FORM 6-K
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
dated March 3, 2015
Commission File Number 1-15148
BRF S.A.
(Exact Name as Specified in its Charter)
N/A
(Translation of Registrant’s Name)
1400 R. Hungria, 5th Floor
Jd América-01455000-São Paulo – SP, Brazil
(Address of principal executive offices) (Zip code)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F x Form 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(7):
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes o No x
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable.
* * *
This material includes certain forward-looking statements that are based principally on current expectations and on projections of future events and financial trends that currently affect or might affect the Company’s business, and are not guarantees of future performance. These forward-looking statements are based on management’s expectations, which involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the Company’s control and any of which could cause actual financial condition and results of operations to differ materially fom those set out in the Company’s forward-looking statements. You are cautioned not to put undue reliance on such forward-looking statements. The Company undertakes no obligation, and expressly disclaims any obligation, to update or revise any forward-looking statements. The risks and uncertainties relating to the forward-looking statements in this Report on Form 6-K, including Exhibit 1 hereto, include those described under the captions “Forward-Looking Statements” and “Item 3. Key Information — D. Risk Factors” in the Company’s annual report on Form 20-F for the year ended December 31, 2012.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 3, 2015 |
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BRF S.A. |
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By: |
/s/ Augusto Ribeiro Junior |
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Name: |
Augusto Ribeiro Junior |
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Title: |
CFO AND IRO
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Attachments to the Proposal of the Board of Directors to the Ordinary and Extraordinary
General Meeting to be held on 04.08.2015
(In accordance with CVM Instructions 480 and 481 and with the Circular Letter/CVM/SEP/nº01/ 2014)
1
TABLE OF
CONTENTS
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Annex I - Directors'
comments |
Page.03 |
(Items 10 to 10.11, pursuant to
CVM Instruction 480, of December 07, 2009) |
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Annex II - Allocation of Net
Income |
Page.59 |
(As Annex 9-1-II of CVM
Instruction 481 of December 17, 2009) |
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Annex III - Information
candidates to the positions of Council members |
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of Directors and Audit
Committee |
Page.65 |
(Items 12.6 to 12.10, pursuant to
CVM Instruction 480, of December 07, 2009) |
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Annex IV - Remuneration of
Directors |
Page.
128 |
(Items 13.1 to 13.16, pursuant to
CVM Instruction 480, of December0 7, 2009) |
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Annex V - Stock Option Grant
Plan |
Page.
142 |
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Annex VI – Restricted Stocks
Plan |
Page.
158 |
2
Annex I - Directors' comments
(Items 10 to 10:11, pursuant to CVM Instruction
480, of December 07, 2009)
10.
Management Comments
10.1. a. Comments of Directors
on financial conditions and asset status
BRF S.A. ("BRF" or
"Company"), 7th largest publicly traded food company in the world in market
value 1 , operates in the segments meat
(poultry and pork), meat processed foods, margarine, pasta, pizzas and frozen
vegetables. The Company has an integrated business model consisting of
strategically located production facilities associated with a wide range of
distribution network with access to the main channels and consumer markets,
which gives a significant capacity for growth. The Board believes that the
Company, through its diversification strategy combined with its growth and a
global platform of production and distribution, BRF has sufficient financial and
equity conditions to continue its business plan and meet its short and long term
deadlines, including third party loans, as well as financing its activities and
cover its need for resources, at least for the next 12 months.
The results presented
below refer to the continued operations of the Company, excluding the results in
discontinued operations (Dairy sector) which, as reported by the Fact of
September 3, 2014 and the Notice to the Market December 5, 2014, is in sale
process to Lactalis Brazil - Trade, Import and Export Ltd. Dairy.
("Lactalis").
The table below shows
the evolution of the main financial indicators of the Company, considering its
consolidated financial statements:
Ratio |
2014 2 |
2013 |
2012 |
Current Liquidity |
1.71 |
1.57 |
1.55 |
Overall Liquidity |
0.97 |
0.94 |
0.99 |
Leverage (Net Debt 3 /
EBITDA4) |
1.04³ |
2.17 |
2.62 |
1 Considers the market
value of the Company (the Company's share price on 12.31.2014, multiplied by the
number of shares outstanding), compared to the market value of the main
competitors in the segment.
2 For the year
2014, we considered only the continued operations for calculation of current
liquidity ratios and overall liquidity. The discontinued operations were
considered as assets held for sale.
3 The Company
calculates net debt as the balance of loans and financing, debentures and
derivative financial instruments net of cash and cash equivalents and marketable
securities]. Net debt is not a measure in accordance with GAAP in Brazil,
according to IFRS or US GAAP.
In 4Q14, it was considered for
the multiple calculation only the result from continuing operations (without
Dairy sector), other quarters consider continued and discontinued
operations.
4 EBITDA is
defined as earnings before interest income (expense), net, income tax and social
contribution, depreciation and amortization is used as a performance measure by
our management.
3
2014
2014 was a remarcable
year for the BRF, which significantly advanced in its, ambitions and the
consolidation of a new culture: solidify the operational and strategic basis
that enabled the company to structure itself as a global company, bigger and
better, conducted with hard for each of the over 104,000 people who make up our
direct workforce. Promoted during numerous structural changes as the new model
of Gogo-to-market (GTM), zero-based budgeting (ZBB) and improvements in the
level of services that generated good operating results.
We optimized our
investments and further improved our working capital resulting in a historical
cash flow of R$4.1 billion in 2014.
We produced a total
of 4.3 million tons of food, with a reduction of 7.4% in the slaughter of
poultry and 1.3% in the slaughter of pork / beef, in line with the company's
strategy.
We recorded R$29
billion in net revenue (4.4% over 2013) and ended the year with operating income
of R$3.5 billion and net income of R$2.1 billion in continuing
operations.
The Company's net
debt stood at R$5.0 billion, 25.8% below that registered on 12.31.13, resulting
in a net debt to EBITDA (LTM) of 1,04x.
These indicators show
us that we chose a bold strategy, but solid, to improve our performance and meet
future risks, converting them into opportunities. We have a robust production
structure and increasingly efficient, invest in win-win relationships with
customers and suppliers and we are ready to meet the demands of different
markets with standard BRF quality.
In the year of 2014
the line of the income statement related to net financial income and expenses
represented an expense of R$ 990.7 million, corresponding to an increase of
32.5% compared to 2013. The main drivers of this impact were the premium paid
for Bonds repurchase execution in the second half of 2014 and the present value
adjustments during the year.
The use of non
derivative financial instruments and derivatives used by the Company for
exchange coverage enables significant reductions in net exposure balance in
foreign currency.
Non-derivative
financial instruments designated as hedge accounting for hedging cash flow
totaled US$600 million. In addition, derivative financial instruments designated
for hedge accounting, the concept cash flow hedge for coverage of highly
probable exposures have reached in their respective currencies, the amounts of
US$716 million, EUR82 million, GBP42 million and ¥16,993 million. In both cases,
the result of unrealized exchange rate was recorded in the line of other
comprehensive income.
In 12.31.2014 Equity
totaled the amount of R$15.7 billion due to the improvement of the Company's
results.
2013
We experience a
period full of achievements, with a very favorable operating performance
compared to the previous year, demonstrating the company's resilience to a still
challenging environment. Net income from continuing operations reached R$27.8
billion, a 6.9% increase over 2012. Operating income was R$1.9 billion and net
income totaled R$1.1 billion, an increase over the previous year but below we
set ourselves.
4
The Company's net
debt stood at R$6.8 billion, 3.4% below that registered in 12.31.12, resulting
in a net debt to adjusted EBITDA (LTM) of 2,17x, considering the continuing
operations and discontinued.
Net financial
expenses totaled R$747.5 million in the year, 31.0% above the same period last
year. This increase was mainly due to the increase in gross debt, rising
interest rates and the impact of currency fluctuations.
Given the high level
of exports, the Company conducts operations in the derivatives market with the
specific purpose of protection (hedge) Exchange. The use of non derivative
financial instruments and derivatives for currency hedging enables significant
reductions in net exposure balance in foreign currency.
On 12.31.13, the non
derivative financial instruments designated as hedge accounting for hedging cash
flow totaled US$600 million. In addition, derivative financial instruments
designated for hedge accounting, the concept cash flow hedge for coverage of
highly probable exports have reached, in their respective currencies, the value
of US$793 million, EUR107 million and GBP33 million. These instruments also
contributed directly to the reduction of foreign exchange exposure. In both
cases, the result of unrealized exchange rate was recorded in other
comprehensive income.
In 12.31.2013 Equity
totaled the amount of R$14.7 billion, with the main transactions in the period
generating net income of R$1.1 billion and payment of interest on capital (JCP)
of R$359 million, 32.6% of the generated profit.
2012
Whitin
the business field, we face a global economic crisis and an increase of
unprecedented costs, with high volatility and rising grain prices, which
featured one of the most difficult years for the global segment of proteins. But
even with the transfer of assets and the suspension of brands representing about
a third of our sales volume in Brazil, we were able to increase consolidated net
revenues from continuing operations by 12.1% to R $ 25.9 billion. EBITDA reached
R $ 2.3 billion, 21.6% below 2011, with net income of R$ 770 million, negative
growth of 43.7% over the previous year.
This
result reflects a very vigorous and consistent work of a process that involved
all the Company in the execution of two agendas: the company's daily operations
and the commitments of the merger. The result has reaffirmed our capacity
planning as an important asset and a differential of BRF.
The
Company's net debt stood at R$7.0 billion, 29.7% higher than in 12.31.11,
resulting in a net debt to adjusted EBITDA (LTM) of 2,62x at book exchange
exposure of US $ 411.6 million, 12.5% lower, considering the continuing and
discontinued operations.
Net
financial expenses totaled R$570.6 million in the year, an increase of 19.0%,
especially by the increase in debt due to currency effects and the need for cash
direction to promote support for investments in CAPEX and working capital, due
to lower cash generation in the period.
Given the
high level of exports, the company carries out operations with the specific
purpose of protection (hedge) Exchange. According to the accounting hedge
accounting standards (CPC 38 and IAS 39), the Company uses derivative financial
instruments (eg NDF) and non derivative financial instruments (eg foreign
currency debt) to engage in hedging operations and concomitantly eliminate their
unrealized exchange variations in the statement of income (in the Financial
Expenses line).
5
The use
of non-derivative financial instruments for currency hedging still allowing
significant reductions in net exposure balance in foreign currency, generating
substantial benefits from the timing of the flows of liabilities in foreign
currency and export shipments, contributing to the reduction in the volatility
of financial results.
On
12.31.12, the non derivative financial instruments designated as hedge
accounting for currency hedging totaling US$ 614 million and led to a lower
exchange equity exposure of equal value. In addition, derivative financial
instruments designated for hedge accounting, the concept cash flow hedge for
coverage of highly probable exports have reached, in their respective
currencies, the value of US$ 1,007 million, EUR 197 million and GBP 53.4
million. These instruments also contributed directly to the reduction of foreign
exchange exposure. In both cases, the result of unrealized exchange rate was
recorded in other comprehensive income, thus avoiding the impact on financial
expenses.
In
12.31.2012 Equity totaled the amount of R$14.6 against to R$14.1 billion in
2011, 3.3% higher and reflecting the 5.7% annualized return on
investment.
10.1.b.
Capital Structure and possibility of redemption of shares or quotas, indicating:
(i) redemption assumptions; (ii) the redemption value calculation
formula
On
12.31.14, BRF's capital structure was composed of 58% equity and 42% of
debt.
On 12.31.13, BRF's capital structure was composed of 59%
equity and 41% of debt.
On 12.31.12, BRF's capital structure was composed of 61%
equity and 39% of debt.
The Company's financing model is based on the use of own
resources and of debt, the latter being related to funding from financial
institutions or the issuance of the debt market. More information about the use
of capital from third by the Company can be found in item 10.1.f
below.
There is no statutory provision for the redemption of
BRF's shares beyond those provided in the Brazilian legislation, which he may
therefore occur under Article 44 of Law nº 6,404/76.
10.1.c.
Payment capacity in relation to financial commitments
Whereas 76% of gross
debt is long term, the Company has cash of R$6,007 million (cash and cash
equivalents) compared to their short-term financial commitments to R$2,739
million and we expect positive cash flow for the year 2015 due to operational
improvement initiatives for the period, greater efficiency in working capital
and maintenance CAPEX, the Company considers its comfortable payment
capacity.
10.1.d. sources of financing for working capital and
investments in non-current assets
We raise funds
through loans and financing from the financial and capital market operations,
which were used to finance our working capital needs and short and long term
investments (see item 10.1.f for details on contracts relevant loans and
financing).
10.1.e. sources of financing for working capital and
investments in non-current assets to be used to cover liquidity
shortfalls
6
During 2015, the Company will hire new loans and
financing from the financial and capital markets when identifying the need for
additional resources to finance long-term investment plan or in order to
continue improving the debt profile.
Keep low cost funding and long-term financings made with
the funding agencies as BNDES (Economic and Social Development Bank), BNB (Bank
NE) and FINEP (Research and Projects Financing), where resources are used to
fund essentially fixed capital, and renewals of Rural Credit operations, which
are operations with interest subsidized by the Federal Government, such as EGF
and NPR to finance working capital of the Company.
Item 10.1.f. Debt levels and
characteristics of such debts, including:
i. Loan agreements and
relevant financing
ii. Other long-term relationships with financial
institutions
iii. Degree of debt subordination
iv. Any
restrictions imposed on the issuer, in particular in relation to debt limits and
contracting new debt, distribution of dividends, sale of assets, issuance of new
securities and the sale of corporate control.
Loans and Financing Current and
Noncurrent 2014, 2013 and 2012
(In R$/ thousand)
7
|
Consolidated |
|
Charges (%
p.a.) |
|
Weighted average interest rate (%
p.a.) |
|
WAMT
(1) |
|
Current |
|
Non-current |
|
12.31.14 |
|
12.31.13 |
Local
currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital |
6.26% (5.50%
on 12.31.13) |
|
6.26% (5.50%
on 12.31.13) |
|
0.6 |
|
1,239,834 |
|
- |
|
1,239,834 |
|
1,210,328 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Export credit facility |
9.63% (98.50% CDI / TJLP + 3.75% / Fixed rate on
12.31.13) |
|
9.63% (8.21% on 12.31.13) |
|
0.5 |
|
967,748 |
|
- |
|
967,748 |
|
914,119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development bank credit lines |
Fixed
rate / TJLP + 2.50% (Fixed rate / TJLP + 2.56% on 12.31.13)
|
|
3.89% (4.68% on 12.31.13) |
|
1.6 |
|
277,909 |
|
485,839 |
|
763,748 |
|
866,060 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds |
7.75% (7.75% on
12.31.13) |
|
7.75% (7.75% on
12.31.13) |
|
3.4 |
|
4,140 |
|
497,052 |
|
501,192 |
|
500,322 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other secured debts and financial
lease |
8.14% (8.37% on 12.31.13) |
|
8.14% (8.37% on
12.31.13) |
|
3.6 |
|
45,951 |
|
248,675 |
|
294,626 |
|
362,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special
program asset restructuring |
Fixed
rate / IGPM + 4.90% (Fixed rate / IGPM + 4.90% on 12.31.13)
|
|
8.54% (10.37% on 12.31.13) |
|
5.2 |
|
3,887 |
|
209,564 |
|
213,451 |
|
206,073 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal incentives |
Fixed
rate / 10.00% IGPM + 1.00% (Fixed rate / 10.00% IGPM + 1.00% on
12.31.13) |
|
1.52% (1.70% on 12.31.13) |
|
7.5 |
|
1,892 |
|
10,653 |
|
12,545 |
|
12,682 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
2,541,361 |
|
1,451,783 |
|
3,993,144 |
|
4,072,463 |
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Foreign
currency |
|
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Bonds |
5.87% (6.13% on 12.31.13) + e.r. US$ and ARS
|
|
5.87% (6.13% on 12.31.13) + e.r. US$ and ARS
|
|
7.6
|
|
89,902 |
|
6,324,090 |
|
6,413,992 |
|
4,910,991 |
|
|
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|
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|
|
|
|
|
|
|
|
Export credit facility |
LIBOR
+ 2.71% (LIBOR + 2.71% on 12.31.13) + e.r. US$ |
|
3.01% (3.06% on 12.31.13) + e.r. US$
|
|
3.4 |
|
6,948 |
|
1,052,485 |
|
1,059,433 |
|
929,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital |
Fixed
rate + LIBOR + 2.71% (Fixed rate + LIBOR + 4.75% on 12.31.13) + e.r.
