of arrangement or contract has received the approval of 90% in value of the shareholders of

165

Mercado. The acquisition price shall be the economic value of the tendered shares determined in accordance with an appraisal report prepared by a specialized firm. There are specific requirements for the appointment of the appraisal firm and the applicable laws and regulations also allow the review of the economic value appraised in certain circumstances;

(ii) delisting of Cosan’s shares: Cosan or its controlling shareholder must effect a mandatory tender offer for the acquisition of all shares held by the remaining shareholders of Cosan for purposes of delisting Cosan’s shares and cancelling its registration as a publicly-held company. The acquisition price shall reflect the fair value of Cosan’s shares evaluated in accordance with the specific requirements established by applicable laws and regulations. Shareholders holding at least ten per cent (10%) of outstanding shares may request that management call a special general meeting with holders of outstanding shares in order to determine a new appraisal, based on the same or different criteria from those originally adopted, for purposes of determining the valuation of the company as provided;

(iii) increase of the interest held by the controlling shareholder: in the event of the acquisition by the controlling shareholder of additional shares in Cosan (i) representing more than 1/3 of its free float; or (ii) which may affect the liquidity of Cosan’s shares as determined by the CVM, the controlling shareholder of Cosan must effect a mandatory tender offer for acquisition of all shares held by the remaining shareholders of Cosan. The acquisition price shall reflect the fair price of Cosan’s shares evaluated in accordance with the specific requirements established by the applicable laws and regulations. Shareholders holding at least ten per cent (10%) of outstanding shares may request that the officers call a special general meeting with holders of outstanding shares in order to determine a new appraisal, based on the same or different criteria from those originally adopted, for purposes of determining the valuation of the company as provided; and

(iv) change of control: a buyer of a controlling interest of Cosan must effect a mandatory tender offer for the acquisition of Cosan’s remaining shares in the event of an acquisition of control of Cosan, providing to the remaining shareholders of Cosan the same conditions that applied to the acquisition of the controlling

the company. The acquiring entity may, within two months of obtaining the requisite 90% approval from the shareholders of the company, give notice to any dissenting shareholders that it desires to acquire such dissenting shareholders shares. A dissenting shareholder who receives notice has the ability to apply to court for relief within one month after the receipt of the notice.

Pursuant to section 103 of the Companies Act 1981 where an acquirer supported by not less than 95% of the shares or class of shares of the company can compel the remaining minority shareholders to sell their interest to the acquirer provided that the terms offered are the same for all holders of shares whose acquisition is involved. Under this procedure the acquirer is only required to give notice to the remaining shareholders of the intention to acquire their shares and once notice has been received the acquirer is bound to acquire the shares on the terms set out in the notice unless the remaining minority shareholders apply to the courts for an appraisal of the value of their shares.

166

	interest. The mandatory public tender offers described above are subject to several specific rules and requirements. The description above is merely a general description and does not intend to provide a detailed description of the procedures and rules to which Cosan and its controlling shareholder are subject with respect to mandatory public tender offers.

Transfer Rights	The transfer of any of Cosan’s shares occurs upon the an entry, made by the Depositary Institution of Cosan’s shares on its books, at the expense of the transferor and to the credit of the transferee’s account, taking into account a written order by the transferor or a judicial order, which will remain in the Institution’s care.	Our board of directors may, in its discretion and without assigning any reason therefor, refuse to register the transfer of any share that is not fully paid. Our board of directors may also refuse to recognize an instrument of transfer of a share unless it is accompanied by the relevant share certificate and other evidence of the transferor’s rights to make the transfer, as our board of directors shall reasonably require. Any transfer of beneficial ownership of the class B series 1 common shares or class B series 2 common shares not registered with the company will be null and void. Under our bye-laws each class B common share is convertible into one class A common share at the option of the holder. Each class B common share will automatically convert into one class A common share if the aggregate outstanding class B common series 1 shares represent less than 45% of the company’s voting power in respect of the issued and outstanding share capital in the company or, upon particular transfers of control of such class B common shares. Each class B series 2 common share will automatically convert into one class A common share in the event that all of the class B series 1 shares are converted into class A common shares pursuant to the bye-laws.

Modification of Rights	Pursuant to Brazilian corporate law, the number of Cosan’s shares and their respective value may only be modified in the case of an alteration of its share capital, its monetary expression, splitting or grouping of shares, redemption, refund shares or the cancellation of shares issued. Except for the redemption and refund of shares, which, according to Cosan’s by-laws must be approved by the Board, all other measures to modify the rights of Cosan’s shares must be approved at a General Shareholders’ Meeting.	Pursuant to our bye-laws rights attaching to the class A common shares, class B common series 1 common shares and class B series 2 common shares may be modified with the consent of the holders of not less than 66 ²/₃ % of the aggregate voting power of the issued shares in the company and with the consent of the holders of not less than 75% of the aggregate voting power of the issued shares of the class or series whose rights are being modified. The quorum for any general meeting held for the purpose of modifying the rights of the shares of the company is two persons present or by proxy holding one third of the voting power of the shares of the relevant classor series (providing that where one class or series of share has only one shareholder, one shareholder present in person or proxy will constitute the necessary quorum). Each holder of shares of the relevant

167

		class or series is entitled on poll when voting as a class or series to one vote for every such share held by him.

Amendment of Organizational Documents	According to Cosan’s by-laws, any alteration in the corporate purpose or in the organizational documents must be approved by the General Shareholders’ Meeting, which must follow the procedure mentioned in the section referring to “Voting”, above. It should be noted, however, that as Cosan is a listed in the Novo Mercado segment of BOVESPA, its organizational documents must comply with the requirements of the Novo Mercado Listing Rules.	Our bye-laws provide that in the case of rescission, alteration or amendment to the bye-laws relating to interpretation, rights of shares, modification of rights, indemnity of directors and officers, amalgamations and other business combinations, specific transactions involving interested shareholders, discontinuation into another jurisdiction, tag along rights and amendment or alteration over the bye-laws, the required resolutions must include the affirmative vote of at least 66²/₃% of our directors then in office and holders of at least 66²/₃%of the class A common shares and at least a majority of the class B common shares then in issue entitling the holder to attend and vote on the resolution with holders of each class voting separately. In the case of rescission, alteration of amendment to the bye-laws relating to the transmission of shares upon death of the holder of class B series 1 shares, election of directors, the removal of directors, the increase of share capital and the alteration of share capital, the requisite affirmative votes are the majority of the directors in office and the holders of a majority of each of the class A common shares and the class B common share then in issue entitling the holder to attend and vote on the resolution, with holders of each class voting separately. Under Bermuda law, the holders of an aggregate of not less than 20% in par value of the company’s issued and outstanding share capital or any class thereof, or the holders of the aggregate of not less than 20% of the company’s debentures entitled, object to amendments to the memorandum of association have the right to apply to a Bermuda court for annulment of any amendment to the memorandum of association adopted by the shareholders at any general meeting, other than an amendment which alters or reduces a company’s share capital or changes its name as provided in the Companies Act 1981. Where such application is made, the amendment only becomes effective to the extent that it is confirmed by the Bermuda court. An application for annulment of an amendment of the memorandum of association must be made within 21 days after the date on which the resolution altering the company’s memorandum of association has passed and may be made on behalf of persons entitled to make the

168

		application by one or more of their number as they may appoint in writing for the purpose. No application may be made by shareholders voting in favor of the amendment.

Appraisal Rights and Shareholders’ Suits	Pursuant to Brazilian corporate law, the company, subject to deliberation in the shareholders’ meeting, may file an action against the directors and officers for losses incurred by the company on account of (i) negligence or willful misconduct by the directors and officers, or (ii) violation of the law or of the Company’s by-laws on behalf of the directors and officers. Any shareholder may file such action if is not brought within three months from the shareholders’ meeting. If the general meeting does not approve the filing of the action, it may still be brought by shareholders representing at least 5% of a company’s share capital.	Class actions and derivative actions are not generally available to shareholders under Bermuda law. Bermuda courts may permit in certain circumstances a shareholder to commence an action in the name of a company to remedy a wrong to the company where the challenged act would allegedly be beyond the power of the company or illegal. In addition, consideration would be given by a Bermuda court to acts that would allegedly constitute a fraud against the minority shareholders or for instance, where an act requires the approval of a greater percentage of the company’s shareholders’ voting power than that which actually approved it. When the affairs of the company are being conducted in a manner which is oppressive or prejudicial to the interests of some or all of the shareholders, one or more shareholder may apply to a Bermuda court, which may make such an order as it sees fit, including an order regulating the conduct of the company’s affairs in the future or ordering the purchase of the shares by any shareholder by other shareholders or by the company.

Inspection of Records	According to Brazilian law and CVM regulations, the public documents of a company are available through the CVM’s website and the investor relations department of the company. These documents include the company’s by-laws and any alterations thereto, the notice and the minutes of shareholders’ meetings, minutes of the board of directors’ meetings, as well as the company’s audited annual and quarterly financial statements. A company is required to keep its registration data current, updating its records in up to five days from the occurrence of any alteration. Cosan’s records are publicly available through CVM’s website (www.cvm.gov.br) and Cosan’s Investor Relations department. Furthermore, any person may obtain certified copies of the entries made in the Shares Registry Book, the Registered Shares Transfer Book, the Registered Founder Shares Registry Book and the Registered Founder Shares Transfer Book, as long as it is necessary for the defense of his/her rights or the clarification of situations of personal interest or interest of any shareholder or the capital market. A company is authorized to charge for the cost of such copies and should the company deny the request for	Bermuda law provides the general public with the right to inspect the public documents of a company available at the Registrar of Companies in Bermuda. These documents include the company’s memorandum of association and any alteration to its memorandum of association. The shareholders have the additional right to inspect the bye-laws of the company, minutes of general meetings (copies of which are held at the registered office of the company) and the company’s audited financial statements, which must be presented at the annual general meeting unless waived in accordance with the provisions of the Companies Act 1981. The register of shareholders is required to be open for inspection for not less than two hours in any business day (subject to the ability of a company to close the register of shareholders for not more than thirty days in a year). A company is required to maintain its share register in Bermuda, but may subject to the provisions of the Companies Act 1981, establish a branch register outside Bermuda. A company is required to keep at its registered office a register of directors and officers that is open for inspection for not less than two hours in any

169

DIVIDENDS AND DIVIDEND POLICY

	such copies, this decision is subject to appeal to the CVM.	business day by members of the general public without charge. Bermuda law does not, however, provide a general right for shareholders to inspect or obtain copies of any other corporate records.

Directors and Officers’ Indemnity	Brazilian corporate law provides that a director or officer is not personally liable for the obligations it contracts on behalf of the company and in virtue of its regular management. It is, however, liable for losses when they arise: (i) within his or her attribution due to negligence or willful misconduct; or (ii) in violation of law or the company’s by-laws. Cosan’s by-laws do not provide any indemnity for directors and officers’ liability.	Bermuda law provides that a company may in its bye-laws or in any contract or arrangement indemnify a director or officer in respect of any liability attaching to him as a result of any negligence, default, breach of duty or breach of trust, except in the case of fraud or dishonesty, of which the director may be guilty in relation to the company or any subsidiary thereof. Our bye-laws provide that the directors and officers of the company are indemnified in respect of their actions and omissions, except in case of fraud or dishonesty.

Directors’ Interests	Pursuant to Brazilian corporate law, a director is prohibited from intervening in or deliberating about any transaction which has conflicting interests with that of the company. The director with conflicting interests must notify the Board of directors of the nature and scope of his or her impediment, which must then be registered in the minutes of the meeting. Further, Brazilian law provides that a director can only contract with the company under arms’ length conditions, observing principles of equity and reasonableness.	Our bye-laws provide that a director is entitled to be counted in the quorum of any board meeting provided that he discloses to the board any direct or indirect interest in any contract or arrangement. However, the director may not vote in respect of any such contract or arrangement in which he is interested.

Loans to Directors	Brazilian corporate law provides that directors and officers of a company must seek prior approval from the General Shareholders’ Meeting or the board of directors in order to borrow resources or assets from such company.	Bermuda law provides that a director (including the spouse or children of the director, or any company (other than the holding company or a subsidiary company of the company giving the loan) of which such director, spouse or children own or control, directly or indirectly, more than 20% of the total capital or loan debt) cannot borrow money from the company without the consent of not less than 90% of shareholders having the right to vote at any general meeting of the shareholders.

170

Dividend Rights

Cosan Limited is a holding company and can only pay dividends to the extent, if any, that funds are received from our subsidiaries. Our dividend policy is similar to the current dividend policy of our main subsidiary, Cosan. Cosan is required by the Brazilian corporate law to distribute (and has historically done so) on an annual basis dividends representing 25% of its net income (as calculated under Brazilian GAAP, subject to certain adjustments mandated by Brazilian corporate law). We intend to pay cash dividends representing on an annual basis 25% of our annual consolidated net income (as calculated under U.S. GAAP), to holders of class A common shares and class B common shares in proportion to the number of shares held by them unless our board of directors has determined, in its discretion, that such distribution would not be advisable or appropriate in light of our financial condition or we are unable to meet requirements under Bermuda law.

Cosan has a dividend policy that is similar to that of our company, although the net income is calculated in accordance with Brazilian GAAP (subject to certain adjustments mandated by Brazilian corporate law). Because Brazilian GAAP differs in significant respects from U.S. GAAP, Cosan’s dividends to us may be lower than the corresponding amounts under our dividend policy, which is based upon net income under U.S. GAAP. The main difference between U.S. GAAP and Brazilian GAAP that produces material variances in net income relates to hedging transactions. Under Brazilian GAAP, hedging results are allocated to the income statement together with the result of the underlying asset. Under U.S. GAAP, on the other hand, we “mark to market” our hedging portfolio against financial income (expense). As a result, for U.S. GAAP purposes, our hedging policy is likely to be responsible for fluctuations in our net income. In fiscal year 2007, the difference between dividends paid by Cosan and the dividends we would have paid if our dividend policy were in effect as of April 30, 2007 would have been US$8.8 million assuming that Cosan had been our wholly-owned subsidiary. We expect that differences may occur in fiscal year 2008 and future periods, as Cosan continues to enter into hedging transactions. The amount of Cosan’s dividends to us will also depend upon the level of our future ownership in Cosan’s common shares. In the event of any difference between dividends to be paid under our dividend policy and dividends paid to us by Cosan, our board of directors will be required to decide, at the relevant time, either to pay dividends above 25% of net income (as calculated under U.S. GAAP) or else pay dividends below that 25% level using cash dividends received from Cosan and any other subsidiaries.

Our board of directors may, in its discretion, amend or repeal our dividend policy. You may not receive the level of dividends provided for in the dividend policy or any dividends at all due to a number of factors, such as:

we are a holding company, and therefore, our ability to pay dividend will depend on our ability to receive distributions from our subsidiaries, particularly our subsidiary Cosan. See “Risk Factors – Risks Related to the Corporate Restructuring and the Exchange Offer – As a holding company, we may face limitations on our ability to receive distributions from our subsidiaries” and “Cosan’s Dividend Policy”;

·	our subsidiaries may become subject to covenants restricting their ability to distribute dividends under credit facilities, term loans or other indebtedness;

any imposition of restrictions on conversions and remittances by the Brazilian government could hinder or prevent us from converting into U.S. dollars or other foreign currencies and remitting abroad dividends of our Brazilian subsidiaries. See “Risk Factors – Risks Related To the Corporate Restructuring and the Exchange Offer – As a holding company, we may face limitations on our ability to receive distributions from our subsidiaries”;

·	our shareholders have no contractual or other legal rights to dividends pursuant to Bermuda law; and

·	we may not have sufficient cash to pay dividends due to changes in our operating earnings, working capital requirements and anticipated cash needs.

Under Bermuda law, a company’s board of directors may declare and pay dividends from time to time unless there are reasonable grounds for believing that the company is or would, after the payment, be unable to pay its

171

liabilities as they become due or that the realizable value of its assets would thereby be less than the aggregate of its liabilities and issued share capital and share premium accounts. Under our bye-laws, each class A common share and class B common share is entitled to dividends if, as and when dividends are declared by our board of directors, subject to any preferred dividend right of holders of any preference shares. There are no restrictions on our ability to transfer funds (other than funds denominated in Bermuda dollars) in or out of Bermuda or to pay dividends to U.S. residents who are holders of our common shares.

We expect to have sufficient available cash to pay dividends in accordance with our dividend policy. We do not, however, plan to pay dividends in the event that we do not generate sufficient cash from operations. In addition, we will not pay dividends if we believe that such payment will limit or preclude our or our subsidiaries’ ability to pursue growth opportunities. Although our bye-laws and Cosan’s by-laws do not restrict us from borrowing funds to pay dividends, we do not intend to borrow funds to pay dividends.

The dividend rights attaching to our class A common shares and class B common shares are not cumulative in the event that we do not, for any reason, pay dividends on those shares.

Any cash dividends payable to holders of our common shares quoted on the NYSE will be paid to Mellon Investors Services LLC, our transfer agent in the United States, for disbursement to those holders.

Cosan’s Dividend Policy

Brazilian corporate law and Cosan’s by-laws require that Cosan distributes annually to its shareholders a mandatory minimum dividend, unless Cosan’s board of directors notifies the shareholders that such distribution is not advisable in light of Cosan’s financial condition as reflected in Cosan’s financial statements in accordance with Brazilian GAAP. The mandatory dividend is equal to 25% of Cosan’s net income for the prior year (as calculated under Brazilian GAAP, subject to certain adjustments mandated by Brazilian corporate law). The mandatory dividend may be made in the form of dividends or interest on shareholders equity, which may be deducted by Cosan in calculating its income and social contribution tax obligations. The declaration of annual dividends, including dividends in excess of the mandatory distribution, requires approval by the vote of a majority of the holders of Cosan’s common shares and depends on numerous factors. These factors include Cosan’s results of operations, financial condition, cash requirements, future prospects, financial covenant limitations, and other factors deemed relevant by Cosan’s board of directors and shareholders. Cosan’s board of directors has adopted a dividend policy pursuant to which Cosan has distributed as dividends and/or interest on shareholders equity in the amount of approximately 25% of Cosan’s net income for each fiscal year. Under Brazilian corporate law, Cosan may establish income reserve accounts composed of a legal reserve, an investments reserve and/or a retained profit reserve. The balance of such income reserve accounts must not exceed the amount of Cosan’s capital stock and any excess amounts must either be incorporated to its capital stock or distributed as dividends. Cosan currently does not have any income reserve accounts, but may establish them in the future. Cosan has historically paid cash distributions.

The following table sets forth Cosan’s dividend distributions calculated, under Brazilian GAAP, for each of the last five fiscal years:

Fiscal Year	Total Dividend Distribution
	(in millions of US$)
2003	US$	1.8
2004		1.0
2005		0.6
2006		—
2007		37.3

Brazilian Taxation

Dividends paid by Cosan to us are currently not subject to withholding income tax in Brazil, to the extent that such amounts are related to profits generated as of January 1, 1996. In addition, Brazilian tax laws permit Cosan to make distributions to shareholders of interest on shareholders’ equity and treat those payments as a deductible

172

expense for purposes of calculating Brazilian income tax and social contributions. For tax purposes, this interest is limited to the daily pro rata portion of the TJLP, as determined by the Central Bank from time to time, and the amount of the deduction is limited to (1) 50% of net income (after social contributions but before income tax and the amount to be distributed as interest on shareholders’ equity) related to the period in respect of which the payment is made; or (2) 50% of the sum of retained profits and profit reserves as of the date of the beginning of the period in respect of which the payment is made. A payment to us of interest on shareholders’ equity is subject to withholding income tax at the rate of 25%.

173

TAXATION

General

The following is a discussion of the material Brazilian, U.S. federal and Bermuda income tax consequences to you of participating in the exchange offer and of the ownership and disposition of our class A common shares or class B series 2 common shares that you receive in the exchange offer (together, the “new common shares”).

You should consult your own tax advisor regarding the specific tax consequences to you of participating in the exchange offer and of owning and disposing of our new common shares, including your eligibility for the benefits of any treaty for the avoidance of double taxation, the applicability or effect of any special rules to which you may be subject, and the effect of any state, local, or other tax laws.

Brazilian Tax Consequences

General

In the opinion of Souza, Cescon Avedissian, Barrieu e Flesch Advogados, the following are the Brazilian income tax consequences to you of participating in the exchange offer and of the ownership and disposition of the new common shares. The following discussion is based on Brazilian law and practice as applied and interpreted as of the date of this prospectus, which are subject to change at any time. In addition, the discussion applies to you only if you are a non-resident of Brazil.

The Exchange Offer

There is no settled jurisprudence with respect to the tax treatment of the exchange offer and no agreement as to the final tax treatment has been entered into with the Brazilian tax authorities. It is possible to argue that the exchange of shares in the exchange offer without the payment of a return and provided that a shareholder maintains the cost of acquisition of Cosan shares for Brazilian tax purposes, would not result in taxation, considering that no capital gain is incurred by the parties involved. If it was determined that the exchange of shares in the exchange offer did result in a taxable gain, shareholders registered in accordance with Brazilian law No. 2,689/01 would not be adversely affected, since the shares they tender in the exchange offer will be purchased and exchanged through an auction on the São Paulo Stock Exchange, and in such a transaction, such shareholders would be exempt from tax in Brazil, unless the shareholder is resident in a tax haven. For these purposes, a tax haven is a country or other location where income is not taxed or is taxed at rates lower than 20%, or the legislation of which imposes secrecy with respect to the shareholders of legal entities. If you are not sure whether you are registered in accordance with Brazilian law No. 2,689/01, or you wish to register in accordance with Brazilian law No. 2,689/01, you should contact your custodian, representative, broker or other nominee.

We recommend that you consult your own tax advisor for advice regarding the tax treatment applicable to your particular circumstances.

Taxation of Distributions

Distributions on our new common shares paid as dividends to you will not be subject to taxation in Brazil.

Sale and Other Disposition of New Common Shares

Any capital gains you realize on the sale or other disposition of our new common shares will not be subject to taxation in Brazil.

Other Taxes

Securities transactions may be subject to the Tax on Securities Transactions (“IOF/Títulos”). Currently, for most transactions, the rate of the IOF/Títulos is zero, although the executive branch may increase the rate at any time, at the maximum rate of 1.5% per day.

174

The Tax on Foreign Exchange Transactions (“IOF/Câmbio”) is also imposed on the conversion of the reais into foreign currencies and vice versa. Currently, the majority of foreign exchange transactions (related to the inflow and outflow of funds), are subject to a rate of 0.38%, although the executive branch may increase the rate at any time, up to a maximum of 25%. It is worth remembering that foreign exchange transactions involving the investment of funds under the Brazilian financial and capital markets which are made in accordance with Brazilian law No. 2,689/01 shall have a IOF/Câmbio rate of 0%.

Finally, it is worth remembering that until December, 2007 any transaction carried out by a holder of securities in Brazil that would result in the transfer of reais from an account maintained by such holder (or its custodian) with a Brazilian financial institution was subject to the temporary contribution on financial institutions (“CPMF”). The CPMF was a withholding tax generally levied on debits to current accounts, at the rate of 0.38%.

The Brazilian Senate did not approve a constitutional amendment to the Brazilian Federal Constitution which would renew the imposition of the CPMF and since January, 2008 such contribution is no longer imposed. However, the Brazilian Federal Government may try to reestablish the imposition of the CPMF by means of a new constitutional amendment to the Brazilian Congress. In this case, the CPMF will only be imposed on future transactions and after a 90 day period, counting from the date of the publication of the constitutional amendment.

Material U.S. Federal Income Tax Considerations

In the opinion of Davis Polk & Wardwell, the following are the material U.S. federal income tax consequences to holders who exchange common shares of Cosan for our new common shares pursuant to our plan of corporate reorganization, and the material U.S. federal income tax consequences of holding and disposing of our new common shares. This discussion applies only to “U.S. Holders” (as defined below) that will hold our new common shares as capital assets.

This discussion does not describe all of the tax consequences that may be relevant to a holder in light of the holder’s particular circumstances or to holders subject to special rules, such as:

·	certain financial institutions;

·	insurance companies;

·	dealers in securities;

·	persons holding common shares of Cosan or the new common shares as part of a hedge, “straddle”, integrated transaction or similar transactions;

·	persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;

·	partnerships or other entities classified as partnerships for U.S. federal income tax purposes;

·	persons subject to the alternative minimum tax;

·	tax-exempt organizations; or

·	persons that own or are deemed to own five percent or more of both our voting stock and the total value of our stock.

This discussion is based on the U.S. Internal Revenue Code of 1986, as amended, or the “Code”, administrative pronouncements, judicial decision and final, temporary and proposed Treasury regulations, all as currently in effect. These laws are subject to change, possibly on a retroactive basis. Please consult your own tax advisers concerning the U.S. federal, state, local and foreign tax consequences of purchasing, owning and disposing of new common shares in your particular circumstances.

As used herein, the term “U.S. Holder” means a beneficial owner of common shares of Cosan that is, for U.S. federal tax purposes:

·	an individual citizen or resident of the United States;

·	a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any political subdivision thereof; or

·	an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.

The Exchange Offer

The treatment of the exchange offer for U.S. federal income tax purposes is not entirely clear because it depends on characterizing a series of restructuring steps carried out over a period of months as a single plan, and there is no

175

legal authority directly addressing this scenario; however, it is the opinion of Davis Polk and Wardwell that the exchange offer should qualify as the third and final step in a broader plan of corporate reorganization and should be treated as an exchange of shares pursuant to a plan which qualifies as a tax-free incorporation under Section 351 of the Code. Accordingly, a U.S. Holder who exchanges common shares of Cosan for our new common shares pursuant to the exchange offer should not recognize gain or loss, and such holder’s basis in the new common shares would be the same as the basis in the common shares of Cosan surrendered pursuant to the exchange offer, and the holding period of the new common shares received by a holder would include the period for which the common shares of Cosan were considered to be held.

If the exchange offer were not treated as an exchange of stock pursuant to an overall plan governed by Section 351 as described above, the exchange of common shares of Cosan for new common shares would be taxable to U.S. Holders, requiring the recognition of capital gain or loss.

Ownership of New Common Shares

Taxation of Distributions

Subject to the passive foreign investment company rules described below, distributions paid on our new common shares, other than certain pro rata distributions of our new common shares, will be treated as a dividend to the extent paid out of current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Subject to applicable limitations, dividends paid to non-corporate U.S. Holders in taxable years beginning before January 1, 2011, will be taxable at a maximum rate of 15%, provided that certain holding period and other requirements are satisfied. Recently introduced legislation would, if enacted in its current form, deny “qualified dividend income” treatment and impose income tax at regular rates for certain foreign distributions, including payments from foreign entities not subject to tax in the foreign country, like Cosan Limited. It is uncertain whether or when such legislation will be enacted into law. U.S. Holders should consult their own tax advisors regarding the implications of such legislation for their particular circumstances. The amount of the dividend will be treated as foreign source dividend income to you and will not be eligible for the dividends received deduction generally allowed to U.S. corporations under the Code.

To the extent that the amount of any distribution exceeds our current and accumulated earnings and profits for a taxable year (as determined under U.S. federal income tax principles), the distribution will first be treated as a tax-free return of capital, causing a reduction in the adjusted basis of your new common shares, and the balance in excess of adjusted basis will be taxed as capital gain recognized on a sale or exchange. However, we do not expect to keep earnings and profits in accordance with U.S. federal income tax principles. Therefore, you should expect that a distribution will generally be treated as a dividend.

Sale and Other Disposition of New Common Shares

Subject to the passive foreign investment company rules described below, for U.S. federal income tax purposes, gain or loss you realize on the sale or other disposition of your new common shares will be capital gain or loss, and will be long-term capital gain or loss if you held our new common shares for more than one year. The amount of your gain or loss will be equal to the difference between your tax basis in the new common shares disposed of and the amount realized on the disposition. Such gain or loss will generally be U.S. source gain or loss for foreign tax credit purposes.