US$ and ARS |
|
22.97% (27.12% on 12.31.13) + e.r. US$ and ARS
|
|
0.1
|
|
65,474 |
|
3,343 |
|
68,817 |
|
173,216 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development bank credit lines |
UMBNDES + 2.22% (UMBNDES + 2.20% on
12.31.13) + e.r. US$ and other currencies |
|
6.34% (5.85% on 12.31.13) + e.r. US$ and other
currencies |
|
1.1
|
|
27,253 |
|
15,142 |
|
42,395 |
|
73,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other secured debts and financial
lease |
15.08% (15.08% on 12.31.13) + e.r. ARS
|
|
15.08% (15.08%
on 12.31.13) + e.r. ARS |
|
0.9 |
|
7,965 |
|
3,589 |
|
11,554 |
|
21,428 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
197,542 |
|
7,398,649 |
|
7,596,191 |
|
6,108,727 |
|
|
|
|
|
|
|
2,738,903 |
|
8,850,432 |
|
11,589,335 |
|
10,181,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BR GAAP and
IFRS |
|
|
|
|
|
|
|
Consolidated |
|
|
Weighted
average |
|
|
Non- |
|
|
|
Charges (%
p.a.) |
interest rate (%
p.a.) |
WAMT
(1) |
Current |
current |
12.31.13 |
12.31.12 |
Local
currency |
|
|
|
|
|
|
|
Working capital |
5.50% (5.67% on
12.31.12) |
5.50% (5.67% on
12.31.12) |
0.5 |
1,210,328 |
- |
1,210,328 |
1,243,442 |
Export credit facility |
98.50% CDI / TJLP + 3.75% / Fixed
rate (102.21% CDI / TJLP + 3.80% on
12.31.12) |
8.21% (7.91% on
12.31.12) |
0.5 |
914,119 |
- |
914,119 |
1,048,128 |
Development bank credit lines |
Fixed rate / TJLP + 2.56% (Fixed
rate / TJLP+ 2.56% on 12.31.12) |
4.68% (6.20% on
12.31.12) |
2.0 |
212,451 |
653,609 |
866,060 |
935,654 |
Bonds |
7.75% |
7.75% |
4.5 |
4,140 |
496,182 |
500,322 |
- |
Other secured debts and financial
lease |
8.37% (9.52% on 12.31.12) |
8.37% (9.52% on 12.31.12) |
3.8 |
71,245 |
291,634 |
362,879 |
454,963 |
|
Fixed rate / IGPM + 4.90% |
10.37% |
|
|
|
|
|
Special program asset
restructuring |
(Fixed rate / IGPM + 4.90% on
12.31.12) |
(12.39% on 12.31.12) |
6.3 |
2,922 |
203,151 |
206,073 |
195,332 |
|
Fixed rate / 10.00% IGPM +
1.00% |
1.70% |
|
|
|
|
|
Fiscal incentives |
(Fixed rate / 10.00% IGPM + 1.00% on
12.31.12) |
(1.89% on 12.31.12) |
10.3 |
2 |
12,680 |
12,682 |
12,401 |
|
|
|
|
2,415,207 |
1,657,256 |
4,072,463 |
3,889,920 |
Foreign
currency |
|
|
|
|
|
|
|
|
6.13% |
6.13% |
|
|
|
|
|
Bonds |
(7.20% on 12.31.12) + e.r. US$ and
ARS |
(7.20% on 12.31.12) + e.r. US$ and
ARS |
7.4 |
63,835 |
4,847,156 |
4,910,991 |
3,607,416 |
|
LIBOR + 2.71% |
|
|
|
|
|
|
|
(LIBOR / Fixed rate / CDI + 2.36% on
12.31.12) |
3.06% |
|
|
|
|
|
Export credit facility |
+ e.r. US$ |
(3.28% on 12.31.12) + e.r. US$ |
4.4 |
4,741 |
924,879 |
929,620 |
1,691,553 |
|
Fixed rate + LIBOR + 4.75% |
27.12% |
|
|
|
|
|
Working capital |
(21.25% on 12.31.12) + e.r. US$ and
ARS |
(21.25% on 12.31.12) + e.r. US$ and
ARS |
0.1 |
168,220 |
4,996 |
173,216 |
117,808 |
|
UMBNDES + 2.20% |
5.85% |
|
|
|
|
|
|
(UMBNDES + 2.22% on 12.31.12) |
(5.78% on 12.31.12) |
|
|
|
|
|
Development bank credit lines |
+ e.r. US$ and other
currencies |
+ e.r. US$ and other
currencies |
1.3 |
36,149 |
37,323 |
73,472 |
105,577 |
|
15.08% |
15.08% |
|
|
|
|
|
|
(UMBNDES + 2.15% on 12.31.12) |
(14.22% on 12.31.12) |
|
|
|
|
|
Other secured debts and financial
lease |
+ e.r. ARS |
+ e.r. ARS |
1.4 |
8,442 |
12,986 |
21,428 |
3,835 |
Advances for foreign exchange rate
contracts |
- |
- |
- |
- |
- |
- |
102,212 |
|
|
|
|
281,387 |
5,827,340 |
6,108,727 |
5,628,401 |
|
|
|
|
2,696,594 |
7,484,596 |
10,181,190 |
9,518,321 |
8
10.1.f.i. Contract
relevant loans and financing
Our main source of
debt is to raise funds to finance our capital expenditures and working capital.
In 2014, our loans and financing totaled R$11.6 billion, of which R$4.0 billion
was denominated in local currency and R$7.6 billion in foreign currencies,
primarily US dollars. In 2013, our loans and financing totaled R$10.2 billion,
of which R$4.1 billion was denominated in local currency and R$6.1 billion in
foreign currencies, primarily US dollars. In 2012, our loans and financing
totaled R$9.5 billion, of which R$3.9 billion was denominated in local currency
and R$5.6 billion in foreign currencies, primarily US dollars.
Our loans and
financing include the instruments described below. Management believes that
businesses listed were concluded on market terms.
Senior Notes BRF
2024: On 05.15.14, BRF completed Senior Notes offering ten
(10) years, totaling US$750,000, with principal due at 05.22.24 ("Senior Notes
BRF 2024"), issued on coupon (interest) of 4.75% y.y. (Yield to maturity of
4.952%), payable semiannually, from 11.22.14.
Of the total funding
of the Senior Notes BRF in 2024, US$470,593 was used to settle operation called
Tender Offer held in order to buy back part of the debts of Sadia Overseas Bonds
2017 and BFF Notes 2020 ("existing bonds").
In implementing the
Tender Offer, BRF made a premium payment of US$86,427 (equivalent to R$198,514)
to the holders of existing bonds, which was recorded as interest
expense.
Senior Notes BRF
2023: On 15.05.13 In the BRF offer made in bonds outside of
(i) ten (10) years, totaling US$500,000 ("bonds in dollars"), with principal due
in 05.22.23 ("Senior Notes BRF 2023"), issued with a coupon (interest) of 3.95%
y.y. (Yield to maturity of 4.135%), payable semiannually, from 11.22.13 and (ii)
five (5) years in the amount of R$500,000 ("bonds in reais"), with principal due
in 05.22.18, issued at an interest rate of 7.75% y.y. (Yield to maturity of
7.75%), payable semiannually from 11.22.13.
Of the total capture
of bonds in dollars ("Senior Notes BRF 2023"), US$150,000 was used in an
operation called Exchange Offer to exchange part of the debt of Sadia Overseas
Bonds 2017 of US$250,000 and part of the BFF Notes 2020 US$750,000 (“Existing
Bonds") by BRF 2023 Senior Notes.
BRF
Notes: On 01.28.10, the BFF International Limited issued
senior notes totaling US$750,000, whose bonds are guaranteed by BRF, with
nominal interest rate of 7.25% y.y. and effective rate of 7.54% pa and maturing
on 28.01.20. On 06.20.13 in the amount of US$120,718 of these senior notes was
replaced by Senior Notes BRF 2023, so that the remaining balance totaled
US$629.282. On 15.05.14, there was a tender offer, it was repurchased part of
BRF Notes 2020 ("Existing Bonds") in the amount of US$409,640, so that the
remaining balance amounted to US$219,642.
Sadia
Bonds: A total value of US$250,000, whose bonds are guaranteed
by BRF, with interest rate of 6.88% y.y. and expires on 05.24.17. On 06.20.13 in
the amount of US$29,282 of these bonds was replaced by Senior Notes BRF 2023, so
that the remaining balance amounted to US$220,718. On 05.15.14, there was a
Tender Offer, it was repurchased part of Sadia Overseas Bonds 2017 ("existing
bonds") in the amount of US$60,953, so that the remaining balance amounted to
US$159,765.
9
BRF
Notes: On 06.06.12, BRF issued senior notes in the total
nomional value of US$500,000, with nominal interest rate of 5.88% y.y. and
effective rate of 6.00% y.y. maturing in 06.06.22. On 06.26.12 the Company made
an additional funding of US$250,000, with nominal interest rate of 5.88% y.y.
and effective rate of 5.50% y.y. The Company is guaranteer of the
transaction.
Operations with
BNDES: On 12.31.14, the Company and its subsidiaries have
various outstanding obligations with BNDES. The loans were used to finance
purchases of machinery, equipment and expansion of production facilities, and
special lines for export financing, as shown in item 10.1.f. above.
10.1.f.ii. Other long-term relationships with financial
institutions:
The
company has agreements with various banks where the main objective is to
facilitate access to credit for the company's partners producers for the
construction of poultry houses, farms and fitness standards.
It
also includes agreements with banks to facilitate access to credit from
suppliers who wish to advance their receivables with the Company.
Finally,
the Company has operations with derivatives whose purpose is to hedge against
exchange rate fluctuations and changes in interest rates, non-speculative
purposes. These transactions are recorded at market value, according to the
hedge accounting methodology.
10.1.f.iii. Degree of debt
subordination:
There is no degree of
contractual subordination between the unsecured financial debt of the Company.
Financial debts with real guarantee have preferences and privileges provided by
law.
The degree of
subordination stands in operations that have collateral, mostly plants,
contracted with BNDES. In addition to the BNDES, there are collateral in the
amount of R $ 294 MM, referring to financing from Banco do Nordeste. The table
below shows the detailed amounts of collateral.
Values below
expressed in R$/thousand.
|
|
|
|
|
|
|
12.31.14 |
|
12.31.13 |
|
12.31.12 |
Total of loans and
financing |
10.030.622 |
|
7.675.301 |
|
6.704.949 |
Mortgage
guarantees: |
1.102.742 |
|
1.278.353 |
|
1.405.735 |
Related to FINEM-BNDES |
594.915 |
|
817.340 |
|
900.226 |
Related to FNE-BNB |
293.529 |
|
335.395 |
|
361.144 |
Related to tax incentives and
other |
214.298 |
|
125.618 |
|
144.365 |
Statutory lien on assets
acquired with |
|
|
|
|
|
financing: |
1.045 |
|
26.755 |
|
91.079 |
Related to FINEM-BNDES |
648 |
|
1.203 |
|
5.209 |
Related to financial lease |
397 |
|
25.552 |
|
85.870 |
10
|
|
|
|
|
|
|
12.31.14 |
|
12.31.13 |
|
12.31.12 |
Total of loans and
financing |
11.589.336 |
|
10.181.190 |
|
9.518.321 |
Mortgage
guarantees: |
1.102.742 |
|
1.278.353 |
|
1.405.735 |
Related to FINEM-BNDES |
594.915 |
|
817.340 |
|
900.226 |
Related to FNE-BNB |
293.529 |
|
335.395 |
|
361.144 |
Related to tax incentives and
other |
214.298 |
|
125.618 |
|
144.365 |
Statutory lien on assets
acquired with |
|
|
|
|
|
financing: |
1.045 |
|
26.783 |
|
91.079 |
Related to FINEM-BNDES |
648 |
|
1.203 |
|
5.209 |
Related to financial lease |
397 |
|
25.580 |
|
85.870 |
10.1.f.iv. Any restrictions
imposed on the issuer, in particular in relation to debt limits and contracting
new debt, distribution of dividends, sale of assets, issuance of new securities
and the sale of corporate control:
In 2014,
the Company had no financing agreement with restrictive clauses (financial
covenants).
Item 10.1.g Operating
limits of current funding arrangements
Revolving Credit
Facility. In order to improve liquidity management, on April 27,
2012, we contracted US$500 million in a revolving operating three years in two
tranches (dollar and euro) with a syndicate of 19 banks. If the appeal is
withdrawn, interest would range between 1.6% and 2.5% depending on our credit
risk. No drawing was held and June 2, 2014 this line was replaced by a new one
revolving credit facility ("Revolver Credit Facility") for the BRF and its
wholly owned subsidiary BRF Global GmbH in the amount equivalent to US$1,000,000
with maturing in May 2019 (5 years), with a syndicate consisting of 28 banks and
better rates than previous (between 1.40% and 2.05%) for withdrawal.
Item 10.1.h.
significant variations in each item of financial statements
Main variations in
the consolidated balance sheet, comparing December 31, 2014 to December 31,
2013.
11
|
|
|
|
|
|
|
|
|
|
BRF S.A. |
|
BALANCE
SHEETS |
Amounts in Millions of Reais (1) |
|
|
|
2014 |
|
|
|
2013 |
|
Variation % |
ASSETS |
2014 (1) |
|
AV - % |
|
2013 (1) |
|
AV - % |
|
2014 x 2013 |
CURRENT |
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
6,006.9 |
|
16.6% |
|
3,127.7 |
|
9.7% |
|
92.1% |
Marketable
securities |
587.5 |
|
1.6% |
|
459.6 |
|
1.4% |
|
27.8% |
Trade accounts
receivable, net |
3,046.9 |
|
8.4% |
|
3,338.4 |
|
10.3% |
|
-8.7% |
Notes
receivable |
215.1 |
|
0.6% |
|
149.0 |
|
0.5% |
|
44.3% |
Interest on
shareholders' equity receivable |
10.2 |
|
0.0% |
|
0.0 |
|
0.0% |
|
63950.0% |
Inventories |
2,941.4 |
|
8.1% |
|
3,111.6 |
|
9.6% |
|
-5.5% |
Biological
assets |
1,130.6 |
|
3.1% |
|
1,205.9 |
|
3.7% |
|
-6.2% |
Recoverable
taxes |
1,009.1 |
|
2.8% |
|
1,302.9 |
|
4.0% |
|
-22.6% |
Other financial
assets |
43.1 |
|
0.1% |
|
11.6 |
|
0.0% |
|
272.5% |
Other current
assets |
539.5 |
|
1.5% |
|
386.9 |
|
1.2% |
|
39.4% |
|
15,530.2 |
|
43.0% |
|
13,093.6 |
|
40.4% |
|
18.6% |
|
Assets of
discontinued operations and held for sale |
1,958.0 |
|
5.4% |
|
148.9 |
|
0.5% |
|
1214.6% |
Total current assets |
17,488.2 |
|
48.4% |
|
13,242.5 |
|
40.9% |
|
32.1% |
|
NON-CURRENT
ASSETS |
|
|
|
|
|
|
|
|
|
Marketable
securities |
62.1 |
|
0.2% |
|
56.0 |
|
0.2% |
|
10.9% |
Trade accounts
receivable, net |
7.7 |
|
0.0% |
|
7.8 |
|
0.0% |
|
-1.3% |
Notes
receivable |
361.7 |
|
1.0% |
|
353.7 |
|
1.1% |
|
2.3% |
Recoverable
taxes |
912.1 |
|
2.5% |
|
800.8 |
|
2.5% |
|
13.9% |
Deferred income and
social contribution taxes |
714.0 |
|
2.0% |
|
665.7 |
|
2.1% |
|
7.3% |
Judicial
deposits |
615.7 |
|
1.7% |
|
478.7 |
|
1.5% |
|
28.6% |
Biological
assets |
683.2 |
|
1.9% |
|
569.0 |
|
1.8% |
|
20.1% |
Receivables from
related parties |
- |
|
0.0% |
|
- |
|
0.0% |
|
0.0% |
Restricted
cash |
115.2 |
|
0.3% |
|
99.2 |
|
0.3% |
|
16.1% |
Other non-current
assets |
317.4 |
|
0.9% |
|
413.7 |
|
1.3% |
|
-23.3% |
Investments
inassociates and join ventures |
438.4 |
|
1.2% |
|
108.0 |
|
0.3% |
|
306.0% |
Property, plan and
equipment, net |
10,059.3 |
|
27.9% |
|
10,821.6 |
|
33.4% |
|
-7.0% |
Intangible |
4,328.6 |
|
12.0% |
|
4,757.9 |
|
14.7% |
|
-9.0% |
Total non-current assets |
18,615.5 |
|
51.6% |
|
19,132.0 |
|
59.1% |
|
-2.7% |
TOTAL ASSETS |
36,103.7 |
|
100.0% |
|
32,374.6 |
|
100.0% |
|
11.5% |
(1)
Information extracted from the financial statements of
December 31, 2014 and 2013.
Current
assets
Current assets
amounted to R$17,488.2 billions on December 31, 2014 and R$13,242.5,0 billions
on December 31, 2013, representing an increase of R$4,245.7 billions or 32.1%,
mainly due to the Cash and cash equivalents. On December 31, 2014, current
assets were 48.4% of total assets compared to 40.9% in the preceding
year
Cash and Cash
Equivalents
Cash and cash
equivalents reported an increase of R$ 2,879.2 billions or 92.1% from R$3,127.7
billions on December 31, 2013 to R$6,006.9 billions on December 31, 2014. This
increase was largely a reflection of the operating improvement in the period and
more efficient employment of working capital.
Trade Accounts
receivable from clients, net
Trade accounts
receivable from clients, net
12
Trade accounts
receivable from clients amounted to R$3,046.9 billion of Reais on December 31,
2014, decreasing by R$291.5 million of Reais or 8.7% in relation to December 31,
2013, when this item stood at R$3,338.4 billion of Reais. The reduction occurred
in function, that from 2014, in addition to measuring the adjustment to present
value of non-current trade accounts receivable, also has measured the adjustment
to present value for current trade accounts receivable, which is recorded in
accounts reducing their lines in counterpart to the financial result in the
amount of R$10.2 million of Reais. This improvement in the accounting policy was
due to the efforts made to reduce working capital and capital employed, which
resulted mainly in increasing the average payment to the Company's suppliers.
The reduction was also occasioned by the reclassification of trade accounts
receivable balance R$233.0 million of Reais related to the dairy segment for
Assets of discontinued operations and held for sale.
Inventory
Inventory decreased
R$170.3 million of Reais or 5.5% to R$2,941.4 billions as at December 31, 2014
compared to R$3,111.6 billions on December 31, 2013. The decrease in inventory
was caused by adjustment to present value in the amount of R$23.5 million of
Reais held in contrast to the balance of trade accounts payable of
short-term and by the reduction in the amount of R$213.0 million of Reais in
finished products caused by the reclassification of that amount related to the
dairy products for Assets of discontinued operations and held for
sale.
Non-current
assets
Non-current assets
amounted to R$18,615.5 billions on December 31, 2014 and R$19,132.0 billions on
December 31, 2013, reducing R$516.6 million of Reais or 2.7%. This reduction is
principally due to the property, plant and equipment (a reduction of 762.2
million of Reais or 7.0% in relation to 2013) and Intangible (a reduction of
R$429.3 million of Reais or 9.0% in relation to 2013), due to reclassification
of dairy products assets for the Assets of discontinued operations and held for
sale.
Property, plan and
equipment
Property, plan and
equipment decreased R$762.2 million of Reais or 7.0%, amounting to R$10,059.3
billions on December 31, 2014 and R$10,821.6 billions on December 31, 2013. The
reduction mainly due to the reclassification of dairy products assets for Assets
of discontinued operations and held for sale.
13
|
|
|
|
|
|
|
|
|
|
BRF S.A. |
|
BALANCE
SHEETS |
Amounts in Millions of Reais (1) |
|
|
|
2014 |
|
|
|
2013 |
|
Variation % |
LIABILITIES |
2014 (1) |
|
AV - % |
|
2013 (1) |
|
AV - % |
|
2014 x 2013 |
CURRENT |
|
|
|
|
|
|
|
|
|
Short-term
debt |
2,738.9 |
|
7.6% |
|
2,696.6 |
|
8.3% |
|
1.6% |
Trade accounts
payable |
3,977.3 |
|
11.0% |
|
3,674.7 |
|
11.4% |
|
8.2% |
Payroll and related
charges |
427.1 |
|
1.2% |
|
433.5 |
|
1.3% |
|
-1.5% |
Tax
payable |
300.0 |
|
0.8% |
|
253.7 |
|
0.8% |
|
18.2% |
Interest on
shareholders' equity |
430.9 |
|
1.2% |
|
336.7 |
|
1.0% |
|
28.0% |
Employee and
management profit saring |
395.8 |
|
1.1% |
|
177.1 |
|
0.5% |
|
123.5% |
Other financial
liabilities |
257.4 |
|
0.7% |
|
357.2 |
|
1.1% |
|
-27.9% |
Provision for tax,
civil and labor risks |
243.0 |
|
0.7% |
|
243.9 |
|
0.8% |
|
-0.4% |
Pension and other
post-employment plans |
56.1 |
|
0.2% |
|
49.0 |
|
0.2% |
|
14.4% |
Advances from
related parties |
- |
|
0.0% |
|
- |
|
0.0% |
|
0.0% |
Other current
liabilities |
234.4 |
|
0.6% |
|
213.7 |
|
0.7% |
|
9.7% |
|
9,060.9 |
|
25.1% |
|
8,436.0 |
|
26.1% |
|
7.4% |
|
Liabilities of
discontinued operations |
508.3 |
|
1.4% |
|
- |
|
0.0% |
|
0.0% |
Total current liabilities |
9,569.1 |
|
26.5% |
|
8,436.0 |
|
26.1% |
|
13.4% |
|
NON-CURRENT
LIABILITIES |
|
|
|
|
|
|
|
|
|
Long-term
debt |
8,850.4 |
|
24.5% |
|
7,484.6 |
|
23.1% |
|
18.2% |
Tax
payable |
25.9 |
|
0.1% |
|
19.5 |
|
0.1% |
|
32.9% |
Provision for tax,
civil and labor risks |
942.8 |
|
2.6% |
|
775.4 |
|
2.4% |
|
21.6% |
Deferred income and
social contribution taxes |
90.2 |
|
0.2% |
|
20.6 |
|
0.1% |
|
338.5% |
Liabilities with
related parties |
- |
|
0.0% |
|
- |
|
0.0% |
|
0.0% |
Advances from
related parties |
- |
|
0.0% |
|
- |
|
0.0% |
|
0.0% |
Pension and other
post-employment plans |
258.0 |
|
0.7% |
|
242.2 |
|
0.7% |
|
6.5% |
Other non-current
liabilities |
677.4 |
|
1.9% |
|
700.1 |
|
2.2% |
|
-3.2% |
Total non-current liabilities |
10,844.7 |
|
30.0% |
|
9,242.4 |
|
28.5% |
|
17.3% |
SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
|
Capital |
12,460.5 |
|
34.5% |
|
12,460.5 |
|
38.5% |
|
0.0% |
Capital
reserves |
109.4 |
|
0.3% |
|
113.8 |
|
0.4% |
|
-3.8% |
Income
reserves |
3,945.8 |
|
10.9% |
|
2,511.9 |
|
7.8% |
|
57.1% |
Treasury
shares |
(304.9) |
|
-0.8% |
|
(77.4) |
|
-0.2% |
|
294.0% |
Other comprehensive
loss |
(620.4) |
|
-1.7% |
|
(353.7) |
|
-1.1% |
|
75.4% |
Equity attributable
to interest of controlling shareholders |
15,590.5 |
|
43.2% |
|
14,655.1 |
|
45.3% |
|
6.4% |
Equity attributable
to non-controlling interest |
99.5 |
|
0.3% |
|
41.1 |
|
0.1% |
|
142.1% |
Total shareholders' equity |
15,689.9 |
|
43.5% |
|
14,696.2 |
|
45.4% |
|
6.8% |
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY |
36,103.7 |
|
100.0% |
|
32,374.6 |
|
100.0% |
|
37.5% |
(1)
Information extracted from the financial statements of
December 31, 2014 and 2013.
Current
liabilities
Current liabilities
amounted R$9,569.1 billions on December 31, 2014 and R$8,436.0 billions on
December 31, 2013, an increase of R$1,133.1 billions or 13.4%. The increase is
related mainly the participation of managements and employee that presented a
grew of R$218.7 million of Reais or 123.5% in relation to December 31, 2013 and
to increase of R$302.6 million of Reais or 8.2% suppliers account, where in
December 31, 2014, the value was of R$3,977.3 billions and in December 31, 2013
the value was of R$3,674.7 billions, due to the transactions in the external
market. The current liabilities’s share over the total liabilities was of 26.5%
in December 31, 2014, and 26.1% in the previous period.
14
Loans and Financing (current)
Short-term debt,
including the current portion of the long-term debt with financial institutions
summed R$2,738.9 billions on December 31, 2014 and R$2,696.6 billions on
December 31, 2013, and increase of R$42.3 million or 1.6%. The increase in debt
is related to the credit lines from exports and development banks to finance the
Company’s working capital.
Non-current
liabilities
Non-current
liabilities totaled R$10,844.7 billions on December 31, 2014 and R$9,242.4
billions on December 31, 2013, with an increase of R$1,602.3 billions or 17.3%,
mainly due to the raise in loans and financings, as detailed in the following
item.
Loans and Financing
(non-current)
Our long-term debt
with financial institutions totaled R$8,850.4 billions on December 31, 2014 and
R$7,484.6 billions on December 31, 2013, an increase of R$1,365.8 billions or
18.2%, mainly due to the offer of Senior Notes of ten years, in the value of
US$750.0 million due to 05.22.24 (“Senior Notes BRF 2024”), to be paid
semestrally, since 11.22.14.
Shareholders’
equity
Shareholder’s equity
on December 31, 2014 was of R$15,689.9 billions, whereas by the end of the
previous period it was R$14,696.2 billions. There was an increase of R$993.8
million or 6.8% due to the increse in the profits reserve by R$1,433.9 billions,
made up by the variation in R$111.3 million of the legal reserve, R$451.6
million of reserve for increase in capital, R$730.7 million of reserve for
expansão and R$140.4 million of reserve for fiscal incentives. The increment in
the profit reserve is due to the increase in R$1,162.6 billions or 52.3% of the
net profit of the exercise, if compared to December 31, 2014, where the net
profit of the exercise was of R$2,225.0 billions and December 31, 2014, when the
net profit of the xercise was of R$1,062.4 billions.
Main variations in
the consolidated balance sheet, comparing December 31, 2013 to December 31,
2012.
15
|
|
|
|
|
|
|
|
|
|
BRF S.A. |
BALANCE
SHEETS |
Amounts in Millions of Reais (1) |
|
|
|
|
|
|
|
|
|
|
Variation (%) |
ASSETS |
2013 (1) |
|
AV (%) |
|
2012(1) |
|
AV (%) |
|
(2013 x 2012) |
CURRENT |
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
3,127.7 |
|
9.7 |
|
1,930.7 |
|
6.3 |
|
62.0 |
Marketable
securities |
459.6 |
|
1.4 |
|
621.9 |
|
2.0 |
|
(26.1) |
Trade accounts
receivable, net |
3,338.4 |
|
10.3 |
|
3,131.2 |
|
10.2 |
|
6.6 |
Interest on
shareholders' equity receivable |
0.0 |
|
0.0 |
|
- |
|
- |
|
- |
Inventories |
3,111.6 |
|
9.6 |
|
3,018.6 |
|
9.8 |
|
3.1 |
Biological
assets |
1,205.9 |
|
3.7 |
|
1,371.0 |
|
4.5 |
|
(12.0) |
Recoverable
taxes |
1,302.9 |
|
4.0 |
|
964.8 |
|
3.1 |
|
35.1 |
Assets held for
sale |
148.9 |
|
0.5 |
|
22.5 |
|
0.1 |
|
561.4 |
Other financial
assets |
11.6 |
|
0.0 |
|
33.2 |
|
0.1 |
|
(65.1) |
Other current
assets |
535.9 |
|
1.7 |
|
496.1 |
|
1.6 |
|
8.0 |
Total current
assets |
13,242.5 |
|
40.9 |
|
11,590.0 |
|
37.7 |
|
14.3 |
NON-CURRENT
ASSETS |
|
|
|
|
|
|
|
|
|
Marketable
securities |
56.0 |
|
0.2 |
|
74.5 |
|
0.2 |
|
(24.8) |
Trade accounts
receivable, net |
7.8 |
|
0.0 |
|
11.1 |
|
0.0 |
|
(29.8) |
Notes
receivable |
353.7 |
|
1.1 |
|
152.3 |
|
0.5 |
|
132.2 |
Recoverable
taxes |
800.8 |
|
2.5 |
|
1,141.8 |
|
3.7 |
|
(29.9) |
Deferred income and
social contribution taxes |
665.7 |
|
2.1 |
|
718.2 |
|
2.3 |
|
(7.3) |
Judicial
deposits |
478.7 |
|
1.5 |
|
365.3 |
|
1.2 |
|
31.0 |
Biological
assets |
569.0 |
|
1.8 |
|
428.2 |
|
1.4 |
|
32.9 |
Restricted
cash |
99.2 |
|
0.3 |
|
93.0 |
|
0.3 |
|
6.7 |
Other non-current
assets |
413.7 |
|
1.3 |
|
732.1 |
|
2.4 |
|
(43.5) |
Investments
inassociates and join ventures |
108.0 |
|
0.3 |
|
36.7 |
|
0.1 |
|
194.6 |
Property, plan and
equipment, net |
10,821.6 |
|
33.4 |
|
10,670.7 |
|
34.7 |
|
1.4 |
Intangible |
4,757.9 |
|
14.7 |
|
4,751.7 |
|
15.4 |
|
0.1 |
Total non-current
assets |
19,132.0 |
|
59.1 |
|
19,175.5 |
|
62.3 |
|
(0.2) |
TOTAL ASSETS |
32,374.6 |
|
100.0 |
|
30,765.5 |
|
100.0 |
|
5.2 |
(1)
Information extracted from the financial statements of
December 31, 2014 and 2013.
Current
assets
Current assets
amounted to R$13,243.0 billions on December 31, 2013 and R$11.590,0 billions on
December 31, 2012, representing an increase of R$1,652.5 billions or 14.3%. On
December 31, 2013, current assets were 40.9% of total assets compared to 37.7%
in the preceding year.
Cash and Cash
Equivalents
Cash and cash
equivalents reported an increase of 62.0% from R$1,930.7 billions on December
31, 2012 to R$3,127.7 billions on December 31, 2013. This increase was largely a
reflection of the operating improvement in the period and more efficient
employment of working capital.
Trade Accounts
receivable from clients, net
Accounts receivable
from clients amounted to R$3,338.4 billions on December 31, 2013, increasing by
6.6% in relation to December 31, 2012, when this item stood at R$3,131.2
billions. This increase is due to the lengthening of the term of the receivables
relating to Year-End Festive Product billings and an increase in sales volume.
16
Inventory
Inventory increased
3.1% to R$3,111.6 billions as at December 31, 2013 compared to R$3,018.6
billions on December 31, 2012, that is a difference of R$93.0 million. The
increase in inventory was in the overseas market, 17.5%, principally due to the
decline in demand in this segment.
Non-current
assets
Non-current assets
amounted to R$19,132.0 billions on December 31, 2013 and R$19,175.5 billions on
December 31, 2012, a reduction of R$43.5 million. This reduction is principally
due to the doubtful accounts lines (a reduction of 26.9% in relation to 2012)
and recoverable taxes (a reduction of 29.9% in relation to 2012).
Property, plant and
equipment
Property, plant and
equipment assets increased 1.4%, amounting to R$10,821.6 billions on December
31, 2013 and R$10,670.7 billions on December 31, 2012. Improvement and
productivity projects amounted to R$304.7 million distributed in various units
and regions. Depreciation totaled R$635.3 million and there were also write-offs
of R$171.2 million involving sales and obsolescence.
|
|
|
|
|
|
|
|
|
|
BRF S.A. |
BALANCE
SHEETS |
Amounts in Millions of Reais (1) |
|
|
|
|
|
|
|
|
|
|
Variation (%) |
LIABILITIES |
2013 (1) |
|
AV (%) |
|
2012(1) |
|
AV (%) |
|
(2013 x 2012) |
CURRENT |
|
|
|
|
|
|
|
|
|
Short-term
debt |
2,696.6 |
|
8.3 |
|
2,440.8 |
|
7.9 |
|
10.5 |
Trade accounts
payable |
3,674.7 |
|
11.4 |
|
3,381.2 |
|
11.0 |
|
8.7 |
Payroll and related
charges |
433.5 |
|
1.3 |
|
426.2 |
|
1.4 |
|
1.7 |
Tax
payable |
253.7 |
|
0.8 |
|
228.0 |
|
0.7 |
|
11.3 |
Interest on
shareholders' equity |
336.7 |
|
1.0 |
|
160.0 |
|
0.5 |
|
110.4 |
Employee and
management profit saring |
177.1 |
|
0.5 |
|
76.9 |
|
0.3 |
|
130.1 |
Other financial
liabilities |
357.2 |
|
1.1 |
|
253.4 |
|
0.8 |
|
40.9 |
Provision for tax,
civil and labor risks |
243.9 |
|
0.8 |
|
173.9 |
|
0.6 |
|
40.3 |
Pension and other
post-employment plans |
49.0 |
|
0.2 |
|
17.4 |
|
0.1 |
|
181.5 |
Advances from
related parties |
- |
|
- |
|
- |
|
- |
|
- |
Other current
liabilities |
213.7 |
|
0.7 |
|
323.7 |
|
1.1 |
|
(34.0) |
Total current
liabilities |
8,436.0 |
|
26.1 |
|
7,481.6 |
|
24.3 |
|
12.8 |
|
NON-CURRENT
LIABILITIES |
|
|
|
|
|
|
|
|
|
Long-term
debt |
7,484.6 |
|
23.1 |
|
7,077.5 |
|
23.0 |
|
5.8 |
Tax
payable |
19.5 |
|
0.1 |
|
13.5 |
|
0.0 |
|
44.9 |
Provision for tax,
civil and labor risks |
775.4 |
|
2.4 |
|
760.9 |
|
2.5 |
|
1.9 |
Deferred income and
social contribution taxes |
20.6 |
|
0.1 |
|
27.8 |
|
0.1 |
|
(26.0) |
Pension and other
post-employment plans |
242.2 |
|
0.7 |
|
266.5 |
|
0.9 |
|
(9.1) |
Other non-current
liabilities |
700.1 |
|
2.2 |
|
548.4 |
|
1.8 |
|
27.7 |
Total non-current
liabilities |
9,242.4 |
|
28.5 |
|
8,694.7 |
|
28.3 |
|
6.3 |
|
SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
|
Capital |
12,460.5 |
|
38.5 |
|
12,460.5 |
|
40.5 |
|
- |
Capital
reserves |
113.8 |
|
0.4 |
|
69.9 |
|
0.2 |
|
62.8 |
Income
reserves |
2,511.9 |
|
7.8 |
|
2,274.2 |
|
7.4 |
|
10.5 |
Treasury
shares |
(77.4) |
|
(0.2) |
|
(51.9) |
|
(0.2) |
|
49.1 |
Other comprehensive
loss |
(353.7) |
|
(1.1) |
|
(201.0) |
|
(0.7) |
|
76.0 |
Equity
attributable to interest of controlling shareholders |
14,655.1 |
|
45.3 |
|
14,551.7 |
|
47.3 |
|
0.7 |
Equity attributable
to non-controlling interest |
41.1 |
|
0.1 |
|
37.5 |
|
0.1 |
|
9.5 |
Total shareholders'
equity |
14,696.2 |
|
45.4 |
|
14,589.2 |
|
47.4 |
|
0.7 |
|
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY |
32,374.6 |
|
100.0 |
|
30,765.5 |
|
100.0 |
|
5.2 |
(1)
Information extracted from the financial statements of
December 31, 2013 and 2012.
17
Current
liabilities
Current liabilities
were R$8,436.0 billions on December 31, 2013 and R$7,481.6 billions on December
31, 2012, a growth of 12.8%. Growth reflects export credit lines which increased
by about 99.3% or R$457.9 million. The ratio of current liabilities to total
liabilities was 26.1% on December 31, 2013 and 24.3% in the preceding
period.
Loans and Financing
(current)
Short term debt,
including the current portion of long term debt with financial institutions
amounted to R$ 2,696.6 billions on December 31, 2013, and R$2,440.8 billions on
December 31, 2012, an increase of 10.5%. Increased leverage reflects export
credit lines for funding the Company’s working capital.
Suppliers
Accounts payable to
suppliers of raw materials, materials and services necessary for operating
activities totaled R$3,674.7 billions on December 31, 2013 and R$3,381.3
billions on December 31, 2012, an 8.7% increase.
Long term
liabilities
Amounted to R$9,242.4
billions on December 31, 2013 and R$8,694.7 billions on December 31, 2012, an
increase of R$547.7 million for the year, principally due to the increase in
long term debt.
Loans and Financing
(non-current)
Our long term debt
with financial institutions amounted to R$7,484.6 billions on December 31, 2013
and R$7,077.5 billions on December 31, 2012, representing an increase of R$407.0
million.
Shareholders’
equity
Shareholders’ equity
as of 2013 was R$14,696.2 billions, while at the end of 2012, this figure stood
at R$14,589.2 billions. This represents a year-on-year rise of 0.7% due to a
higher reserve for capital increase of R$121.8 million; a legal reserve of R$
53.1 million and a reserve for tax credits of R$121.2 million.
Main variations in
the consolidated balance sheet, comparing December 31, 2012 to December 31,
2011.
18
|
|
|
|
|
|
|
|
|
|
BRF S.A. |
BALANCE
SHEETS |
Amounts in Millions of Reais (1) |
|
|
|
|
|
|
|
|
|
|
Variation (%) |
ASSETS |
2012(1) |
|
AV (%) |
|
2011(1) |
|
AV (%) |
|
(2012 x 2011) |
CURRENT |
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
1,930.7 |
|
6.3 |
|
1,366.8 |
|
4.6 |
|
41.3 |
Marketable
securities |
621.9 |
|
2.0 |
|
1,372.7 |
|
4.6 |
|
(54.7) |
Trade accounts
receivable, net |
3,131.2 |
|
10.2 |
|
3,207.8 |
|
10.7 |
|
(2.4) |
Interest on
shareholders' equity receivable |
- |
|
- |
|
- |
|
- |
|
- |
Inventories |
3,018.6 |
|
9.8 |
|
2,679.2 |
|
8.9 |
|
12.7 |
Biological
assets |
1,371.0 |
|
4.5 |
|
1,156.1 |
|
3.9 |
|
18.6 |
Recoverable
taxes |
964.8 |
|
3.1 |
|
907.9 |
|
3.0 |
|
6.3 |
Assets held for
sale |
22.5 |
|
0.1 |
|
19.0 |
|
0.1 |
|
18.5 |
Other financial
assets |
33.2 |
|
0.1 |
|
23.5 |
|
0.1 |
|
41.5 |
Other current
assets |
496.1 |
|
1.6 |
|
390.7 |
|
1.3 |
|
27.0 |
Total current
assets |
11,590.0 |
|
37.7 |
|
11,123.8 |
|
37.1 |
|
4.2 |
NON-CURRENT
ASSETS |
|
|
|
|
|
|
|
|
|
Marketable
securities |
74.5 |
|
0.2 |
|
83.4 |
|
0.3 |
|
(10.7) |
Trade accounts
receivable, net |
11.1 |
|
0.0 |
|
2.4 |
|
0.0 |
|
360.0 |
Notes
receivable |
152.3 |
|
0.5 |
|
147.3 |
|
0.5 |
|
3.4 |
Recoverable
taxes |
1,141.8 |
|
3.7 |
|
744.6 |
|
2.5 |
|
53.3 |
Deferred income and
social contribution taxes |
718.2 |
|
2.3 |
|
2,628.8 |
|
8.8 |
|
(72.7) |
Judicial
deposits |
365.3 |
|
1.2 |
|
228.3 |
|
0.8 |
|
60.0 |
Biological
assets |
428.2 |
|
1.4 |
|
387.4 |
|
1.3 |
|
10.5 |
Restricted
cash |
93.0 |
|
0.3 |
|
70.0 |
|
0.2 |
|
32.8 |
Other non-current
assets |
732.1 |
|
2.4 |
|
362.7 |
|
1.2 |
|
101.9 |
Investments
inassociates and join ventures |
36.7 |
|
0.1 |
|
20.4 |
|
0.1 |
|
79.7 |
Property, plan and
equipment, net |
10,670.7 |
|
34.7 |
|
9,798.4 |
|
32.7 |
|
8.9 |
Intangible |
4,751.7 |
|
15.4 |
|
4,386.1 |
|
14.6 |
|
8.3 |
Total non-current
assets |
19,175.5 |
|
62.3 |
|
18,859.7 |
|
62.9 |
|
1.7 |
TOTAL ASSETS |
30,765.5 |
|
100.0 |
|
29,983.5 |
|
100.0 |
|
2.6 |
(1)
Information extracted from the financial statements of
December 31, 2012 and 2011.