Passive Foreign Investment Company Rules

In general, a non-U.S. corporation will be classified as a “passive foreign investment company,” or “PFIC”, for U.S. federal income tax purposes in any taxable year in which, after applying certain look-through rules, either (1) at least 75% of its gross income is “passive income” or (2) at least 50% of the average value of its gross assets is attributable to assets that produce “passive income” or are held for the production of “passive income”. Passive income for this purpose generally includes dividends, interest, royalties, rents and gains from commodities, foreign currency and securities transactions. Based on the current composition of our income and the market value and composition of our assets, we believe that we will not be considered a PFIC for our current taxable year, and do not expect to become a PFIC in the future. However, since PFIC status depends upon the composition of our income and

176

assets and the market value of our assets (including, among others, goodwill and less than 25% owned equity investments) from time to time, we cannot assure you that we will not be considered a PFIC for any taxable year. Specifically, we have now, and may continue to have after the exchange offer is completed, a significant amount of cash and other assets on our consolidated balance sheet that are or may be considered passive assets for PFIC purposes, depending on, among other factors, how soon and in what assets we invest these amounts. Our current PFIC status will not be determinable until the close of our current taxable year, and is in any event an inherently factual determination. Accordingly, Davis Polk & Wardwell is unable to render an opinion on our PFIC status. If we were treated as a PFIC for any taxable year during which a U.S. Holder held a new common share, certain adverse consequences could apply to the U.S. Holder.

If we were treated as a PFIC for any taxable year, gain recognized by such U.S. Holder on a sale or other disposition of new common shares would be allocated ratably over the U.S. Holder’s holding period for the new common shares. The amounts allocated to the taxable year of the sale or other exchange and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, and an interest charge would be imposed on the amount allocated to such taxable year. Further, any portion of any distribution in respect of new common shares that exceeds 125% of the average of the annual distributions on new common shares received by the U.S. Holder during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, would be subject to taxation as described above. U.S. persons may be able to make a mark-to-market election that may mitigate the adverse consequences resulting from PFIC status.

In addition, if we were to be treated as a PFIC in a taxable year in which we pay a dividend or the prior taxable year, the 15% dividend rate discussed above with respect to dividends paid to non-corporate holders would not apply.

Information Reporting and Backup Withholding

Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries generally are subject to information reporting and to backup withholding unless (1) you are a corporation or other exempt recipient or (2) in the case of backup withholding, you provide a correct taxpayer identification number and certify that you are not subject to backup withholding.

The amount of any backup withholding from a payment to you will be allowed as a credit against your U.S. federal income tax liability and may entitle you to a refund, provided that the required information is timely furnished to the Internal Revenue Service.

Bermuda Tax Consequences

The following discussion applies to you only if you are a non-resident of Bermuda.

According to Appleby, our special Bermuda counsel, at the present time, there is no Bermuda income or profits tax, withholding tax, capital gains tax, capital transfer tax, estate duty or inheritance tax payable by us or by our shareholders (other than shareholders ordinarily resident in Bermuda) in respect of our shares.

We have obtained an assurance in the form of a certificate from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act 1966 that, in the event that any legislation is enacted in Bermuda imposing any tax computed on profits or income, or computed on any capital asset, gain or appreciation or any tax in the nature of estate duty or inheritance tax, such tax shall not, until March 28, 2016, be applicable to us or to any of our operations or to our shares or other obligations except insofar as such tax applies to persons ordinarily resident in Bermuda or to any taxes payable by us in respect of real property or leasehold interests in Bermuda held by us. An Annual Government Fee is payable yearly and is assessed according to the assessable share capital of the company.

177

EXPENSES

The following is an itemized statement of the expenses incurred or estimated to be incurred by us in connection with the transaction.

Expenses	Amount (in US$)
Accounting fees	US$	173,100
Filing and listing fees		659,700
Intermediary Institution fees		1,586,300
Legal fees		1,400,000
Printing costs		329,200
Miscellaneous costs		300,000
Total	US$	4,448,300

178

LEGAL MATTERS

The validity of the class A common shares and class B series 2 common shares being offered in the exchange offer and certain other matters of Bermuda law will be passed upon for us by Appleby, Hamilton, Bermuda.

Certain matters of United States law will be passed upon for us by Davis Polk & Wardwell, New York, New York.

Certain matters of Brazilian law will be passed upon for us by Souza, Cescon Avedissian, Barrieu e Flesch Advogados, São Paulo, Brazil.

179

EXPERTS

Ernst & Young Auditors Independentes S.S., independent registered public accounting firm, has audited our balance sheet at April 30, 2007, as set forth in their report. We have included this balance sheet in this prospectus and elsewhere in the registration statement in reliance on the report of Ernst & Young Auditores Independentes S.S. given on their authority as experts in accounting and auditing.

Ernst & Young Auditores Independentes S.S., independent registered public accounting firm, has audited Cosan’s consolidated financial statements and schedule at April 30, 2007 and 2006, and for each of the three years in the period ended April 30, 2007, as set forth in their report. We have included Cosan’s financial statements and schedule in this prospectus and elsewhere in the registration statement in reliance on the report of Ernst & Young Auditores Independentes S.S., given on their authority as experts in accounting and auditing.

The address of Ernst & Young Auditores Independentes S.S. is Avenida Presidente Juscelino Kubitschek, 1830, 6^o. floor, São Paulo, 04543-900, Brazil.

180

WHERE YOU CAN FIND MORE INFORMATION

We are subject to the informational requirements of the U.S. Securities Exchange Act of 1934, or “Exchange Act”. Accordingly, we are required to file reports and other information with the SEC, including annual reports on Form 20-F and reports on Form 6-K. You may inspect and copy reports and other information to be filed with the SEC at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington D.C. 20549. Copies of the materials may be obtained from the Public Reference Room of the SEC at 100 F Street, N.E., Washington, D.C. 20549 at prescribed rates. The public may obtain information on the operation of the SEC’s Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet website at http://www.sec.gov, from which you may electronically access the registration statement and its materials. In addition, you may inspect reports and other information concerning us at the offices of The New York Stock Exchange, Inc. at 20 Broad Street, New York, NY 10005.

As a foreign private issuer, we are not subject to the same disclosure requirements as a domestic U.S. registrant under the Exchange Act. For example, we are not required to prepare and issue quarterly reports. However, we intend to furnish our shareholders with annual reports containing financial statements audited by our independent auditors and to make available to our shareholders quarterly reports containing unaudited financial data for the first three quarters of each fiscal year.

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with additional information or information different from that contained in this prospectus. We are offering shares of our class A common stock and class B series 2 common stock pursuant to the exchange offer (as described in this prospectus) only in jurisdictions where permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of closing of the exchange offer and delivery of shares of our class A common stock or class B series 2 common stock pursuant thereto.

181

ENFORCEMENT OF CIVIL LIABILITIES

Bermuda

We are a Bermuda-incorporated exempted company. As a result, the rights of holders of our common shares will be governed by Bermuda law and our memorandum of association and bye-laws. The rights of shareholders under Bermuda law may differ from the rights of shareholders of companies organized in other jurisdictions.

All of our directors and officers and certain of the named experts referred to in this prospectus are not residents of the United States, and all of our assets are located outside the United States. As a result, it may be difficult for investors to effect service of process on those persons in the United States and to enforce the judgments obtained in U.S. courts against us or those persons based on the civil liability provisions of the U.S. federal or state securities laws. We have been advised by Appleby, our Bermuda counsel, that a final and conclusive judgment of a competent foreign court against the Company may be enforceable in Bermuda if the foreign court is situated in a country to which the Judgments (Reciprocal Enforcement) Act of 1958, or “1958 Act”, applies. The 1958 Act does not apply to the United States. A final and conclusive judgment of a foreign court against our company under which a sum of money is payable (not being a sum payable in respect of taxes or other charges of a like nature, in respect of a fine or other penalty, or in respect of multiple damages as defined in The Protection of Trading Interests Act 1981) may be the subject of enforcement proceedings in the Supreme Court of Bermuda under the common law doctrine of obligation by action on the debt evidenced by the foreign court’s judgment. A final opinion as to the availability of this remedy should be sought when the facts surrounding the foreign court’s judgment are known, but, on general principles, we would expect such proceedings to be successful provided that (1) the court which issued the judgment was competent to hear the action in accordance with private international law principles as applied in Bermuda; and (2) the judgment is not contrary to public policy in Bermuda, has not been obtained by fraud or in proceedings contrary to natural justice and is not based on an error in Bermuda law. Enforcement of such a judgment against assets in Bermuda may involve the conversion of the judgment debt into Bermuda dollars, but the Bermuda Monetary Authority has indicated that its present policy is to give the consents necessary to enable recovery in the currency of the obligation. The United States and Bermuda do not have a treaty providing for enforcement of judgments in civil and commercial matters. As a result, a final judgment for the payment of money rendered in the United States based on civil liability, whether or not based solely on U.S. federal or state securities laws, would not automatically be enforceable in Bermuda.

We have expressly submitted to the jurisdiction of the U.S. federal and New York state courts sitting in The City of New York for the purpose of any suit, action or proceeding arising out of the exchange offer, and we have appointed CT Corporation System to accept service of process in any such action.

Brazil

Cosan, our principal operating subsidiary, is incorporated under the laws of Brazil. All of our directors and officers and certain of the named experts are residents of Brazil. Substantially all of our assets are located in Brazil. As a result, it may be difficult for you to effect service of process upon these other persons within the United States or to enforce judgments obtained in United States courts against us or them, including those predicated upon the civil liability provisions of the U.S. federal or state securities laws.

We have been advised by Souza, Cescon Avedissian, Barrieu & Flesch Advogados, our Brazilian counsel, that a judgment of a U.S. court for civil liabilities predicated upon the federal securities laws may be enforced in Brazil, subject to certain requirements described below. Our Brazilian counsel has advised that a judgment against us, Cosan, our directors and officers or certain experts named herein obtained in the United States would be enforceable in Brazil upon confirmation of that judgment by the Superior Tribunal de Justiça (Superior Tribunal of Justice). That confirmation will only be available if the U.S. judgment:

·	fulfills all formalities required for its enforceability under the laws of the United States;

182

·	is issued by a court of competent jurisdiction after proper service of process on the parties, which service must be in accordance with Brazilian law if made in Brazil, or after sufficient evidence of our absence has been given, as established pursuant to applicable law;

·	is not subject to appeal;

·	is for payment of a determined sum of money;

·	is authenticated by a Brazilian diplomatic office in the United States and is accompanied by a sworn translation into Portuguese; and

·	is not against Brazilian public policy, good morals or national sovereignty (as set forth in Brazilian law).

We have been further advised by our Brazilian counsel that original actions may be brought in Brazilian courts in connection with this prospectus predicated solely on the U.S. federal or state securities laws and that, subject to applicable law, Brazilian courts may enforce liabilities in such actions against us, Cosan or our directors and officers, and certain experts named herein.

In addition, a plaintiff, whether Brazilian or non-Brazilian, that resides outside Brazil during the course of litigation in Brazil must provide a bond to guarantee court costs and legal fees if the plaintiff owns no real property in Brazil that could secure payment. This bond must have a value sufficient to satisfy the payment of court fees and defendant attorney’s fees, as determined by the Brazilian judge, except in the case of the enforcement of foreign judgments that have been duly confirmed by the Brazilian Superior Tribunal de Justiça. Notwithstanding the foregoing, we cannot assure you that confirmation of any judgment will be obtained, or that the process described above can be conducted in a timely manner.

183

INDEX TO FINANCIAL STATEMENTS


Cosan Limited
Audited Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets at April 30, 2007 and 2006	F-3
Consolidated Statements of Operations for Years Ended April 30, 2007, 2006 and 2005	F-5
Consolidated Statements of Shareholders’ Equity and Comprehensive Income for Years Ended April 30, 2007, 2006 and 2005	F-6
Consolidated Statements of Cash Flows for Years Ended April 30, 2007, 2006 and 2005	F-7
Notes to the Consolidated Financial Statements	F-8

Cosan Limited
Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at October 31, 2007 (Unaudited) and April 30, 2007	F-38
Condensed Consolidated Statements of Income for the Six-Month Periods Ended October 31, 2007 and 2006 (Unaudited)	F-40
Condensed Consolidated Statements of Shareholders’ Equity for the Six-Month Period Ended October 31, 2007 (Unaudited)	F-41
Condensed Consolidated Statements of Cash Flows for the Six-Month Periods Ended October 31, 2007 and 2006 (Unaudited)	F-42
Notes to the Condensed Consolidated Financial Statements (Unaudited) October 31, 2007	F-43

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Cosan Limited

We have audited the accompanying consolidated balance sheets of Cosan Limited (successor Company to Cosan S.A. Indústria e Comércio) and subsidiaries as of April 30, 2007 and 2006, and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the three years in the period ended April 30, 2007. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting, Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cosan Limited (successor Company to Cosan S.A. Indústria e Comércio) and subsidiaries at April 30, 2007 and 2006, and the consolidated results of their operations and their cash flows for each of the three years in the period ended April 30, 2007, in conformity with accounting principles generally accepted in the United States of America.

São Paulo, Brazil August 17, 2007	ERNST & YOUNG Auditores Independentes S.S. CRC2SP015199/O-8


	/s/ Luiz Carlos Nannini
	Luiz Carlos Nannini Accountant CRC 1SP171638/O-7

F-2

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

CONSOLIDATED BALANCE SHEETS

April 30, 2007 and 2006

(In thousands of U.S. dollars, except share data)

	2007		2006
Assets
Current assets:
Cash and cash equivalents		316,542		29,215
Restricted cash		17,672		62,996
Marketable securities		281,879		368,838
Trade accounts receivable, less allowances: 2007—4,013; 2006—2,343		55,206		101,762
Inventories		247,480		187,174
Advances to suppliers		103,961		63,526
Deferred income taxes		—		74,755
Other current assets		116,763		72,049
		1,139,503		960,315

Property, plant, and equipment, net		1,194,050		1,008,052
Goodwill		491,857		497,865
Intangible assets, net		93,973		98,935
Accounts receivable from Federal Government		156,526		—
Other non-current assets		177,460		126,585
		2,113,866		1,731,437
Total assets		3,253,369		2,691,752

Liabilities and shareholders’ equity
Current liabilities:
Trade accounts payable		55,938		96,552
Advances from customers		24,275		37,888
Taxes payable		57,543		39,991
Salaries payable		31,109		23,801
Current portion of long-term debt		36,076		46,576
Derivative financial instruments		9,779		133,376
Dividends payable		37,261		—
Other liabilities		22,238		18,932
		274,219		397,116
Long-term liabilities:
Long-term debt		1,342,496		941,741
Estimated liability for legal proceedings and labor claims		379,191		462,248
Taxes payable		106,897		152,446
Advances from customers		24,333		41,595
Deferred income taxes		141,587		81,633
Other long-term liabilities		47,484		33,083
		2,041,988		1,712,746
Minority interest in consolidated subsidiaries		463,551		287,644

F-3

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

CONSOLIDATED BALANCE SHEETS

April 30, 2007 and 2006

(In thousands of U.S. dollars, except share data)

	2007		2006
Shareholders’ equity:
Common stock, no par value. Authorized 96,332,044 shares; issued and outstanding 96,332,044 shares in 2007 and 2006		963		963
Additional paid-in capital		354,022		349,231
Accumulated other comprehensive income		36,696		19,819
Accumulated income (loss)		81,930		(75,767	)
Total shareholders’ equity		473,611		294,246
Total liabilities and shareholders’ equity		3,253,369		2,691,752

See accompanying notes to consolidated financial statements.

F-4

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended April 30, 2007, 2006 and 2005

(In thousands of U.S. dollars, except share data)

	2007			2006			2005

Net sales		1,679,050			1,096,614			644,376
Cost of goods sold		(1,191,251	)		(796,295	)		(456,567	)
Gross profit		487,799			300,319			187,809
Selling expenses		(133,807	)		(97,848	)		(57,796	)
General and administrative expenses		(121,094	)		(71,998	)		(39,981	)
Operating income		232,898			130,473			90,032
Other income (expenses):
Financial income		555,550			186,469			76,753
Financial expenses		(266,187	)		(413,050	)		(115,910	)
Other		16,284			(5,457	)		(16,367	)

Income (loss) before income taxes, equity in income of affiliates and minority interest		538,545			(101,565	)		34,508
Income taxes (expense) benefit		(188,818	)		29,742			(14,859	)
Income (loss) before equity in income of affiliates and minority interest		349,727			(71,823	)		19,649
Equity in income of affiliates		(38	)		1,584			3,423
Minority interest in net income of subsidiaries		(172,989	)		33,115			(11,495	)
Net income (loss)		176,700			(37,124	)		11,577

Earnings (loss) per share:
Basic and diluted		1.83			(0.35	)		0.10
Weighted number of shares outstanding
Basic and Diluted		96,745,329			106,554,279			119,445,143

See accompanying notes to consolidated financial statements.

F-5

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

Years ended April 30, 2007, 2006 and 2005

(In thousands of U.S. dollars, except share data)

	Capital Stock
	Class B Common shares number		Class B Common shares amount		Additional paid-in capital			Accumulated Income (loss)			Accumulated other comprehensive income (loss)			Total shareholders’ equity
Balances at May 1, 2004		1,000		—		—			—			—			—
Contribution of 51% of Cosan S.A. Equity		96,331,044		963		132,508			(17,320	)		(47,513	)		68,638
Issuance of common shares for shares of Santa Bárbara Agrícola S.A.		—		—		11,799			—			—			11,799
Shares issued in connection with contribution of investments in subsidiaries at carryover basis		—		—		69			—			—			69
Issuance of common shares for cash		—		—		3			—			—			3
Dividends		—		—		—			(327	)		—			(327	)
Legal reorganization		—		—		—			(8,172	)		—			(8,172	)
Conversion of preferred to common stock		—		—		—			—			—			—
Net income		—		—		—			11,577			—			11,577
Currency translation adjustment		—		—		—			—			13,483			13,483
Balances at April 30, 2005		96,332,044		963		144,379			(14,242	)		(34,030	)		97,070

Issuance of common shares for cash		—		—		43,631			—			—			43,631
Spin—off of investments in subsidiary distributed to owners		—		—		(47,156	)		(13,346	)		—			(60,502	)
Capitalization of retained earnings of new shares		—		—		11,054			(11,054	)		—			—
Issuance of common shares for cash		—		—		169,038			—			—			169,038
Issuance of common shares for cash		—		—		26,328			—			—			26,328
Share based compensation		—		—		1,956			—			—			1,956
Net loss		—		—		—			(37,124	)		—			(37,124	)
Currency translation adjustment		—		—		—			—			53,849			53,849
Balances at April 30, 2006		96,332,044		963		349,231			(75,767	)		19,819			294,246

Exercise of stock option		—		—		1,633			—			—			1,633
Share based compensation		—		—		3,158			—			—			3,158
Dividends		—		—		—			(19,003	)		—			(19,003	)
Net income		—		—		—			176,700			—			176,700
Currency translation adjustment		—		—		—			—			16,877			16,877
Balances at April 30, 2007		96,332,044		963		354,022			81,930			36,696			473,611

See accompanying notes to consolidated financial statements.

F-6

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended April 30, 2007, 2006 and 2005

(In thousands of U.S. dollars)

	2007			2006			2005
Cash flow from operating activities:
Net (loss) income for the year		176,700			(37,124	)		11,577
Adjustments to reconcile net income to cash provided by operating activities
Depreciation and amortization		187,367			98,632			41,732
Deferred income and social contribution taxes		150,242			(53,001	)		(2,314	)
Interest, monetary and exchange variation		116,284			24,275			8,092
Minority interest in net income of subsidiaries		172,989			(33,115	)		11,495
Accounts receivable from Federal Government		(149,121	)		—			—
Others		(27,669	)		15,942			9,826
Decrease/increase in operating assets and liabilities
Trade accounts receivable, net		48,226			(35,412	)		(18,525	)
Inventories		(54,108	)		30,920			(20,704	)
Advances to suppliers		(38,707	)		(10,679	)		(1,920	)
Trade accounts payable		(43,239	)		28,676			14,755
Derivative financial instruments		(155,028	)		83,538			(16,020	)
Taxes payable		(36,592	)		(37,640	)		(9,129	)
Other assets and liabilities, net		(63,393	)		11,025			(21,248	)
Net cash provided by operating activities		283,951			86,037			7,617
Cash flows from investing activities:
Restricted cash		47,037			(62,565	)		5,088
Marketable securities		96,987			(366,856	)		9,507
Acquisition of property, plant and equipment		(356,225	)		(135,152	)		(68,825	)
Acquisitions, net of cash acquired		(39,409	)		(260,878	)		(8,454	)
Net cash used in investing activities		(251,610	)		(825,451	)		(62,684	)
Cash flows from financing activities:
Proceeds from issuance of common stock		3,201			383,071			23,275
Dividends paid		—			—			(642	)
Additions of long-term debts		424,605			899,273			538,995
Payments of long-term debts		(204,959	)		(556,486	)		(528,076	)
Net cash provided by financing activities		222,847			725,858			33,552
Effect of exchange rate changes on cash and cash equivalents		32,139			29,611			12,764
Net increase (decrease) in cash and cash equivalents		287,327			16,055			(8,751	)
Cash and cash equivalents at beginning of year		29,215			13,160			21,911
Cash and cash equivalents at end of year		316,542			29,215			13,160

Supplemental cash flow information
Cash paid during the year for interest		74,567			61,154			5,275
Income tax		12,760			17,066			—
Non-cash transactions:
Acquisitions paid with equity		—			100,900			—

See accompanying notes to consolidated financial statements.

F-7

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005

(In thousands of U.S. dollars, unless otherwise stated)

1. Operations

Cosan Limited (“Cosan” or the “Company”) was incorporated in Bermuda as an exempted company on April 30, 2007. In connection with its incorporation, Cosan Limited issued 1,000 shares of common stock for US$10.00 to Mr. Rubens Ometto Silveira Mello, who indirectly controls Cosan S.A. Indústria e Comércio and its subsidiaries (“Cosan S.A.”).

The companies included in the consolidated financial statements have as their primary activity the production of ethanol and sugar. They are constantly pursuing opportunities to capitalize on the growing demand for ethanol and sugar in the world. They are focused on increasing production capacity through expansion of existing facilities, development of greenfield projects and, as opportunities present themselves, acquisitions.

Cosan S.A. was the predecessor to Cosan and operated the business in the consolidated group prior to a reorganization in August, 2007. In contemplation of an initial public offering on August 1, 2007, Aguassanta Participações S.A. and Usina Costa Pinto S.A. Açúcar e Álcool, controlling shareholders of Cosan S.A. and both indirectly controlled by Mr. Rubens Ometto Silveira Mello, the controlling shareholder, contributed their common shares of Cosan S.A. to Cosan in exchange for 96,332,044 of our class B1 common shares. The common shares contributed to the Company by Aguassanta Participações S.A. and Usina Costa Pinto S.A. Açúcar e Álcool consisted of 96,332,044 common shares of Cosan, representing 51.0% of Cosan S.A. outstanding common shares. As a result of this reorganization Cosan Ltd. became the controlling shareholder of Cosan S.A.

The reorganization is accounted for as a reorganization of companies under common control in a manner similar to pooling of interest. The transferred equity interests of Cosan S.A. have been recognized at the carrying amounts in the accounts of Cosan S.A. at the date of transfer. The balance sheet of Cosan Limited as of April 30, 2007 and 2006 and the statements of income for the three-year ended April 30, 2007, reflect the results of operations of the entities as though the transfer of equity occurred at the beginning of the period. Earnings per share has been computed assuming that the share issued in connection with the formation of Cosan Limited, and the shares of Cosan S.A. contributed into Cosan Limited and exchanged for Cosan S.A. shares have been outstanding from the beginning of the years.

Shareholders’ equity as April 30, 2004 (beginning period) has been stated as follows:

	Class B Common shares number		Class B Common shares amount			Additional paid-in capital		Accumulated income (loss)			Accumulated other comprehensive loss			Total shareholders' equity
As stated
Cosan Limited		1,000		–			–		–			–			–
Cosan S.A. Indústria e Comércio		–		149,963			111,746		(33,961	)		(93,163	)		134,585
Contribution of 51% of Cosan S.A. equity as of April 30, 2004		96,331,044		76,481			56,990		(17,320	)		(47,513	)		68,638
Reclassification from common stock		–		(75,518	)		75,518		–			–			–
As restated		96,332,044		963			132,508		(17,320	)		(47,513	)		68,638

On August 17, 2007, the Company concluded its global offering of 111,678,000 class A common shares which resulted in gross proceeds in the amount of US$1,171,027. As a result of the global offering, Cosan’s shares are traded on the New York Stock Exchange (NYSE) and on the São Paulo Stock Exchange (Bovespa) by BDR (Brazilian Depositary Receipts).

F-8

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

The costs directly attributable to the offering were charged against the gross proceeds of the offering in a total amount of US$52,594. Therefore the net proceeds related to the IPO totaled US$1,118,433.

2. Presentation of the Consolidated Financial Statements

a. Basis of presentation

In the opinion of management, the consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company’s results for the periods presented.

The consolidated financial statements include the accounts of Cosan Limited and its subsidiaries. All significant intercompany transactions have been eliminated.

The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), which differs in certain respects from accounting principles generally accepted in Brazil (“Brazilian GAAP”), which Cosan uses to prepare its statutory consolidated financial statements as filed with the Brazilian Securities Commission—CVM (“Comissão de Valores Mobiliários”).

The Brazilian real is the currency of the primary economic environment in which Cosan and its subsidiaries located in Brazil operate and generate and expend cash and is the functional currency, except for the foreign subsidiaries in which U.S. dollar is the functional currency. However, Cosan utilizes the U.S. dollar as its reporting currency. The accounts of Cosan are maintained in Brazilian reais, which have been translated into U.S. dollars in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 52 Foreign Currency Translation. The assets and liabilities are translated from reais to U.S. dollars using the official exchange rates reported by the Brazilian Central Bank at the balance sheet date and revenues, expenses, gains and losses are translated using the average exchange rates for the period. The translation gain or loss is included in the accumulated other comprehensive income component of shareholders’ equity, and in the statement of comprehensive income (loss) for the period in accordance with the criteria established in SFAS No. 130 “Reporting Comprehensive Income”.

The exchange rate of the Brazilian real (R$) to the U.S. dollar (US$) was R$2.0339=US$1.00 at April 30, 2007, R$2.0892=US$1.00 at April 30, 2006 and R$2.5313=US$ 1.00 at April 30, 2005.

3. Significant Accounting Policies

a. Principles of consolidation

The consolidated financial statements include the accounts and operations of Cosan and its subsidiaries. All significant intercompany accounts and transactions are eliminated upon consolidation.

F-9

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

The following subsidiaries were included in the consolidated financial statements for the Years ended April 30, 2007, 2006 and 2005.