Current
assets
The current asset
totalized R$11,590.0 billions on December 31, 2012 and R$11,123.7 billions on
December 31, 2011, representing an increase of R$466.3 million or 4.2%. On
December 31, 2012, the current assets represented 37.7% of total assets,
compared to 37.1% in the previous year.
Cash and cash
equivalents
Cash and cash
equivalents presented a increase of 41.3%, from R$1,366.8 billions as of
December 31, 2011 to R$1,930.7 billions as of December 31, 2012. Such increase
is mainly due to the Company’s financing activities.
Trade Accounts
receivable, net
Accounts receivable
totaled R$3,131.2 billions as of December 31, 2012, decreasing 2.4% when
compared to December 31, 2011, which totaled R$3,207.8 billions. This reduction
is due to the better management of receivables in receipts.
Inventories
On December 31, 2012,
inventories totaled R$3,018.6 billions compared with R$2,679.2 billions as of
December 31, 2012, increasing 12.7% or R$339.4 million. There was a significant
variation on the inventory, mainly due to the decrease on the external market
demand.
19
Non-current
assets
As of December 31,
2012, non-current assets totaled R$19,175,5 billions (R$18,859.7 billions as of
December 31, 2011). This variation is a consequence from the net increase in
property, plant and equipment.
Property, plant and
equipment, net
On December 31, 2012
property, plant and equipment increased 8.9%, totaling R$10,670.7 billions
(R$9,798.3 billions as of December 31, 2011). Improvement and productivity
projects amounted to R$893.0 million and were allocated in several plants and
regions. Depreciation and amortization amounted to R$488.3 million and there
were also disposals in the total amount of R$723.4 million mainly due to
implementation of TCD, sales or obsolescence.
|
|
|
|
|
|
|
|
|
|
BRF S.A. |
BALANCE
SHEETS |
Amounts in Millions of Reais (1) |
|
|
|
|
|
|
|
|
|
|
Variation (%) |
LIABILITIES |
2012(1) |
|
AV (%) |
|
2011(1) |
|
AV (%) |
|
(2012 x 2011) |
CURRENT |
|
|
|
|
|
|
|
|
|
Short-term
debt |
2,440.8 |
|
7.9 |
|
3,452.5 |
|
11.2 |
|
(29.3) |
Trade accounts
payable |
3,381.2 |
|
11.0 |
|
2,681.3 |
|
8.7 |
|
26.1 |
Payroll and related
charges |
426.2 |
|
1.4 |
|
434.2 |
|
1.4 |
|
(1.8) |
Tax
payable |
228.0 |
|
0.7 |
|
224.8 |
|
0.7 |
|
1.4 |
Interest on
shareholders' equity |
160.0 |
|
0.5 |
|
312.6 |
|
1.0 |
|
(48.8) |
Employee and
management profit saring |
76.9 |
|
0.3 |
|
224.5 |
|
0.7 |
|
(65.7) |
Other financial
liabilities |
253.4 |
|
0.8 |
|
270.7 |
|
0.9 |
|
(6.4) |
Provision for tax,
civil and labor risks |
173.9 |
|
0.6 |
|
118.5 |
|
0.4 |
|
46.8 |
Pension and other
post-employment plans |
17.4 |
|
0.1 |
|
- |
|
- |
|
- |
Advances from
related parties |
- |
|
- |
|
- |
|
- |
|
- |
Other current
liabilities |
323.7 |
|
1.1 |
|
268.7 |
|
0.9 |
|
20.4 |
Total current
liabilities |
7,481.6 |
|
24.3 |
|
7,987.8 |
|
26.0 |
|
(6.3) |
|
NON-CURRENT
LIABILITIES |
|
|
|
|
|
|
|
|
|
Long-term
debt |
7,077.5 |
|
23.0 |
|
4,601.1 |
|
15.0 |
|
53.8 |
Tax
payable |
13.5 |
|
0.0 |
|
29.5 |
|
0.1 |
|
(54.3) |
Provision for tax,
civil and labor risks |
760.9 |
|
2.5 |
|
835.2 |
|
2.7 |
|
(8.9) |
Deferred income and
social contribution taxes |
27.8 |
|
0.1 |
|
1,791.9 |
|
5.8 |
|
(98.4) |
Pension and other
post-employment plans |
266.5 |
|
0.9 |
|
266.0 |
|
0.9 |
|
0.2 |
Other non-current
liabilities |
548.4 |
|
1.8 |
|
362.0 |
|
1.2 |
|
51.5 |
Total non-current
liabilities |
8,694.7 |
|
28.3 |
|
7,885.7 |
|
25.6 |
|
10.3 |
|
SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
|
Capital |
12,460.5 |
|
40.5 |
|
12,460.5 |
|
40.5 |
|
- |
Capital
reserves |
69.9 |
|
0.2 |
|
76.3 |
|
0.2 |
|
(8.3) |
Income
reserves |
2,274.2 |
|
7.4 |
|
1,760.4 |
|
5.7 |
|
29.2 |
Treasury
shares |
(51.9) |
|
(0.2) |
|
(65.3) |
|
(0.2) |
|
(20.5) |
Other comprehensive
loss |
(201.0) |
|
(0.7) |
|
(161.5) |
|
(0.5) |
|
24.5 |
Equity
attributable to interest of controlling shareholders |
14,551.7 |
|
47.3 |
|
14,070.3 |
|
45.7 |
|
3.4 |
Equity attributable
to non-controlling interest |
37.5 |
|
0.1 |
|
39.6 |
|
0.1 |
|
(5.2) |
Total shareholders'
equity |
14,589.2 |
|
47.4 |
|
14,109.9 |
|
45.9 |
|
3.4 |
|
|
|
|
|
|
|
|
|
- |
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY |
30,765.5 |
|
100.0 |
|
29,983.5 |
|
97.5 |
|
2.6 |
(1)
Information extracted from the financial statements of
December 31, 2012 and 2011.
20
Current
liabilities
Current liabilities
totaled R$7,481.6 billions as of December 31, 2012 (R$7,987.8 billions as of
December 31, 2011) presenting an decrease of 6.3%. Such decrease is related to
the export credit lines, which decreased approximately 67.6%, meaning R$929.4
million aiming to finance the Company’s working capital. Current liabilities
represented 24.3% of total liabilities, compared to 26.6% from the previous
year.
Short-term loans and
financing
Short-term debts,
including the current portion of long-term debt with financial institutions
totaled R$2,440.8 billions as of December 31, 2012 (R$3,452.4 billions as of
December 31, 2011), presenting a reduction of 29.3%. The decrease of the debts
is related for the export credit lines to finance the Company’s working capital.
Suppliers
Debts to suppliers of
raw materials, materials and services that are necessary to the operational
activities of the Company amounted to R$3,381.3 billions as of December 31, 2012
and R$2,681.3 billions as of December 31, 2011, increasing 26.1%. This decrease
is related to the growth of the production and the costs of the main raw
materials
Non-current
liabilities
As of December 31,
2012 non-current liabilities totaled R$8,694.7 billions (R$7,885.7 billions as
of December 31, 2011), representing a increase of R$809.0 million during the
year, mainly due to increase of long-term debts.
Long-term loans and
financing
Long-term debts with
financial institutions totaled R$7,077.5 billions, as of December 31, 2012 and
R$4,601.0 billions as of December 31, 2011, representing an increase of
R$2,476.5 billions.
Shareholder´s
Equity
The shareholders’
equity of 2012 corresponded to R$14,589.2 billions (R$14,110.0 billions as of
December 31, 2011). There was an increase of 3.4% derived from the variation of
the following groups: reserve for expansion in the amount of R$237.5 million;
reserve for capital increase in the amount of R$155.1 million; legal reserve in
the amount of R$40.7 million and reserve for government grants in the amount of
R$67.4 million.
21
Item 10.2. Directors should comment:
a. Results of the issuer's operations, in
particular:
i. Description of any important components of
revenue
ii. Factors that materially affect operating
results
b. Changes in revenues due to changes in prices,
exchange rates, inflation, changes in volumes and introduction of new products
and services
c. Impact of inflation, changes in prices of key inputs
and products, exchange and interest rates on operating results and financial
results of the issuer
key Indicators:
In R$million |
2014 |
2013 |
2012 |
Net sales
|
29,007 |
27,787 |
25,975 |
Brazil |
13,367 |
14,371 |
13,979 |
International
markets |
13,640 |
13,416 |
11,996 |
Gross profit
|
8,509 |
6,910 |
5,902 |
Gross margin
(%) |
29.3% |
24.9% |
22.7% |
Operating
income |
3,478 |
1,896 |
1,360 |
Operating margin
(%) |
12.0% |
6.8% |
5.2% |
EBITDA - CONTINUED
OPERATIONS |
4,709 |
3,009 |
2,295 |
Ebitda margin - continued operations
(%) |
16.2% |
10.8% |
8.8% |
EBITDA |
4,897 |
3,131 |
2,283 |
Ebitda margin
(%) |
15.4% |
10.3% |
8.0% |
Net Continuied
Operations |
2,135 |
1,015 |
797 |
Net margin - continued
operations (%) |
7.4% |
3.7% |
3.1% |
Net Income (loss) -
discontinued operations |
90 |
47 |
(27) |
Net
Income |
2,225 |
1,062 |
770 |
Net Margin
(%) |
7.7% |
3.8% |
3.0% |
Market
Value |
55,350 |
42,969 |
36,810 |
Total
Assets |
36,030 |
32,375 |
30,765 |
Net
Worth |
15,655 |
14,696 |
14,589 |
Net Debt |
5,032 |
6,784 |
7,018 |
Net Debt/EBITDA*
|
1.04 |
2.17 |
3.07 |
Results per share
R$ |
2.46 |
1.17 |
0.92 |
Nº of Shares |
872,473,246 |
872,473,246 |
872,473,246 |
Nº of Treasury
shares |
5,188,897 |
1,785,507 |
2,399,335 |
*In 4Q14, it was considered for the multiple
calculation only the result from continuing operations (without Dairy sector),
other quarters consider continued and discontinued
operations.
22
The results presented below
refer to the Company´s continued operations, excluding the results obtained from
the discontinued operations (dairy sector), that as reported by the Relevant
Fact of September 3, 2014 and the Announcement to the Market of December 5, 2014
are in a sale process for Lactalis.
a.i) Description of
any important components of revenue
BRF S.A. owns
estabilished brands such as Sadia, Perdigão, Batavo, Elegê, Qualy, Chester,
Perdix and Paty, with portfolio of over 2,000 items..
BRF was created from
the merger of Perdigão and Sadia, whose consolidation was announced in 2009 and
completed in 2012. The Company generates its revenues primarily from the sale of
meat (poultry and pork), meat processed foods, margarine, pasta, pizza and
frozen vegetables.
A breakdown of our
products is as follows:
•
Meat products:
ü frozen whole and cut chickens
ü frozen pork cuts a nd beef cuts,
which we refer to in this Form 20-F, together with frozen whole and cut
chickens, as in natura meat
•
Processed food products, such as the following:
23
ü marinated frozen whole and cut
chickens, roosters (sold under the Chester® brand) and turkeys
ü specialty meats, such as
sausages, ham products, bologna, frankfurters, salami, bacon and other smoked
products
ü frozen processed meats, such as
hamburgers, steaks, breaded meat products, kibes and meatballs and frozen
processed vegetarian foods
•
Other processed products:
ü frozen prepared entrees, such as
lasagna and pizzas, as well as other frozen foods, including vegetables, cheese
breads and pies
ü juices, soy milk and soy juices
ü margarine
ü mayonnaise, mustard and ketchup
·
Other:
ü soy meal and refined soy flour,
as well as animal feed
·
Dairy
products - discontinued operation as announced in December 2014
ü milk (UHT and pasteurized)
ü dairy products, such as cheeses,
powdered milk and yogurts
BRF
whose operational strategy using the capillarity of its assets so as to reach a
greater number of regions with the highest efficiency in its production and
distribution network, prioritizing the sale of higher value-added products such
as breaded, pasta, pizza, among others, markets and more profitable segments,
whether in Brazil or internationally.
a.ii) factors
that materially affect operating results
Seasonal factors and
volatility affecting both the prices of raw material as our sales prices could
materially affect the Company's results.
Our business is
largely dependent on the cost and supply of corn, the average price in Brazil in
2014 was 0.5% higher compared to the year 2013, which was 11.2% higher than in
2012. We depend also soybean meal, which in 2014 had an average price 5.3%
higher than in 2013, which compared to the year 2012 was 3.7% higher. Among
other raw materials are soybeans, pork, beef and milk, for example. The sales
prices of our products are determined by constant changes in supply and demand
can fluctuate significantly, and other external factors we can not control how
fluctuations in global domestic production levels of poultry, pork, beef and
milk (impact 2014), changes in environmental regulations, changes in economic
conditions, weather, animal diseases and crop and costs linked to exchange
rates.
24
The effect of
variations in the price of raw materials in our gross margin and higher for
products with similar nature and commodities, lower, on products with higher
added value.
The economic sector
in which we operate, is also characterized by cyclical periods of prices and
profitability, which vary according to the occurrence of overproduction or lack
of product. We can not, in most part, mitigate materially from those risks with
long-term procurement with our customers and with many of our suppliers, since
these contracts are not customary in our industry.
Our financial
performance is also affected by domestic and international freight costs, which
are vulnerable to fluctuations in oil prices. May not be successful in
addressing the effects of cyclicality and volatility on costs and expenses or
the pricing of our products and in this case, our financial performance may be
adversely affected.
Natural disasters,
pandemics or climate change, including floods, extreme heat or cold, hurricanes
or other storms, as well as fire and water shortages, may adversely affect the
health and even the growth of our livestock, damage the production and
processing, suspension of transport channels, information systems and damage
other issues.
b) Changes in
revenues attributable to changes in prices, exchange rates, inflation, changes
in volumes and introduction of new products and services
The financial data
below derive from consolidated financial statements.
2014
Recorded R$29.0
billion in net revenue (4.4% over 2013) and ended the year with operating income
of R$3.5 billion and net income of R$2.1 billion. The performance was better
than expected, due to the results in international markets, the growth in sales
outlets in Brazil, the improvements obtained with other structural changes that
resulted, for example, improving service level.
For the year ended
December 31, 2014, 35.01% of our net revenue was generated by sales of in natura
poultry, 9.2% for meat pork and beef in natura, 46.4% for processed and other
products processed, 6.0% for food services and 3.4% for other sales. Moreover
48.0% of net revenue was generated in Brazil and 46% in international markets
and 6.0% in the food services segment and the foreign market with the other
47.0% in 2014.
The average price
(ROL) grew by 9.8% compared to 2013, and in Brazil, average prices were 4.8%
higher, and in the International market, there was increase of average prices in
both real (+ 15.7%), benefited by the devaluation of the exchange rate in the
period (-9.1%) and the increase in prices in dollars (+ 6.2%) compared to 2013)
with reduction. In the food services segment, the average price for the year was
stable, with a slight decrease of 0.7% compared to the previous year
.
Volumes were 4.9%
lower compared to the previous year, following the search of Company's strategy
for greater profitability. In International, we had a reduction of 12.3% in
volume in the year. On the other hand, in Brazil, volumes were 1.9% higher
compared to the previous year and 9.7% above the same comparison in the food
services segment.
25
*Food Services:
includes sales generated in Brazil and International markets for customers that
category such as bars, restaurants, industrial kitchens, among
others.
2013
Recorded R$27.8
billion in net sales (6.9% above 2012) and ended the year with operating income
of R$1.9 billion and net income of R$ 1.0 billion.
Net operating income
benefited mainly by good sales performance in the first half of the year in
Brazil and the recovery of revenues in international markets (with the benefit
of devaluation of the real against the dollar of 10.4%).
The average price
(ROL) grew by 13.6% compared to 2012, a decrease of 5.8% in sales
volumes.
Looking at the
composition of our net operating revenue, it is noticed that the processed
products had a higher share, accounting for 45.3% of the total net sales,
followed by birds with participation of 35.1%, pork / beef with 10.2% , food
services with 5.8% and other sales with 3.6%. (as the chart below)
Participation in Net
Operating Revenue (NOR) - Continuing operations
26
2012
Recorded R$25.9
billion in net sales (12.1% over 2011) and ended the year with operating income
of R$1.4 billion and net income of R$770 million. The year was marked by strong
international crisis and increased costs, with high volatility and rising grain
prices, getting marked as one of the most difficult years for the global segment
of proteins.
The average price
(ROL) grew by 8.0% compared to 2011, an increase of 3.8% in sales
volumes.
Looking at the
composition of our net operating revenue, it is noticed that the processed
products had a higher share, accounting for 45.5% of the total net sales,
followed by poultry with participation of 34.3%, pork / beef with 10.7% , food
services with 6.0% and other sales 3.5%. (as the chart below)
Participation in Net
Operating Revenue (NOR) - Continuing operations
27
Below are tables with
revenue, volume and average price from leading BRF business units:
2014 X
2013
|
|
|
|
|
|
|
|
|
|
Brazil |
R$
Million |
Thousand
Tons |
Average
Price - R$ |
|
2014 |
2013 |
Δ% |
2014 |
2013 |
Δ% |
2014 |
2013 |
Δ% |
In Natura |
2,653 |
2,439 |
8.8% |
446 |
407 |
9.6% |
5.95 |
6.00 |
(0.8%) |
Poultry |
1,826 |
1,492 |
22.3% |
339 |
275 |
23.2% |
5.39 |
5.43 |
(0.7%) |
Pork/Beef |
827 |
947 |
(12.6%) |
107 |
132 |
(18.8%) |
7.74 |
7.20 |
7.6% |
Processed Foods |
10,361 |
9,670 |
7.2% |
1,509 |
1,502 |
0.5% |
6.87 |
6.44 |
6.7% |
Others Sales |
921 |
941 |
(2.1%) |
320 |
324 |
(1.2%) |
2.87 |
2.90 |
(1.0%) |
Total without Other
Sales |
13,014 |
12,109 |
7.5% |
1,955 |
1,909 |
2.4% |
6.66 |
6.34 |
4.9% |
Total |
13,935 |
13,050 |
6.8% |
2,275 |
2,233 |
1.9% |
6.12 |
5.84 |
4.8% |
|
|
|
|
|
|
|
|
|
|
International |
R$ Million |
Thousand
Tons |
Average Price -
R$ |
2014 |
2013 |
Δ% |
2014 |
2013 |
Δ% |
2014 |
2013 |
Δ% |
In
Natura |
10,190 |
10,159 |
0.3% |
1,788 |
2,019 |
(11.4%) |
5.70 |
5.03 |
13.3% |
Poultry |
8,339 |
8,262 |
0.9% |
1,579 |
1,750 |
(9.8%) |
5.28 |
4.72 |
11.9% |
Pork/Beef |
1,851 |
1,897 |
(2.4%) |
208 |
268 |
(22.3%) |
8.89 |
7.08 |
25.6% |
Processed Foods |
3,085 |
2,917 |
5.8% |
424 |
447 |
(5.2%) |
7.28 |
6.53 |
11.6% |
Others
Sales |
51 |
56 |
(9.9%) |
0 |
55 |
- |
- |
1.03 |
- |
Total |
13,325 |
13,132 |
1.5% |
2,211 |
2,520 |
(12.3%) |
6.03 |
5.21 |
15.7% |
|
|
|
|
|
|
|
|
|
|
R$ Million |
Thousand Tons |
Average Price -
R$ |
Food
Services |
2014 |
2013 |
Δ% |
2014 |
2013 |
Δ% |
2014 |
2013 |
Δ% |
Total |
1,747 |
1,606 |
8.8% |
238 |
217 |
9.7% |
7.35 |
7.41 |
(0.8%) |
28
c) Impact of
inflation, changes in prices of key inputs and products, exchange and interest
rates on operating results and financial results of the issuer.
Year ended December
31, 2014 Compared to the Year Ended December 31,
2013.
Among the main items
that impact our operating results we mention the cost of goods sold (COGS). The
cost of sales totaled R$20.5 billion, 1.8% lower compared to 2013. We had in the
period a fall in the price of corn, which was partially offset by higher soybean
meal. In 2014 COGS represented 70.7% of net sales against 75.1% recorded in
2013.
The 2014 average
dollar was 9.01% up to 2013, at R$2.3536. This increase contributes to the
improvement of results in the international market, however, BRF also has costs
linked to the dollar, for example, grain, packaging and freight, which
ultimately minimize the possible positive impacts.
Grains are one of the
main inputs of our production. In 2014, the average price of corn in Brazil was
0.5% higher than the average price in 2013Já the average price of soybean meal
in Brazil was 5.3% higher than the average price in 2013, the devaluation of
real as this input is tied to the dollar.
For the year, gross
profit reached R$8.5 billion from R$6.9 billion in 2013, representing,
therefore, an increase of 23.1%. Gross margin reached 29.3% in 2014 compared to
24.9% in 2013.
With regard to
operating expenses, in the year had a slight increase of 1.1%, mainly due to
higher spending on marketing and trade marketing, in line with our strategy to
give greater focus to the consumed and strengthen the Company's brands . In
percentage terms, given the growth of BRF Expenses fell, totaling 15.9% of net
sales compared to 16.4% in 2013.
Considering the year,
had a negative net profit in line with other operating results equivalent to R $
438.1 million, a decrease of 4.4% compared to 2013. The main revenue impacting
this result were net gains in exchange of shares with Minerva on the disposition
of cattle slaughter plants in the amount of R $ 179.3 million, as well as net
gains on disposal of fixed assets, totaling R $ 111.4 million in
2014.
On the other hand,
the main expenses for the period included the participation of employees in the
Company's results, which totaled R$ 356.5 million, from R$ 214.7 million
spending on restructuring and increased provisions for tax and civil risks and
labor equivalent to R$ 91.2 and R$ 72.4 million, respectively.
In addition, in the
year, the caption net financial income and expenses showed a net financial
expense of R$990.7 million, corresponding to an increase of 32.5% compared to
2013. The main items that impacted this result was the premium paid for the bond
repurchase execution in the second quarter and the adjustment to present value
in the year.
The use of non
derivative financial instruments and derivatives for currency hedging enables
the Company, significant reductions in net exposure balance in foreign currency.
We emphasize that we move from a currency exposure impacting income of US$36.0
million "bought" in 3T14 to US$ 567.0 million "bought" in 4Q14.
This long-term
foreign exchange exposure, came as a result of signing the contract with
Lactalis for sale of our Dairy business in December 2014. Since the transaction
amount agreed upon in the amount of R$1.8 billion, was fixed in dollars upon
signing the contract (approximately US$700.0 million), without hedging constitution,
being therefore subject to exchange rate adjustments to the closing of this
transaction.
29
Year ended December
31, 2013 Compared to the Year Ended December 31, 2012.
Among the main items
that impact our operating results we mention the cost of goods sold (COGS). The
cost of sales totaled R$20.8 billion, 4.0% lower compared to 2012, impacted
primarily due to: (1) labor costs, (2) soybean meal costs, (3) increases in
items indexed to the dollar, such as packaging and vitamins, and (4) freight
costs.
The 2013 average
dollar was 10.39% higher than in 2012, at R$2.1576. This increase contributes to
the improvement of results in the international market, however, BRF also has
costs linked to the dollar, for example, grain, packaging and freight, which
ultimately minimize the possible positive impacts.
With respect to
grains, for example, which is one of our main inputs, have faced significant
volatility in recent years. In 2013, the average price of corn in Brazil was
11.2% lower than the average price in 2012 and prices were considerably lower
throughout the year. For example, maize prices in grains of one of the main
inputs of our production. In 2014, the average price of corn in Brazil was 11.2%
lower than the average price in 2012 and prices were considerably lower
throughout the year. For example, maize prices in December 2013 were 23.8% lower
than in December 2012. In 2013, the average price of soybean meal in Brazil was
3.7% higher than the average price in 2012 and, comparing December 2012 with
December 2013, soybean meal prices in Brazil rose by about 10.6%, influenced by
the depreciation of the real since this input is tied to the dollar.
For the year, gross
profit reached R$6.9 billion from R$5.9 billion in 2012, an increase of 17.1%,
with gross margin of 24.9% versus 22.7%.
Regarding the
Operating Expenses for the year were 9.0% higher than 2012. We had an increase
in selling expenses due to investments in development of new product lines and
marketing campaigns, increase in operation in the logistics chain and port
strikes and transport during the year.
In the financial
result, net financial expenses totaled R$747.5 million in the year increase of
31.0% compared to 2012, especially explained by the increase in debt due to
currency effects and the need for cash direction to promote support investments
in CAPEX and working capital, due to the lower cash generation in the
period.
10.3.
Events with significant effects occurred and expected,
in the financial statements
a)
addition or elimination of segment
information
As
disclosed in explanatory note 13.2 Discontinued operations in DFP 2014, on
December 05, 2014, BRF entered into a sales contract with Lactalis (“buyer”),
establishing terms and conditions for the disposal of its manufacturing
facilities in the dairy operating segment, which includes (i) manufacturing
facilities located in the cities of Bom Conselho (PE), Carambeí (PR), Ravena
(MG), Concórdia (SC), Teutônia (RS), Itumbiara (GO), Terenos (MS), Ijuí (RS),
Três de Maio I (RS), Três de Maio II (RS) and Santa Rosa (RS and (ii) related
assets and trademarks dedicated to such segment Batavo, Elegê, Cotochés,
Santa Rosa e DoBon) deste segmento (“Transaction”).
30
On
this date, the value of such Transaction was set forth at US$697,756 million of
dollars (equivalent to R$1,800,000 billion reais), to be received on the
conclusion date of the transaction, subject to usual adjustments for
working capital and net debt, as the terms of the contract.
The
Transaction was fixed in U.S. Dollars and, considering that the functional
currency of BRF and of buyer is different of U.S. Dollars, was recognized an
embedded derivative in the terms of CPC 38, approved by CVM Deliberation
No.604/09. The fair market value of the embedded derivative totaled R$27,955
million reais on December 31, 2014 and was recognized in other financial assets
in counterpart of financial results.
The
conclusion of the Transaction is also subject to compliance with precedent
conditions, such as necessary investments to adapt the assets to transfer to the
buyer and regulatory approval (including the Administrative Council for Economic
Defense (“CADE”)). The Company does not expect significant impact on the
conclusion of the transaction, planned for the 2nd quarter 2015.
The
statement of income and cash flow from discontinued operations that represent
the dairy segment performance are disclosed as follows:
|
|
|
|
STATEMENTS OF
INCOME |
Amounts in millions of Reais
(1) |
|
|
Parent company and
Consolidated |
|
12.31.14 |
|
12.31.13 |
Net Sales |
2,720.4 |
|
2,733.8 |
Cost of sales |
(2,111.5) |
|
(2,075.5) |
Gross
Profit |
608.9 |
|
658.2 |
Operating Income
(Expenses) |
|
|
|
Selling |
(424.9) |
|
(483.3) |
General and administrative |
(30.0) |
|
(34.8) |
Other operating expenses,
net |
(30.6) |
|
(77.3) |
Equity in income of
associates |
(2.8) |
|
0.4 |
Income Before
Taxes |
120.6 |
|
63.3 |
Current income tax |
(30.8) |
|
(16.2) |
Net income from discontined
operations |
89.8 |
|
47.2 |
(2)
Information extracted from the financial statements of
December 31, 2014 and 2013.
31
|
|
|
|
STATEMENTS OF CASH
FLOWS |
Amounts in millions of Reais (1) |
|
|
Parent company and
Consolidated |
|
12.31.14 |
|
12.31.13 |
|
Net profit from discontinued
operations |
89.8 |
|
47.2 |
Adjustments to reconcile net
income to net cash provided by discontinued |
|
|
|
operations |
|
|
|
Depreciation,
amortization and exhaustion |
67.5 |
|
58.7 |
Equity in income of
affiliates |
2.8 |
|
(0.4) |
Net cash provided by
discontinued operating activities |
160.2 |
|
105.5 |
Investing activities from
discontinued operations |
|
|
|
Additions to
property, plant and equipment |
(51.2) |
|
(87.7) |
Net cash used investing
activities from continued operations |
(51.2) |
|
(87.7) |
|
Net cash provided from
discontinued operations |
109.0 |
|
17.8 |
(1)
Information extracted from the financial statements of
December 31, 2014 and 2013.
b)
constitution, acquisition or disposal of equity
interest
As
disclosed in explanatory note 1.1 Equity Interest in DFP 2014, the following
changes were made:
·
Federal
Foods LLC: On January, 16, 2013 BRF acquired 49% of the equity interest with the
rights to 60% of dividends as permitted by Federal Law Nº 8/1984, in force in
the United Arab Emirates and according to the shareholders’ agreement. On April
09, 2014, the Company announced the conclusion of purchase of 100% of the
economic rights.
Main activity: Import and
commercialization of products.
·
BRF
Foods GmbH: On February 21, 2014, establishment of wholly-owned subsidiary.
Main activity:
Industrialization, import and commercialization of products.
·
PR-SAD
Administração de bem próprio S.A.: On March 14, 2014, acquisition of equity
interest. Main activity: Management of assets.
·
Sadia
U.K. Ltd.: On April 12, 2014, settlement of wholly-owned subsidiary.
Main activity: Import and
commercialization of products.
·
Rising
Star Food Company Ltd.: On April 30, 2014, disposal of 50% of equity interest
held by BRF GmbH to Pah Chong Hong Limited.
Main activity:
Industrialization, import and commercialization of products.
·
Avex
S.A.: On June 26, 2014, Sadia Alimentos S.A. disposed of 50% of the shares of
Avex S.A. to Sadia Uruguay S.A. Main activity: Industrialization and
commercialization of products.
32
·
Sino
dos Alpes Alimentos Ltda.: On June 27, 2014, PSA Laboratório Veterinário Ltda,
disposed of 1 (one) share to VIP S.A. Empreendimentos e Participações
Imobiliárias.
Main activity:
Industrialization and commercialization of products.
·
Al Khan
Foodstuff LLC: On July 03, 2014, acquisition of 40% of equity interest of Al
Khan Foodtuff LLC.
Main activity: Importação e
comercialização/distribuição de produtos.
·
Mato
Grosso Bovinos S.A.: On October 1, 2014, disposal of equity interest to Minerva
S.A. Main activity: Participações em outras
empresas.
·
Minerva
S.A.: On October 1, 2014, acquisition of equity interest.
Main activity: Industrialization
and commercialization of products.
·
Elebat
Alimentos S.A.: On October 15, 2014, establishment of equity interest.
Main activity: Industrialization
and commercialization of products.
·
BRF Al
Yasra Food K.S.C.C.: On November 21, 2014, acquisition of equity interest.
Main activity: Importação e
comercialização/distribuição de produtos.
·
PSA
Laboratório Veterinário Ltda.. On December 1, 2014, corporate restructuring due to
dissolution of the wholly-owned subsidiary Perdigão Trading S.A.
Main activity: Atividades
veterinárias
·
Perdigão
Trading S.A. On December 1, 2014, dissolution of the wholly-owned subsidiary.
Main activity:
Holding.
·
Avipal
S.A. Construtora e Incorporadora: On December 31, 2014, dissolution of the
wholly-owned subsidiary.
Main activity: Construction and
real estate marketing.
Additionally,
detailed relevant operations below, executed aiming at the participation of BRF
through its products in the International Market, in accordance with the
Company’s growing strategy in this market:
i.
Step acquisition – Federal Foods LLC
(“FF”)
On January 16, 2013,
BRF acquired 49% equity interest of FF, becoming the holder of 60% of economic
rights of such company, with no control, pursuant to the terms of shareholders
agreement entered into with Al Nowais Investments Company LLC ("ANI"), former
parent company of FF.
33
On April 09, 2014,
the Company concluded the acquisition of the remaining economic rights for a
consideration of R$61,5 million reais, becoming the controlling shareholder of
FF. Such transaction, in compliance with CVM Deliberation No. 665/11, which
approved the technical pronouncement CPC 15 (R1), in their paragraphs 41 and 42,
was accounted for as step acquisition. Thus, the carrying amount of the
investment prior to this acquisition was measured at fair value and generated a
gain of R$25,0 million reais recorded as other operating results.
The fair value of
assets acquired and liabilities assumed in determining the purchase price
allocation, as follows:
|
|
Amounts in millions of Reais
(1) |
|
|
Fair value recognized
on |
|
acquisition
date |
|
Cash and
cash equivalents |
10.9 |
Trade
accounts receivable, net |
109.9 |
Inventories |
131.5 |
Property,
plan and equipament |
2.4 |
Relationship with
costumers |
29.3 |
Other
assets |
15.7 |
|
299.8 |
|
Loans and
financing |
75.3 |
Trade
accounts receivable |
78.7 |
Payroll and
related charges |
3.0 |
Deferred
taxes |
7.3 |
Other
liabilities |
27.8 |
|
192.1 |
Net assets
acquired |
107.7 |
|
Fair value of consideration
paid |
151.7 |
|
Goodwill from
acquisition |
44.1 |
(1)
Information extracted from the financial statements of
December 31, 2014 and 2013.
34
The fair value of consideration paid was determined as
follows:
|
|
Amounts in millions of Reais
(1) |
|
Cash - consideration paid for
acquisition of controlling |
61.5 |
Carrying amount of former equity
interest |
65.3 |
Gain generated by the
remeasurement of the former equity interest at fair value |
25.0 |
Fair value of consideration
paid at the acquisition date |
151.7 |
(1)
Information extracted from the financial statements of
December 31, 2014 and 2013.
ii.
Acquisition of entity interest of Al Khan Foods LLC
(“AKF”)
On July 03, 14, BRF
acquired 40% of equity interest of AKF for R$45.5 million of reais.
The Company prepared
an appraisal report to support the fair value of assets acquired and liabilities
assumed in determining the purchase price allocation, as follows:
|
|
Amounts in millions of Reais
(1) |
|
|
Cash - consideration paid for
acquisition of 40% of equity interest |
45.5 |
Fair value of equity interest in
AKF immediately before acquisition of 40% of equity interest (2) |
5.2 |
Preliminary goodwill
generated in transaction |
40.2 |
Allocation of relationship with
customers (note 19) |
(17.3) |
Deferred income tax |
4.3 |
Goodwill in the acquisition
of equity interest |
27.2 |
(1)
Information extracted from the financial statements of
December 31, 2014 and 2013.
(2)
Corresponding to assets (current and non-current) of
R$29.112 and liabilities (current and non-current) of R$23.9 million of
reais.
Additionally, BRF has
a commitment to acquire the remaining equity interest of AKF within 36 to 90
months from the acquisition closing date. The purchase price of the remaining
equity interest will be determined based on multiples of EBITDA of
AKF.
AKF is a leader in
the distribution of frozen food in the Sultanate of Oman, covering a broad
sector of retail, food service and wholesale clients. The company has been
distributing Sadia’s products for 25 years, in addition to several of frozen
products of other brands and suppliers.
The AKF’s investment
is measured based on the equity method and classified as joint
venture.
35
iii.
Business combination – BRF Alyasra Food Company K.S.C.C
(“BRF AFC”)
On January 16, 2013,
BRF acquired 75% equity interest of BRF AFC for R$324.730. The acquisition was
realized in compliance to the local laws and regulation of Kuwait.
The fair value of
assets acquired and liabilities assumed in determining the purchase price
allocation, as follows:
|
|
Amounts in millions of Reais
(1) |
|
|
Fair value recognized
on |
|
acquisition
date |
|
Cash and
cash equivalents |
12.5 |
Trade
accounts receivable, net |
55.2 |
Inventories |
50.3 |
Property,
plan and equipment |
1.5 |
Relationship with
costumers |
184.7 |
|
304.3 |
|
Trade
accounts payable |
5.9 |
Deferred
taxes |
46.2 |
|
52.1 |
|
Net assets |
252.2 |
|
Non-controlling interest
(25%) |
63.1 |
|
Net assets
acquired |
189.2 |
|
Fair value of consideration
paid |
324.7 |
|
Goodwill on the expected
future profitability |
135.5 |
(1)
Information extracted from the financial statements of
December 31, 2014 and 2013.