	Ownership %
	2007						2006						2005
	Direct			Indirect			Direct			Indirect			Direct			Indirect
Cosan S.A. Indústria e Comércio		51.0	%		—			51.0	%		—			51.0	%		—
Amaralina Agrícola Ltda.⁽⁵⁾		—			—			—			—			—			50.9	%
Cosan Operadora Portuária S.A.		—			45.9	%		—			45.9	%		—			45.9	%
Administração de Participações Aguassanta Ltda.		—			46.7	%		—			46.7	%		—			46.7	%
Usina da Barra S.A. Açúcar e Álcool⁽¹⁾		—			—			—			—			—			48.5	%
Agrícola Ponte Alta S.A.		—			50.2	%		—			50.2	%		—			48.5	%
Cosan Distribuidora de Combustíveis Ltda.		—			50.9	%		—			50.9	%		—			50.9	%
Cosan S.A. Bioenergia⁽³⁾		—			50.9	%		—			50.9	%		—			—
Corona Bioenergia S.A.⁽³⁾		—			50.2	%		—			—			—			—
FBA Bioenergia S.A.⁽³⁾		—			50.2	%		—			—			—			—
Barra Bioenergia S.A.⁽³⁾		—			50.2	%		—			—			—			—
Cosan International Universal Corporation		—			51.0	%		—			—			—			—
Cosan Finance Limited		—			51.0	%		—			—			—			—
Cosan S.A. Refinadora de Açúcar⁽⁴⁾		—			—			—			—			—			50.9	%
Da Barra Alimentos Ltda.⁽³⁾		—			50.2	%		—			50.2	%		—			—
Jump Participações S.A.^(2),(7)		—			—			—			51.0	%		—			—
Mundial Açúcar e Álcool S.A.^(6),(7)		—			—			—			51.0	%		—			—
Alcomira S.A.^(6),(7)		—			—			—			51.0	%		—			—
ABC 125 Participações Ltda.^(2),(7)		—			—			—			50.9	%		—			—
ABC 126 Participações Ltda.^(2),(7)		—			—			—			50.9	%		—			—
Bonfim Nova Tamoio—BNT Agrícola Ltda.		—			50.2	%		—			50.2	%		—			—
Usina da Barra S.A. Açúcar e Álcool		—			50.2	%		—			50.2	%		—			—
Aguapar Participações S.A.^(2),(7)		—			—			—			51.0	%		—			—
Usina Açucareira Bom Retiro S.A.^(6),(7)		—			—			—			51.0	%		—			—
Grançucar S.A. Refinadora de Açúcar		—			51.0	%		—			—			—			—
Cosan Centroeste S.A. Açúcar e Álcool		—			51.0	%		—			—			—			—

(1)

Merged into Usina da Barra S.A. Açúcar e Álcool—formerly Açucareira Corona S.A.

(2)

Holding companies set up in 2006 to allow the acquisition process.

(3)

Companies set up in 2006

(4)

Merged into Cosan

(5)

Assets distributed to owners in a spin-off

(6)

Companies acquired through holding companies

(7)

Merged into Cosan S.A. Indústria e Comércio

b. Revenue recognition

Cosan recognizes revenue when title passes to the customer. This is date of shipment when shipped FOB shipping point and date of receipt by customer for certain export sales, which are shipped FOB

F-10

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

destination. Selling prices are fixed based on purchase orders or contractual arrangements. Provision is made for estimated returns and estimated credit losses.

Shipping and handling costs are classified as selling expenses in the consolidated statement of operations.

c. Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates. These estimates and assumptions are reviewed and updated regularly to reflect recent experience.

d. Cash and cash equivalents

Cosan considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

e. Restricted cash

The restricted cash amounts are related to deposits of margin requirements with commodities brokers that trade Cosan’s derivative instruments.

f. Marketable securities

Cosan classifies its debt securities as available-for-sale securities, which are carried at fair value, with the unrealized gains and losses reported in other comprehensive income. Interest on securities classified as available-for-sale is included in financial income. These securities primarily comprise fixed-income securities, which are debt securities issued by highly rated financial institutions indexed in Reais with Inter Deposit Rates (CDI). Cost of these securities approximates market value.

g. Trade accounts receivable and allowance for doubtful accounts

Trade accounts receivable are recorded at estimated net realizable value and do not bear interest. The allowance for doubtful accounts is recorded at an amount considered sufficient to cover estimated losses arising on collection of accounts receivable.

h. Inventories

Inventories are valued at the lower of cost or market. Cost for finished goods and work-in-progress includes purchased raw materials, labor, maintenance costs of growing crops, depreciation of major maintenance costs and manufacturing and production overhead, which are related to the purchase and production of inventories.

During the development period of growing crops, costs are recorded in property, plant and equipment. After the development period, annual maintenance costs of growing crops become a portion of the cost of the current-year crop, along with harvesting costs, depreciation of the plants, and allocated overhead costs. Annual maintenance costs include cultivation, spraying, pruning, and fertilizing. The annual maintenance costs are allocated to cost of production based on the amount of sugarcane milled during the harvest period.

F-11

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

Cosan’s harvest period begins between the months of April and May each year and ceases normally in the months of November and December. From January to April Cosan performs its major maintenance activities, as described at item j below.

i. Investment in affiliated companies

Investments in affiliates in which Cosan exercises significant influence over the operating and financial policies are accounted for using the equity method.

j. Property, plant and equipment

Property, plant and equipment are recorded at cost of acquisition, formation or construction, including interest incurred on financing. During the period of construction, costs include land preparation, plants, preparation of planting beds, stakes and wires, cultural care during the development period, and overhead. Amortization of sugarcane plants is calculated using the straight-line method at a rate of 20% per annum as Cosan harvests these plants during a five-year average period.

Depreciation is calculated using the straight-line method at rates that take into account the estimated useful life of the assets: 25 years for buildings; 10 years for machinery and equipment; 7 years for furniture, fixtures and computer equipment; 5 years for vehicles; 25 years for leasehold improvements; and 5 years for sugarcane plant development costs.

Cosan performs planned major maintenance activities in its industrial facilities on an annual basis. This occurs during the months from January to April, with the purpose to inspect and replace components. The annual major maintenance costs include labor, material, outside services, and general or overhead expense allocations during the inter-harvest period. Cosan utilizes the built-in overhaul method to account for the annual costs of major maintenance activities. Thus the estimated cost of the portion of the total cost of a fixed asset which must be replaced on an annual basis is recorded as a separate component of the cost of fixed assets and depreciated over its separate estimated useful life. It is then replaced in connection with the annual major maintenance activities. Costs of normal periodic maintenance are charged to expense as incurred since the parts replaced do not enhance or maintain the crushing capacity or provide betterments to the fixed assets.

Impairment of long-lived assets is recognized when events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be recoverable. If the expected future undiscounted cash flows are less than the carrying amount of the asset, an impairment loss is recognized at that time to reduce the asset to the lower of its fair value or its net book value.

k. Goodwill and other intangible assets

Cosan tests goodwill and indefinite-lived intangible assets for impairment at least annually during the fourth quarter after the annual forecasting process is completed. Furthermore, goodwill is reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

l. Environmental matters

Cosan’s production facilities and its plantation activities are both subject to environmental regulations. Cosan diminishes the risks associated with environmental matters, through operating procedures and controls and investments in pollution control equipment and systems. Cosan believes that

F-12

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

no provision for losses related to environmental matters is currently required, based on existing Brazilian laws and regulations.

m. Estimated liability for legal proceedings and labor claims

Determination of the estimated liability for legal proceedings and labor claims involves considerable judgment on the part of management. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 5, Accounting for Contingencies, a contingency is an existing condition, situation, or set of circumstances involving uncertainty as to possible gain or loss to an enterprise that will ultimately be resolved when one or more future events occur or fail to occur. Cosan is subject to various claims, legal, civil and labor proceedings covering a wide range of matters that arise in the ordinary course of business activities. Cosan accrues such liabilities when it determines that losses are probable and can be reasonably estimated. The balances are adjusted to account for changes in circumstances in ongoing issues and the establishment of additional reserves for emerging issues. Actual results could differ from estimates.

n. Income taxes

Deferred income taxes are recognized for the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. This method also requires the recognition of future tax benefits such as net operating loss carry forwards, to the extent that realization of such benefits is more likely than not.

Valuation allowances are established when management determines that it is more likely than not that the deferred tax assets will not be realized.

o. Earnings (losses) per share

Earnings (losses) per share are computed by dividing net income (loss) by the weighted average number of common shares outstanding during the year. Diluted earnings per share are calculated by adjusting average outstanding shares for the impact of conversion of all potentially dilutive stock options.

p. Share-based compensation

Cosan’s share-based compensation plan was adopted on August 30, 2005 at which time Cosan early-adopted SFAS No. 123(R), Share-Based Payments, which required it to recognize expense related to the fair value of its share-based compensation awards. Compensation expense for all share-based compensation awards granted in the fiscal year ended April 30, 2006 was based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123(R) and the expense has been recognized for share-based awards on a straight-line basis over the requisite service period of the award. Cosan used a binomial model to estimate the fair value of options on their date of grant.

q. Derivative financial instruments

Cosan accounts for derivative financial instruments utilizing SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, as amended. As part of Cosan’s risk management program, Cosan uses a variety of financial instruments, including commodity futures contracts, forward currency agreements, interest rate and foreign exchange swap contracts and option contracts. Cosan does not hold or issue derivative financial instruments for trading purposes. Cosan recognizes all derivative instruments as non-hedge transactions. The derivative instruments are measured at fair value and the gains or losses resulting from the changes in fair value of the instruments are recorded in financial income or financial expense.

F-13

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

r. Recently issued accounting standards

In February 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—including an amendment of FASB Statement No. 115” (“SFAS 159”), which expands the use of fair value measurement by permitting entities to choose to measure many financial instruments and certain other items at fair value at specified election dates. This statement is required to be adopted by Cosan as of May 1, 2008. Cosan does not believe the adoption of SFAS 159 will have a material effect on its consolidated financial position, results of operations or cash flows.

In September 2006, the FASB also issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 does not require any new fair value measurements but instead is intended to eliminate inconsistencies with respect to this topic found in various other accounting pronouncements. This Statement is effective for Cosan as of May 1, 2008. Cosan does not believe the adoption of SFAS 157 will have a material effect on its consolidated financial position, results of operations or cash flows.

In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes—An Interpretation of FASB Statement No. 109 (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in the financial statements with SFAS No. 109, Accounting for Income Taxes. This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognizing, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. Cosan will adopt FIN 48 as of May 1, 2007, as required. The adoption of FIN 48 is not expected to have a material effect on Cosan’s consolidated financial statements.

In September 2006, the U.S. Securities and Exchange Commission (the “SEC”) released Staff Accounting Bulletin No. 108, Quantifying Financial Statement Misstatements (SAB 108). Due to diversity in practice among registrants, SAB 108 expresses SEC staff views regarding the process by which misstatements in financial statements are evaluated for purposes of determining whether financial statement restatement is necessary. SAB 108 is effective for fiscal years ending after November 15, 2006, and early application is encouraged. Cosan does not believe SAB 108 will have a material effect on its results of operations or financial position.

4. Cash and Cash Equivalents

	2007		2006
Local currency
Cash and bank accounts		16,208		21,930
Foreign currency
Bank accounts		300,334		7,285
		316,542		29,215

F-14

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

5. Derivative Financial Instruments

Cosan enters into derivative financial instruments with various counterparties and uses derivatives to manage the overall exposures related to sugar price variations in the international market, interest rate and exchange rate variation. The instruments are commodity futures contracts, forward currency agreements, interest rate and foreign exchange swap contracts, and option contracts. Cosan recognizes all derivatives on the balance sheet at fair value.

The following table summarizes the notional value of derivative financial instruments as well as the related amounts recorded in balance sheet accounts:

	Notional amounts				Carrying value asset (liability)
	2007		2006		2007			2006
Commodities derivatives
Future contracts:
Purchase commitments		—		1,378		—			86
Sell commitments		783,019		626,932		47,427			(73,508	)

Options:
Purchased		335,715		860,785		4,502			6,728
Written		—		187,513		—			(27,175	)

Foreign exchange derivatives
Forward contracts:
Sale commitments		153,824		264,810		13,274			9,841
Swap agreements		328,419		383,214		(9,779	)		(32,693	)
Total assets						65,203			16,655

Total liabilities						(9,779	)		(133,376	)

When quoted market prices were not available, fair values were based on estimates using discounted cash flows or other valuation techniques. Asset figures are classified as Other current assets.

6. Inventories

	2007		2006
Finished goods:
Sugar		5,730		12,897
Ethanol		8,731		9,160
Others		1,681		453
		16,142		22,510
Annual maintenance cost of growing crops		183,157		130,316
Other		48,181		34,348
		247,480		187,174

247,480

187,174

F-15

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

The increase in the annual maintenance cost of growing crops in 2007 is due to the expansion of cultivated area in approximately 15,000 hectares and price increases of agricultural products.

7. Property, Plant and Equipment

	2007			2006
Land and rural properties		157,952			149,695
Machinery, equipment and installations		868,775			847,980
Vehicles		87,840			82,026
Furniture, fixtures and computer equipment		20,122			15,482
Buildings		94,233			89,442
Leasehold improvements		93,334			83,617
Construction in progress		130,295			19,011
Sugarcane plant development costs		373,267			248,404
		1,825,818			1,535,657
Accumulated depreciation and amortization		(631,768	)		(527,605	)
Total		1,194,050			1,008,052

8. Acquisitions

On April 27, 2006, Cosan acquired all of the outstanding shares of Usina Açucareira Bom Retiro S.A. (“Bom Retiro”), a processor of sugar and ethanol from sugarcane, for US$51,078 net of cash acquired.

On February 8, 2006, Cosan acquired all of the outstanding shares of Açucaceira Corona S.A. (“Corona”) a processor of sugar and ethanol from sugarcane, for US$180,582 net of cash acquired.

On December 12, 2005, Cosan acquired all of the outstanding shares of Alcomira S.A. (“Alcomira”) and Mundial S.A. Açúcar e Álcool S.A. (“Mundial”), processors of sugar and ethanol from sugarcane, for US$29,218 net of cash acquired.

On May 31, 2005, Cosan acquired from Tereos do Brasil Participações Ltda. and Sucden Investimentos S.A., for the amount of US$100,900 the remaining 52.5% of the outstanding shares of FBA-Franco Brasileira S.A. Açúcar e Álcool (“FBA”), as set forth in Note 16.a.

These acquisitions have been accounted for using the purchase method and the results of the acquired companies have been included in the consolidated results from the acquisition date.

Also on January 31, 2005, Cosan conducted a legal reorganization together with its parent company Aguassanta Participações S.A. In such transaction, Cosan exchanged its interest in the subsidiary NC Participações S.A. amounting to US$26,141 for the shares of JVM Participações S.A., valued at their respective book values of US$1,865. As a result of the transactions performed on January 31, 2005, Cosan increased its indirect share control over Usina da Barra from 45.3% to 87.9%, corresponding to a total interest of 95%. This is a transaction among entities under common control and net assets were transferred

F-16

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

at their carrying value. The income tax effects caused by this transaction were also recorded in equity. Therefore, the total amount recorded in equity related to this transaction was US$16,023.

The following table summarizes the estimated fair value of assets acquired and liabilities assumed in the acquisitions:

Description	FBA			Corona			Alcomira and Mundial			Bom Retiro			Total
Property, plant and equipment		110,716			306,029			34,633			59,456			510,834
Intangible assets		19,284			35,755			7,706			3,590			66,335
Other assets		44,257			130,504			11,268			8,981			195,010
Long-term debts including current installments		(28,152	)		(175,032	)		(27,274	)		(2,076	)		(232,534	)
Other liabilities		(78,126	)		(313,115	)		(49,348	)		(35,237	)		(475,826	)
Net assets (liabilities) acquired (assumed)		67,979			(15,859	)		(23,015	)		34,714			63,819
Purchase price, net of cash acquired		100,900			180,582			29,218			51,078			361,778
Goodwill		32,921			196,441			52,233			16,364			297,959

Cosan expects the goodwill balance relating to these acquisitions will be substantially deductible for tax purposes. The goodwill is substantially based on future profitability.

The following unaudited pro forma financial information presents the pro forma results of operations of Cosan and the acquired companies as if the acquisitions had occurred at the beginning of the years presented. The unaudited pro forma financial information does not purport to be indicative of the results that would have been obtained if the acquisitions had occurred as of the beginning of the years presented or that may be obtained in the future:

	2006			2005
Net sales		1,278,361			869,564
Net income (loss)		(84,509	)		(7,870	)
Basic EPS per thousand shares (R$)		(0.54	)		(0.07	)
Diluted EPS per thousand shares (R$)		(0.53	)		—

In April 2007, Cosan acquired for US$39,409 cash, 33.33% of the outstanding shares of Etanol Participações S.A. “Etanol” There are two other shareholders of Etanol, neither of which has control of the entity. Etanol owns two operating companies, Usina Santa Luiza and Agropecuária Aquidaban Ltda., that produce sugar and alcohol from sugarcane. The investment is being accounted for using the equity method and the results of the acquired company have been included in the consolidated results from the acquisition date.

F-17

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

9. Goodwill and Other Intangible Assets

Goodwill

The carrying amounts of goodwill by reporting segment for the years ended April 30, 2007, 2006 and 2005 are as follows:

	Sugar segment			Ethanol segment			Total
Balance as of April 30, 2005		101,182			65,466			166,648
Acquisitions		177,487			120,472			297,959
Total tax benefit applied to reduce goodwill		(4,428	)		(4,058	)		(8,486	)
Existing goodwill of equity investment now consolidated		2,444			4,483			6,927
Reduction of equity interest on TEAS		—			(447	)		(447	)
Effect of currency translation		21,411			13,853			35,264
Balance as of April 30, 2006		298,096			199,769			497,865
Total tax benefit applied to reduce goodwill		(11,647	)		(7,898	)		(19,545	)
Effect of currency translation		8,105			5,432			13,537
Balance as of April 30, 2007		294,554			197,303			491,857

Other intangible assets

	Gross carrying amount		Weighted average amortization period	Accumulated amortization			Net carrying amount
Intangible assets subject to amortization:
Favorable operating leases		110,872	16 years		(20,934	)		89,938
Trademark		5,857	15 years		(1,822	)		4,035
Balance as of April 30, 2007		116,729			(22,756	)		93,973

Intangible assets subject to amortization:
Favorable operating leases		107,937	16 years		(13,311	)		94,626
Trademark		5,702	15 years		(1,393	)		4,309
Balance as of April 30, 2006		113,639			(14,704	)		98,935

The acquired companies maintained several operating lease agreements with agricultural producers which set forth an amount of sugarcane tons to be delivered at each harvest period. However, if that sugarcane had been bought directly from the producer with no lease agreement, the amount to be paid would depend on the productivity in tons of the sugarcane acquired in that same geographic area. Therefore, the intangible assets identified in each acquisition were valued based on the benefit that each acquired company had in these contracts. The intangible assets are depreciated on the straight-line method based on the contract periods.

F-18

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

No significant residual value is estimated for these intangible assets. The following table represents the total estimated amortization of intangible assets for the five succeeding fiscal years:

Fiscal Year ending April 30,	2007
2008		7,525
2009		7,025
2010		7,002
2011		7,002
2012		7,002
Thereafter		58,417
Total		93,973

10. Taxes Payable

Cosan and its subsidiaries participate in several programs that provide for payments of taxes in installments, as follows:

	2007			2006
Special State Tax Payment Program State REFIS		—			30,468
Tax Recovery Program—Federal REFIS		81,626			82,455
Special Tax Payment Program—PAES		43,239			50,646
Others		39,575			28,868
		164,440			192,437
Current liabilities		(57,543	)		(39,991	)
Long-term liabilities		106,897			152,446

Special State Tax Payment Program—State REFIS

On October 2000, two acquired subsidiaries adhered to the Special State Tax Payment Program established by the São Paulo State Government for the settlement of outstanding ICMS debts. Therefore, these amounts are being paid in 120 monthly installments as from December 2001, subject to adjustment based on the variation of the Long-term Interest Rate—TJLP.

Tax Recovery Program—Federal REFIS

In 2000, several subsidiaries of Cosan signed an Option Instrument applying to pay their debts in installments based on the Tax Recovery Program—Federal REFIS. Therefore, the companies voluntarily informed the Brazilian Internal Revenue Service—SRF and the National Institute of Social Security—INSS of their tax and social contribution obligations. Property, plant and equipment of the companies were offered as security in the debt consolidation process.

Under the REFIS, tax payments are made based on 1.2% of the taxpayer’s monthly gross revenue. The remaining balance is monetarily adjusted based on the TJLP variation.

F-19

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

Special Tax Payment Program—PAES

By using the benefit granted by the Special Tax Payment Program—PAES published on May 31, 2003, Cosan and its subsidiaries discontinued litigation in certain judicial proceedings and pleaded the payment in installments of debts maturing up to February 28, 2003 to the SRF and the INSS. Installments are adjusted monthly based on the TJLP variation. Relevant installments have been paid based on 1.5% of Cosan’s revenues, considering a minimum of 120 and a maximum of 180 installments.

Cosan and its subsidiaries must comply with several conditions to continue benefiting from the installment payment programs mentioned above, particularly the regular payment of the installments as required by law and of the taxes becoming due.

State VAT Amnesty

In October 2006, Cosan and the subsidiary Usina da Barra subscribed for the benefit of waiver of interest and penalties on state VAT obligations, approved by State Law No. 12399/06, of September 29, 2006, which provides for a 90% penalty reduction and a 50% interest reduction, calculated to the date of payment.

On October 31, 2006, under the amnesty, the subsidiary Usina da Barra S.A. Açucar e Álcool prepaid tax obligations recorded under taxes payable as Special State Tax Payment Program (State REFIS) in the amount of US$37,417 and taxes payable in the amount of US$8,427. The prepayment resulted in a discount of US$20,683, which was recognized as financial discount under financial income.

On October 31, 2006, Usina da Barra S.A. Açucar e Álcool also prepaid for US$68,338 tax debts recorded under the caption estimated liability for legal proceedings and labor claims in the amount of US$99,852. The discount granted in the amount of US$31,515 is comprised of US$20,043 of principal, penalty and fees, which was classified under the caption other operating income (expenses), with the remaining financial discount in the amount of US$11,471, classified under the caption financial income in the statement of operations.

11. Long-term Debt

Long-term debt is summarized as follows:

	Index	Average annual interest rate			2007			2006
Resolution No. 2471 (PESA)	IGP-M		3.95	%		196,545			176,326

Corn price			12.50	%		685			445

Senior notes due 2009	US Dollar		9.0	%		200,000			200,000

Senior notes due 2017	US Dollar		7.0	%		407,311			—

IFC	US Dollar		7.44	%		67,677			66,879

Perpetual notes	US Dollar		8.25	%		459,035			459,585

Others	Various	Various				47,319			85,082
						1,378,572			988,317

Current liability						(36,076	)		(46,576	)

Long-term debt						1,342,496			941,741

F-20

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

	Index	Average annual interest rate	2007			2006
				1,378,572			988,317

Current liability				(36,076	)		(46,576	)

Long-term debt				1,342,496			941,741

Long-term debt has the following scheduled maturities:

2009			9,420
2010			206,940
2011			6,855
2012			6,670
2013			18,504
2014			2,009
2015 and thereafter			1,092,098
			1,342,496

Resolution No. 2471—Special Agricultural Financing Program (Programa Especial de Saneamento de Ativos), or PESA

To extend the repayment period of debts incurred by Brazilian agricultural producers, the Brazilian government passed Law 9.138 followed by Central Bank Resolution 2,471, which, together, formed the PESA program. PESA offered certain agricultural producers with certain types of debt the opportunity to acquire Brazilian treasury bills (“CTNs”) in an effort to restructure their agricultural debt. The face value of the Brazilian treasury bills was the equivalent of the value of the restructured debt and was for a term of 20 years.

The acquisition price was calculated by the present value, discounted at a rate of 12% per year or at the equivalent of 10.4% of its face value. The CTNs were deposited as a guarantee with a financial institution and cannot be renegotiated until the outstanding balance is paid in full. The outstanding balance associated with the principal is adjusted in accordance with the IGP-M until the expiration of the restructuring term, which is also 20 years, at which point the debt will be discharged in exchange for the CTNs. Because the CTNs will have the same face value as the outstanding balance at the end of the term, it will not be necessary to incur additional debt to pay PESA debt.

On July 31, 2003, the Central Bank issued Resolution 3,114, authorizing the reduction of up to five percentage points of PESA related interest rates, effectively lowering the above-mentioned rates to 3%, 4% and 5%, respectively. The CTNs held by Cosan as of April 30, 2007 and 2006 amounted to US$82,205 and US$72,872, respectively, and are classified as Non-current assets-other.

Senior notes due 2009

The senior notes are listed on the Luxembourg Stock Exchange, mature in November 2009 and bear interest at a rate of 9% per annum, payable semi-annually in May and November as from May 1, 2005. The senior notes are guaranteed by Cosan’s subsidiary, Usina da Barra.

F-21

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

Senior notes due 2017

On January 26, 2007, Cosan Finance Limited, wholly-owned subsidiary at Cosan, issued US$400,000 of senior notes in the international capital markets. These senior notes, listed on the Luxembourg Stock Exchange, mature in November 2017 and bear interest at a rate of 7% per annum, payable semi-annually. The senior notes are guaranteed by Cosan, and its subsidiary, Usina da Barra.

IFC—International Finance Corporation

On June 28, 2005, Cosan entered into a credit facility agreement in the total amount of US$70,000 with the IFC, comprising an “A loan” of US$50,000 and a “C loan” of US$20,000. The “C loan” was used on October 14, 2005 while the funds from the “A loan” were deposited and available at February 23, 2006. Under the agreement, Cosan has granted to IFC an option for the total or partial conversion of the “C loan” into common shares of Cosan in connection with its Initial Public Offering. On November 7, 2005, IFC informed Cosan of its intention to exercise the conversion option in relation to the amount of US$5,000, which was converted into 686,750 common shares (228,750 shares pre-split) on November 16, 2005.

Interest on these loans is due on a semi-annual basis and is payable on January 15 and July 15 of each year, based on the LIBOR plus a spread of 3.75% per annum for “C Loan”, and on LIBOR plus a spread of 2.5% per annum for “A Loan”. The “C loan” accrues additional interest based on a formula that takes Cosan’s EBITDA into consideration. The “C loan” outstanding principal will be settled in a lump sum on January 15, 2013, and may be prepaid. The “A loan” principal will be repaid in 12 equal installments payable every six months beginning July 15, 2007. The debt is secured by the industrial facilities of “Usina Rafard”, with a carrying value of US$5,400 at April 30, 2007, and is guaranteed by the controlling shareholder and Usina da Barra, Cosan Operadora Portuária and Agrícola Ponte Alta S.A.

Cosan, together with its controlling shareholder and its subsidiaries, entered into a Shareholders Agreement with IFC, whereby tag along rights and a put option have been granted to IFC, which requires Cosan’s controlling shareholders to hold a minimum interest of 51% in Cosan’s share capital.

Perpetual Notes

On January 24 and February 10, 2006, Cosan issued perpetual notes which are listed on the Luxemburg Stock Exchange—EURO MTF. These notes bear interest at a rate of 8.25% per year, payable quarterly on May 15, August 15, November 15 and February 15 of each year, beginning May 15, 2006.

The notes may, at the discretion of Cosan, be redeemed on any interest payment date subsequent to February 15, 2011. The notes are guaranteed by Cosan and by Usina da Barra.

Cosan and its subsidiaries are subject to certain restrictive covenants related to their indebtedness, including the following: net debt/EBTIDA ratio; current asset/current liability ratio; limitation on transactions with shareholders and affiliated companies; and limitation on payment of dividends and other payments affecting subsidiaries. At April 30, 2007, Cosan was in compliance with all debt covenants.

F-22

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

12. Related Parties

Cosan conducts some of its operations through various joint ventures and other partnership forms which are principally accounted for using the equity method. The statement of operations includes the following amounts resulting from transactions with related parties:

	2007			2006			2005
Transactions involving assets
Remittance of financial resources, net of receipts and credit assignments		21			(44	)		60,396
Sale of finished products and services		—			—			4,461
Purchase of finished products and services		—			—			(65,428	)
Financial expenses		—			—			(2,832	)

Transactions involving liabilities
Payment of financial resources, net of funding		(11,469	)		(12,213	)		(9,969	)
Sale of finished products and services		—			2,076			—
Financial expenses		—			—			468
Land leasing		11,096			8,606			1,717

The purchase and sale of products are carried out at arm’s length and unrealized profit or losses with consolidated companies have been eliminated.

In 2005, the related companies Usina Costa Pinto S.A. Açúcar e Álcool, Indústria Açucareira São Francisco S.A. and Usina Santa Bárbara S.A. Açúcar e Álcool had an agreement with Cosan for industrial processing of sugarcane, whereby those companies were entitled to 1.25 sacks (50kg) of VHP sugar and 20 liters of ethanol per ton of sugarcane processed. The terms were similar to those available in the market. In the quarter ended July 31, 2005, the companies entered into an agreement to terminate this type of transaction.

In addition, as of April 30, 2007, Cosan is the lessee of land from unconsolidated affiliated companies as follows: 5,758 hectares (unaudited) of land (5,793 hectares (unaudited) in 2006) owned by Santa Bárbara Agrícola S.A.; 12,751 hectares (unaudited) of land (12,751 hectares (unaudited) in 2006) owned by Indústria Açucareira São Francisco S.A.; and 17,192 hectares (unaudited) of land (13,713 hectares (unaudited) in 2006) owned by Amaralina. These leases are carried out on an arm’s length basis, and rent is calculated based on sugarcane tons per hectare, valued according to price established by CONSECANA (São Paulo State Council of Sugar Cane, Sugar and Alcohol Producers).

13. Contingencies and Commitments

	2007		2006
Tax contingencies		329,493		415,776
Civil and labor contingencies		49,698		46,472
		379,191		462,248

Cosan and its subsidiaries are parties in various ongoing labor claims, civil and tax proceedings arising in the normal course of its business. Respective provisions for contingencies were recorded

F-23

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

considering those cases in which the likelihood of loss has been rated as probable. Management believes resolution of these disputes will have no effect significantly different than the estimated amounts accrued.

Judicial deposits recorded by Cosan under other non-current assets in the balance sheets, amounting to US$21,274 (US$26,148 in 2006), have been made for certain of these suits. Judicial deposits are restricted assets of Cosan placed on deposit with the court and held in judicial escrow pending legal resolution of the related legal proceedings.

Tax contingencies mainly refer to suits filed by Cosan and its subsidiaries, discussing several aspects of the legislation ruling PIS, Cofins, contributions to the extinct IAA- Sugar and Ethanol Institute, and the Excise tax (IPI), as well as tax delinquency notices related to ICMS and contributions to the INSS.

The major tax contingencies as of April 30, 2007, are related to Excise tax—IPI credit premium in the amount of US$123,671, Value added tax—ICMS in the amount of US$18,347, IAA Tax Contribution in the amount of US$37,683, and Social Contributions in the amount of US$58,640.

In addition to the aforementioned claims, Cosan and its subsidiaries are involved in other contingent liabilities relating to tax claims and environmental matters, which have not been recorded, considering their current stage and the likelihood of favorable outcomes. These claims can be summarized as follows:

	2007		2006
Tax assessment – withholding income tax		73,037		-
IPI Premium Credit Resulting from Regulatory Ruling No. 67/98		70,860		57,972
ICMS—State value added tax		28,964		28,836
IAA—Sugar and Ethanol Institute		23,706		22,638
IPI—Federal value-added tax		31,921		6,575
Others		18,574		7,802
		247,062		123,823

The subsidiary Usina da Barra has several indemnification suits filed against the Federal Government. The suits relate to product prices that did not conform to the reality of the market, which were mandatorily established at the time the sector was under the Government’s control.

The Company is expecting a final decision relative to the payment terms within three years, which is expected to be in the form of public debt, to be received over a ten year period. The amount is subject to interest and inflation adjustment by an official index. Lawyers’ fees in the amount of US$18,783 relating to this suit have been recorded in General and administrative expenses.

The detail of the movement in the estimated liability for legal proceedings and labor claims is as follows:

Balance at April 30, 2005

101,724

F-24

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

Provision	47,280
Acquisitions	291,718
Foreign currency translation	21,526
Balance at April 30, 2006	462,248
Provision, less effect of State VAT amnesty	(25,466	)
Settlements	(70,160	)
Effect of foreign currency translation	12,569
Balance at April 30, 2007	379,191

The provisions for tax, civil and labor contingencies are included in the statement of operations as follows:

	2007			2006		2005
Net sales		2,106			8,086		7,993
General and administrative expenses		(6,208	)		—		—
Financial expenses		(1,404	)		21,840		12,535
Other income (expense)		(19,960	)		6,317		10,791
Income taxes		—			11,037		1,597
		(25,466	)		47,280		32,916

Commitments

Sales

Considering that Cosan operates mainly in the commodities market, its sales are substantially made at prices applicable at sales date, and therefore, there are no outstanding orders with amounts involved. However, Cosan has several agreements in the sugar market in which there are commitments of sales involving volumes of these products in future harvest periods.

The volumes related to the commitments mentioned above are as follows (unaudited):

Product		2007				2006
Sugar (in tons)			5,459,000				3,196,000

The commitments by harvest period are as follows (unaudited):

Harvest period	2007		2006
2006/2007		—		1,402,000
2007/2008		2,507,000		897,000
2008/2009		2,068,000		897,000
2009/2010		884,000		—
Total		5,459,000		3,196,000

F-25

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

Purchase

Cosan has entered into several commitments to purchase sugarcane from third parties in order to guarantee part of its production for the next harvest periods. The amount of sugarcane to be purchased was calculated based on an estimation of the sugarcane to be harvested in each geographic area. The amount to be paid by Cosan will be determined for each harvest period at the end of such harvest period according to price of the sugarcane published by CONSECANA.

The purchase commitments by harvest period as of April 30, 2007 and 2006 are as follows (unaudited):

Harvest period	2007		2006
2007/2008		5,743,069		6,187,195
2008/2009		5,259,707		5,484,059
2009/2010		5,123,754		5,077,070
2010/2011		3,360,875		2,901,271
2011/2012		2,578,114		2,166,673
Thereafter		3,450,395		3,322,512
Total		25,515,914		25,138,780

As of April 30, 2007, Cosan had a normal capacity to mill 40,000 millions (unaudited) of sugarcane during each harvest period.

Leases

Cosan also has noncancelable operating leases, primarily related to seaport and lands for the plantation of sugarcane, which expire up to the next 20 years.

Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the lease. Rental expense for operating leases during 2007, 2006 and 2005 consisted of the following:

	2007		2006		2005
Minimum rentals		53,081		46,199		26,304
Contingent rentals		55,621		14,767		1,320
Rental expense		108,702		60,966		27,624

Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) as of April 30, 2007 are:

Fiscal Year ending April 30,	Operating leases
2008		56,023
2009		55,741
2010		54,694
2011		52,378

F-26

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

Fiscal Year ending April 30,	Operating leases
2012		53,043
Thereafter		339,816
Total minimum lease payments		611,695

14. Financial Income and Expenses, Net

	2007			2006			2005
Financial expenses
Interest⁽¹⁾		(126,876	)		(101,117	)		(61,354	)
Monetary variation—losses		(33,210	)		(13,212	)		(12,325	)
Foreign exchange variation—losses		20,024			(60,415	)		(1,141	)
Results from derivatives⁽³⁾		(111,156	)		(223,707	)		(31,793	)
CPMF expenses⁽⁴⁾		(11,517	)		(10,185	)		(4,285	)
Bank charges		(3,452	)		(3,080	)		(3,357	)
Other expenses		—			(1,334	)		(1,655	)
		(266,187	)		(413,050	)		(115,910	)
Financial income
Interest⁽¹⁾		18,951			11,681			20,290
Monetary variation—Gains		3,282			8,552			918
Foreign exchange—Gains⁽²⁾		(629	)		133,054			45,718
Results from derivatives⁽³⁾		301,795			14,330			4,324
Earnings from marketable securities		36,759			18,154			3,133
Discounts obtained		43,370			418			2,370
Accounts receivable from government agency⁽⁵⁾		149,121			—			—
Other income		2,901			280			—
		555,550			186,469			76,753
Net amount		289,363			(226,581	)		(39,157	)

(1)

Includes results from swap operations.

(2)

Includes foreign exchange gains on liabilities denominated in foreign currency.

(3)

Includes results from transactions in futures, options and forward contracts.

(4)

Tax on Financial Transactions—CPMF.

(5)

See note 13.

15. Income Taxes

Income tax benefit (expense) attributable to income from continuing operations consists of:

	2007			2006			2005
Income taxes benefit (expense):
Current		(43,346	)		(19,946	)		(15,179	)
Deferred		(145,472	)		49,688			320
		(188,818	)		29,742			(14,859	)

F-27

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

		2007				2006				2005
			(188,818	)			29,742				(14,859	)

Income taxes differed from the amounts computed by applying the income tax rate of 25% and social contribution tax rate of 9% to income before income taxes due to the following:

	2007			2006			2005
Income (loss) before income taxes		538,545			(101,565	)		34,508
Income tax benefit (expense) at statutory rate—34%		(183,105	)		34,532			(11,733	)
Increase (reduction) in income taxes resulting from:
Write-off of deferred income taxes on tax loss carry forwards related to merged affiliates		—			(3,366	)		—
Equity in earnings of affiliates not subject to taxation		(12	)		539			1,163
Nondeductible goodwill amortization		(3,758	)		(1,381	)		(1,422	)
Nondeductible donations, contributions and others		(1,943	)		(582	)		(2,867	)
Income tax benefit (expense)		(188,818	)		29,742			(14,859	)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at April 30, 2007 and 2006 are presented below:

	2007			2006
Deferred tax assets:
Derivatives					54,663
Net operating loss carryforwards		28,016			84,572
Provision for contingencies		82,313			97,498
Legal reorganization		8,214			11,217
Other temporary differences		33,413			17,485
Total gross deferred tax assets		151,956			265,435
Current portion		24,788			83,193
Non-current portion		127,168			182,242

Deferred tax liabilities:
Deferred tax liabilities on assigned value of the net assets and on temporary differences		297,174			272,313

Current portion		28,419			8,438
Non-current portion		268,755			263,875

Net deferred tax assets (liabilities):
Current portion		(3,631	)		74,755
Non-current portion		(141,587	)		(81,633	)
		(145,218	)		(6,878	)

In assessing the valuation allowance of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the

F-28

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities and projected future taxable income in making this assessment. There is no expiration term for the net operating loss carry forwards. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that Cosan will realize the benefits of these deductible differences at April 30, 2007, as well as the net operating loss carry forwards. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.

As of April 30, 2007, Cosan and its subsidiaries have consolidated net operating loss carry forwards for income and social contribution tax purposes of US$82,386 and US$82,435, respectively. Income tax loss carry forwards and the negative basis for social contribution tax may be offset against a maximum of 30% of annual taxable income earned from 1995 forward, with no statutory limitation period.

16. Capital

On December 13, 2004, an extraordinary shareholders’ meeting of Cosan S.A. approved a capital increase of US$11,799, through the issue of 7,851,756 common shares with no par value. The capital increase was fully subscribed by Santa Bárbara Agrícola S.A. with rural properties, exchanged at fair value.

On January 31, 2005, an extraordinary shareholders’ meeting of Cosan S.A. approved a capital increase of US$4,255, through the issue of 12,251,466 common shares with no par value. The capital increase was fully subscribed and paid up by Aguassanta Participações S.A., and shares were exchanged at fair value.

The extraordinary shareholders’ meetings of Cosan S.A. of May 31, 2005 approved a capital increase of US$16,073, with the issuance of 12,948,053 new common shares, with no par value, which were fully subscribed by the new shareholders, Tereos do Brasil Participações Ltda. and Sucden Investimentos S.A., through a share exchange equivalent to 13,650,000 common shares, corresponding to 52.5% of capital of FBA—Franco Brasileira S.A. Açúcar e Álcool (“FBA”), whereby Cosan became the holder of a 99.9% interest in FBA.

On July 29, 2005, the shareholders of Cosan S.A. spun-off the shares of Amaralina Agrícola Ltda. (“Amaralina”) valued at US$60,502.

At the annual and extraordinary shareholders’ meetings of Cosan S.A. on August 30, 2005 the following was decided:

• Allocation of US$11,054 from retained earnings to increase capital, without issuance of new shares; and

• Reverse share split of Cosan shares on the basis of eight old shares to one new share. Additionally, Cosan consummated a share split in August 2006.

On November 7, 2005, the IFC communicated to Cosan S.A. its decision to exercise its conversion option with respect to the US$5,000 amount which, translated on November 16, 2005, totaled US$4,949 of the “C loan”, representing 686,250 common shares issued at the IPO price.

On November 18, 2005, Cosan S.A. issued 48,139,530 common shares with no par value through primary public offering (the “IPO”) of shares in Brazil, with exclusion of right of first refusal of its current shareholders, on the terms of article 172, item I of Law No. 6404, dated December 15, 1976, as amended

F-29

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

and within authorized capital limit provided for in its Bylaws. The issue price of shares was established based on a book building process at US$7 (US$22 pre-split) per share, and approved by Cosan’s Board of Directors. Also at this meeting, a capital increase was approved, within the authorized capital limit, in the amount of US$169,038. On November 18, 2005, Cosan shares started being traded on the São Paulo Stock Exchange, at a differentiated corporate governance level named “Novo Mercado”, under code CSAN3.

On November 22, 2005, Cosan S.A.’s Board of Directors authorized the issue of additional shares corresponding to 15% of the number of shares initially offered, with the exclusive purpose of meeting the excess demand noted during the IPO. Therefore, Cosan issued 7,220,928 book-entry, registered common shares, with no par value, at the issue price of US$7 (US$22 pre-split) each, which resulted in a new capital increase of US$26,328.

On August 1, 2007, Cosan Limited became the controlling shareholder of Cosan S.A. in which it holds 51% interest.

This operation was carried out by means of a corporate reorganization involving the Cosan’s former direct controlling shareholders, to wit, Usina Costa Pinto S.A. Açúcar e Álcool (“Usina Costa Pinto”) and Aguassanta Participações S.A. (“Aguassanta Participações”). Referred to shareholders contributed capital to Cosan Limited in the form of Cosan’s common shares, as stated below, thus becoming part of Cosan’s indirect ownership structure:

Shareholder	Number of shares of Cosan’s issue contributed as capital to Cosan Limited		Interest held in Cosan
Usina Costa Pinto		30,010,278		15.89	%
Aguassanta Participações		66,321,766		35.11	%
		96,332,044		51.00	%

Subsequently, Aguassanta Participações proceeded with the corporate restructuring involving its interest held in Cosan Limited. As a result of this restructuring, the equity interest formerly held by Aguassanta Participações directly in Cosan Limited turned into indirect interest, by means of holding companies in Brazil and abroad. Upon completion of said corporate restructuring operation, Cosan Limited ownership structure – where Cosan Limited equity interest in Cosan S.A. Indústria e Comércio remained unaltered, corresponding to 51%, was as follows:

Shareholder	Class of shares	Number of shares		Interest
Usina Costa Pinto	B1		30,010,278		15.29	%
Queluz Holdings Limited	B1		66,321,766		33.78	%
Aguassanta Participações	A		5,000,000		2.55	%
Other shareholders	A		95,000,000		48.39	%
			196,332,044		100.00	%

Cosan Limited shares owned by Usina Costa Pinto and Queluz Holdings Limited are Class B1 shares, which entitle their holders to 10 votes per share. Other shares are Class A shares, which entitle holders to 1 vote per share.

On August 16, 2007, Cosan Limited concluded its Global Initial Public Offering (IPO) at the New York Stock Exchange by offering 100,000,000 Class A shares. As of that date, Cosan Limited priced its IPO at US$10.50 per Class A share, equivalent to the amount of R$21.05. As a result of the Global

F-30

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

Offering Cosan’s shares are traded on the New York Stock Exchange (NYSE) and on the São Paulo Stock Exchange (BOVESPA) by BDR (Brazilian Depositary Receipts).

17. Share-Based Compensation

In the ordinary and extraordinary general meeting of Cosan S.A. held on August 30, 2005, the guidelines for the outlining and structuring of a stock option plan for Cosan S.A.’s officers and employees were approved, thus authorizing the issue of up to 5% of shares comprising its share capital. This stock option plan was outlined to attract and retain services rendered by officers and key employees, offering them the opportunity to become shareholders of Cosan S.A. On September 22, 2005, Cosan S.A.’s board of directors approved the distribution of stock options corresponding to 4,302,780 common shares to be issued or purchased by Cosan S.A. related to 3.25% of the share capital at the time, authorized by the annual/extraordinary meeting. The remaining 1.75% may still be distributed. On September 22, 2005, the officers and key employees were informed regarding the key terms and conditions of the share-based compensation arrangement.

According to the market value on the date of issuance, the exercise price is US$2.93 (two dollars and ninety three cents) per share which does not include any discount. The exercise price was calculated before the valuation mentioned above based on an expected private equity deal which did not occur. Options may be exercised after a one-year vesting period starting November 18, 2005, at the maximum percentage of 25% per year of the total stock options offered by Cosan S.A. The options for each 25% have a 5 year period to be exercised.

The exercised options will be settled only through issuance of new common shares or treasury stock.

The employees who leave Cosan S.A. before the vesting period will forfeit 100% of their rights. However, if the employment is terminated by Cosan S.A. with no cause, the employees will have the right to exercise 100% of their options of that particular year plus the right to exercise 50% of the options of the following year.

The fair value of share-based awards was estimated using a binominal model with the following assumptions:

Grant date	September 22, 2005
Grant price—in U.S. dollars		2.93
Expected life (in years)		7.5
Interest rate		14.52	%
Volatility		34	%
Dividend yield		1.25	%
Weighted-average fair value at grant date—in U.S. dollars		5.92

Expected Term—Cosan’s expected term represents the period that Cosan S.A.’s stock-based awards are expected to be outstanding and was determined based on the assumption that the officers will exercise their options when the exercise period is over. Therefore, this term was calculated based on the average of 5 and 10 years. Cosan S.A. does not expect any forfeiture as those options are mainly for officers, whose turnover is low.

F-31

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

Expected Volatility—Cosan S.A. had its shares publicly-traded for less than 6 months as of April 30, 2006. Therefore, Cosan S.A. has opted to substitute the historical volatility by an appropriate global industry sector index, based on the volatility of the share prices, and considering it as an assumption in its valuation model. Cosan S.A. has identified and compared similar public entities for which share or option price information is available to consider the historical, expected, or implied volatility of those entities’ share prices in estimating expected volatility based on global scenarios.

Expected Dividend—Cosan S.A. uses the payment history of dividends for the expected dividend value factor when using the Binominal Model option-pricing formula to determine the fair value of options granted. As Cosan S.A. was a new public entity, the expected dividend yield was calculated based on the current value of the stock market at grant date, adjusted by the average rate of return to shareholders for the expected term, in relation of future book value of the stocks.

Risk-Free Interest Rate—Cosan S.A. bases the risk-free interest rate used in the Binominal Model valuation method on the implied yield currently available on SELIC—Special System Settlement Custody which is the implied yield currently available on zero-coupon securities in Brazil.

As of April 30, 2007 the amount of US$14,293 related to the unrecognized compensation cost related to stock options is expected to be recognized in 2.5 years. Cosan S.A. currently has no shares in treasury.

Stock option activity for the year ended April 30, 2007, is as follows:

	Shares			Weighted-average exercise price
Outstanding as of April 30, 2005		—			—
Grants of options		4,302,780			2.93
Exercises		—			—
Forfeitures or expirations		—			—
Outstanding as of April 30, 2006		4,302,780			2.93
Grants of options		—			—
Exercises		(1,132,707	)		3.00
Forfeitures or expirations		(285,060	)		3.00
Outstanding as of April 30, 2007		2,885,013			3.00
Shares exercisable at April 30, 2007		—			—
Shares exercisable at April 30, 2006		—			—

18. Risk Management and Financial Instruments

a. Risk management

The volatility in the price of commodities and foreign exchange rates are the main market risks to which Cosan and its subsidiaries are exposed. Cosan carries out operations involving financial instruments with a view to managing such risks.

These risks and related instruments are managed through the definition of strategies, establishment of control systems and determination of foreign exchange, interest rate and price change limits.

F-32

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

The financial instruments are contracted for hedging purposes only.

b. Price risk

Cosan carries out transactions involving derivatives, with a view to reducing its exposure to sugar price variations in the foreign market. Such transactions assure an average minimum income for future production. Cosan actively manages the positions contracted and relevant results of such activity are continually monitored, so as to allow that adjustments be made to goals and strategies considering changes in market conditions. Cosan operates mainly in futures and options markets on the NYBOT (New York Board of Trade) and the LIFFE (London International Financial Futures and Options Exchange).

c. Foreign exchange risk

Cosan carries out transactions involving derivatives, with a view to reducing its exposure to foreign exchange rate variations on exports. Transactions with derivatives combined with commodity price derivatives assure an average minimum income for future production. Cosan actively manages the positions contracted and relevant results of such activity are continually monitored, so as to allow that adjustments be made to goals and strategies considering changes in market conditions. Cosan operates mainly in the over-the-counter segment with leading institutions.

Additionally, Cosan has also engaged in currency and interest rate swap operations for charges associated to Senior Notes, from the U.S. dollar exchange rate variation plus interest of 9% per annum to 81% of CDI.

d. Interest rate risk

Cosan monitors fluctuations of the several interest rates linked to its monetary assets and liabilities and, in the event of increased volatility of such rates, it may engage in transactions with derivatives so as to minimize such risks. At April 30, 2007, Cosan did not record any interest rate derivative contracts, except for the swap arrangement referred to in item c) Foreign exchange risk.

e. Credit risk

A significant portion of sales made by Cosan and its subsidiaries is made to a selected group of best-in-class counterparties (i.e., trading companies, fuel distribution companies and large supermarket chains). Credit risk is managed through specific rules of client acceptance, credit rating and setting of limits for customer exposure, including the requirement of a letter of credit from major banks. Cosan and its subsidiaries historically have not recorded material losses on trade accounts receivable.

f. Debt acceleration risk

As of April 30, 2007, Cosan was a party to loan and financing agreements with covenants generally applicable to these operations, regarding cash generation, debt to equity ratio and others. These covenants are being fully complied with by Cosan and do not place any restrictions on its operations as a going-concern.

F-33

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

g. Estimated market values

The following methods and assumptions were used to estimate the fair value of each main class of financial instruments:

•

Accounts receivable and trade accounts payable: The carrying amounts reported in the balance sheet for accounts and notes receivable and accounts payable approximate their fair values.

•

Short-term and long-term debt and advances from customers: The market values of loans and financing were calculated based on their present value calculated through the future cash flows and using interest rates applicable to instruments of similar nature, terms and risks or based on the market quotation of these securities.

The following table presents the carrying amounts and estimated fair values of Cosan’s financial instruments at April 30, 2007 and 2006. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties.

	2007				2006
	Carrying amount		Fair value		Carrying amount		Fair value
Financial assets:
Cash and cash equivalents		316,542		316,542		29,215		29,215
Marketable securities		281,879		281,879		368,838		368,838

Financial liabilities:
Short-term and long-term debt		1,378,572		1,416,390		988,317		1,154,625
Advances from customers		48,608		45,576		79,483		80,659

Assets and liabilities that are reflected in the accompanying consolidated financial statements at fair value or have their fair value disclosed in the notes to the consolidated financial statements are not included in the above disclosures; such items include cash and equivalents and derivative financial instruments.

19. Segment Information

a. Segment information

The following information about segments is based upon information used by Cosan’s senior management to assess the performance of operating segments and decide on the allocation of resources. Cosan’s reportable segments are business units that target different industry segments. Each reportable segment is managed separately because of the need to specifically address customer needs in these different industries. Cosan has three segments: sugar, ethanol and others group. The operations of these segments are based solely in Brazil.

The sugar segment mainly operates and produces a broad variety of sugar products, including raw (also known as very high polarization—VHP sugar), organic, crystal and refined sugars, and sells these products to a wide range of customers in Brazil and abroad. Cosan exports the majority of the sugar produced through international commodity trading companies. Cosan’s domestic customers include

F-34

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

wholesale distributors, food manufacturers and retail supermarkets, through which it sells its “Da Barra” branded products.

The ethanol segment substantially produces and sells fuel ethanol, both hydrous and anhydrous (which has a lower water content than hydrous ethanol) and industrial ethanol. Cosan’s principal ethanol product is fuel ethanol, which is used both as an automotive fuel and as an additive in gasoline, and is mainly sold in the domestic market by fuel distribution companies. Consumption of hydrous ethanol in Brazil is increasing as a result of the introduction of flex fuel vehicles that can run on either gasoline or ethanol (or a combination of both) to the Brazilian market in 2003. In addition, Cosan sells liquid and gel ethanol products used mainly in the production of paint and cosmetics and alcoholic beverages for industrial clients in various sectors.

The accounting policies underlying the financial information provided for the segments are based on Brazilian GAAP. We evaluate segment performance based on information generated from the statutory accounting records.

Others segment is comprised by selling cogeneration of electricity, diesel and corporate activities.

No asset information is provided by reportable segment due to the fact that the majority of the assets used in production of sugar and ethanol are the same.

Measurement of segment profit or loss and segment assets

Cosan evaluates performance and allocates resources based on return on capital and profitable growth. The primary measurement used by management to measure the financial performance of Cosan is adjusted EBIT (earnings before interests and taxes excluding special items such as impairment and restructuring, integration costs, one-time gains or losses on sales of assets, acquisition, and other items similar in nature). The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.

Cosan reports net sales by geographic area based on the destination of the net sales.

	2007		2006		2005
Net sales—Brazilian GAAP
Sugar		1,029,592		657,846		417,795
Ethanol		551,474		378,366		198,830
Others		95,832		57,792		51,545
Total		1,676,898		1,094,004		668,170
Reconciling items to U.S. GAAP
Sugar		2,152		2,610		(1,957	)
Ethanol		—		—		(20,426	)
Others		—		—		(1,411	)
Total		2,152		2,610		(23,794	)
Total net sales		1,679,050		1,096,614		644,376

Segment operating income—Brazilian GAAP
Sugar		105,290		65,997		39,493
Ethanol		56,396		37,959		18,795
Others		9,800		5,797		4,872
Operating income—Brazilian GAAP		171,486		109,753		63,160

F-35

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

	2007			2006			2005
Reconciling items to U.S. GAAP
Depreciation and amortization expenses
Sugar		39,340			24,013			18,458
Ethanol		21,072			13,811			8,784
Others		3,662			2,110			2,277
		64,074			39,934			29,519
Other adjustments
Sugar		(816	)		(10,501	)		11,407
Ethanol		(1,573	)		(7,559	)		(14,280	)
Others		(273	)		(1,154	)		226
Total sugar		143,814			79,509			69,358
Total ethanol		75,895			44,211			13,299
Total others		13,189			6,753			7,375
Operating income—U.S. GAAP		232,898			130,473			90,032

b. Sales by geographic area

The following table includes Cosan’s net sales by region:

	2007		2006		2005
Brazil		663,886		522,435		261,017
Europe		304,634		61,457		31,609
Middle East and Asia		473,752		323,488		202,486
North America		113,010		43,841		29,710
Latin America, other than Brazil		19,392		5,784		3,059
Africa		102,224		136,999		140,289
Total		1,676,898		1,094,004		668,170

c. Sales by principal customers

Sugar

The following table sets forth the amount of sugar that we sold to our principal customers during the years as a percentage of our total sales of sugar:

Market	Customer	2007			2006			2005
International	Sucres et Denrées		33.3	%		33.7	%		25.8	%
	Coimex Trading Ltd		11.5	%		11.3	%		15.3	%
	S.A. Fluxo		9.5	%		0.8	%		—
	Tate & Lyle International		5.3	%		10.0	%		12.2	%
	Cane International Corporation		2.2	%		12.8	%		13.3	%

F-36

COSAN LIMITED

(Formerly Cosan S.A. Industria e Comércio)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Years ended April 30, 2007, 2006 and 2005--Continued

(In thousands of U.S. dollars, unless otherwise stated)

Ethanol

The following table sets forth the amount of ethanol that we sold to our principal customers during the years as a percentage of our total sales of ethanol:

Market	Customer	2007			2006			2005
International	Vertical UK LLP		11.6	%		9.3	%		16.3	%
	Kolmar Petrochemicals		6.2	%		0.3	%		0.7	%
	Alcotra S.A.		—			5.8	%		—
Domestic	Shell Brasil Ltda.		14.8	%		27.8	%		30.4	%
	Petrobrás Distribuidora S.A.		9.2	%		12.0	%		6.0	%
	Manancial Distribuidora de Petróleo Ltda.		8.2	%		2.3	%		—
	Flag Distribuidora de Petróleo Ltda.		4.1	%		8.9	%		9.8	%

F-37

COSAN LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

OCTOBER 31, 2007 AND APRIL 30, 2007

(In thousands of U.S. dollars, except share data)

	(Unaudited) October 31, 2007		April 30, 2007
Assets			(restated)
Current assets:
Cash and cash equivalents		77,037		316,542
Restricted cash		1,780		17,672
Marketable securities		1,131,612		281,879
Trade accounts receivable, less allowances: October, 31, 2007 – 2,113; April 30, 2007 – 4,013		61,352		55,206
Inventories		676,967		247,480
Advances to suppliers		173,448		103,961
Other current assets		90,597		116,763
		2,212,793		1,139,503

Property, plant and equipment, net		1,405,094		1,194,050
Goodwill		562,654		491,857
Intangible assets, net		105,178		93,973
Accounts receivable from Federal Government		190,038		156,526
Other non-current assets		209,998		177,460
		2,471,962		2,113,867
Total assets		4,684,755		3,253,370

F-38

COSAN LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

OCTOBER 31, 2007 AND APRIL 30, 2007

(In thousands of U.S. dollars, except share data)

	(Unaudited) October 31, 2007		April 30, 2007
Liabilities and shareholders’ equity			(restated)
Current liabilities:
Trade accounts payable		212,015		55,938
Advances from customers		16,435		24,275
Taxes payable		51,705		57,543
Salaries payable		63,805		31,109
Current portion of long-term debt		44,010		36,076
Derivative financial instruments		26,779		9,779
Dividends payable		—		37,261
Other liabilities		7,279		22,238
		422,028		274,219
Long-term liabilities:
Long-term debt		1,226,173		1,342,496
Estimated liability for legal proceedings and labor claims		459,824		379,191
Taxes payable		130,494		106,897
Advances from customers		8,333		24,333
Deferred income taxes		144,657		141,587
Other long-term liabilities		50,963		47,485
		2,020,444		2,041,989

Minority interest in consolidated subsidiaries		550,040		463,551

Shareholders’ equity
Common stock class A, $.01 par value, 1,000,000,000 shares authorized; 111,678,000 shares issued and outstanding		1,117		—
Common stock class B1, $.01 par value, 96,332,044 shares authorized, issued and outstanding		963		963
Common stock class B2, $.01 par value, 92,554,316 shares authorized; no shares issued		—		—
Additional paid-in capital		1,473,250		354,022
Accumulated other comprehensive income		116,035		36,696
Retained earnings		100,878		81,930
Total shareholders’ equity		1,692,243		473,611
Total liabilities and shareholders' equity		4,684,755		3,253,370

See accompanying notes to condensed consolidated financial statements.