Whereas the BRF AFC
was acquired in 11.21.14, the Company's Management believes that the net profit
and revenues by the closing date (12.31.14) are not relevant for further
disclosures. BRF AFC was originated from the transfer of assets and liabilities
arising from the distribution activity of frozen products of Alyasra Food
Company WLL, Kuwait. The Company did not have access to revenues and net profit
prior at the acquisition date.
36
iv.
Acquisition of equity interest of Minerva Minerva
S.A.
On October 01, 2014,
the Extraordinary Shareholders Meetings of Minerva S.A. and Mato Grosso Bovinos
S.A. (a wholly-owned subsidiary of BRF S.A) approved the merger of all shares
issued by Mato Grosso Bovinos S.A. by Minerva S.A. BRF transferred to Mato
Grosso Bovinos S.A. its beef slaughtering and deboning activities carried out on
the manufacturing facilities of Várzea Grand and Mirassol D’Oeste, both located
in Mato Grosso State.
As a consideration
for the share exchange transaction, BRF received 29,000,000 shares issued by
Minerva S.A. which currently correspond to 15.2% of the total and voting capital
stock of Minerva. In such transaction, the Company measured a gain of R$179.3
million of reais, related to the difference between the carrying amount of net
assets of Mato Grosso Bovinos S.A. and the fair value of 29,000,00 shares
received by BRF.
A preliminary
appraisal report to support the fair value of assets acquired and liabilities
assumed in determining the purchase price allocation in the financial statements
was prepared to record the Company´s investment, since the measurement of fair
value was still in progress on the date of approval of the financial statements
by the Board of Directors.
The preliminary fair
value of assets acquired and liabilities assumed of Minerva on acquisition date
as follows:
|
|
Amounts in millions of Reais
(1) |
|
|
Fair value recognized
on |
|
acquisition
date |
|
01.10.14 |
|
Current assets |
632.6 |
Non-current assets |
464.5 |
Current liabilities |
228.8 |
Non-current
liabilities |
746.3 |
Preliminary fair value of
equity interest in the net assets acquired |
122.1 |
Estimated purchase
price |
372.7 |
Goodwill on the expected
future profitability |
250.6 |
(1)
Information extracted from the financial statements of
December 31, 2014 and 2013.
The Minerva´s
investment is measured based on the equity method and classified as associate.
The Company has utilized the financial statements of October 31, 2014 of Minerva
to adjust the investment and measure the result from the associate up to
December 31, 2014.
c) unusual events or
transactions
The Company did not
participate in events or operations unusual.
37
10.4. Executive boards comments
on:
a. significant changes in accounting
practices
The Company’s
consolidated financial statements are prepared in accordance with the
International Financial Reporting Standards (“IFRS”) issued by the International
Accounting Standards Board (“IASB”) and interpretations issued by the
International Financial Reporting Interpretations Committee (“IFRIC”),
implemented in Brazil through Brazilian Accounting Pronouncements Committee
(“CPC”) and its technical interpretations (“ICPC”) and guidelines
(“OCPC”), approved by the Brazilian Securities Exchange Commission
(“CVM”).
The Parent Company’s
individual financial statements have been prepared in accordance with the
accounting practices adopted in Brazil, which comprises the provisions of
Corporate Law, required by Law No. 6,404/76 amended by Law No. 11,638/07 and No.
11,941/09 and accounting pronouncements, interpretations and guidelines issued
by CPC, approved by CVM. Up to December 31, 2013, such accounting practices
differs from IFRS, applicable to separate financial statements, in relation to
the evaluation of investments in subsidiaries, affiliates and joint ventures,
which were measured and recorded based on the equity pick-up accounting method
rather than at cost or fair value, as required by IFRS.
With the issuance of
the Standard IAS 27 (Separate Financial Statements) reviewed by the IASB in
2014, the separate financial statements in accordance with IFRS began to allow
the use of the equity pick-up accounting method for evaluation of investments in
subsidiaries, associates and joint ventures. In December 2014, CVM issued CVM
Deliberation No. 733/2014, approved the Document of Technical Pronouncement
Review No. 07 related to the pronouncements CPC 18, CPC 35 and CPC 37 issued by
CPC, due to amendments introduced by IAS 27, allowing its adoption from year
ended December 31, 2014. Thus, Parent Company’s individual financial statements
are in compliance with IFRS from year ended December 31, 2014.
The Company’s
individual and consolidated financial statements are expressed in thousands of
Brazilian Reais (“R$”), as well as the amounts of other currencies disclosed in
the quarterly financial statements, when applicable, were also expressed in
thousands. The result information is prepared by their accumulated over the same
period last year.
The preparation of
the Company’s financial statements requires Management to make judgments, use
estimates and adopt assumptions that affect the reported amounts of revenues,
expenses, assets and liabilities, as well as the disclosures of contingent
liabilities, as of the reporting date of these financial statements. However,
the uncertainty inherent to these judgments, assumptions and estimates could
lead to results requiring a material to carrying amount of the affected asset or
liability in future periods.
The Company reviews
its judgments, estimates and assumptions quarterly.
b. significant impacts due to changes
in accounting practices
During the year ended
December 31, 2014, there were no significant changes in accounting practices
issued by the Brazilian Securities Commission (“CVM”) and the pronouncements and
interpretations of the Brazilian Accounting Pronouncements Committee (“CPC”),
which are in conformity with the International Financial Reporting Standards
(“IFRS”) issued by the International Accounting Standards Board
(“IASB”).
38
c. qualification and emphasis in
the auditor´s opinion
In the last three
fiscal years the auditors issued unqualified opinion over the Company’s
financial statements.
The
independent auditor’s report regarding to BRF’s individual financial statements,
prepared according to new Brazilian accounting practices (“BR GAAP”) and the
consolidated financial statements prepared according to international financial
reporting standards (“IFRS”), related to year ended December 31, 2013, comparatives
for years ended as of December 31, 2012 were not unqualified, however, the
independent auditor’s report has tow emphasis of matter paragraph, namely, as
follows:
“As described in Note
2, the individual financial statements were prepared in accordance with the
accounting practices adopted in Brazil. In the case of BRF S.A. these practices
differ from IFRS, applicable to separate financial statements, only in relation
to the valuation of investments in subsidiaries, associates and joint ventures
under the equity method, while for IFRS purposes it would be cost of fair value.
Our opinion is not modified due to this matter.”
“As described on
footnote 3.34, due to changes in accounting principles adopted by the Company on
2013, the corresponding figures related to the financial statements for the year
ended December 31, 2012, presented for comparison purposes, were restated and
are presented according to CPC23 - Práticas Contábeis, Mudanças de Estimativa e
Retificação de Erro. Our opinion is not modified due to this
matter.”
The
independent auditor’s report regarding to BRF’s individual financial statements,
prepared according to new Brazilian accounting practices (“BR GAAP”) and the
consolidated financial statements prepared according to international financial
reporting standards (“IFRS”), related to year ended December 31, 2012, comparatives
for years ended as of December 31, 2011 were not unqualified, however, the
independent auditor’s report has tow emphasis of matter paragraph, namely, as
follows:
“As described in Note
2, the individual financial statements were prepared in accordance with the
accounting practices adopted in Brazil. In the case of BRF-Brasil Foods S.A.
these practices differ from IFRS, applicable to separate financial statements,
only in relation to the valuation of investments in subsidiaries, associates and
joint ventures under the equity method, while for IFRS purposes it would be cost
of fair value. Our opinion is not modified due to this matter”.
10.5. Critical accounting
practices
The
preparation of the Company’s financial statements requires Management to make
judgments, use estimates and adopt critical accounting assumptions, as
explanatory note 2 In the financial statement. The Management evaluates those
estimates and judgments periodically, based on the historical experience and
innumerable other factors regarded reasonable under such conditions.
Changes in facts and circumstances could conduct to a revision of estimates, the
actual future results may differ materially from those estimated.
In
the Company’s Management opinion the critical accounting policies adopted,
summarized below, adequately reflect the conditions of their
business:
a)
Revenue Recognition and Sales
Returns: We
recognize revenue when we deliver our products to customers, the selling price
is fixed and determinable, evidence of arrangements with our customers exists,
collectability is reasonably assured and title and risks of ownership have
passed to the customer. Our revenue recognition policy
therefore requires judgments regarding, among other things, the likelihood of
collectability from our customers.
39
During the holiday
season, when volumes of some of our products increase, we offer certain large
customers the ability to return products they are unable to sell. We monitor
these product returns and record a provision for the estimated amount of such
future returns, based on historical experience and any notification received of
pending returns. While we believe that we make reliable estimates for these
matters, fluctuations in demand could cause our estimates and actual amounts to
differ and could have a negative effect on our net sales in future
periods.
b)
Allowances for Doubtful
Accounts: We
maintain allowances for doubtful accounts for estimated losses from the
inability of our customers to make required payments. Our management records an
allowance for doubtful accounts for domestic customers who are more than 60 days
past due and for foreign customers who are more than 90 days past due. We record
the expense of estimated losses due from doubtful accounts under selling
expenses. When we are unsuccessful in our effort to recover an account
receivable, the amount credited to the estimated loss on doubtful accounts is
generally reversed against a permanent write-off of the account receivable. If
the financial condition of our customers were to deteriorate, we could be
required to increase our allowances for doubtful accounts, which would be
charged to our statements of income.
c)
Business Combination: were
accounted for using the acquisition method. The cost of an acquisition is the
sum of the consideration transferred, valued based on the fair value at the
acquisition date, and the amount of any non-controlling interests in the
acquiree. For each business combination, we recognize any non-controlling
interest in the acquiree either at fair value or at the non-controlling
interest’s proportionate share of the acquiree’s net assets. Costs directly
attributable to the acquisition must be accounted for as an expense when
incurred.
When acquiring a
business, our management evaluates the assets acquired and the liabilities
assumed in order to classify and allocate them pursuant to the terms of the
agreement, economic circumstances and the conditions at the acquisition
date.
Goodwill is measured
as the excess of the consideration transferred over the fair value of the net
assets acquired (net assets identified and liabilities assumed). If the
consideration is lower than the fair value of the net assets acquired, the
difference should be recognized as a gain in the statement of income.
After initial
recognition, goodwill is measured at cost, net of any accumulated impairment
losses. For purposes of impairment testing, the goodwill acquired in a business
combination, as from the acquisition date, is allocated to each of the Company’s
cash generating units expected to benefit from the synergies of the business
combination, regardless of whether other assets or liabilities of the acquire
are attributed to these units.
Goodwill is not
amortized and is subject to a yearly impairment test. The amount of goodwill
impairment, if any, is measured based on projected discounted future operating
cash flows. We identify our reporting units and determine the carrying value of
each reporting unit by assigning the assets and liabilities, including the
existing goodwill and intangible assets. We then determine the fair value of
each reporting unit by expected discounted operating cash flows generated by the
reporting unit. If the carrying amount of a reporting unit exceeds its fair
value, an impairment loss is recognized first to goodwill until
it is reduced to zero and then proportionally to other long-lived
assets.
40
The use of different
assumptions for valuation purposes, including estimates of future cash flows and
discount rates, could have resulted in different estimates.
d)
Depreciation, Depletion, Amortization and
Impairment: We recognize
expenses related to the depreciation of our property, plant and equipment, the
depletion of our forests and the amortization of software, patents, our
relationships with suppliers and loyalty among our outgrowers loyalty. The rates
of depreciation, depletion and amortization are based on our estimates of the
useful lives of the assets over the periods during which these assets can be
expected to provide benefits to us. In addition, we monitor the use of our
property, plant and equipment and intangibles to determine whether any
impairment of those assets should be recorded. The determination of such
impairment involves judgments and estimates as to whether the asset is providing
an adequate return in relation to its book value. While we believe that we make
reliable estimates for these matters, the uncertainty inherent to this estimate
could lead to results requiring a material adjustment to the carrying amount of
the assets in future periods.
e)
Biological Assets: The
consumables and production biological assets (living animals and plants) are
measured at their cost and the forest at their fair value.
f)
Contingencies: are
established when the Company has a present obligation, formalized or not, as a
result of a past event, it is probable that an outflow of resources will be
required to settle the obligation and its amount can be reliably
estimated.
The Company is part
of various lawsuits, including, tax, labor and civil claims. The assessment of
the likelihood of an unfavorable outcome in these lawsuits includes the analysis
of the available evidence, the hierarchy of the laws, available former court
decisions, as well as the most recent court decisions and their importance to
the Brazilian legal system, as well as the opinion of external legal counsel.
The provisions are reviewed and adjusted to reflect changes in the
circumstances, such as the applicable statute of limitation, conclusions of tax
inspections or additional exposures identified based on new claims or court
decisions.
A contingent
liability recognized in a business combination is initially measured at fair
value and subsequently measured at the higher of:
· the amount that would
be recognized in accordance with the accounting policy for the provisions above
that comply with CVM Deliberation Nº 594/09; or
· the amount initially
recognized less, if appropriate, cumulative amortization recognized in
accordance with CVM Deliberation Nº 692/12.
g)
Inventory: We record
inventories at average acquisition or formation cost, not exceeding market value
or net realizable value. The cost of finished products includes raw
materials, labor, cost of production, transport and storage, which are related
to all process needed to make the products ready for sale. Provisions for
obsolescence, adjustments to net realizable value, impaired items and
slow-moving inventories are recorded when necessary. Usual production losses
are recorded and are an integral part of the production cost
of the respective month, whereas unusual losses, if any, are recorded as other
operating expense.
41
h)
Income Tax and Social Contribution:
Deferred taxes represent credits and debits on IRPJ and
CSLL tax losses, as well as temporary differences between the tax basis and the
carrying amount. Deferred income tax and social contribution assets and
liabilities are classified as non-current, as required by CVM Deliberation Nº
676/11. When the Company’s analysis indicates that the realization of these
credits, within 10 years, is not probable, a provision for losses is
recorded.
Deferred tax assets
and liabilities are offset if a legally enforceable right exists to set off
current tax assets against current tax liabilities and they relate to income
taxes levied by the same tax authority on the same taxable entity. In the
consolidated financial statements, the Company’s tax assets and liabilities can
be offset against the tax assets and liabilities of the subsidiaries if, and
only if, these entities have a legally enforceable right to make or receive a
single net payment and intend to make or receive this net payment, or recover
the assets and settle the liabilities simultaneously. Therefore, for
presentation purposes, the balances of tax assets and tax liabilities are being
disclosed separately.
Deferred tax assets
and liabilities must be measured by rates that are expected to be applicable for
the period when the assets are realized and liabilities settled, based on the
rates (and tax regulation) that are in force at the balance sheet
date.
i)
Financial Instruments: financial assets
and liabilities are recorded when the Company becomes party to the contractual
provisions of the instruments and classified into the following categories:
marketable securities, loans and receivables, derivatives and other.
· Marketable Securities: Financial
investments are financial assets that consist of public and private fixed-income
securities, classified and recorded based on the purpose for which they were
acquired, as follows:
ü Trading
securities — if the financial assets were purchased for the
purpose of sale or repurchase in the short term, they are initially recorded at
fair value and their variations are recorded directly in the statement of
income within the year as financial income or expenses;
ü Held to maturity — if we have
the intent and financial ability to hold the financial assets to maturity, the
investments are recorded at amortized cost. Interest, monetary and exchange rate
variation are recognized in the statement of income, when incurred, as financial
income or expenses; and
ü Available for sale — includes
all financial assets that do not qualify in the other two categories above. They
are initially measured at fair value and changes in fair value are recorded to
shareholders’ equity, within other comprehensive income while the asset is not
realized, net of tax. Interest, inflation adjustments and exchange rate
variations, when applicable, are recognized in the statement of
income, when incurred, as financial income or expenses.
j)
Derivative Financial Instruments measured at fair value:
are those actively traded on organized markets and fair
value is determined based on the amounts quoted on an active market at the
balance
sheet date. These financial instruments are designated at initial recognition,
classified as other financial assets and/or liabilities, with a corresponding
entry in the statement of income within financial income or expenses or cash
flow hedge, a component of other comprehensive income, net of
taxes.
42
k)
Hedge Transactions: the Company utilizes
derivative and non-derivative financial instruments, as disclosed in note 4, to
hedge the exposure to exchange rate and interest variations or to modify the
characteristics of financial assets and liabilities and highly probable
transactions, which are: (i) highly correlated to changes in the market value of
the item being hedged, both at inception and throughout the term of the contract
(effectiveness between 80% and 125%); (ii) supported by documents that identify
the transaction, the hedged risk, the risk management process and the
methodology used to assess effectiveness; and (iii) considered effective
in the mitigation of the risk associated with the hedged exposure. These
transactions are accounted for in accordance with CVM Deliberation Nº 604/09,
that permits the protection accounting methodology (“hedge accounting”) with
measurement of effect of fair value in equity and its realization in income for
the relevant heading.
Hedges that meet the
criteria of hedge accounting are recorded as cash flow hedge.
In a cash flow
hedge, the effective portion of the gain or loss on the hedging instrument is
recognized as other comprehensive income, while the ineffective portion of the
hedge is recognized immediately as financial income or expense.
The amounts recorded
as other comprehensive income are immediately transferred to the statement of
income when the hedged transaction affects the statement of income, for example,
when the forecasted revenue in foreign currency occurs.
If the occurrence of
the forecasted transaction or firm commitment is no longer expected, the amounts
previously recognized in other comprehensive income are transferred to the
statement of income. If the hedging instrument expires or is sold, terminated or
exercised without replacement or rollover, or if its classification as a hedge
is revoked, the gains or losses previously recognized remain recorded in other
comprehensive income until the forecasted transaction or firm commitment affect
the statement of income.
l)
Loans and Receivables: these are financial
assets and liabilities with fixed or determinable payments which are not quoted
on an active market. Such assets and liabilities are initially recognized at
fair value plus any attributable transaction costs. After initial recognition,
loans and receivables are measured at amortized cost under the effective
interest rate method, less any impairment losses.
10.6. Internal
controls adopted for preparing the financial statements – Efficiency and
deficiency levels and recommendations in the independent auditor’s report Item
10.6. Executive Board’s comments with respect to the internal controls adopted
to ensure the reliable preparation of financial statements:
a. degree of
efficiency of such controls, indicating any imperfections and measures adopted
to correct them
43
Management is
responsible for establishing and maintaining adequate internal controls over the
Company’s financial reporting. In order to evaluate the effectiveness of the
internal controls for disclosing financial information in line with the dictates
of Section 404 of the Sarbanes-Oxley Act, Management has conducted an
assessment, which includes tests using “Internal Control-Integrated Framework”
criteria and issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). The Company’s internal controls system for financial
reporting was designed to provide reasonable assurance as to the reliability of
the Company’s financial information and for the preparation of financial
statements for disclosure purposes in accordance with generally accepted
accounting principles.