F-39

COSAN LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE SIX MONTH

PERIODS ENDED OCTOBER 31, 2007 AND 2006

(In thousands of U.S. dollars, except share data)

(Unaudited)

	Six months ended October 31,
	2007			2006
				(restated)
Net sales		629,268			887,749
Cost of goods sold		(583,675	)		(593,771	)
Gross profit		45,593			293,978
Selling expenses		(82,133	)		(63,192	)
General and administrative expenses		(54,501	)		(46,025	)
Operating income (loss)		(91,041	)		184,761

Other income (expense):
Financial income		307,687			295,440
Financial expenses		(178,368	)		(206,110	)
Other		(405	)		18,385

Income before income taxes, equity in income (loss) of affiliates and minority interest		37,873			292,475

Income taxes		(9,834	)		(100,027	)
Income before equity in income (loss) of affiliates and minority interest		28,039			192,448
Equity in income (loss) of affiliates		(2,033	)		153
Minority interest in net income of subsidiaries		(7,058	)		(95,251	)
Net income		18,948			97,349

Earnings per share:
Basic and Diluted		0.13			0.98

Weighted average number of shares outstanding:
Basic and Diluted		140,752,618			99,747,279

See accompanying notes to condensed consolidated financial statements.

F-40

COSAN LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY FOR

THE SIX MONTH PERIOD ENDED OCTOBER 31, 2007

(In thousands of U.S. dollars, except share data)

(Unaudited)

	Class A Common number		Class A Common amount		Class B Common number		Class B Common amount		Additional paid-in capital		Accumulated other comprehensive income		Retained earnings		Total shareholders’ equity
Balance at May 1, 2007		—		—		1,000		—		—		—		—		—

Contribution of 51% of Cosan S.A. equity		—		—		96,331,044		963		354,872		76,159		81,930		513,924
Issuance of common shares class A for cash		100,000,000		1,000		—		—		994,814		—		—		995,814
Issuance of common shares class A for cash		11,678,000		117		—		—		122,502		—		—		122,619
Stock compensation		—		—		—		—		1,062		—		—		1,062
Net income		—		—		—		—		—		—		18,948		18,948
Currency translation adjustment		—		—		—		—		—		39,876		—		39,876
Total comprehensive income																58,824
Balances at October 31, 2007		111,678,000		1,117		96,332,044		963		1,473,250		116,035		100,878		1,692,243

See accompanying notes to condensed consolidated financial statements.

F-41

COSAN LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE

SIX MONTH PERIODS ENDED OCTOBER 31, 2007 AND 2006

(In thousands of U.S. dollars)

(Unaudited)

	Six months Ended October 31,
	2007			2006
Cash flow from operating activities				(restated)
Net income		18,948			97,349
Adjustments to reconcile net income to cash used in operating activities
Depreciation and amortization		158,997			83,129
Deferred income and social contribution taxes		(14,531	)		88,157
Interest, monetary and exchange variation		(97,641	)		96,133
Minority interest in net income of subsidiaries		7,058			95,251
Others		12,652			(13,130	)
Decrease (increase) in operating assets and liabilities
Trade accounts receivable, net		(1,280	)		(29,348	)
Inventories		(388,349	)		(388,453	)
Advances to suppliers		(52,206	)		(19,378	)
Trade accounts payable		146,778			68,242
Derivative financial instruments		42,496			(131,370	)
Taxes payable		(16,214	)		(52,470	)
Other assets and liabilities, net		(14,502	)		(42,591	)
Net cash used in operating activities		(197,794	)		(148,479	)
Cash flows from investing activities
Restricted cash		18,830			59,873
Marketable securities		(791,758	)		198,284
Acquisition of property, plant and equipment		(184,851	)		(51,133	)
Other		(1,207	)		(62	)
Net cash provided by (used in) investing activities		(958,986	)		206,962
Cash flows from financing activities
Proceeds from issuance of common stock		1,118,433			—
Additions of long-term debt		—			25,295
Payments of long-term debt		(260,419	)		(95,641	)
Net cash provided by (used in) financing activities		858,014			(70,346	)
Effect of exchange rate changes on cash and cash equivalents		59,261			9,105
Net decrease in cash and cash equivalents		(239,505	)		(2,758	)
Cash and cash equivalents at beginning of period		316,542			29,215
Cash and cash equivalents at end of period		77,037			26,457

See accompanying notes to condensed consolidated financial statements.

F-42

FINANCIAL STATEMENTS OCTOBER 31, 2007

(In thousands of U.S. dollars, unless otherwise stated)

1. Operations and Purpose

The companies included in the unaudited consolidated interim financial statements have as their primary activity the production of ethanol and sugar. They are constantly pursuing opportunities to capitalize on the growing demand for ethanol and sugar in the world. They are focused on increasing production capacity through expansion of existing facilities, development of greenfield projects and, as opportunities present themselves, acquisitions.

On August 1, 2007, Aguassanta Participações S.A. and Usina Costa Pinto S.A. Açúcar e Álcool, controlling shareholders of Cosan S.A. and both indirectly controlled by Mr. Rubens Ometto Silveira Mello, the controlling shareholder, contributed their common shares of Cosan S.A. to Cosan in exchange for 96,332,044 of our class B1 common shares. The common shares contributed to the Company by Aguassanta Participações S.A. and Usina Costa Pinto S.A. Açúcar e Álcool consisted of 96,332,044 common shares of Cosan, representing 51.0% of Cosan S.A. outstanding common shares. As a result of this operation Cosan Ltd. became the controlling shareholder of Cosan S.A.

This is a transaction among companies under common control. The transferred equity interests of Cosan S.A. have been recognized at the carrying amounts in the accounts of Cosan S.A. at the date of transfer. The financial statements of Cosan Limited for the six-month period ended October 31, 2007 reflect the results of operations of the entities as though the transfer of equity occurred at the beginning of the period. Additionally, the financial statements for the six-month period ended October 31, 2006 have been restated to reflect the combination of entities under common control to furnish comparative information. Earnings per share has been computed assuming that the share issued in connection with the formation of Cosan Limited, and the shares of Cosan S.A. contributed into Cosan Limited have been outstanding from the beginning of the periods.

F-43

(In thousands of U.S. dollars, unless otherwise stated)

Shareholders’ equity as April 30, 2007 has been stated as follows:

	Class B Common stock number		Class B Common stock amount			Additional paid-in capital		Accumulated other comprehensive income		Retained earnings		Total shareholders’ equity
As stated
Cosan Limited		1,000		—			—		—		—		—
Cosan S.A. Indústria e Comércio		—		535,105			160,944		71,953		160,648		928,650
Contribution of 51% of Cosan S.A. equity as of April 30, 2007		96,331,044		272,904			82,081		36,696		81,930		473,611
Reclassification from common stock		—		(271,941	)		271,941		—		—		—
As restated		96,332,044		963			354,022		36,696		81,930		473,611

The costs directly attributable to the offering were charged against the gross proceeds of the offering in a total amount of US$52,594. Therefore, the net proceeds related to the IPO totaled US$1,118,433.

2. Presentation of the Consolidated Financial Statements

a. Basis of Reporting for Interim Financial Statements

In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company’s results for the periods presented. Interim results for the six-month period ended October 31, 2007, are not necessarily indicative of the results that may be expected for the year ending April 30, 2008.

The unaudited condensed consolidated financial statements include the accounts of Cosan Limited and its subsidiaries. All significant intercompany transactions have been eliminated.

F-44

(In thousands of U.S. dollars, unless otherwise stated)

The accounts of Cosan are maintained in U.S. dollars and the accounts of its subsidiaries are maintained in Brazilian reais, which have been translated into U.S. dollars in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 52 “Foreign Currency Translation” using the real as the functional currency.

The exchange rate of the Brazilian real (R$) to the US$ was R$1.7440=US$1.00 at October 31, 2007 and R$2.0339=US$1.00 at April 30, 2007.

b. Use of estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates. These estimates and assumptions are reviewed and updated regularly to reflect recent experience.

c. Recently issued accounting standards

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS 160”) which amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Before this Statement was issued, limited guidance existed for reporting noncontrolling interests. This Statement changes the way the consolidated income statement is presented. It requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest. It also requires disclosure, on the face of the consolidated statement of operations, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest. This Statement is effective for Cosan as of May 1, 2009. As this statement was recently issued, Cosan is evaluating the impact on its consolidated financial statements and related disclosures.

F-45

(In thousands of U.S. dollars, unless otherwise stated)

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(R), “Business Combinations” (“SFAS 141(R)”), which replaces FASB Statement No. 141, Business Combinations. This Statement establishes principles and requirements for how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This Statement is effective for Cosan as of May 1, 2009. This Statement will only impact Cosan’s financial statements in the event of a business combination on or after May 1, 2009.

F-46

(In thousands of U.S. dollars, unless otherwise stated)

3. Cash and Cash Equivalents

	October 31, 2007		April 30, 2007
Local currency
Cash and bank accounts		54,258		16,208
Foreign currency
Cash and bank accounts		22,779		300,334
		77,037		316,542

4. Marketable Securities

	October 31, 2007		April 30, 2007
Investment funds		1,129,355		—
Bank Deposits Certificate		2,257		281,873
Other fixed income securities		—		6
		1,131,612		281,879

The investment funds balance consists of fixed income investments expressed in U.S. dollars with international prime banks, remunerated at an average rate of 5.2% p.a. and available for prompt redemption.

5. Derivative Financial Instruments

Cosan S.A. has entered into derivative financial instruments with various counterparties and uses derivatives to manage the overall exposures related to sugar price variation in the international market and exchange rate variation. The instruments are commodity futures contracts, forward currency agreements, interest rate and foreign exchange swap contracts, and option contracts. Cosan S.A. recognizes all derivatives on the balance sheet at fair value.

There are no derivative instruments designated as hedges.

F-47

(In thousands of U.S. dollars, unless otherwise stated)

The following table summarizes the notional value of derivative financial instruments as well as the related amounts recorded in balance sheet accounts:

	Notional amounts				Carrying value asset (liability)
	October 31, 2007		April 30, 2007		October 31, 2007			April 30, 2007
Commodities derivatives
Future contracts:
Purchase commitments		928		—		11			—
Sell commitments		152,321		247,882		575			47,427
Options:
Purchased		—		58,587		—			4,502
Written		105,307		—		(3,510	)		—

Foreign exchange derivatives
Future contracts:
Purchase commitments		897		—		(8	)		—
Forward contracts:
Sale commitments		327,860		153,824		47,834			13,274
Swap agreements		327,236		328,419		(23,261	)		(9,779	)
Total assets						48,420			65,203
Total liabilities						(26,779	)		(9,779	)

Where quoted market prices were not available, fair values were based on estimates using discounted cash flows or other valuation techniques. Asset figures are classified as other current assets.

6. Inventories

	October 31, 2007		April 30, 2007
Finished goods:
Sugar		233,851		5,730
Ethanol		239,493		8,731
Others		1,962		1,681
		475,306		16,142
Annual maintenance cost of growing crops		133,209		183,157
Others		68,452		48,181
		676,967		247,480

The increase in finished goods and decrease in annual maintenance cost of growing crops relate to the beginning of the 2007/2008 harvest period which occurred in middle March 2007.

F-48

(In thousands of U.S. dollars, unless otherwise stated)

7. Long-term Debt

Long-term debt is summarized as follows:

	Financial charges
	Index	Average annual interest rate			October 31, 2007			April 30, 2007
Resolution 2471 (PESA)	IGP-M		3.95	%		244,986			196,545
	Corn price variation		12.50	%		419			685
Senior notes due 2009	US Dollar		9.0	%		40,915			200,000
Senior notes due 2017	US Dollar		7.0	%		406,922			407,311
IFC	US Dollar		7.44	%		65,480			67,677
Perpetual notes	US Dollar		8.25	%		458,839			459,035
Others	Various	Various				52,622			47,319
						1,270,183			1,378,572
Current liability						(44,010	)		(36,076	)
Long-term debt						1,226,173			1,342,496

Long-term debt has the following scheduled maturities:

	October 31,
2009		9,769
2010		48,187
2011		40,439
2012		3,446
2013		8,187
2014		1,313
2015 and thereafter		1,114,832
Total		1,226,173

Senior notes due 2009

The senior notes are listed on the Luxembourg Stock Exchange, mature in November 2009 and bear interest at a rate of 9% per annum, payable semi-annually in May and November as from May 1, 2005. Guarantees have been provided by Cosan’s indirect subsidiary, Usina da Barra.

F-49

(In thousands of U.S. dollars, unless otherwise stated)

On October 25, 2007, Cosan S.A. advanced payment of part of the debt thus reducing debt principal by US$164,192 thousand, of which US$3,301 was paid on November 8, 2007. In this operation there was advance settlement of interest and payment of bonus in the total amount of US$17,294, which was recorded in Financial expenses account.

Senior notes due 2017

On January 26, 2007, the indirect wholly-owned subsidiary Cosan Finance Limited issued US$400 million of senior notes in the international capital markets. These senior notes, listed on the Luxembourg Stock Exchange, mature in February 2017 and bear interest at a rate of 7% per annum, payable semi-annually. Guarantees have been provided by the subsidiary, Usina da Barra.

Perpetual notes

On January 24 and February 10, 2006, the wholly-owned subsidiary Cosan S.A. Indústria e Comércio issued perpetual notes. The perpetual notes are listed in the Luxembourg Stock Exchange - EURO MTF and are subject to interest of 8.25% per year, payable quarterly on the 15th of May, August, November and February of each year, beginning May 15, 2006.

These notes may, at the discretion of Cosan S.A., be redeemed as from February 15, 2011 on any interest payment date. Perpetual notes are guaranteed by Cosan S.A. and by Usina da Barra.

F-50

(In thousands of U.S. dollars, unless otherwise stated)

Special Agricultural Financing Program (Programa Especial de Saneamento de Ativos), or PESA

To extend the repayment period of debts incurred by Brazilian agricultural producers, the Brazilian government passed Law 9.138 followed by Central Bank Resolution 2,471, which, together, formed the PESA program. PESA offered certain agricultural producers with certain types of debt the opportunity to acquire Brazilian treasury bills (CTNs) in an effort to restructure their agricultural debt. The face value of the Brazilian treasury bills was the equivalent of the value of the restructured debt and was for a term of 20 years.

On July 31, 2003, the Central Bank issued Resolution 3,114, authorizing the reduction of up to five percentage points of PESA related interest rates, effectively lowering the above-mentioned rates to 3%, 4% and 5%, respectively. The CTNs held by Cosan S.A. as of October 31, 2007 and April 30, 2007 amounted to US$101,996 and US$82,205 respectively, and is classified as other non-current assets.

Cosan’s subsidiaries are subject to certain restrictive covenants related to limitation on transactions with shareholders and affiliated companies; and limitation on payment of dividends and other payments affecting subsidiaries.

F-51

(In thousands of U.S. dollars, unless otherwise stated)

8. Estimated Liability for Legal Proceedings and Labor Claims

	October 31, 2007		April 30, 2007
Tax contingencies		403,418		329,493
Civil and labor contingencies		56,406		49,698
		459,824		379,191

Cosan’s subsidiaries are parties in various ongoing labor claims, civil and tax proceedings arising in the normal course of its business. Respective provisions for contingencies were recorded considering those cases in which the likelihood of loss has been rated as probable. Management believes resolution of these disputes will have no effect significantly different than the estimated amounts accrued.

Judicial deposits recorded by Cosan under the caption other non-current assets have been made for some of these suits amounting to US$26,079 (US$21,274 on April 30, 2007). Judicial deposits are restricted assets of Cosan placed on deposit with the court and held in judicial escrow pending of legal resolution certain legal proceedings.

Tax contingencies refer, substantially, to suits filed by Cosan and its subsidiaries, relating to several aspects of the legislation ruling PIS, Cofins, contributions to the extinct IAA - Sugar and Ethanol Institute, and the Federal VAT (IPI), as well as tax delinquency notices related to ICMS and contributions to the INSS.

The major tax contingencies as of October 31, 2007 are related to Excise tax - IPI credit premium in the amount of US$149,479, Value added tax - ICMS in the amount of US$23,108, IAA tax contribution in the amount of US$44,792, and Social Contributions in the amount of US$123,936.

F-52

(In thousands of U.S. dollars, unless otherwise stated)

	October 31, 2007		April 30, 2007
Tax assessment – Withholding Income Tax		84,616		73,037
IPI Premium Credit resulting from Regulatory Ruling No. 67/98		87,097		70,860
ICMS – State value added tax		35,494		28,964
IAA – Sugar and Ethanol Institute		27,873		23,706
IPI – Federal value added tax		41,961		31,921
Others		23,275		18,574
		300,315		247,062

In connection with one of these suits, a final and unappealable decision in the amount of US$149,121 million was rendered in September 2006 in favor of Usina de Barra. This has been recorded as a gain in the statement of operations for the year ended April 30, 2007. Since the recorded amount is substantially composed of interest and monetary restatement, it was recorded in Financial income and in a non-current receivable on the balance sheet. In connection with the settlement process, the form of payment is being determined. The Company is expecting a final decision relative to the payment terms within three years, which is expected to be in the form of public debt, to be received over a ten year period. The amount is subject to interest and inflation adjustment by an official index. Lawyers’ fees in the amount of US$18,783 relating to this suit were recorded in general and administrative expenses in the statements of operations for the year ended April 30, 2007. At October 31, 2007, the updated amounts are US$190,038 and US$23,937, respectively.

F-53

(In thousands of U.S. dollars, unless otherwise stated)

9. Income Taxes

As mentioned in note 1, the Company is an exempted company located in Bermuda. Nevertheless, the Company’s subsidiaries located in Brazil file income tax returns in the Brazilian federal jurisdiction. These subsidiaries are no longer subject to Brazilian federal income tax examinations by tax authorities for years before December 31, 2001. Additionally, the Cosan S.A. has not been under a Brazilian Internal Revenue Service (IRS) income tax examination for 2002 through 2007.

Effective May 1, 2007, the Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement 109 (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in financial statements and prescribes a threshold of more-likely-than-not for recognition of tax benefits of uncertain tax positions taken or expected to be taken in a tax return. FIN 48 also provides related guidance on measurement, derecognition, classification, interest and penalties, and disclosure. Also, FIN 48 excludes income taxes from the scope of Statement of Financial Accounting Standards No. 5, Accounting for Contingencies.

Prior to the adoption of FIN 48, the Company recognized tax benefits of uncertain tax positions only if it was probable that the positions would be sustained. There was no retained earnings impact upon adoption of FIN 48 as no additional tax position met the recognition threshold under FIN 48.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Balance at May 1, 2007	22,027
Accrued interest on unrecognized tax benefit	612
Settlements	(312	)
Balance at October 31, 2007	22,327

It is possible that the amount of unrecognized tax benefits will change in the next twelve months, however, an estimate of the range of the possible change cannot be made at this time due to the long time to reach a settlement agreement or decision with the taxing authorities.

The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.

F-54

(In thousands of U.S. dollars, unless otherwise stated)

10. Share-based Compensation

In the ordinary and extraordinary general meeting held on August 30, 2005, the guidelines for the outlining and structuring of a stock option plan for Cosan S.A.’s officers and employees were approved, thus authorizing the issue of up to 5% of shares comprising Cosan S.A.’s share capital. This stock option plan was outlined to attract and retain services rendered by officers and key employees, offering them the opportunity to become shareholders of Cosan S.A. On September 22, 2005, the board of directors approved the distribution of stock options corresponding to 4,302,780 common shares to be issued or purchased by Cosan related to 3.50% of the share capital at the time, authorized by the annual/extraordinary meeting. The remaining 1.75% may be distributed. On September 22, 2005, the officers and key employees were informed regarding the key terms and conditions of the share-based compensation arrangement.

According to the market value on the date of issuance, the exercise price is US$3.50 per share which does not include any discount. The exercise price was calculated before the valuation mentioned above based on an expected private equity deal which did not occur. Options may be exercised after a one-year vesting period starting November 18, 2005, at the maximum percentage of 25% per year of the total stock options offered by Cosan S.A. The options for each 25% have a five-year period to be exercised.

On September 11, 2007, the board of directors approved additional distribution of stock options, in connection with the stock option plan mentioned above, corresponding to 450,000 common shares to be issued or purchased by Cosan S.A. related to 0.4% of the share capital at September 22, 2005. The remaining 1.35% may still be distributed.

The exercised options will be settled only through issuance of new common shares or treasury stock that Cosan S.A. may have in each date.

The employees that leave Cosan S.A. before the vesting period will forfeit 100% of their rights. However, if the employment is terminated by Cosan S.A. with no cause, the employees will have right to exercise 100% of their options of that particular year plus the right to exercise 50% of the options of the following year.

F-55

(In thousands of U.S. dollars, unless otherwise stated)

The fair value of stock-based awards was estimated using a binominal model with the following assumptions for the six-month period ended October 31, 2007:

	Awards granted on September 22, 2005			Awards granted on September 11, 2007
Grant price – US$		3.50			3.50
Expected life (in years)		7.5			7.5
Interest rate		14.52	%		9.34	%
Volatility		34	%		46.45	%
Dividend yield		1.25	%		1.47	%
Weighted-average fair value at grant date – US$		7.09			10.43

As of October 31, 2007 the amount of US$17,611 related to the unrecognized stock option compensation cost is expected to be recognized in 2.5 years. Cosan S.A. currently has no shares in treasury.

Additionally as of October 31, 2007 there were 3,335,013 options outstanding with a weighted-average exercise price of US$3.50.

11. Other Comprehensive Income

The table below presents accumulated other comprehensive income for the six–month periods ended October 31:

	Six months ended October 31,
	2007		2006
Net income		18,948		97,349
Currency translation adjustment		39,876		(9,444	)
Total comprehensive income		58,824		87,905

F-56

(In thousands of U.S. dollars, unless otherwise stated)

12. Segment Information

The following information about segments is based upon information used by Cosan’s senior management to assess the performance of operating segments and decide on the allocation of resources. Cosan’s reportable segments are business units that target different industry segments. Each reportable segment is managed separately because of the need to specifically address customer needs in these different industries. Cosan has three segments: Sugar, Ethanol and others group. The operations of these segments are based solely in Brazil.

The sugar segment mainly operates and produces a broad variety of sugar products, including raw (also known as very high polarization - VHP sugar), organic, crystal and refined sugars, and sell these products to a wide range of customers in Brazil and abroad. Cosan exports the majority of the sugar produced through international commodity trading companies. Cosan’s domestic customers include wholesale distributors, food manufacturers and retail supermarkets, through which it sells its “Da Barra” branded products.

The ethanol segment substantially produces and sells fuel ethanol, both hydrous and anhydrous (which has lower water content than hydrous ethanol) and industrial ethanol. Cosan’s principal ethanol product is fuel ethanol, which is used both as an automotive fuel and as an additive in gasoline, and is mainly sold in the domestic market by fuel distribution companies. Consumption of hydrous ethanol in Brazil is increasing as a result of the introduction of flex fuel vehicles that can run on either gasoline or ethanol (or a combination of both) to the Brazilian market in 2003. In addition, Cosan sells liquid and gel ethanol products used mainly in the production of paint and cosmetics and alcoholic beverages for industrial clients in various sectors.

The accounting policies underlying the financial information provided for the segments are based on Brazilian GAAP. We evaluate segment performance information generated from the statutory accounting records from the subsidiaries.

Others segment is comprised by selling cogeneration of electricity, diesel and corporate activities.

No asset information is provided by reportable segment due to the fact that the majority of the assets used in production of sugar an ethanol are the same.

F-57

(In thousands of U.S. dollars, unless otherwise stated)

Measurement of segment profit or loss and segment assets

Cosan evaluates performance and allocates resources based on return on capital and profitable growth. The primary measurement used by management to measure the financial performance of Cosan is adjusted EBIT (earnings before interests and taxes excluding especial items such as impairment and restructuring, integration costs, one-time gains or losses on sales of assets, acquisition, and other items similar in nature). The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.

	October 31,
	2007		2006
Net sales – Brazilian GAAP:
Sugar		383,831		573,015
Ethanol		177,441		282,155
Others		66,130		31,014
Total		627,402		886,184

Reconciling item to U.S. GAAP
Sugar		1,866		1,565
Ethanol		—		—
Others		—		—
Total		1,866		1,565

Total net sales		629,268		887,749

F-58

(In thousands of U.S. dollars, unless otherwise stated)

	October 31,
	2007			2006
Segment operating income – Brazilian GAAP
Sugar		(108,980	)		94,097
Ethanol		(50,380	)		46,334
Others		(18,776	)		5,092

Operating income (loss) under Brazilian GAAP		(178,136	)		145,523

Reconciling items to U.S. GAAP
Depreciation and amortization expenses
Sugar		22,190			26,632
Ethanol		10,258			13,114
Others		3,823			1,441
		36,271			41,187
Other adjustments
Sugar		31,816			(709	)
Ethanol		13,847			(1,118	)
Others		5,161			(122	)
		50,825			1,949
Total sugar		(54,974	)		120,020

Total ethanol		(26,275	)		58,330

Total others		(9,792	)		6,411

Operating income (loss) under U.S. GAAP		(91,041	)		184,761

F-59

(In thousands of U.S. dollars, unless otherwise stated)

Sales to principal customers

Sugar

The following table sets forth the amount of sugar that we sold to our principal customers during the six-month periods ended October 31, as a percentage of our total sales of sugar:

Market	Customer	2007			2006
International	Tate & Lyle International		20	%		8	%
	Sucres Et Denrees		19	%		45	%
	S/A Fluxo Com Assess International		14	%		12	%
	Fluxo – Cane Overseas Ltd		13	%		10	%
	Coimex Trading Ltd		9	%		9	%

Domestic	Atacadão Distr Com Ind Ltda		11	%		8	%
	Nova América S/A – Agroenergia		5	%		5	%
	Companhia Brasileira de Distribuição		4	%		10	%

Ethanol

The following table sets forth the amount of ethanol that we sold to our principal customers during the six-month periods ended October 31, as a percentage of our total sales of ethanol:

Market	Customer	2007			2006
International	Vertical Uk LLP		38	%		41	%
	Vitol Inc.		30	%		—
	Noble Americas Corporation		6	%		—

Domestic	Shell Brasil Ltda.		32	%		29	%
	Euro Petróleo do Brasil Ltda.		18	%		—
	Petrobrás Distribuidora S.A.		9	%		8	%

F-60

(In thousands of U.S. dollars, unless otherwise stated)

13. Subsequent Event

On November 19, 2007, the Company held a Board of Directors’ Meeting, which approved the following main topics:

• Management compensation and stock option plan;

• Committees of the Board of Directors and their members;

• Code of ethics;

• Execution of the “Commercial Opportunity Offering Agreement” by and between the Company and its direct subsidiary, Cosan S.A. Indústria e Comércio;

• Resignation of the board member, Mr. Teo Joo Kim, who was substituted by Mr. Mailson da Nóbrega.

The Extraordinary General Meeting of subsidiary Cosan S.A. Indústria e Comércio held on December 5, 2007, approved by majority voting the following:

• Capital increase of the subsidiary by R$1,736,700, through issue of 82,700,000 new common registered book entry shares with no nominal value, through private subscription, for issue price of R$21.00 each. On that date, the subsidiary’s capital started to be divided into 272,509,307 common registered book entry shares with no nominal value, in the total amount of R$2,935,031;

• Increase the amount of authorized capital limit of Cosan S.A. to R$4,500,000; and

• Execution of the “Commercial Opportunity Offering Agreement” by and between the Company and its direct subsidiary, Cosan S.A. Indústria e Comércio, establishing terms and conditions for partnerships in commercial activities carried out by the controlling company.

F-61

(In thousands of U.S. dollars, unless otherwise stated)

On December 10, 2007, Cosan S.A. made a public announcement of the closure of Usina Santa Luíza and Agropecuária Aquidaban, both located in the city of Motuca-SP and under shared control with other shareholders. Such decision aims to leverage operating and administrative synergies of the controlling groups, since all industrial and farming operations will be redirected to the units of the controlling groups in the proportion of the interest held in capital. Accordingly, unit Bonfim owned by the Cosan Group will absorb the increase of nearly 600 thousand tons of sugar cane in its installed capacity. This does not change the initial projection of future profitability of the business and assets of the acquired companies.

On December 11, 2007, Cosan S.A. held a Board of Directors’ Meeting, which unanimously approved a capital increase through issue of 38,725 new common registered book entry shares with no nominal value, in connection with its stock option plan. This is due to the exercise of the referred to option by eligible executives, for the issue price of R$6.1133 per share, established on the terms of the plan. Due to issue of new shares, Cosan S.A.’s capital was increased from R$2,935,031, divided into 272,509,307 common shares to R$2,935,268 as of the present date, divided into 272,548,032, common registered shares.

F-62

Annex A

Appraisal Report

	Cosan S.A. and Cosan Ltd.

	Appraisal Report December 19, 2007

	(Convenience Translation into English from the Original Previously Issued in Portuguese)

	Deloitte Touche Tohmatsu Consultores Ltda.

Contents


Important Notes	Page 03
Executive Summary	Page 06
Information about the Appraisal Firm	Page 09
Information about the Companies Appraised	Page 14
Market	Page 22
Methodologies Adopted	Page 31
Results	Page 55
Glossary	Page 57
Attachment	Page 59

Important Notes

1.	Deloitte Touche Tohmatsu Consultores Ltda. (“Deloitte Consultores”) has been engaged by the management of Cosan Limited (“Cosan Ltd.” or “Holding”) to prepare this Economic-Financial Appraisal Report of Cosan S.A. and Cosan Ltd., within the scope of a proposed exchange offer, in accordance with the provisions contained in Instruction No. 361 issued by the Brazilian Securities Commission (CVM) on March 5, 2002.

2.	The exchange of shares should occur as disclosed to the market in the Notices of Relevant Facts (“Fatos Relevantes”) dated June 25, July 6 and July 27, 2007.

3.	This Appraisal Report has been prepared pursuant to Article 8 of the above-mentioned CVM Instruction (No. 361/2002), as amended by CVM Instruction No. 436/2006, and is intended solely for the use of the management of Cosan S.A. and Cosan Ltd. and the shareholders of Cosan S.A. in order for them to evaluate the exchange offer referred to above.

4.	The variations in the appraisal values of Cosan S.A. and Cosan Ltd. are limited to a range of minimum and maximum values of 10% for both cases, pursuant to requirements of CVM Instruction No. 361/02.

5.	Deloitte Consultores does not express hereby any judgment in relation to distribution of the economic value among the various types and/or classes of shares of Cosan S.A. and Cosan Ltd.

6.	This report is not intended for general circulation and may not be reproduced or used for any purpose other than the one cited above without our prior written authorization. We assume no responsibility, liability or accountability for contingencies due to any damages caused or for any losses that might be incurred by any party involved, as a result of the circulation, publication, reproduction or use of this document for any purpose other than the one proposed in our engagement letter.

7.	This report does not represent any kind of advice or recommendation on the part of Deloitte Consultores to shareholders to participate in the exchange offer; such decision is the sole and exclusive responsibility of each shareholder.

8.	Shareholders should conduct their own analyses regarding the advisability and timeliness of participating in the exchange offer and should consult their own legal, tax and financial counsel, in order to form their own opinions about the offer and its risks. Accordingly, Deloitte Consultores and its partners and professional staff members are exempt from responsibility in relation to any and all losses that might arise from any shareholder’s decision to participate or not participate in the exchange offer.

Important Notes

9.	Our procedures did not include an independent verification of the data and information provided by the management of Cosan S.A. and Cosan Ltd., which were considered and mentioned in the following report. Our work did not constitute an audit or any other kind of assurance in accordance with generally accepted auditing standards. Accordingly, we cannot and do not express any opinion on Cosan S.A. and Cosan Ltd.’s financial statements. However, the data and information were considered consistent for our analysis purposes.

10.	Deloitte is not responsible for any direct or indirect losses or business interruption (loss of income) resulting from the use of this Appraisal Report.

11.	Among other sources, Deloitte’s appraisal work used as a basis the following information or documents that have been made available to us up to December 19, 2007: (i) the business plans of Cosan S.A. for harvest years 2007/2008 to 2016/2017, as drawn up and approved by its management; (ii) historical operating and financial information of Cosan S.A.; (iii) the amounts of net indebtedness of Cosan S.A. and its equity stakes in other companies; (iv) public information regarding the industry in which Cosan S.A. operates; (v) information on shareholders’ equity, number of shares and net cash investments provided by Cosan Ltd. management; and (vi) discussions with the management of Cosan S.A. in relation to past performance and expectations for future business.

12.	We understand that the estimates and projections that were supplied by the management of Cosan S.A. to Deloitte Consultores, or that were discussed with Deloitte Consultores, especially those whose occurrence depends on uncertain future events reflect the best assessment of its management with respect to the evolution of Cosan S.A. and its markets. We verified the operating assumptions used to prepare the Business Plan of Cosan S.A. for reasonableness and assumed that such information reflect the best estimates and projections presently available with respect to the Company’s future financial performance.

13.	It is important to emphasize that Deloitte Consultores is not responsible for, and does not provide any guarantees with respect to attainment of the projections contained in this report, since such projections are based on the prospects and strategic plans of the management of Cosan S.A., which we believe will continue to conduct its business affairs in the future.

14.	We reserve the right, but are not under any obligation, to revise all the calculations included or referred to in this report, should we deem it necessary, as well as to revise our opinion as to the fair market value of the shares of Cosan S.A. and Cosan Ltd., in the event we subsequently become aware of information that was not available as of the issuance of this report.

Executive Summary

Initial Considerations

This Appraisal Report was prepared by Deloitte Consultores in conformity with the provisions contained in Instruction No. 361 issued by the CVM applicable to an exchange offer.

The exchange of shares should occur as disclosed to the market in the Notices of Relevant Facts dated June 25, July 6 and July 27, 2007, with the objective of allowing the shareholders of Cosan S.A. to migrate to Cosan Ltd., the parent company of the Cosan Group.

Appraisal Method Chosen

Deloitte Consultores chose the Discounted Cash Flow (“DCF”) Method for appraisal of Cosan S.A., as this method best captures specific aspects of the Company and its future cash generation capacity.

In the case of Cosan Ltd., Deloitte Consultores chose the Assets Approach, with the investment in Cosan S.A. being estimated on a DCF basis. Based on this methodology, Cosan Ltd.’s cash investments were added to the economic value of its interest in Cosan S.A.

Principal General Assumptions of the Appraisal

The projections have been based on the operational aspects of the Company’s Business Plan for the period from November 1, 2007 through April 30, 2017. The macroeconomic assumptions adopted in developing the appraisal work, as shown in page 38 of this Report, were based on public information. VHP sugar prices were based on expectations of Deloitte’s sugar and ethanol industry analysts.

·	Discounted Cash Flow Method was used considering only the projections of operating results (debt-free model), adjusted by the non-operating assets and liabilities, in nominal Brazilian Reais (R$).

·	The base date for the appraisal is October 31, 2007, considering the capital contribution by Cosan Ltd. on December 5, 2007.

Perpetual growth figures have been calculated based on the Gordon growth model. The projected cash flow for harvest year 2016/2017 has been adjusted for income tax and social contribution resulting from expectations for reduction in depreciation, considering a perpetual estimated growth rate of 4.0% in nominal Brazilian Reais (R$), equivalent to the projected long-term inflation.

·	The discount rate used was 12.14% in nominal Brazilian Reais (R$).

·	Appraisal date: October 31, 2007, considering the capital contribution to Cosan S.A. on December 5, 2007.

Executive Summary

We concluded that the Discounted Cash Flow Method is the most appropriate approach to estimate the value of shares Cosan S.A. Based on this methodology, the economic value as of October 31, 2007 is in a range of R$24.60 to R$27.19 per share. The following graph presents the comparative per-share values according to the methodologies used in this appraisal engagement:

(1)	Economic value per share after issuance of shares on November 19, 2007 and December 5 and 11, 2007, based on the Discounted Cash Flow Method, with a minimum and maximum value range of 10%, pursuant to CVM Instruction No. 361/02.
(2)	Market value per share based on the weighted average price for shares of:
	(i)	R$39.49 per share in the 12 months prior to the disclosure of the Relevant Fact dated June 25, 2007.
	(ii)	R$26.28 per share from the date of disclosure of the Relevant Fact (June 25, 2007) through the date of this Appraisal Report.
	(iii)	R$20.66 per share from the announcement on November 19, 2007 of the Cosan S.A. share issue through the date of this Appraisal Report.
(3)	Book value per share as of October 31, 2007, adjusted after issuance of shares on November 19, 2007 and December 5 and 11, 2007, resulting in 272,548,032 shares.

We concluded that the Assets Approach, with the investment in Cosan S.A. estimated on a discounted cash flow basis, is the most appropriate method to estimate the value of shares Cosan Ltd. Based on this methodology, the economic value as of October 31, 2007 is in a range of R$22.24 to R$24.58 per share. The following graph presents the comparative per-share values according to the methodologies used in this appraisal engagement:

(1)	Economic value per share based on the Assets Approach, with the investment in Cosan S.A. estimated on a discounted cash flow basis, with a minimum and maximum value range of 10%, pursuant to CVM Instruction No. 361/02.
(2)	Assets Approach with the investment in Cosan S.A. being estimated based on the weighted average price for shares in Cosan S.A. of:
	(i)	R$35.11 per share, for the weighted average value of R$39.49 per share in Cosan S.A. in the 12 months prior to the disclosure of the Relevant Fact dated June 25, 2007.
	(ii)	R$23.74 per share, for the weighted average value of R$26.28 per share Cosan S.A. from the date of disclosure of the Relevant Fact (June 25, 2007) through the date of this Appraisal Report.
	(iii)	R$18.91 per share, for the weighted average value of R$20.66 per share Cosan S.A. from the announcement on November 19, 2007 of the Cosan S.A. share issue through the date of this Appraisal Report.
(3)	Market value per share traded on the NYSE based on the weighted average price per share (i) 21.68 per share, from the date of the Initial Public Offering on August 16, 2007, through the date of this Appraisal Report and; (ii) 19.12 per share, from the announcement on November 19, 2007 of the share issue of Cosan S.A. through the date of this Appraisal Report.
(4)	Book Value per Class A share, based on 208,010,044 shares as of October 31, 2007.

The Corporate Finance area of Deloitte Touche Tohmatsu Consultores Ltda. (Deloitte Consultores), responsible for the preparation of this Appraisal Report, has consistently provided Economic-Financial Appraisal services in general, particularly those involving publicly traded companies, as shown later in this Chapter.

Our consultants have experience in various industrial sectors, both nationally and internationally.

In accordance with the internal norms of Deloitte Consultores, this Appraisal Report has been entirely prepared by the team of analysts itemized in this Report, the contents and format of which have been reviewed by the Engagement Partner, who is signing this document together with the other analysts on the appraisal team. In addition, a second partner, Mr. Eduardo de Oliveira, undertook a technical review of this Appraisal Report.

The following paragraphs detail the identification and qualifications of the professionals responsible for preparing this Appraisal Report:

Pieter Freriks – Dutch

Engagement Partner

Mr. Freriks has experience in all processes of the Corporate Finance area, including Economic-Financial Appraisals, Strategic Planning, Feasibility Studies, Mergers & Acquisitions and Due Diligence, serving leading Brazilian and foreign concerns. He has also taken part in several projects under the National Privatization Program and assisted in various Public Offering processes.

Education: Degree in Business Administration from Amsterdam Free University (Vrije Universiteit van Amsterdam) in the Netherlands.

Eduardo de Oliveira – Brazilian

Reviewing Partner

Mr. Oliveira has has led a number of business appraisal engagements, having participated in several such projects under the National Privatization Program.

He has participated in business appraisal engagements in various sectors, involving mergers and acquisitions, buyouts, etc., and has been responsible for obtaining and analyzing financial and market data and preparing cash flow projections in order to determine the economic value of companies.

Education: Mr. Oliveira has a bachelor’s degree in Accounting from São Paulo’s Pontifical Catholic University (PUC/SP), as well as a Graduate degree in finance from that same university and an International Executive MBA degree from FIA.

Adriano Ferreira de Sousa – Brazilian

Manager

Mr. Ferreira de Sousa joined our São Paulo office in 1996. Among his other responsibilities at present he manages and executes projects in the financial consulting area, among which the following deserve special mention: Economic-Financial Appraisal services in the processes for privatization of TELEBRAS and DATAMEC S.A. Sistemas de Processamento de Dados, as well as Feasibility Studies for Petrobras/BR Distribuidora and ENERGEN (EDP Group), among other medium- and large-sized Brazilian and multinational companies.

Education: Degree in Mechanical Production Engineering from the College of Industrial Engineering (FEI) and Extension Course in Industrial Administration from the University of São Paulo (USP).

Carolina Camargo Kalil – Brazilian

Consultant

Ms. Camargo Kalil joined our São Paulo office in 2002. Among her other responsibilities, at present she carries out projects in the financial consulting area, the most notable of which are Economic-Financial Appraisals of medium- and large-sized Brazilian and multinational companies, such as Energisa S.A, Enel Brasil Participações Ltda, Energias do Brasil, Repsol YPF Brasil S.A., Adeco Brasil Participações Ltda. and ISA Capital do Brasil Ltda., among others.

Education: Degree in Economics from the University of São Paulo (USP).

Credentials - Companies in the Sugar Alcohol Industry	Service	Year
Louis Dreyfus	Economic-financial appraisal to provide backing for goodwill and purchase price alocation (SFAS 141).	2007
Usina Noroeste Paulista	Economic-financial appraisal to provide backing for goodwill and purchase price alocation (SFAS 141).	2007
Usina Monte Alegre	Economic-financial appraisal to provide backing for goodwill and purchase price alocation (SFAS 141).	2006

Credentials - Publicly-Traded Companies	Service	Year
Plascar Participações Industriais S.A.	Appraisal Report for public offer of shares OPA	2007
Cia. Providência Indústria e Comércio S.A.	Economic-financial appraisal to provide backing for goodwill generated by corporate restructuring process.	2007
Energisa S.A.	Appraisal of projections for future operating results in order to obtain credit from the Inter-American Development Bank (IADB).	2007
Companhia de Saneamento do Paraná S.A.	Economic-financial appraisal to update the market value of the investment for the controlling stockholder.	2005-2007
ENERSUL - Empresa Energética do Mato Grosso do Sul S.A.	Economic-financial appraisal to update the market value of the investment for the controlling stockholder.	2005-2007
ESCELSA - Espírito Santo Centrais Elétricas S.A.	Economic-financial appraisal to updated the market value of the investment for the controlling stockholder.	2005-2007
Telemig Celular Participações S.A.	Economic-financial appraisal to updated the market value of the investment for the controlling stockholder.	2005
Tele Norte Celular Participações S.A.	Economic-financial appraisal to updated the market value of the investment for the controlling stockholder.	2005
Brasil Telecom S.A.	Economic-financial appraisal to updated the market value of the investment for the controlling stockholder.	2005

For the intents and purposes of CVM Instruction No. 361/02, Deloitte Consultores hereby declares that:

·	The partners and the professionals involved in this project do not own any shares in either Cosan S.A. or Cosan Ltd., nor do they conduct discretionary management services with respect to such shares.

·	There is no conflict of interest that could decrease the independence required in order for it to perform its functions as an independent appraisal firm.

·	The cost to prepare this Appraisal Report was R$350,000.00 (three hundred and fifty thousand Reais), net of taxes.

Besides the amount received mentioned above, in the past 12 (twelve) months it has received the amount of R$1,179,016.49 (one million, one hundred and seventy-nine thousand, and sixteen Reais and forty-nine centavos) relating to: (i) advisory services in negotiating the Company’s payroll; (ii) preparation of an economic-financial appraisal report, as well as evaluation of its property and organization of fixed assets; and (iii) tax planning; and

·	Notwithstanding the relationship described above, it does not have any other commercial and credit information of any kind with respect to the Cosan S.A. and Cosan Ltd. that might impact this Appraisal Report.

Technical Team Responsible for the Appraisal

DELOITTE TOUCHE TOHMATSU

Consultores Ltda.

Pieter Freriks

Engagement Partner

Eduardo de Oliveira

Reviewing Partner

Adriano Ferreira de Sousa

Manager

Brief History of Cosan S.A.

Cosan S.A. believes to be the largest Brazilian producer of sugar, and ethanol in terms of production and sales volume, according to information disclosed by the Company in the Annual Information Form (AIF) dated April 30, 2007 and which was based on data disclosed by ÚNICA and on an internal survey of public information available.

Currently, Cosan S.A. operates 17 production plants in the South-Central region of Brazil and controls a bulk terminal at the Port of Santos, which is the base from which VHP sugar is exported, in addition to an interest in an ethanol export terminal at the Port of Santos (TEAS) .

For the 2006/2007 harvest season, Cosan S.A. directly employed 35,534 workers, including both full time employees and those who are hired especially for cutting cane, and processed approximately 36,163 million tons of sugarcane. Such processing resulted in the production of 3,174 thousand tons of sugar and 1,222 thousand cubic meters of ethanol. In the same period, Cosan S.A. with sales of R$3.6 billion. Cosan S.A. is responsible for approximately 10% of the Brazilian sugar production.

	Nominal Capacity¹
Productive Units	Sugarcane Crushing (Thousands tons/year)	Sugar (tons/day)	Ethanol (m³/day)	Energy (MW)
Barra	7,200	3,000	1,800	19
Bom Retiro	1,200	600	350	4
Bomfim	4,600	2,250	1,100	17
Costa Pinto	4,000	2,075	1,250	9
Destivale	1,300	360	520	3
Diamante	1,950	1,200	340	7
Dois Córregos	1,400	925	220	4
Gasa	1,250	n.a.	450	4
Ipaussu	1,950	1,250	360	6
Junqueira	2,600	1,200	900	19
Mundial	1,300	500	300	3
Rafard	2,400	1,350	550	10
Santa Helena	2,050	1,200	350	4
São Francisco	1,400	1,100	n.a.	4
Serra	1,800	1,200	430	15
Tamoio	1,400	900	n.a.	4
Univalem	2,200	950	650	8
Total	40,000	20,060	9,570	140

Source: Cosan S.A.

(1) The sugarcane crushing capacity and the sugar and ethanol production are determined by the industrial characteristics of each productive unit.

Currently, the products manufactured by Cosan S.A. serve the industrial, retail and export markets, as shown below:

Product Lines

Retail	Export
1. Shapeless refined sugar	1. Bulk VHP sugar
2. Granulated refined sugar	2. Granulated refined sugar
3. Demerara sugar	3. Crystal sugar
4. Crystal sugar	4. Organic sugar
5. Brown sugar	5. Refined hydrous ethanol
6. Gel alcohol	6. Neutral hydrous ethanol

Industry
1. Demerara sugar
2. Crystal sugar
3. Granulated refined sugar
4. Shapeless refined sugar
5. Liquid sugar
6. Inverte liquid sugar
7. Molasses
8. Ethanol

Source: Cosan S.A. management.

The shareholder composition of Cosan S.A. as of October 31, 2007 was as follows:

Shareholders - Cosan S.A.	Total Shares	(%)
Cosan Limited	96,332,044	51.00%
Aguassanta Participações S.A.	470,185	0.25%
Rio das Pedras Participações S.A.	23,820	0.01%
Rubens Ometto Silveira Mello	675	0.00%
Nova Celisa S.A.	468	0.00%
Board of Directors	19,110	0.01%
Executive Board	33,721	0.02%
Shares Held by Minority Shareholders	92,006,337	48.71%
Total	188,886,360	100.00%

Source: Annual Information Form (AIF) – Apr 30, 2007

On November 19, 2007, the Company issued 922,947 shares under a “Stock Option Plan” at the issue price of R$6.11 per share.

On the same date, the Company called an Extraordinary Shareholders’ Meeting to decide, among other matters, on the issue and subscription of 82,700,000 shares. These shares were issued on December 5, 2007. All Company shareholders are entitled to subscribe for new shares proportionately to their holdings on December 5, 2007 within a thirty-day period.

On December 11, 2007, the Company issued 38,725 shares under a “Stock Option Plan” at the issue price of R$6.11 per share.

On the assumption that all shares issued on December 5 will be subscribed by Cosan Ltd., the shareholders composition of Cosan S.A. after the share issue is as follows:

Shareholders - Cosan S.A.	Total Shares	(%)
Cosan Limited	179,032,044	65.69%
Aguassanta Participações S.A.	470,185	0.17%
Rio das Pedras Participações S.A.	23,820	0.01%
Rubens Ometto Silveira Mello	675	0.00%
Nova Celisa S.A.	468	0.00%
Board of Directors	19,110	0.01%
Executive Board	995,393	0.37%
Shares Held by Minority Shareholders	92,006,337	33.76%
Total	272,548,032	100.00%

Corporate Organization Chart as of December 5, 2007

Income Statement

(*) In the Interim Financial Statements (ITR) and Standard Financial Statements (DFP), Operating Income/Expenses is comprised of the following accounts, as shown in the table above: Operating Expenses, Goodwill Amortization, Financial Results, Equity in Subsidiaries and Share Placement Expenses.

Income Statement	2005/06	2006/07	May to Oct/07
Net Operating Revenues	2,477,921	3,605,056	1,219,202
. Growth %	n.d.	45.5%	n.d.
Cost of Products Sold (*)	(1,721,309)	(2,481,115)	(1,099,122)
. Cost of Products Sold/Net Revenues	-69.5%	-68.8%	-90.2%
Gross Profit	756,612	1,123,941	120,080
. Gross Profit/Net Revenues	30.5%	31.2%	9.8%
Operating Expenses	(378,842)	(492,872)	(259,066)
. Operating Expenses / Net Revenues	-15.3%	-13.7%	-21.2%
EBIT	377,770	631,069	(138,986)
. EBIT Margin (EBIT /Net Revenues)	15.2%	17.5%	-11.4%
. Goodwill Amortization	(142,835)	(223,686)	(112,594)
Profit / (Loss) Before Income Tax	(63,493)	567,301	48,965
. Operating Margin (Profit Before Income Tax/Net Revenues)	-2.6%	15.7%	4.0%
. Income Tax and Social Contribution	5,823	(203,858)	(21,377)
. % Income Tax and Social Contribution	9.2%	35.9%	43.7%
Net Income / (Loss)	(64,562)	357,269	28,890
. Net Margin (Net Income/Net Revenues)	-2.6%	9.9%	2.4%

	2005/06	2006/07	May to Oct/07
EBIT	377,770	631,069	(138,986)
. EBIT Margin (EBIT /Net Revenues)	15.2%	17.5%	-11.4%
. Depreciation and Amortization	139,892	296,960	264,406
EBITDA	517,662	928,029	125,420
. EBITDA Margin (EBITDA /Net Revenues)	20.9%	25.7%	10.3%

Source: Audited DFP as of 4/30/2006 and 4/30/2007 and ITR as of 10/302007 with limited review by Ernst & Young Auditores Independentes S.S.

Balance Sheet – Assets

Balance Sheet – Liabilities

	Actual
Assets	04/30/06	04/30/07	10/31/2007
. Cash and Cash Equivalents	831,522	1,217,129	141,591
. Trade Accounts Receivable	212,601	112,283	107,296
. Inventories	390,845	503,350	1,194,841
. Advances to Suppliers	132,719	211,446	304,492
. Receivables from Related Parties	3	-	-
. Deferred Income Tax & Social Contribution	41,418	38,093	24,236
. Derivative Financial Instruments	288,601	37,578	3,554
. Other Credits	115,727	104,866	75,076

Current Assets	2,013,436	2,224,745	1,851,086
. Financial Applications	90	-	-
. Receivables from Related Parties	-	45	11
. National Treasury Certificates	104,921	123,310	135,886
. Deferred Income Tax & Social Contribution	361,785	242,530	277,065
. Indemnity Suits	-	318,358	331,426
. Other Credits	99,372	112,323	105,752

Long-Term Assets	566,168	796,566	850,140
. Investments	13,414	93,169	13,872
. Property, Plant & Equipment	1,656,396	2,013,137	2,070,286
. Deferred Charges	1,355,359	1,135,737	1,093,802
Permanent Assets	3,025,169	3,242,043	3,177,960
Total Assets	5,604,773	6,263,354	5,879,186

Source: Audited Financial Statements and reviewed ITR (interim financial statements) by Ernst & Young Auditores Independentes S.S.