Due to its inherent
limitations, internal controls over financial reporting may not prevent or
detect misstatements. In addition, forecasts of any effectiveness
evaluation for future periods is subject to the risk that controls may become
inadequate due to changing conditions or because the level of compliance with
the policies and procedures may change.
b. deficiencies and
recommendations on internal controls in the independent auditor's
report
The study and
assessment of the accounting system and internal controls of the Company by the
independent auditors with respect to the auditing of the Financial Statements
was undertaken with the purpose of determining the nature, opportunity and
extent of the audit procedures but not for expressing an opinion on the efficacy
of these internal controls.
In the light of this
study and assessment, effected to the extent and for the abovementioned
objective, suggestions have been submitted to the Company for improving internal
controls, the following principal deficiencies of control for fiscal year 2014
being observed:
# |
Process |
Description of control deficiency |
Management Comments |
1 |
Fixed
Assets |
The Company
has not documented the specific controls for determining and booking the
capitalization of interest on fixed assets in its risks and controls
matrix. |
Action plan concluded on December 31, 2014. We
have undertaken the revision and documentation of all the processes and
controls for the deficiencies that have been cited. |
2 |
Biological
assets – Animals |
Live Animals
(Biological Asset – Fair Value): In the flow of the biological assets
process, the Company has not documented all the elements for determining
the fair value of these assets. For example animal data (“inputs”) and
procedures for revision based on the assumptions in the report put out by
Deloitte (“outputs”). |
3 |
Indirect
Taxes |
In the flow
of the taxes to be recovered process, the Company has not documented all
the elements with respect to determining the provision for the discount on
the realization of ICMS sales tax credits. |
4 |
Shareholders,
Equity |
In the flow
of the Shareholders’ Equity process, the Company has not documented all
the elements involving shares held as treasury stock such as purchase,
sale and accounting impacts. |
5 |
Non-routine
and estimation processes |
In the flow
of certain processes, principally non-routine and estimation processes,
the Company has failed to document the controls on SAP (Z transactions)
standard and customized transactions and the extraction of data and
manipulation of electronic spreadsheets, used in the execution of these
processes and as a basis for supporting the values disclosed in the
explanatory notes. Thus, these specific controls and risks were not
identified and included in the Company’s risks and controls matrix.
|
6 |
Routine,
non-routine and estimate processes |
The Company
has not updated the flow charts for these processes for the year 2013. In
addition, as a rule, the flow charts were prepared in a summarized
format. |
7 |
Biological
assets - Forests |
In the flow
of the process of biological assets (forests), the Company has not
documented all the elements for determining the fair value of these assets
such as the extraction of data (location, hectares) (“inputs”) and the
procedures for revising assumptions and calculations presented in the
report issued by Deloitte (“outputs”) prior to account
registration. |
8 |
Payment based
on shares |
In the flow
process for Stock Options, the Company has not documented the specific
controls for arriving at a fair value for granting and for procedures
related to cancelation. |
9 |
Derivatives/Hedge Accounting
|
In the
derivatives process, the Company has not documented all the controls with
respect to hedge accounting, such as those executed with respect to hedge
effectiveness testing and account classification (result or other overall
results). |
10 |
Closing of
the Financial Statements |
The Company
has not documented the process of analysis for impacts arising from new
accounting pronouncements. |
44
Based on its
assessment, Management has concluded that the deficiencies in controls listed
above are related to the improvement in the description of the controls on these
processes in our risks and controls matrix. We would point out that the controls
have been implemented and are effective. Management is satisfied with the
remedial actions implemented during the course of fiscal year 2014. Up to the
date of filing of this document, no new deficiencies have been pointed out by
our auditors, the deficiencies listed above having all been fully remedied
during the year in accordance with the proposed schedule.
10.8. Description of
significant items not evidenced in the financial statements of the
Company:
a.
assets and liabilities directly or indirectly held by
the Company, which are not disclosed in its balance sheet (off-balance sheet
items), such as:
i. operating
commercial leasing, assets and liabilities;
ii. receivables
portfolios written off over which the entity has risks and responsibilities,
informing respective liabilities;
iii. agreements for
future purchase and sale of products or services
iv. non-finished
construction agreements
v. agreements for
future financing receipts
b. other items not
evidenced in the financial statements
All the operations
which could be classified as off-balance sheet were properly disclosed in the
Financial Statements, including: leasing and purchase commitments. We have no
knowledge of any other operation with these
characteristics other than those already disclosed. However, only for
informative purposes, the information disclosed in the consolidated financial
statements related to these items is as follows:
45
1) Marketable securities
December 31, 2014, of
the total of marketable securities, R$32.4 million reais (R$82.8 million reais
as of December 31, 2013) were pledged as collateral for futures contract
operations in U.S. Dollars and live cattle, traded on the “BM&F”.
2) Inventories
On December 31, 2014,
R$40.0 million reais (R$50.0 million reais as of December 31, 2013) of the
balance of inventories as of the parent company and the consolidated was pledged
as collateral for rural credit operations.
3) Property , plant and
equipment
On December 31, 2014,
the Company had no commitments assumed related to acquisition and/or
construction of property, plant and equipment items.
The property, plant
and equipment items that are pledged as collateral for transactions of different
natures are presented below:
|
|
|
|
|
|
Amounts in millions of Reais (1) |
|
|
|
|
Parent company and
Consolidated |
|
|
|
12.31.14 |
|
12.31.13 |
|
|
|
Book value of
the |
|
Book value of the |
|
Type of
collateral |
|
collateral |
|
collateral |
Land |
Financial/Labor/Tax/Civil |
|
320.9 |
|
330.8 |
Buildings and improvements |
Financial/Labor/Tax/Civil |
|
1,670.5 |
|
1,824.8 |
Machinery and equipment |
Financial/Labor/Tax |
|
2,053.8 |
|
2,054.9 |
Facilities |
Financial/Labor/Tax |
|
640.4 |
|
660.0 |
Furniture |
Financial/Labor/Tax/Civil |
|
18.7 |
|
19.9 |
Vehicles |
Financial/Tax |
|
10.8 |
|
1.6 |
Others |
Financial/Labor/Tax/Civil |
|
76.9 |
|
100.3 |
|
|
|
4,792.1 |
|
4,992.4 |
(3)
Information extracted from the financial statements of
December 31, 2014 and 2013.
The Company is not
allowed to assign these assets as security for other transactions or to sell
them.
46
4) Loans and
financing
The guarantees
related to loans and financing are as follows:
|
|
|
|
|
|
|
|
Amounts in millions of Reais (1) |
|
|
Parent
company |
|
|
|
Consolidated |
|
12.31.14 |
|
12.31.13 |
|
12.31.14 |
|
12.31.13 |
Total of loans and
financing |
10,030.6 |
|
7,675.3 |
|
11,589.3 |
|
10,181.2 |
Mortgage
guarantees |
1,102.7 |
|
1,278.4 |
|
1,102.7 |
|
1,278.4 |
Related to
FINEM-BNDES |
594.9 |
|
817.3 |
|
594.9 |
|
817.3 |
Related to
FNE-BNB |
293.5 |
|
335.4 |
|
293.5 |
|
335.4 |
Related to tax
incentives and other |
214.3 |
|
125.6 |
|
214.3 |
|
125.6 |
Statutory lien on assets
acquired with financing |
1.0 |
|
26.8 |
|
1.0 |
|
26.8 |
Related to
FINEM-BNDES |
0.6 |
|
1.2 |
|
0.6 |
|
1.2 |
Related to
financial lease |
0.4 |
|
25.6 |
|
0.4 |
|
25.6 |
(1)
Information extracted from the financial statements of
December 31, 2014 and 2013.
The Company is the
guarantor of a loan obtained by Instituto Sadia de Sustentabilidade from the
BNDES. The loan was obtained with the purpose of allowing the implementation of
biodigesters in the farms of the outgrowers which take part in the Sadia´s
integration system, targeting the reduction of the emission of Greenhouse Gases.
The value of these guarantees on December 21, 2014 totaled R$53.3 million reais
(R$61.1 million reais as of December 31, 2013).
The Company is the
guarantor of loans related to a special program, which aimed the local
development of outgrowers in the central region of Brazil. The proceeds of such
loans are utilized to improve farm conditions and will be paid in 10 years,
taking as collateral the land and equipment acquired by the outgrowers through
this program. The total of guarantee as of December 31, 2014 amounted to R$280.1
million reais (R$363.7 million reais as of December 31, 2013).
On December 31, 2014,
the Company contracted bank guarantees in the amount of R$2,048.3 million reais
(R$1,707.2 million reais as of December 31, 2013). The variation occurred during
the period is related to bank guarantees offered mainly in litigations involving
the Company´s use of tax credits. These guarantees have an average cost of 0.90%
p.a. (0.90% p.a. as of December 31, 2013).
5)
Commitments
In the normal course
of the business, the Company enters into agreements with third parties which are
mainly related to the purchase of raw materials, such as corn and soymeal, where
the agreed prices can be fixed. The Company enters into other agreements, such
as electric energy supplies, packaging supplies and others for manufacturing
activities. The amounts of the agreements on the date of these financial
statements are set forth below:
47
|
|
Amounts in millions of Reais
(1) |
|
|
Parent company
and |
|
Consolidated |
|
12.31.14 |
2015 |
3,054.7 |
2016 |
697.8 |
2017 |
550.4 |
2018 |
523.4 |
2019 onwards |
2,197.1 |
|
7,023.3 |
(1)
Information extracted from the financial statements of
December 31, 2014 and 2013.
In the year ended
December 31, 2014, then Company has not held any Built to Suit
agreements.
6) Leasing
The Company is lessee
in several contracts, which can be classified as operating or finance
lease.
6.1) Operating
lease
The minimum future
payments of non-cancellable operating lease, for each of the following years,
are presented below:
|
|
|
|
Amounts in millions of Reais (1) |
|
|
Parent
company |
|
Consolidated |
|
12.31.14 |
|
12.31.14 |
2015 |
169.3 |
|
169.4 |
2016 |
150.9 |
|
152.1 |
2017 |
127.6 |
|
128.8 |
2018 |
110.1 |
|
111.4 |
2019 onwards |
226.6 |
|
226.6 |
|
784.5 |
|
788.2 |
(1)
Information extracted from the financial statements of
December 31, 2014 and 2013.
The payments of
operating lease agreements recognized as expense in the year ended December 31,
2014 amounted to R$194.1 million reais in the parent company and R$247.7 million
reais in the consolidated (R$249.9 million reais in the parent company and
R$283.1 million reais in the consolidated as of December 31, 2013).
48
6.2) Financial
lease
The Company contracts
financial leases mainly for the acquisitions of machinery, equipment, vehicles,
software and buildings.
The Company controls
the leased assets which are presented below:
|
|
|
|
|
|
|
|
|
|
Amounts in million of Reais (1) |
|
|
|
|
|
|
Parent
company |
|
|
|
Consolidated |
|
|
Weighted
average |
|
|
|
|
|
|
|
|
|
interest rate |
|
|
|
|
|
|
|
|
|
(p.a.) (2) |
|
12.31.14 |
|
12.31.13 |
|
12.31.14 |
|
12.31.13 |
Cost |
|
|
|
|
|
|
|
|
|
Machinery and
equipment |
|
|
23.7 |
|
75.5 |
|
32.0 |
|
86.5 |
Software |
|
|
73.0 |
|
22.1 |
|
73.0 |
|
22.1 |
Vehicles |
|
|
28.2 |
|
138.9 |
|
28.2 |
|
138.9 |
Buildings |
|
|
128.7 |
|
113.7 |
|
128.7 |
|
113.7 |
|
|
|
253.5 |
|
350.2 |
|
261.8 |
|
361.3 |
|
Accumulated
depreciation |
|
|
|
|
|
|
|
|
|
Machinery and
equipment |
18.45% |
|
(8.3) |
|
(17.8) |
|
(16.6) |
|
(27.0) |
Software |
20.00% |
|
(48.3) |
|
(8.9) |
|
(48.3) |
|
(8.9) |
Vehicles |
13.02% |
|
(8.8) |
|
(37.0) |
|
(8.8) |
|
(37.0) |
Buildings |
15.43% |
|
(20.2) |
|
(9.6) |
|
(20.2) |
|
(9.6) |
|
|
|
(85.7) |
|
(73.3) |
|
(94.0) |
|
(82.5) |
|
|
|
167.8 |
|
276.9 |
|
167.8 |
|
278.8 |
(1)
Information extracted from the financial statements of
December 31, 2014 and 2013.
(2)
The period of depreciation of leased assets corresponds
to the lowest of term of the contract and the useful life of the asset, as
determined by CVM Deliberation Nº 645/10.
49
The future minimum payments required are segregated as
follows, and were booked as current and non-current liabilities:
|
|
|
|
|
|
Amounts in millions of Reais (1) |
|
|
|
|
|
|
Parent
Company |
|
|
|
|
|
12.31.14 |
|
Present value
of |
|
|
|
Minimum
future |
|
minimum payments
(2) |
|
Interest |
|
payments (3) |
2015 |
63.7 |
|
24.7 |
|
88.5 |
2016 |
41.8 |
|
16.6 |
|
58.3 |
2017 |
24.5 |
|
10.0 |
|
34.5 |
2018 |
21.7 |
|
7.8 |
|
29.5 |
2019 onwards |
92.4 |
|
60.3 |
|
152.7 |
|
244.0 |
|
119.5 |
|
363.5 |
|
|
|
|
|
|
Consolidated |
|
|
|
|
|
12.31.14 |
|
Present value
of |
|
|
|
Minimum
future |
|
minimum payments
(2) |
|
Interest |
|
payments (3) |
2015 |
63.8 |
|
24.8 |
|
88.6 |
2016 |
41.8 |
|
16.6 |
|
58.3 |
2017 |
24.5 |
|
10.0 |
|
34.5 |
2018 |
21.7 |
|
7.8 |
|
29.5 |
2019 onwards |
92.5 |
|
60.4 |
|
152.8 |
|
244.2 |
|
119.5 |
|
363.7 |
(1)
Information extracted from the financial statements of
December 31, 2014 and 2013.
(2)
Comprises the amount of R$407 related to financial lease
of vehicles which are recorded as loans and financing.
(3)
Comprises the amount of R$407 related to financial lease
of vehicles which are recorded as loans and financing.
The contract terms
for both modalities, with respect to renewal, adjustment and purchase option,
are according to market practices. In addition, there are no clauses of
contingent payments relating to restrictions on dividends, interest payments on
shareholders ‘equity or additional debt funding.
10.9. Executive
Board’s Comments on each of the items not evidenced in the financial statements
mentioned in item 10.8, informing:
a. how said items
change or may change income, expenses, the result of operations, the financial
expenses or other items of the Company’s financial statements;
b. the nature and
purpose of the operation;
c. nature and amount
of the liabilities assumed and of the rights generated in favor of the Company
as a result of the operation.
The Company’s
management does not expect significant effects on described operations in item
10.8 and not evidenced in the financial statement which may change the revenues,
expenses, the operational result, financial expenses or other items of Company’s
financial information.
50
For a description of
each operation, as well as the amount of the assumed obligations and rights
created in favor of the Company as a result of operations no evidenced in the
financial statement, see item “10.8” above.
10.10 Directors
should indicate and comment on key elements of the issuer's business plan,
specifically exploring the following topics
a) investments,
including:
i. Quantitative and
qualitative description of investments in progress and expected
investments
ii. Investment
funding sources
iii. Relevant
divestitures in progress and expected divestitures
b) If disclosed,
indicate the acquisition of plants, equipment, patents or other assets that may
materially affect the issuer's production capacity
c) New products and
services, including:
i. Description
of ongoing research already disclosed
ii. Total
amounts spent by the issuer in research to develop new products or
services
iii. Projects
in development already disclosed
iv. Total
amounts spent by the issuer in the development of new products or
services
The financial data presented in this section are taken from the consolidated
financial statements.
a) investments,
including:
i. Quantitative and
qualitative description of investments in progress and expected
investments
Investments made in recent
years:
(excluding investments in
head offices)
|
|
|
|
|
2014 |
2013 |
2012 |
(in millions of
R$) |
|
|
|
Growth/Expansin
capacity |
293 |
646 |
992 |
Efficiency/Process
Improvement |
268 |
169 |
285 |
Operation
Support |
387 |
358 |
622 |
Total Investments
(consolidated) |
948 |
1,396 |
1,899 |
51
2014
During the year, the
investments made by the Company totaled R$1.5 billion targeted for growth,
support and efficiency. It has also been found that amount, a total of R$517.5
million invested in biological assets. It was not considered in this number,
however, R$ 514.4 million targeted for acquisitions and other, and R$67.8
million lease, which would total R$2.0 billion investment in 2014.
On January 16, 2013,
BRF SA informed the market that it has completed the acquisition of 49% of the
share capital of the Federal Foods, a privately held company headquartered in
Abu Dhabi, United Arab Emirates, becoming the owner of 60% the economic rights
of the said company. On February 17, 2014, BRF announced signing a binding offer
with Al Nowais Investments (holding the remaining stake of the Federal Foods)
to, among other things, acquire, through its subsidiary in Austria, additional
economic rights issued by Federal Foods, in accordance with the limits set by
law and common practice in the UAE, for a total investment of US$27.8 million,
on April 9, 2014 BRF concludes this business by the aforementioned
investment.
The Federal Foods is
a privately held company headquartered in Abu Dhabi, United Arab Emirates, and
distributor of Sadia products for over 20 years as well as a series of chilled,
frozen products and dry line of other brands and suppliers. Currently, BRF
products represent approximately 65% of net revenue of the Federal
Foods.
52
Also in line with
BRF's strategic plan to internationalize the Company accessing local markets,
strengthening the brands of BRF, distribution and expanding its product
portfolio in the Middle East, the Company announced on July 3, 2014 the
completion of the acquisition of equity interest of Al Khan Foods, a distributor
of products in the Sultanate of Oman. BRF acquired 40% stake in the capital of
AKF, based on an enterprise value (enterprise value) totaling US$ 68.5
million.
Al Khan Foods is the
leading distributor of frozen food in the Sultanate of Oman, covering a broad
scope of retail customers, food services and wholesale. It distributor of Sadia
products in the Sultanate of Oman for 25 years, as well as a number of other
frozen products of other brands and suppliers.
On October 01, 2014
BRF SA holds the total amount of 29,000,000 of Minerva shares, roughly
corresponding to 15.2% of total share capital and voting on it. It should be
noted also that the BRF and the VDQ Holdings SA (controlling shareholder of
Minerva) signed in 2013 the Shareholders' Agreement, which was suspended and
conditioned to the effective completion of the Share Exchange, so this came into
force in October 2014.
Through this
agreement, BRF made an adjustment in its operating model in the beef market.
Without going out of business, desverticalizamos the chain, leaving the
management of the slaughter the care of a specialist company in the case
Minerva, while reinforcing its presence in the segments of food service and food
processed beef. The implementation of the Transaction was subject to the
approval of the Administrative Council for Economic Defense (CADE), which it did
in August 20, 2014.
Also in 2014 BRF
materialized, on November 21, the acquisition of 75% of the distribution of
frozen food retail business of Alyasra. The conclusion of this deal was to
enterprise value base of US$160 million.
Finally, the large
investment of the Company for the year 2014 was the opening of its first factory
of processed foods in the Middle East, the region's largest. We invested
approximately US$160 million in the construction of the unit, located in KIZAD
industrial district of Abu Dhabi, the United Arab Emirates.
The strategic
location of the unit will ensure fast and efficient access to strategic markets.
The plant, which will produce processed foods (breaded products, hamburgers and
pizzas, etc.), began operating with about 350 employees, a figure that could
reach 1,400 in 2017, when it reaches production capacity of 70,000 tons/year. As
with other plants operated by the Company, the new unit production lines follow
strict precepts of food security, one of the attributes most valued by Middle
Eastern consumers.
53
2013
In 2013 investments
(CAPEX) totaled R$ 1.5 billion and were directed to growth projects, efficiency
and support, including R$501.8 million of investments in biological assets.
Moreover, there was also the period, R$164.8 million leasing and R $ 222.5
million of acquisitions and other investments.
The main
disbursements were directed to productive capacity increase investments in
Videira (SC), Ponta Grossa (PR), Paranaguá (PR), Tatuí (SP) and Uberlandia (MG);
construction of new factories: margarine (Victory of the Holy Antão- PE);
cheeses (Three May- RS); expansion of slaughterhouses of the industrial units of
New Mutum (MT) and Dourados (MS); and factory processed in the Middle East; and
investments in automation projects, process improvement, extension lines and
support.
Reducing Capex before
the guidance provided at the beginning of the year, it was a prioritization of
projects, in line with the strategy outlined by the Company, changing only this
direction returning it to process improvement through investments in logistics
and systems (IT).
On November 01, 2013,
the Company entered into an investment agreement with the Minerva SA, one of the
leaders in South America in the production and sale of fresh beef, live cattle
and its derivatives. This Investment Agreement regulates the terms and
conditions of a transaction by which the BRF aportaria their Lowland Great
cattle slaughter plants and Mirassol, with capacity to slaughter 2,600 cattle
per day, as well as employees involved in the BRF those activities of a
company-held shares sold to Minerva.
On January 16, 2013,
BRF informed the market that it has completed the acquisition of 49% of the
share capital of the Federal Foods, a privately held company headquartered in
Abu Dhabi, United Arab Emirates, becoming the owner of 60% of economic rights of
that company, under the shareholders' agreement signed between the parties at
the time.
2012
Investments in Capex
made during the year totaled R$2.5 billion, being 25% higher than in 2011 and
were directed to growth projects, efficiency and support. Are considered in this
amount of R$494 million of investments in biological assets (matrices), to meet
the growth projects.
54
Among the highlights
for 2012 investments, we highlight the creation of two joint ventures: the first
with the Rising Star Food Company Limited (China), for the purpose of access to
distribution in the Chinese market, local processing, Sadia brand development in
China and range of retail channels and food services in Mainland China, Hong
Kong and Macau; and the second with Carbery Goup (Brazil), a joint venture for
processing of whey protein, a partnership, which includes the 50% for BRF and
50% for Carbery, involving shared investment of US$50 million, Carbery using
technology for processing the cheese whey generated in operations.
Among the highlights
also emphasize the acquisition of Quickfood (Argentina). There were also
investments in factories - new margarine units in Vitória do Santo Antao (PE)
and sausage in Lucas do Rio Verde (MT); expansion of the slaughter of poultry in
Lucas do Rio Verde (MT), Rio Verde (GO), Two Neighbors (PR), Toledo (PR), Golden
(MS) and Nova Mutum (MT) - the adequacy of the Distribution Center Rio de
Janeiro (RJ) and the construction of the new Technology Center in Jundiaí
(SP).
a) ii. Investment
funding sources
The Company has
generated funds from operating cash and credit lines with financial institutions
in Brazil and abroad.
a) iii. material
divestitures in progress and expected divestitures
In 05.12.05.14, BRF
signed with Lactalis the contract of sale of its dairy sector, which includes
(i) plans of Good Counsel (PE), Carambeí (PR), Ravenna (MG), Concordia (SC)
Teutonia (RS), Itumbiara (GO), Terenos (MS), Ijuí (RS), May 3 I (RS), May 3 II
(RS) and Santa Rosa (RS), and (ii) the related assets and Bata brands, Elect,
Cotochés, Santa Rosa and DoBon) dedicated to this division
("Transaction").
The value of the
transaction was set at the amount of US$ 697,756 (equivalent to R$1.8 million)
in 05.12.05.14, subject to customary adjustments for working capital and net
debt.
55
BRF SA announced to
the market on February 14, 2012, on the formation of the JV between BRF and Dah
Chong Hong Company Limited ("DCH"), however, BRF and DCH reported on April 30,
2014 which, by common agreement and friendly character, ended the joint venture.
This discontinuation of the operation involved the amount of US$460,000 in
payment for the joint venture. Both companies maintain a business partnership,
not exclusive to the region with a focus on Hong Kong and Macau
markets.
b) If disclosed,
indicate the acquisition of plants, equipment, patents or other assets that may
materially affect the issuer's production capacity
There was no
disclosure of the acquisition of plants, equipment, patents other assets, other
than those already described in the above item, which could materially affect
the Company's production capacity.
c) new products and
services, including:
i. Description of
ongoing research already disclosed
In 2014 were launched
123 new products available to consumers, as follows: 59 releases in the domestic
market, divided into segments meat segments -– 55- and dairymilk 55 - 04. In the
international market, were totaled 36 new products and in the food service
market 28 releases.
The research
activities, development and innovation (R&D&I) BRF understand the
Agricultural Research and Innovation and the Research and Development of
Products and Processes. The team of Research and Development of meat products is
located in Jundiaí, in São Paulo, where the BRF Innovation Center (BIC) is, and
the team of Research and Dairy Development focuses on the city of Carambeí,
state of Paraná.
The area of
R&D&I agricultural seeks to ensure the international competitiveness
of the company by the continuous introduction of new technologies at the right
time, ultimately reducing production costs, improving product quality and
service requirements of customers and consumers.
BRF has one of the
largest experimental structures to search for poultry and pork in the world,
with 19 facilities in 4 experimental farms in the state of Santa Catarina, with
a total of 1,380 stalls for experimental evaluations of the impact of
characteristics in the production chain. The company has 7 bromatological
laboratories and 5 agricultural laboratories that support the research
activities and the operation.
In addition to the
formal structure research structure of the company, the company structured a
research process in the production system. This allows us to evaluate all the
technologies in actual production conditions, with adequate number of samples,
calculate productive and financial impact and set the appropriate time to
introduce certain technology. Field research system is a differential of BRF in
relation to research centers and other companies in the sector.
In 2014, were
registered 170 experiments in the agricultural research system.
c) ii.Total montantes
spent by the issuer in research to develop new products or
services
56
We invested R$192
million in 2014, RUS$68.6 million in 2013 and R$ 33.1 million in 2012 in
R&D&I activities. In the years 2012 and 2013, considered as
R&D&I spent the fixed values expenditures posted to cost centers of
managements linked to these activities. In the year 2014, we started to consider
how expenditure of R&D&I spent the values as material consumption in
experimental research tests and field research of R&D&I projects
agriculture, so the increase in value.
Opened in June 20,
2013, BIC received funding from FINEP (Subvention Program - researcher in the
company) totaling R$106 million, R$58 million for construction of facilities
totaling 13,500 m². The project represents the commitment of BRF to invest in
research, development and innovation to create and add value to their products,
processes and services. Its structure, designed to be the main reference in
technological development in the food sector, includes areas of R&D in meat,
pasta, margarine, vegetables and packaging, as well as quality, project
management and graphic arts, offering office structure and rooms meetings, pilot
plant, sensory environments for testing and evaluation, packaging laboratory,
kitchens for customers of food service, library and creativity room.
Still on the
association of BRF with FINEP and CNPq (PNPD - National Program for Post
Doctoral and RHAE - Training Program of Human Resources in Strategic Areas) and
Araucaria Foundation (Postdoctoral Program in the company), BRF promotes, in
recent years, the inclusion of teachers and doctors on its staff. By the year
2014 were absorbed 9 researchers, 5 remain in training and are approved 2 more
from 2015.
BRF believes that
invest in Research, Development and Innovation is a key factor to maintain its
competitive advantages, is to optimize its supply chain, improving
sustainability and launching innovative products, meeting the expectations and
needs of consumers, customers and markets.
c) iii. projetos in
development already disclosed
BRF has its own
program of breeding pigs, competitive with the programs of international
genetics companies. Currently serves, by choice, 65% of the company's
production, corresponding to the slaughter of approximately 6 million head. The
program has six core farms in the state of Santa Catarina, with a staff of 110
employees, and book farm in Minas Gerais. Aiming to follow the growth of the
company, a new core farm is under construction in the state Goiás, which will
increase by 27% the program's production capacity. A lot of work is running for
the incorporation of genomic evaluation in the selection process. To make this
technological leap, the company has established partnerships with six centers of
Embrapa (Brazilian Agricultural Research Corporation), universities and research
funding agencies (BNDES, FINEP, CNPq) and formed a frame with 9 geneticists, 8
doctors.
The integrated
process of Agricultural innovation BRF part interfaces with companies and
research centers, characterized by sharing the use of physical structures and
staff, for solution of the main demands for development work together, but
mostly resulting in feedback new proposals innovation from the own network of
technological development. This process of innovation has been recognized
externally with the following awards:
•
National Award Teams from EMBRAPA in Category
Partnership 2012
•
National Award Teams from EMBRAPA in Category
Creativity 2011
•
Innovation Award Management Category, Southeast,
granted by FINEP, 2010.
57
The area of
R&D&I of meat and dairy products works to keep the BRF at the
forefront of innovation by developing new products and processes, aligned the
demands of the market, continuous improvement of existing products and
assessment of new technologies. For this, our framework includes senior
professionals, working in product development, packaging, sensory analysis and
support teams, as project management, innovation management, graphic arts and
registration and labeling. Our technical team is composed of technologists and
Food Engineers, Chemical Engineers, Chemical, Pharmaceutical and
Veterinary.
c) iv. total amounts
spent by the issuer in the development of new products or
services
BRF continually
invests in research, development and innovation to launch new products and also
continuously improve its current portfolio, and the Company intends to continue
investing in product innovations in all markets in which current. However, it
involves trade secrets, this information can not be disclosed in
advance.
BRF spent in 2014
US$192 million dollars in research activities, development and innovation. Some
examples of product launches in Brazil in 2014: the line of sliced cold in
packaging opens and closes-Soltíssimo, the line Easy Chicken Sadia (whole
chicken and frozen seasoned cuts in packaging bakes easy) to aerated margarine
Qualy AERA, the sausage Tuscany Baked BBQ Chicken Fillet Perdigao and Milanese
to Food Services.
BRF held first patent
filing with the INPI (National Institute of Industrial Property) in 2014, two
deposits of invention patents, 1 utility model 1 and 1 industrial design in 2013
and 3 deposits Patent in 2012.
10.11. Comment on
other factors that have significantly affected operating performance and that
have not been identified or commented on other items in this
section.
All relevant
information were identified and discussed in previous sections.
58
Annex II - Allocation of Net Income
(As Annex 9-1-II of CVM
Instruction 481 of December 17, 2009)
1. Net Profite for
the fiscal year
The Company's net
income on 12.31.2014 was R$2,225,036 thousand.
2. Total
amount per share of dividends, including dividend advances and interest on the
company’s capital which have already been declared
In the course of the
year 2014 the following values as a distribution of profits to shareholders
declared:
|
|
|
|
|
|
2014
|
|
(R$
thousand) |
|
Total shares
outstanding 12/31/2013 – weighted average per share |
|
870,412,068 |
Earnings per share |
|
2,46 |
Dividends per share |
|
0,10 |
Interest on
Equity per share |
|
0,85 |
|
3. Percentage of Net
Profit for the year that has been distributed
The percentage of net
income distributed year was 33.16%.
4. Total amount
and amount per share distributed on the basis of profit from previous
years
During the fiscal
year 2014 were not distributed dividends based on prior years'
profits.
5. State, after
deducting dividend advances and interent on company’s capital which have already
been declared
There will be
proposed to the General Meeting the declaration of dividends or interest on
additional capital to already declared.
b. The form and
term of payment of dividends and interest on capital
As mentioned in
sub-item "a" of this item, the mandatory dividend for the 2014 financial year
has been fully declared by the Board of Directors and paid to
shareholders.
59
For dividends and
interest on equity already declared, shareholders may receive the amounts due to
them in
the following ways:
·
American
holders Shareholders Depositary Receipts (ADRs):
Payment will be made
directly to the foreign depositary bank (Bank of New York Mellon) who will
forward it to the shareholders.
·
Shareholders who hold current accounts with Itaú
Unibanco SA duly registered:
Payment will be made
by direct credit to the respective current accounts.
·
Shareholders who hold current accounts with other banks
that have already indicated the bank / agency / checking account:
Payment will be made
through wire DOC or TED, as their values.
·
Shareholders whose shares are deposited in fiduciary
custody of BM & FBOVESPA.
Payment will be made
directly to BM & FBOVESPA through the Central Depositary of BM &
FBOVESPA (former CBLC), which will forward it to the shareholders, through the
depositor Brokerage Firms.
·
Shareholders holding shares in bearer not yet converted
to the book-entry system:
Payment will be made
upon delivery of the respective certificates for mandatory
conversion.
There will be proposed
to the General Meeting the declaration of dividends or interest on additional
capital to already declared. Payment dates already occurred, see table in item 6
below.
c. Any restatement and
interest on dividends and interest on capital
None.
d. Date of
declaration of payment of dividends and interest on equity used to identify
shareholders entitled to receive them.
There will be
proposed to the General Meeting the declaration of dividends or interest on
additional capital to already declared.
6. If dividends on
company’s capital have been declared on the basis of profits shown on
half-yearly balance sheets or balance sheets for shorter periods
a. Inform the amount
of dividends or interest on equity already declared
b. State the date of
the respective payments
60
Year |
Gender |
Payment Day |
Value per Shre (R$) |
equivalent value in US$ at the payment
date |
2014 |
Interest on capital |
08.15.2014 |
0.41421437 |
0.183272585 |
2014 |
Interest on capital |
02.13.2015 |
0.43441923 |
0.153250513 |
2014 |
Dividends |
02.13.2015 |
0.09972393 |
0,035179712 |
7. Provide a
comparative table indicating the following amounts per share of each type and
class:
a. Net income for the
year and the three (3) previous years
b. Dividends and
interest on equity paid in three (3) previous years
The data below refer
to the consolidated financial statements.
|
|
|
2014 R$/Thousand |
2013 R$/Thousand |
2012 R$/Thousand |
|
|
Net Profit |
|
2,225,036 |
1,062,430 |
770,002 |
|
|
Interest on capital
distributed |
|
737,765 |
724,013 |
274,750 |
|
|
Dividends
distributed |
|
86,489 |
- |
45,300 |
|
For the calculation
of earnings per share, dividing the net income by the amount of outstanding
shares, excluding treasury shares on the date the balance sheet.
8. If profits are
allocated to the legal reserve
a.
State the amount allocated to the legal
reserve
The legal reserve is
made on the basis of 5% of net income in accordance with art. 193 of Law 6,404 /
76, amended by Law No. 11,638 / 07, limited to 20% of the share capital. On
31/12.31/.14 the balance appropriated to the legal reserve was R $ 111.252
million, representing 5% of net income, and the balance of legal reserve in the
period was R $ 384,619 corresponding to 3.09% of the share capital (2 19% by
12./31./13).
b. Give a detailed
description of how the legal reserve is calculated
The legal reserve is established on the basis of 5% of
net income in accordance with art. 193 of Law 6,404 / 76, amended by Law No.
11,638 / 07, limited to 20% of the share capital.
61
9. In case the
Company has preferred shares entitled to fixed or minimum
dividends
a. Describe the
calculation of fixed or minimum dividends
b. Inform whether the
income is sufficient for the full payment of fixed or minimum
dividends
c. Identify whether
any unpaid portion is cumulative
d. Identify the total
amount of fixed or minimum dividends to be paid to each class of preferred
shares
e. Identify the fixed
or minimum dividends to be paid per preferred share of each class
10. In relation to
the mandatory dividend
a. Describe the
calculation method set forth in the statute
The Company's bylaws
determine the distribution of a minimum dividend of 25% of net income, adjusted
pursuant to art. 202 of Law 6,404 / 76 to be assigned to all the Company's
shares. At least 3 years the Company distributed values above the minimum
dividend.
b. Inform whether it
is being fully paid
The mandatory
dividend was fully paid, pursuant to item 6 above.
c. Inform the amount
withheld
There were no
retained amounts.
11. In case of
retention of mandatory dividend due to the Company's financial
situation
a. Inform the amount
withheld
b. Describe in detail
the financial situation of the company, including covering aspects related to
liquidity analysis, working capital and positive cash flows
c. Justify the
withholding of dividends
There will be no
retention of mandatory dividends.
12. If income is allocated to
the contingency reserve
a. Identify the
amount allocated to the reserve
b. Identify the
probable loss and its cause
c. Explain why the
loss was considered probable
62
d. Justify the
reserve
No allocation to a
contingency reserve.
13. If income is allocated to
revenue reserves to be held
a. Inform the amount
allocated to the reserve for unrealized profits
b. Inform the nature
of unrealized profits that originated the reserve
No allocation of
income to the reserve for unrealized profits.
14. If income is
allocated to statutory reserves
a. Describe the
statutory clauses that establish the reserve
b. Identify the
amount allocated to the reserve
c. Describe how the
amount was calculated
The data below refer
to the consolidated financial statements.
|
|
2014 R$/Thousand |
2013 R$/Thousand |
2012 R$/Thousand |
Retention of income to
statutory reserve |
|
1.182.324 |
121.800 |
392.541 |
Retention of income to
statutory reserve (Reserve for capital increase) |
|
451.640 |
121.800 |
155.077 |
Retention of income to
statutory reserve (Reserve for expansion) |
|
730.684 |
- |
237.464