	Actual
Liabilities	04/30/06	04/30/07	07/31/2007
. Trade Accounts Payable	201,717	113,773	373,295
. Loans and Financing	68,778	88,991	105,072
. Salaries and Wages Payable	49,726	63,273	113,423
. Taxes and Contributions	111,120	126,202	101,037
. Advances from Customers	79,156	49,373	28,663
. Promissory Notes	55,791	1,261	-
. Payables to Related Parties	76	667	-
. Deferred Income Tax & Social Contribution without Revaluation Reserve	5,486	5,486	5,486
. Dividends Payable	-	75,815	34
. Derivative Financial Instruments	65,368	35,536	31,184
. Other Obligations	32,758	31,356	12,283
Current Liabilities	669,976	591,733	770,477
. Loans and Financing	2,002,684	2,770,435	2,178,807
. Taxes and Contributions	446,947	338,507	344,968
. Payables to Related Parties	1,350	-	-
. Advances from Customers	86,901	49,491	14,533
. Promissory Notes	12,747	-	-
. Reserve for Contingencies	907,395	727,966	757,468
. Debentures	55,069	55,069	55,069
. Deferred Income Tax & Social Contribution without Revaluation Reserve	40,801	33,435	28,303
. Other Obligations	11,464	45,528	50,783

Long-Term Liabilities	3,565,358	4,020,431	3,429,931

Minority Interest	14,017	20,191	18,889




Shareholder's Equity	1,355,422	1,630,999	1,659,889
Total Liabilities and Shareholder's Equity	5,604,773	6,263,354	5,879,186

Information about the Companies Appraised

Brief History of Cosan Ltd.

Cosan Ltd. was incorporated in Bermuda on April 30, 2007 to be a platform for international expansion of Cosan S.A. The starting capital of Cosan Ltd. was 1,000 (one thousand) shares of common stock in the total amount of US$10.00 (ten United States Dollars), equivalent to R$20.00 (twenty Reais), fully paid up in cash by shareholder Rubens Ometto Silveira Mello, the current controlling shareholder of Cosan Ltd.

On August 1, 2007, a capital increase was carried out, involving 96,331,044 shares of class B1 stock, paid in with the 51% stake in Cosan S.A.

On August 16, 2007, Cosan Ltd. made a global initial public offer involving 100,000,000 class A shares Cosan Ltd., for a price per share of US$10.50, corresponding to R$21.05 per share. Concurrently with the global offering of class A shares, a local offering of Brazilian Depositary Receipts (BDRs) was made, with each BDR representing 1 class A share.

On September 7, 2007, a supplementary batch (greenshoe) of 11,678,000 shares of class A stock was issued.

The following chart shows the changes in Cosan Ltd.’s ownership interest:

Description	Date	Common shares of class A stock	Common shares of class B stock	Total shares
Starting capital stock	04/30/2007	-	1,000.00	1,000
Capital contribution	08/01/2007	-	96,331,044	96,331,044
Total prior to offering		-	96,332,044	96,332,044
Global initial public offering	08/16/2007	100,000,000	-	100,000,000
Total after offering		100,000,000	96,332,044	196,332,044
Supplementary batch (greenshoe)	09/07/2007	11,678,000	-	11,678,000
Total after offering		111,678,000	96,332,044	208,010,044

Source: Interim Financial Statements as of October 31, 2007.

The shareholder composition as of October 31, 2007 is as follows:

Shareholders - Cosan Ltd.	Total Shares	(%)
Usina Costa Pinto S.A. Açúcar e Álcool	30,010,278	14.43%
Queluz Holdings Limited	66,321,766	31.88%
Aguassanta Participações S.A.	5,000,000	2.40%
Janus Capital Group (Denver)	27,500,000	13.22%
Wellington Management Company, LLP	14,000,000	6.73%
Fidelity (Boston)	12,750,000	6.13%
Outros	52,428,000	25.20%
Total	208,010,044	100.00%

Source: Annual Information Form (AIF) – Apr 30, 2007

Information about the Companies Appraised

The Transaction

The global exchange offer is the third stage of a comprehensive corporate restructuring of Cosan S.A. and Cosan Ltd. The global initial public offer of Cosan Ltd. was launched on July 30, 2007, the issue price was set on August 16, 2007 and settlement occurred on August 21, 2007. On September 7, 2007, a supplementary batch of shares (greenshoe) was issued.

The capital stock of Cosan Ltd. presently issued and outstanding is comprised of class B1 and class A shares. No class B2 share has been issued or is outstanding. Each class B share has 10 votes, while each class A share has 1 vote. Any amendments to Cosan Ltd.’s bye-laws and any decisions relating to share rights, tag along sale, among others, require the approval of holders of at least 2/3 of the class A shares, as a separate voting group.

Each class B share may be converted into a class A share at any time, at the shareholder’s option. Each class B2 share will automatically convert into a class A share in the event: (i) such class B share is transferred, subject to certain exceptions applicable to class B1 shares, (ii) the class B1 shares represent less than 45% of the total voting power in respect of all the issued and outstanding shares of Cosan Ltd., or (iii) all of the class B1 shares are converted into class A shares.

Now that the initial global offering has been completed, the final step of the corporate reorganization is the global exchange offer, which is being carried out in Brazil and the U.S., extending to the current Cosan S.A. shareholders the right to exchange their Cosan S.A. shares for (i) class A shares or, as an alternative for Brazilian shareholders, BDRs representing such class A shares, or (ii) class B2 shares, solely for shareholders of Cosan S.A. as of July 26, 2007, in accordance with the base shareholding position for conversion into class B2 shares.

Except for the exceptions applicable to class B1 shares relating to the succession of the controlling shareholder of Cosan Ltd. and certain permitted transfers, the class B2 shares are entitled to the same rights as the class B1 shares, including: (i) the right to 10 votes per class B share in all matters submitted to the vote of shareholders and (ii) automatic conversion into class A shares if such shares are transferred, or if the total number of the class B1 shares issued represent less than 45% of the total voting power in respect of all the shares issued by Cosan Ltd.

The class B1 and class B2 shares will not be listed on the New York Stock Exchange (NYSE), Bolsa de Valores de São Paulo (BOVESPA) or any other stock exchange.

Market

Description of the Business

The chart below illustrates the sugarcane agro-business system, from production of sugarcane in the fields to distribution of the product to the final consumer:

Sugar

Extracted from the juice resulting from crushing of sugarcane, with subsequent bleaching, de-cantering, evaporating, floating and crystallizing. There are many types of sugar for various purposes, either final consumption (refineries) or a plethora of segments in the food and beverage industries, each of which features its own market value, besides trading companies, the main export channel. Sugar-chemistry provides us with glucose, fructose, glycerin, acids, sorbitol and sucrose and a wide range of other chemicals. Additional fermenting gives us acetones, antibiotics (such as penicillin and tetracycline), industrial enzymes (amylases, proteases), vitamins (C, B2, B12), amino-acids (lysine, phenylalanine) and biological raw materials for a wide range of uses in agricultural production (bio-insecticides and fertilizers) .

Ethanol

The fermenting of sugarcane juice and subsequent distilling gives us ethanol, which basically comes in three types: (1) neutral, used in preparing beverages in general, as well as cosmetics and pharmaceutical products; (2) hydrated (96GL - 96% ethanol and 4% water), used for direct consumption as fuel in automobiles and the chemical industry; and (3) ethanol (99.5GL), which is mixed with gasoline at a ratio of 25%.

Among the various derivatives of ethanol, special mention should be made of ethanol-chemical products, which can be divided into two groups: dehydrated (ethylene) and dehydrogenated (acetaldehyde).

Market

Byproducts

Sugarcane bagasse - the fibrous residue of crushing sugarcane (also termed cane-thrash) . It is used as fuel in steam generation units (boilers), to power turbines and generate power used in crushing and grinding and occasional return to the public distribution network. It is also used in industrial boilers in the citric fruit, pulp and paper and other industries, as well as for power generation. It also generates pulp paste for production of paper and can also be used in animal feed. The leaves and tips can also be used as a result of the sugarcane crushing process.

Stillage (Vinhaça) - residue resulting from distilling, used as a fertilizer in irrigating crops.

Yeast – used as a major raw material in the human food and animal feed industries. It is the cheapest protein supplement found so far on the planet. It can also be used with the right equipment to produce ethanol - and sugar-based chemical products.

Sugar and ethanol are the main products sold by sugar-mills in Brazil. The quantity produced depends on the total sugar recoverable (ATR or Açúcar total recuperável that is) extracted from the sugarcane in the industrial process. The quantity of ATR, in turn, is linked to the content of sucrose, the fiber and purity of the cane, as well as productive efficiency.

By and large, sucrose accounts for around one third of the energy contained in the cane, with the remaining two thirds representing cane-thrash (bagasse), husks and leaves.

Another characteristic of the sugarcane agro-business system is its highly specific nature in terms of location and time factors. The location specific refers to the distance of the raw material (sugarcane) from the mill (processing unit), it being estimated that sugarcane grown more than 50 kilometers distance from the mill makes processing an unviable proposition, due to the high transportation costs involved.

The specific time aspect relates to the length of time between burning and crushing the sugarcane, that is, once the cane is burned it needs to be crushed fairly quickly, otherwise quality suffers. These specific aspects determine three forms of transaction between production of the raw material in sugarcane fields and crushing thereof at the mills, as follows:

1.	Mills that own the land were the sugarcane raw material is obtained for crushing;

2.	Mills that lease land for production of cane and subsequent crushing; and

3.	Specialized rural producers contractually linked to the mills.

As a general rule, around 70% (seventy per cent) of internal sugarcane production is in the hands of the mills, either through their own lands or under lease arrangements, with the remaining 30% (thirty per cent) carried out by specialized producers.

Market

World Sugar Production

According to the USDA, world sugar production was 146.9 million tons for the 2005/2006 harvest year. As shown in the following bar chart, sugar production has been growing in recent years, due to expansion of sugarcane cultivation in general, improved productivity and favorable climate. The leading continents contributing to this upwards trend have been South America and Asia.

As a result of the 2005/06 harvest, Brazil exported 49.3 million metric tons of sugar. Besides being world sugar leader, Brazil is also the leader in exporting the world’s biggest crop, accounting for no less than 38.7% of all sugar exports in the entire world. The second-ranked produced, the European Union, accounted for just 15.2%, less than half of Brazil’s exports.

The following charts show the leading sugar exporting countries and the development of worldwide sugar exports:

Market

Brazilian Sugarcane Production

Between 1995 and 2007, Brazil produced an average of 324 million metric tons of sugarcane per year. According to the association cited earlier (UNICA), Brazilian sugarcane production for the 2006/2007 harvest year reached 426 million metric tons, representing growth of 10.2% in relation to the 2005/2006 harvest year. Out of the total sugarcane production for the 2006/2007 harvest year, the Central/Southern region accounted for around 87.5%, with the remaining 12.5% produced in the Northern/Northeastern region, as can be see in the following graph:

The second survey of the nation’s sugarcane harvest and its destinations (sugar, ethanol and other byproducts), conducted by the National Supply Company (CONAB - Companhia Nacional de Abastecimento) in August of 2007, estimates that Brazil should produce around 473.2 million metric tons of sugarcane in the 2007/2008 harvest-year.

Brazilian Sugar Production

In Brazil, 29.8 million metric tons of sugar were produced in the 2006/2007 harvest year, up 14.9% in relation to 2005/2006. The Central/Southern region accounted for 86.2% of total Brazilian sugar output, with the Northern/Northeastern region accounting for the remaining 13.8% of the nation’s sugar production.

According to the most recent sugar- ethanol industry survey conducted by CONAB (in August of 2007, as mentioned above), about 222.0 million metric tons of Brazilian sugarcane to be cut during the 2007/2008 harvest will be channeled for the production of 30.0 million metric tons of sugar.

The following chart shows the evolution of Brazilian sugar production, in millions of metric tons:

Market

Brazilian Sugar Production (continued)

According to UNICA data, in 2006 Brazil exported 18.9 million metric tons of sugar. From January through June of 2007, it exported 8.4 million metric tons, equivalent to 21.1% more than the same period last year.

Of the total amount of sugar exported from Brazil in the past three years, roughly 70% has been shipped out through the Port of Santos, which has been increasing its share of Brazilian sugar exports in recent years, as can be seen in the following graph:

As regards the countries to which Brazilian sugar exports are sent, the leading importers are Russia, the United Arab Emirates (UAE), Iran, Nigeria and Malaysia. This is because Brazilian exports of this commodity have low market penetration in the United States, the European Union and Japan, owing to protectionist barriers that can reach as high as 400%.

Ethanol Production

In the past 10 harvest years, the Brazilian sugar and ethanol industry turned out an average of 14.1 million cubic meters of ethanol per year.

As shown in the bar chart appearing below, ethanol production in the 2006/2007 harvest year was 17.8 million cubic meters, up no less than 11.5% in relation to the previous harvest year. Out of the total ethanol production in the 2006/2007 harvest year, 90.4% came from the Central/Southern region.

Market

Ethanol Production (continued)

The second harvest survey conducted of the sugar and ethanol industry conducted by CONAB in August 2007, around 21.3 million cubic meters of ethanol will be produced in the 2007/2008 harvest year. Out of this total, 40.3% should be anhydrous ethanol, 59.6% de hydrated ethanol and 0.1% neutral ethanol. The Central/Southern Region will account for 90.7% of total Brazilian ethanol production, according to CONAB.

While Brazil is only the world’s second largest ethanol producer, it is the leading exporter. According to report issued by market analysts, world ethanol exports have grown by an average of 25% per year between 2002 and 2006, reaching around 8 million cubic meters of ethanol in 2006.

According to the Brazilian Foreign Trade Secretariat (Secex), during the months from April to July of 2007, some 1.2 million cubic meters of ethanol, were shipped out of the country, representing growth of 22% in relation to the same period the previous year. Expansion of ethanol production has been considerably strengthened by the rising use of dual-fuel vehicles and an increase in exports too. Further according to reports issued by market analysts, in 2007 around 84.4% of the Brazilian fleet of vehicles being licensed for the first time was comprised of dual-fuel vehicles.

Market

Price – Sugar on the International Market

Profitability in the sugar industry is chiefly affected by the fluctuations in the international price for raw sugar and the exchange rate. The international price is determined based on the New York Board of Trade Futures Contract No 11, or “NY11” . Refined sugar is traded at a premium above the price for raw sugar. Prices are affected by the current situation and future outlook regarding the supply and demand for sugar and its substitutes.

Supply is affected by weather conditions, government trade policies and quantities planted. Demand is affected by the growth in world consumption for sugar and the prices for sugar and substitute products.

Price – Sugar on the Domestic Market

The following graph shows the evolution of the price of crystal sugar on the Brazilian domestic market:

Market

Price – Ethanol on the International Market

Operations in the ethanol industry are affected by the international and domestic prices for ethanol, gasoline and sugar, as well as by the competition, governmental policies and also by the demand for ethanol as an alternative or additive fuel to gasoline.

Cosan S.A.’s sale prices on the international market are based on international prices, including the futures contract recently launched on the New York Futures Market. Prices of the industrial and bottle ethanol sold by Cosan S.A. are also based on the market prices and have historically been higher than the prices for fuel ethanol.

Price – Ethanol on the Domestic Market

Ethanol operations are affected by the domestic and international markets, by the competition, governmental policies and regulations and demand on the market for ethanol as an alternative source of fuel (or added in a mixture with gasoline in dual-fuel vehicles) . The prices charged are referenced to the indices published by the Luiz de Queiroz Advanced School of Agriculture - ESALQ and by the Brazilian Commodities and Futures Exchange (BM&F) .

The following graph shows the evolution of the price of ethanol on the internal market:

According to CVM Instruction No. 361, dated March 5, 2002, Section 8, Paragraph 3, which sets forth the procedures to be applied for exchange offers, the appraisal report is to indicate the appraisal criteria and comparison elements adopted, as well as – at a minimum and on a cumulative basis – the following items:

Introduction

1.	Weighted average quotation price of the Company’s shares at the stock exchange or over-the-counter market, specifying the share price by kind and class: (i) in the past twelve (12) months immediately prior to the disclosure of the relevant fact; and (ii) between the date of disclosure of the relevant fact and the appraisal report date.

2.	Book value per share of Cosan S.A. as verified in the last periodical information sent to the CVM.

3.	The economic value per share, calculated on a discounted cash flow basis or on a multiple basis, as may be regarded as the most appropriate method for the case, in order to appraise it properly.

4.	Value according to the appraisal criteria adopted by the offering party for the purposes of defining a fair price, as the case should be, and provided that it is not included in the previous items.

The parameters described are based on distinct methods and criteria, as they consider different aspects such as prospects for future profitability growth given macroeconomic and industry expectations, historical results and accounting figures, as well as individual perceptions of capital market investors. Therefore, the results verified may or may not differ to a significant degree.

In the process of performing our appraisal work, we based our estimates on documents and information mainly supplied by the management of Cosan S.A., including among others, the following:

Documents Received

·	Business Plan of Cosan S.A. for harvest years 2007/2008 through 2016/2017, as prepared by management.

·	Standardized Financial Statements (DFP) of Cosan S.A. as of April 30, 2006 and April 30, 2007, audited by Ernst & Young Auditores Independentes S.S.

·	Interim Financial Statements (ITR) of Cosan S.A. as of October 31, 2007 and October 31, 2006, with Limited Review by Ernst & Young Auditores Independentes S.S.

·	Consolidated interim analytical balance sheet of Cosan S.A. as of October 31, 2007.

·	Quarterly Financial Letter relating to the Interim Financial Statements (ITR) of Cosan S.A. as of October 31, 2007 and 2006.

·	Presentation made at the Meeting with Investors & Analysts – APIMEC-SP held September 21, 2007.

·	Definitive Prospectus for First Public Distribution of Certified Certificates of Deposit for Class A Common Shares issued by Cosan Limited on August 16, 2007.

Besides using the documents mentioned, we also used information and other documents available on the Company’s website and further conducted meetings with the management of Cosan S.A. in order to obtain information that might allow us to enhance our understanding of its operating process and the market in which it operates.

1. Stock Market Quotation

The performance of the shares of Cosan S.A. for the 12 months prior to the disclosure of the Relevant Fact on June 25, 2007 through the date of this Appraisal Report is as shown below:

The following charts show the volumes and average monthly quotation figures of Cosan S.A. shares for the mentioned period:

Period	Traded Shares	Volume (R$ thousand)	Average Price (R$)
25/06/06 a 24/07/06	16,391,100	769,733	46.96
25/07/06 a 24/08/06	19,825,500	841,924	42.47
25/08/06 a 24/09/06	13,574,800	489,093	36.03
25/09/06 a 24/10/06	21,244,700	715,525	33.68
25/10/06 a 24/11/06	11,934,700	448,717	37.60
25/11/06 a 24/12/06	21,140,300	854,042	40.40
25/12/06 a 24/01/07	18,317,500	774,134	42.26
25/01/07 a 24/02/07	25,358,000	1,016,205	40.07
25/02/07 a 24/03/07	16,225,600	621,535	38.31
25/03/07 a 24/04/07	17,091,400	684,683	40.06
25/04/07 a 24/05/07	13,486,900	553,609	41.05
25/05/07 a 24/06/07	40,526,200	1,515,666	37.40
Average 06/25/2006 to 06/24/2007	235,116,700	9,284,866	39.49

Source: Bloomberg.

1. Stock Market Quotation (continued)

The performance of shares Cosan S.A. from the date subsequent to the disclosure of Relevant Fact on June 25, 2007, through the date of this Appraisal Report, is as shown below:

Period	Traded Shares	Volume (R$ thousand)	Average Price (R$)
06/25/07 to 07/24/07	29,084,300	946,458	32.54
07/25/07 to 08/24/07	31,700,600	874,668	27.59
08/25/07 to 09/24/07	31,107,200	730,135	23.47
09/25/07 to 10/24/07	22,498,400	596,836	26.53
10/25/07 to 11/24/07	20,882,100	510,425	24.44
11/25/07 to 12/19/07	18,459,100	381,533	20.67
Average 06/25 to 12/19/2007	153,731,700	4,040,055	26.28

Source: Bloomberg.

The performance of shares in Cosan S.A. after November 19, when the share issue was announced, through the date of this Appraisal Report is as follows:

Period	Traded Shares	Volume (R$ thousand)	Average Price (R$)
Average 11/20 to 12/19/2007	22,188,400	458,515	20.66

Source: Bloomberg.

2. Proforma Book Value per Share Based on the Interim Financial Statements as of October 31, 2007, Adjusted to Reflect the Effect of Subsequent Issue of Shares

	R$ thousand
Assets	10/31/2007
. Cash and Cash Equivalents	141,591
. Trade Accounts Receivable	107,296
. Inventories	1,194,841
. Advances to Suppliers	304,492
. Receivables from Related Parties	-
. Deferred Income Tax & Social Contribution	24,236
. Derivative Financial Instruments	3,554
. Other Credits	75,076
Current Assets	1,851,086
. Financial Applications	-
. Receivables from Related Parties	11
. National Treasury Certificates	135,886
. Deferred Income Tax & Social Contribution	277,065
. Indemnity Suits	331,426
. Other Credits	105,752

Long-Term Assets	850,140
. Investments	13,872
. Property, Plant & Equipment	2,070,286
. Deferred Charges	1,093,802
Permanent Assets	3,177,960
Total Assets	5,879,186

Source: Interim Financial Statements as of October 30, 2007, with limited review of Cosan S.A. financial statements by Ernst & Young Auditores Independentes S.S.

The Book Value per Share was calculated based on the proforma Shareholders’ Equity divided by 272,548,032 shares.

	R$ thousand
Liabilities	07/31/2007
. Trade Accounts Payable	373,295
. Loans and Financing	105,072
. Salaries and Wages Payable	113,423
. Taxes and Contributions	101,037
. Advances from Customers	28,663
. Promissory Notes	-
. Payables to Related Parties	-
. Deferred Income Tax & Social Contribution without Revaluation Reserve	5,486
. Dividends Payable	34
. Derivative Financial Instruments	31,184
. Other Obligations	12,283
Current Liabilities	770,477
. Loans and Financing	2,178,807
. Taxes and Contributions	344,968
. Payables to Related Parties	-
. Advances from Customers	14,533
. Promissory Notes	-
. Reserve for Contingencies	757,468
. Debentures	55,069
. Deferred Income Tax & Social Contribution without Revaluation Reserve	28,303
. Other Obligations	50,783
Long-Term Liabilities	3,429,931
Minority Interest	18,889




Shareholder's Equity	1,659,889
Total Liabilities and Shareholder's Equity	5,879,186

Proforma Shareholders’ Equity
Shareholders’ Equity – 10/31/2007 (R$ thousand)	1,659,889
Stock Option Plan - 11/19/2007 (R$ thousand)	5,639
Issuance of Common Shares (R$ thousand)	1,736,700
Stock Option Plan - 12/11/2007 (R$ thousand)	237
Proforma Shareholders’ Equity (R$ thousand)	3,402,465
Proforma Book Value per Share (R$ / share)	12.48

In estimating the share value based on the prospects for the future profitability of Cosan S.A., represented by its fair market value, we adopted the Discounted Cash Flow (DCF) appraisal methodology.

3. Discounted Cash Flow

The Discounted Cash Flow Methodology is presented below:

In estimating the economic value of Cosan S.A., we based our work on the concept of fair market value, which is generally defined as the price (expressed in currency of constant purchasing power) that could be obtained on a market that is open and has no restrictions, between informed and prudent parties acting with independence and under no obligation, and without considering any special benefit for any potential investor.

Perpetuity figures have been calculated based on Gordon’s growth model. The projected cash flow for harvest year 2016/2017 has been adjusted with respect to income tax and social contribution owing to expectations for reduction in depreciation expenses and considers a perpetual growth rate estimated at 4.0% in nominal Brazilian reais (R$), equivalent to the projected long-term inflation.

General Assumptions

·	The financial projections are shown in nominal terms, that is, they contain the inflation estimated during the projection period and are translated in thousands of Reais (R$ thousands), except when another unit is otherwise indicated.

·	The base date for the appraisal is October 31, 2007. The projections of Cosan S.A.’s operations include the period from November 1, 2007 to April 30, 2017 (end of harvest year 2016/2017).

·	The assumptions used in this study were based on the Business Plan prepared by Cosan S.A.'s management for the period from 2007/2008 to 2016/2017.

·	To calculate the present value, the half-rate approach was used, assuming that the Company’s cash flow is generated evenly throughout the year.

·	The main macroeconomic assumptions adopted in the business plan are as follows:

Harvest year	2007/08	2008/09	2009/10	2010/11	2011/12	2012/13	2013/14	2014/15	2015/16	2016/17	Basic for Perpetuity
Macroeconomic Assumptions
IGP-M ⁽¹⁾	4.92%	4.13%	4.05%	4.01%	4.00%	4.00%	4.00%	4.00%	4.00%	4.00%	4.00%
CPI - Consumer Price Index ⁽²⁾	2.40%	2.07%	2.27%	2.40%	2.47%	2.61%	2.61%	2.61%	2.61%	2.61%	2.61%
Exchange rate (R$/US$) ⁽³⁾	1.94	1.88	1.97	2.01	2.06	2.12	2.15	2.18	2.21	2.24	2.24

Source: Focus Report by Central Bank of Brazil of 12/07/2007, The Economist, Nov/2007 and Deloitte analyses.

⁽¹⁾Central Bank's projection until 2011. After this period, the indicator projected for 2011 was held constant.

⁽²⁾Projections from The Economist "Country Forecast Brazil" Report, Nov/2007, through 2012, adjusted for the harvest years. After this period, na indicator of 2,61% p.y., based on Deloitte’s judgement and analysis.

⁽³⁾ Central Bank of Brazil's projections for the average exchange rate until 2010/11, adjusted for the harvest years. After this period, the difference between the Brazilian and American inflation (purchasing power parity) was maintained.

The Company’s management projects investments for the expansion of 10,600 thousand tons in the following units: Gasa (2,600 thousand), Mundial (2,000 thousand), Destivale (1,900 thousand), Gasa II (1,800 thousand), Bonfim (1,000 thousand), Univalem (500 thousand), Ipaussu (500 thousand), and Junqueira (300 thousand).

§	Production Capacity

In addition, the Company is making investments in three new units (greenfield) located in the State of Goiás, totally intended for the exportation of ethanol. The total milling capacity will be of 10 million tons of sugarcane per year, or 900 thousand cubic meters per year, with projections for beginning ethanol production in 2009/2010.

§	Volume of Sugarcane

In the projection of the harvest area gradual increases were considered from the harvest year 2007/2008 to 2012/2013, when 458,826 hectares are reached, an area which is kept in similar levels for the remaining harvest years projected.

The average yield presented in the Company’s Business Plan is of 90.6 tons of sugarcane per hectare, which vary from minimum of 86.3 tons and 95.0 tons of sugarcane per hectare as a maximum:

The co-generation installed capacity is approximately 140 MW, most of which is generated for purposes of providing power to the industrial plants (mills).

§	Volume of Sugar

§	Volume of Ethanol

§	Co-generation

Cosan S.A. is investing in co-generation projects involving plants in service to meet the demand for 455,520 MWh/year sold through two auctions sponsored by the government in 2005 and 2006, for an average price of R$153 per MWh.

Moreover, the Company is forecasting investments in co-generation in other existing plants with a view to expanding generation capacity by 680,000 MWh/year.

The electric power co-generation, which will become operational from the harvest year 2008/2009, presents a long-term EBITDA margin of approximately 90%, considering that no other costs are involved in electric power co-generation.

§	Other Revenues

Other Revenues refers mainly to the performance of port services, sale of retail products (jelly, chocolates, etc.) and sale of sugarcane seedlings and electric power.

The price for VHP sugar (NY11) has been projected for the period of harvest years 2007/2008 through 2011/2012. As from harvest year 2012/2013, the price has been restated for U.S. inflation. The prices for VHP sugar quoted on the international market are affected by the current market situation and future outlook regarding the supply and demand for sugar and its substitutes. The expectations of prices are based on Deloitte’s sugar and ethanol industry analysts and have been converted into Reais according to the average exchange rate estimated over the course of the projection period.

§	Prices

Harvest year	2007/08	2008/09	2009/10	2010/11	2011/12

VHP Sugar Price (US$ cents/lb)	9.50	9.80	10.50	11.50	12.50

Source: VHP sugar prices were based on expectations of Deloitte’s sugar and alcohol industry analysts.

In general, the price of ethanol is directly associated with the price of sugar and, moreover, is further becoming heavily correlated to the price of oil. The correlation between the prices of sugar and ethanol is explained by the fact that a huge portion of such products come from mills that manage to alter a portion of their production between sugar and ethanol, depending on the variations in the market prices for sugar and ethanol.

Furthermore, given that sugar prices in Brazil are determined by international prices, there is a tight connection between the price of Brazilian ethanol and the price of sugar on the international market.

The chart below shows a summary of the prices projected for the distinct products used in preparing this Appraisal Report:

The net revenue resulting from the assumptions of Product Volume and Prices, as mentioned, is shown in the chart below:

§	Net Operating Revenue

§	Sugar and ethanol Domestic and Foreign Markets

The segregated revenues from sugar and ethanol in the domestic and foreign markets are presented in the chart below:

The structure of the Company's costs can be segregated between costs related to the prices of products sold by the Company and those costs that are not related to such prices. Two of the main components of the costs, raw materials and land leasing/partnerships, are related to prices.

§	Cost of Products Sold

The Company’s management estimates agricultural and industrial gains as a result of expansions and startup of the greenfields (Goiás), the productivity of which is higher than the former plants in operation.

Other costs refer mainly to the performance of port services, sale of retail products (jelly, chocolates, etc.), resale of diesel oil to service providers, and sale of sugarcane seedlings.

The chart below shows the projected cost of products sold:

The new mills in State of Goiás are expected to increase the average transportation costs. Expenditures have also been estimated for administrative structure to support the projected expansion plans slated in the Business Plan of Cosan S.A. However, considering the gain generated by the rise in volume, a reduction in operating expenses in relation to net revenue has been projected.

§	Operating Expenses

§	EBITDA

The increase in the EBITDA margin during the projection period is a result of a higher VHP sugar price, improved agricultural and industrial yields and industrial productivity resulting from expansions and startup of greenfield projects and electric power co-generation.

The projected depreciation of fixed assets as of the base date is calculated in accordance with prevailing laws.

Other Assumptions

§	Depreciation and Amortization

New investments in replacement, expansion, greenfield, and co-generation are depreciated at an average annual rate of 10%.

Pursuant to legislation in force, expenses relating to formation of crops (planting) are amortized at an annual rate of 20%, while expenses relating to maintenance of off-season crops are amortized at a rate of 100% of investments from the previous year.

§	Working Capital

The components of the working capital were projected on an individual basis, based on the historical behavior and the suitability to the levels of the projected activities.

§	Income Tax and Social Contribution

Income tax and social contribution on net income were calculated in accordance with the legislation in force at the date when this Appraisal Report was issued, by applying the tax rates listed as follows:

Tax	Rate (%)
IR (Income Tax)	15%
IR - Surcharge	10%
CSLL (Social Contribution on Net Income)	9%

The 10% income tax surcharge is only applied to the portion of the profits exceeding R$240 thousand a year.

§	Tax Losses and Negative Results for Social Contribution purposes

The calculation of direct taxes considered the balance of tax credits (tax losses subject to offset against income tax and negative results for social contribution purposes), in the amounts of R$219.083 thousand and R$219.185 thousand, respectively, as of October 31, 2007.

Besides replacement of assets, Company management is projecting investments in the following areas:

§	Investments

1.	Expansion of current milling capacity of 40.0 million to 50.6 million tons.

2.	Greenfield project, which encompasses investments in three mills in the State of Goiás, with projections for a total million capacity of 10.0 million tonnes, reaching a total of 60.6 million tonnes, and beginning production of ethanol for exportation in harvest year 2009/2010, reaching 900 thousand cubic meters per year.

3.	Investments in additional operating processes with a view to increasing productivity from the harvests and enhancing efficiency, as well as reducing production costs and making investments to increase the level of harvest mechanization from the current 28% in harvest year 2006/2007 to 79% by harvest year 2011/2012 (both reflected in replacement investments).

4.	Investments in electric power co-generation systems for sale to the Brazilian distribution network as from 2009.

The projection of total investments is as follows:

1) Expansion and Greenfield investments do not include planting and off-season crop maintenance investments.

2) The basis for perpetuity was calculated based on investments required to maintain the Company’s operations.

The discount rate is composed as follows:

Discount Rate

Formula

WACC = Ke* (E/E+D) + Kd * (1-tax) * (D/D+E)

Ke = rf + β*(ERP) + CRP

Weighed Average Cost of Capital (WACC)		Notes
Cost of Equity (ke)
Risk-free rate (R_rf)	4.92%	(a)
Market premium (ERP)	7.10%	(b)
Beta (β)	0.75	(c)
Country risk (CRP)	1.69%	(d)
Cost of own equity (ke)	11.94%
Own capital share (E)	80%	(e)
Cost of debt (Kd)	5.45%	(f)
Third parties' capital share (D)	20%	(e)
Nominal WACC in US$	10.64%
Difference between Brazilian and American inflation rate	1.36%	(g)
Nominal WACC in R$	12.14%

(a)	Represents the return required by an investors for investments in risk-free securities. As a risk-free rate parameter the historical arithmetic mean for the last 24 months as disclosed by the US Government (North American 30-year T-Bond) was adopted . Source: Bloomberg and Deloitte’s analyses.

(b)	Represents the return above the risk-free rate that the investor requires to invest (to accept the risk exposure) in the capital market (equity risk premium), due to the risk inherent to the investment. As parameter the average premium recorded for shares was adopted (valuation and dividends paid) in large American companies since 1926. Source: Ibbotson Associates.

(c)	Represents the risk measure of the company or industry under analysis. The beta was obtained by calculating the arithmetic mean of releveraged betas of companies operating in the same industry as Cosan, eliminating from the sample companies with releveraged betas outside the interval between the mean plus or minus one standard deviation. The betas considered were unleveraged based on each company’s capital structure and IR rate, and, then releveraged based on the industry’s capital structure (see note (e) below) and on a 34% IR/CS rate. Source: Bloomberg and Deloitte’s analyses.

(d)	Represents the total additional interest (premium) required by an institutional investor to invest in Brazil (country risk premium). As a parameter the historical arithmetic mean of spread in the last 12 months applied to Brazilian and American government securities in a comparable period was adopted . Source: Bloomberg and Deloitte’s analyses.

(e)	The financial leverage was calculated considering the same comparable companies used in the beta calculation (see flowchart on page 48). The arithmetic mean of the debt/equity ratio resulted in the following structure: 80% - own capital and 20% - third parties’ capital. Source: Bloomberg and Deloitte’s analyses.

(f)	The cost of third parties’ capital is calculated using the marginal cost of Cosan S.A., i.e., 8.25% p.y., net of IR/CS (income and social contribution taxes). Source: Cosan S.A. management.

(g)	Represents a difference between the long-term annual inflation rate in Brazil (4.00%) and in the United States (2.61%). The American inflation rate was determined using the built-in expectation of inflation in long-term securities (North American 30-year T- Bond) of the United States, whose yield is indexed to the Consumer Price Index (CPI). Source: EIU.

The companies included in the capital structure calculation are listed in the chart below:

Capital Structure

	(a)	(b)	(c)	(d)	(e)	(f)
Company	Market Value in Local Currency	Current Indebtedness	Noncurrent Indebtedness	Cash and Cash Equivalents	Third Parties’ Capital	Third Parties’ Capital	Industry
Illovo Sugar Limited	8,024	134	1,577	974	738	8%	Sugar-ethanol
Agrana Beteiligungs AG	1,025	265	290	104	450	31%	Sugar-ethanol
Cosan SA Industria e Comercio	5,104	117	2,646	816	1,946	28%	Sugar-ethanol
Archer Daniels Midland Company	23,052	2,590	4,733	1,121	6,202	21%	Agribusiness, consumer goods
Verasun Energy	1,249	-	657	414	242	16%	Sugar-ethanol
CSR Limited	3,161	4	498	53	449	12%	Sugar-ethanol
Suedzucker AG	2,967	327	2,153	803	1,677	36%	Sugar-ethanol
Bunge Limited	13,919	1,635	3,480	845	4,270	23%	Agribusiness, consumer goods
Corn Products International, Inc.	3,184	85	535	157	463	13%	Agribusiness, consumer goods
Arithmetic Mean						20%

Source: Bloomberg

Formulas:

Third parties’ capital:	(e) = (b) + (c) - (d)
Third parties’ capital share:	(f) = (e) / [(a) + (e)]

Beta

The companies included in the beta calculation are listed in the chart below:

	(h)	(i)	(j)	(k)	(l)
Company	Capital terceiros/ capital próprio	Beta (Local)	Taxa de IR da Empresa	Beta Desalavancado	Beta Realavancado
Illovo Sugar Limited	9.2%	0.43	34.0%	0.41	0.48
Agrana Beteiligungs AG	44.0%	0.43	19.7%	0.32	0.38
Cosan SA Industria e Comercio	38.1%	1.57	38.9%	1.27	1.51
Archer Daniels Midland Company	26.9%	0.84	30.3%	0.71	0.84
Verasun Energy	19.4%	0.86	41.4%	0.77	0.92
CSR Limited	14.2%	0.54	19.4%	0.48	0.57
Suedzucker AG	56.5%	0.60	16.7%	0.41	0.48
Bunge Limited	30.7%	0.77	27.1%	0.63	0.75
Corn Products International, Inc.	14.5%	0.82	34.8%	0.75	0.89
Arithmetic Mean	28.2% (g)	0.58	27.0%	0.64	0.75

Source: Bloomberg

Formulas:

Third parties’ capital / Own capital:	(h) = (f) / [1 - (f)]
Unleveraged Beta:	*(k) = (i) / [1 + {1-(j)} (h)]**
Releveraged Beta:	*(l) = (k) [1 + {1 - 34%} * (g)]**

Projected Income Statement

	Projected										Basis for
Income Statement	2007/08 (6M)	2008/09	2009/10	2010/11	2011/12	2012/13	2013/14	2014/15	2015/16	2016/17	Perpetuity
Net Operating Revenues	1,452,800	2,878,375	3,537,034	4,404,462	5,373,175	6,062,447	6,379,605	6,692,795	7,020,790	7,365,323	7,365,323
. Growth %	n.d.	7.7%	22.9%	24.5%	22.0%	12.8%	5.2%	4.9%	4.9%	4.9%	n.a.
Cost of Products Sold(*)	(1,097,150)	(2,279,747)	(2,717,724)	(3,167,950)	(3,649,675)	(4,042,469)	(4,235,509)	(4,365,167)	(4,513,190)	(4,665,080)	(4,422,382)
. Cost of Products Sold/Net Revenue	-75.5%	-79.2%	-76.8%	-71.9%	-67.9%	-66.7%	-66.4%	-65.2%	-64.3%	-63.3%	-60.0%
Gross Profit	355,650	598,628	819,310	1,236,512	1,723,500	2,019,978	2,144,096	2,327,628	2,507,600	2,700,243	2,942,941
. Gross Profit/Net Revenue	24.5%	20.8%	23.2%	28.1%	32.1%	33.3%	33.6%	34.8%	35.7%	36.7%	40.0%
Operating Expenses	(235,319)	(506,416)	(567,731)	(623,829)	(679,170)	(722,110)	(750,670)	(777,764)	(805,735)	(834,745)	(834,745)
. Operating Expenses / Net Revenue	-16.2%	-17.6%	-16.1%	-14.2%	-12.6%	-11.9%	-11.8%	-11.6%	-11.5%	-11.3%	-11.3%
EBIT	120,331	92,212	251,579	612,683	1,044,330	1,297,867	1,393,426	1,549,864	1,701,865	1,865,498	2,108,196
. EBIT Margin (EBIT /Net Revenue)	8.3%	3.2%	7.1%	13.9%	19.4%	21.4%	21.8%	23.2%	24.2%	25.3%	28.6%
. Goodwill Amortization	(83,224)	(139,791)	(129,570)	(119,325)	(115,897)	(115,301)	(115,301)	(115,256)	(87,944)	-	-
Profit / (Loss) Before Income Tax	37,107	(47,579)	122,009	493,358	928,433	1,182,566	1,278,125	1,434,608	1,613,921	1,865,498	2,108,196
. Operating Margin (Profit Before Income Tax/Net Revenue)	2.6%	-1.7%	3.4%	11.2%	17.3%	19.5%	20.0%	21.4%	23.0%	25.3%	28.6%
. Income Tax and Social Contribution (**)	(9,991)	-	(31,350)	(119,730)	(299,190)	(402,774)	(435,264)	(488,468)	(549,435)	(634,971)	(706,489)
. % Income Tax and Social Contribution	26.9%	-	25.7%	24.3%	32.2%	34.1%	34.1%	34.0%	34.0%	34.0%	33.5%
Net Income / (Loss)	27,116	(47,579)	90,659	373,628	629,243	779,792	842,861	946,140	1,064,486	1,230,527	1,401,707
. Net Margin (Net Income/Net Revenue)	1.9%	-1.7%	2.6%	8.5%	11.7%	12.9%	13.2%	14.1%	15.2%	16.7%	19.0%

											Basis for
Ebitda	2007/08 (6M)	2008/09	2009/10	2010/11	2011/12	2012/13	2013/14	2014/15	2015/16	2016/17	Perpetuity
EBIT	120,331	92,212	251,579	612,683	1,044,330	1,297,867	1,393,426	1,549,864	1,701,865	1,865,498	2,108,196
. EBIT Margin (EBIT /Net Revenue)	8.3%	3.2%	7.1%	13.9%	19.4%	21.4%	21.8%	23.2%	24.2%	25.3%	28.6%
. Depreciation and Amortization	(42,622)	392,567	567,096	692,208	792,359	854,042	871,917	883,253	917,637	947,775	705,077
EBITA	162,953	484,779	818,675	1,304,890	1,836,689	2,151,910	2,265,343	2,433,117	2,619,502	2,813,273	92,813,273
. EBITDA Margin (EBITDA/Net Revenue)	11.2%	16.8%	23.1%	29.6%	34.2%	35.5%	35.5%	36.4%	37.3%	38.2%	38.2%

(*)	Perpetual Cost of Products Sold (CPS): The CPS for the last harvest year (2016/2017) was adjusted in the amount of R$ 242,698 thousand so as to reflect a decrease in depreciation expenses to the investment level considered in the basis for perpetuity of R$ 705,077 thousand.

(**)	Perpetual IR/CS: IR/CS for the last harvest year (2016/2017) was adjusted to reflect a gradual decrease (5 years) in depreciation expenses as mentioned in note (*) above. Accordingly, IR/CS expenses increased by R$71,518 thousand, totaling R$706,489 thousand.

Results of Appraisal by the Discounted Cash Flow Method

Discounted Cash Flow	2007/08 (6M)	2008/09	2009/10	2010/11	2011/12	2012/13	2013/14	2014/15	2015/16	2016/17	Basis for Perpetuity
Net Income/(Loss) for the Year	27,116	(47,579)	90,659	373,628	629,243	779,792	842,861	946,140	1,064,486	1,230,527	1,401,707
. Depreciation and Amortization	42,622	392,567	567,096	692,208	792,359	854,042	871,917	883,253	917,637	947,775	705,077
. Goodwill amortization	83,224	139,791	129,570	119,325	115,897	115,301	115,301	115,256	87,944	-	-
. Working capital variation	555,879	(119,533)	(116,724)	(113,139)	(128,642)	(102,982)	(39,877)	(36,256)	(39,925)	(42,271)	(42,271)
. Investments	(942,308)	(1,484,241)	(1,036,724)	(803,282)	(717,056)	(622,995)	(642,205)	(662,031)	(683,032)	(705,077)	(705,077)
Cash Flow	(233,466)	(1,118,995)	(366,124)	268,740	691,801	1,023,159	1,147,997	1,246,362	1,347,111	1,430,954	1,359,436
Discount Rate (*) ==>	0.9718	0.8917	0.7952	0.7091	0.6323	0.5638	0.5028	0.4484	0.3998	0.3565	0.3565
Cash Flow at Present Value	(226,872)	(997,836)	(291,132)	190,557	437,427	576,898	577,202	558,808	538,583	510,159	484,662
Cash Flow at Present Value	1,873,794
(+) Perpetuity (**)	6,190,605
Cosan S.A. Operational Flow	8,064,399
Economic Adjustments (***)	(2,688,836)
Economic Value of 100% of Shares in Cosan S.A.	5,375,563
Economic Value of Cosan S.A. Net of Minority Interests	5,314,391
Total Number of Shares Cosan S.A. as of October 31, 2007	188,886,360
Economic Value of Cosan S.A. on 10/31/2007(R$/share)	28.14
Stock Option Plan on 11/19/2007 (shares)	922,947
Share Issue on 12/05/2007 (shares)	82,700,000
Stock Option Plan on 12/11/2007 (shares)	38,725
Total Number of Shares in Cosan S.A. after 12/11/2007 (shares)	272,548,032
Capital Contribution - Stock Option Plan (R$ thousand)	5,876
Capital Contribution - Share Issue on 12/05/2007 (R$ thousand)	1,736,700
Economic Value of Cosan S.A. after 12/11/2007 (R$ thousand)	7,056,966
Economic Value of Cosan S.A. after 12/11/2007 (R$/Share)	25.89

(*)	The discount rate was calculated at 12.14% p.y., in nominal Brazilian reais, using the half-rate approach, that is, considering the cash flow generated in the middle of each projected period.

(**)	Formula: Perpetuity = Basis for Perpetuity * (1+G) / (WACC - G), where Basis for Perpetuity = R$1,359,436 mil, WACC = 12.14% e G = 4%.
	The ratio between the perpetual reinvestment and growth rates (G) is presented on page 60 of this report.

(***)	A breakdown of the economic adjustments performed may be found on page 51 of this report.

The breakdown of the economic adjustments, including non-operating assets and liabilities, added or deducted (as the case may be) from the economic value of Cosan S.A. is as follows:

Economic Adjustments

Economic Adjustments	R$ thousands
(+) Cash and Cash Equivalents	141,591
(+) Treasury Certificates	135,886
(+) Indemnity Suits	331,426
(+) Investments	13,872
(-) Loans and Financing	(2,283,879)
(-) Dividends Payable	(34)
(-) Reserve for Contingencies	(757,468)
(-) Debentures Payable	(55,069)
(-) Present Value of Taxes Payable in Installments (1)	(317,766)
(-) Other Credits and Obligations, Net (2)	22,417
(+) Settled Derivatives (3)	(4,089)
(+) Unsetlled Derivatives (4)	84,277
(=) Total Economic Adjustments	(2,688,836)

Source: Interim Financial Statements as of October 31, 2007.

(1)	Taxes Payable in Installments refer to Tax Debt Refinancing Programs (REFIS and PAES) and other special installment plans for payment of INSS, ICMS, ISS and FGTS. Amounts considered comprise of current and noncurrent taxes totaling R$36,766 thousand and R$344,968 thousand, respectively, as detailed in note 13 of the Interim Financial Statements as of October 31, 2007. Taxes were projected with the respective adjustments, considering their respective amortization periods, and were calculated at present value at a discount rate of 12.14% p.y.

(2)	Refers to adjustments in accounts Deferred Income Tax & Social Contribution, Debentures Payable, Other Credits, Other Current Obligations and Other Noncurrent Obligations.

(3)	As detailed in note 6 of the Interim Financial Statements as of October 31, 2007, margin deposits, in the amount of R$ 3,104 thousand, net of income and social contribution taxes payable on the amount of R$21,607 thousand, which corresponds to unrealized gains from Derivative Financial Instruments.

(4)	As mentioned in note 22 of the Interim Financial Statements as of October 31, 2007.

1. Stock Market Quotation

The following is the performance of the class A shares of Cosan Ltd. on the NYSE, converted into R$ at daily rates, since the initial launch on August 16, 2007, through the issue date of this Appraisal Report.

The following chart shows average monthly trading volumes and average prices of the class A shares of Cosan Ltd. on the NYSE:

Period	Traded Shares	Volume (R$ thousands)	Average Price (R$)
08/16/07to 09/15/07	34,291,500	754,191	21.99
09/16/07 to 10/15/07	16,701,600	383,986	22.99
10/16/07 to 11/15/07	12,418,125	257,832	20.76
11/16/07 to 12/16/07	7,170,500	137,439	19.17
12/17/2007 to 12/19/2007	1,507,395	29,112	19.31
Average 08/16 to 12/19/2007	72,089,120	1,562,560	21.68

The performance of shares in Cosan Ltd. after November 19, when the share issue of Cosan S.A. was announced, through the date of this Appraisal Report is as follows:

The following chart shows average monthly trading volumes and average prices of the class A shares of Cosan Ltd. on the NYSE:

Period	Traded Shares	Volume (R$ thousands)	Average Price (R$)
Average 11/20 a 12/19/2007	4,365,345	83,847	19.21

The book value of Cosan Ltd. on October 31, 2007 is shown in the table below:

2. Book Value

Item	Amount
Original Value of Net Cash Investments (R$ thousand)	1,969,939
Capital Contribution	(1,736,700)
Proforma Value of Net Cash Investments	233,239
Book Value of the 51.0% Interest in Cosan S.A.	775,609
Increase of 14.7% in Cosan Ltd.’s Interest in Cosan. S.A.	1,736,700
Book Value of Cosan Ltd.’s 65.7% Interest in Cosan S.A.	2,512,309
Book Value of Cosan Ltd. (R$ thousand)	2,745,548
Current Number of Shares in Cosan Ltd.	208,010,044
Book Value of Cosan Ltd. Cosan Ltd. per Share (R$/Share)	13.20

Source: Interim Financial Statements - 10/31/07

(*) Represents the equivalent to 51% of shareholders’ equity of Cosan S.A. as of October 31, 2007, in the amount of R$1,659,889 thousand, net of the negative goodwill recorded on this investment, in the amount of R$70,934 thousand, as disclosed in ITR of Cosan Ltd. as of October 31, 2007.

3. Discounted Cash Flow

The Discounted Cash Flow Method was not applied to Cosan Ltd. since it does not have operations per se that would permit generation of operating cash.

4. Assets Approach

The Assets Approach is usually employed in appraising certain kinds of business, such as real estate companies and holding companies, for determining the goodwill of a business, and for estimating the value of an undertaking which failed to generate positive cash flow, in which case it should be liquidated.

The estimation of the fair market value, net of the costs related to the disposal of such assets, is carried out in such an orderly basis so as to minimize losses and/or accrued taxes. In this case, should a business be regarded as a developing undertaking or subject to liquidation, all of its fixed assets and liabilities are individually appraised and subsequently added.

For appraisal of Cosan Ltd., Deloitte Consultores chose the Assets Approach, with the investment in Cosan S.A. being estimated on a DCF basis. Based on this methodology, Cosan Ltd.’s cash investments, after the capital contribution on December 5, 2007, were added to the economic value of its interest in Cosan S.A.

The calculation of value per share is shown in the following chart:

4. Assets Approach (continued)

The calculation of value per share is shown in the following chart:

Item	Amount
Current Number of Shares in Cosan Ltd.	208,010,044
Number of Shares in Cosan S.A.	272,548,032
Number of Shares in Cosan S.A. Belonging to Cosan Ltd. (65.7%)	179,032,044
Value of Shares in Cosan S.A. based on Deloitte’s Report (R$/share)	25.89
Net Cash Investments of Cosan Ltd. (R$ thousand)	1,969,939
Capital Contribution to Cosan S.A. on 12/05/2007	(1,736,700)
Proforma Cash Investments of Cosan Ltd. (R$ thousand)	233,239
Value of Cosan Ltd.’s Interest in Cosan S.A. (R$ thousand)	4,635,598
Economic Value of Cosan Ltd. (R$ thousand)	4,868,837
Economic Value of Cosan Ltd. per Share (R$/share)	23.41

Source: Interim Financial Statements - 10/31/2007 and Deloitte´s analysis

If Cosan Ltd.’s remaining cash investments are used to increase Cosan S.A.‘s capital, the value of Cosan S.A. and Cosan Ltd. would be the following:

Item	Amount
Current Number of Shares in Cosan Ltd.	208,010,044
Number of Shares in Cosan S.A. on 12/11/2007	272,548,032
Hypothetical Capital Contribution to Cosan Ltda. using Cosan Ltd.’s Remaining Cash Investments	11,106,619
Number of Shares in Cosan S.A. if Additional Capital Contribution is Made by Cosan Ltd.	283,654,651
Number of Shares in Cosan S.A. Belonging to Cosan Ltd. on 12/05/2007 (65.7%)	179,032,044
Hypothetical Capital Contribution to Cosan Ltda. using Cosan Ltd.’s Remaining Cash Investments	11,106,619
Number of Shares in Cosan S.A. if Additional Capital Contribution is Made by Cosan Ltd. (67.03%)	190,138,663
Value of Shares in Cosan S.A. if Additional Capital Contribution is Made by Cosan Ltd. (R$/share)	25.70
Net Cash Investments of Cosan Ltd. on 10/31/2007 (R$ thousand)	1,969,939
Capital Contribution to Cosan S.A. on 12/05/2007	(1,736,700)
Proforma Net Cash Investments of Cosan Ltd. On 12/05/2007 (R$ thousand)	233,239
Capital Contribution to Cosan S.A. using Cosan Ltd.’s Remaining Cash Investments (R$ thousand)	(233,239)
Net Cash Investments of Cosan Ltd. If Additional Capital Contribution is Made to Cosan S.A. (R$ thousand)	-
Value of Cosan Ltd.’s Interest in Cosan S.A. – 67.03% (R$ thousand)	4,886,752
Economic Value of Cosan Ltd. (R$ thousand)	4,886,752
Economic Value of Cosan Ltd. Per Share (R$/share)	23.49
Source: Interim Financial Statements – 10/31/2007 and Deloitte’s analysis.

For comparative purposes, the economic value per share of Cosan Ltd. was calculated using the Assets Approach with the investment in Cosan S.A. being estimated by the average quotation price for the three periods reflected in the evaluation of Cosan S.A. The results of this comparative analyses are summarized below:

1.	Value of Cosan Ltd. of R$35.11 per share, considering the average quotation price of R$39.49 per share of Cosan S.A. in the 12 months prior to the disclosure of the Relevant Fact dated June 25, 2007.

2.	Value of Cosan Ltd. of R$23.74 per share, considering the average quotation price of R$26.28 per share of Cosan S.A. subsequent to the disclosure of the Relevant Fact (June 25, 2007) through the date of this Appraisal Report.

3.	Value of Cosan Ltd. of R$18.91 per share, considering the average quotation price of R$20.66 per share of Cosan S.A. subsequent to the share issue on November 19 through the date of this Appraisal Report.

Results

We concluded that the Discounted Cash Flow Method is the most appropriate approach to estimate the value of the Cosan S.A. shares. Based on this methodology, the economic value as of October 31, 2007 is in a range of R$24.60 to R$27.19 per share. The following graph presents the comparative per-share values according to the methodologies used in this appraisal engagement:

(1)	Economic value per share after issuance of shares on November 19, 2007 and December 5 and 11, 2007, based on the Discounted Cash Flow Method, with a minimum and maximum value range of 10%, pursuant to CVM Instruction No. 361/02.
(2)	Market value per share based on the weighted average price for shares of:
	(i)	R$39.49 per share in the 12 months prior to the disclosure of the Relevant Fact dated June 25, 2007.
	(ii)	R$26.28 per share from the date of disclosure of the Relevant Fact (June 25, 2007) through the date of this Appraisal Report.
	(iii)	R$20.66 per share from the announcement on November 19, 2007 of the Cosan S.A. share issue through the date of this Appraisal Report.
(3)	Book value per share as of October 31, 2007, adjusted after issuance of shares on November 19, 2007 and December 5 and 11, 2007, resulting in 272,548,032 shares.

We concluded that the Assets Approach, with the investment in Cosan S.A. estimated on a discounted cash flow basis, is the most appropriate method to estimate the value of the Cosan Ltd. shares. Based on this methodology, the economic value as of October 31, 2007 is in a range of R$22.24 to R$24.58 per share. The following graph presents the comparative per-share values according to the methodologies used in this appraisal engagement: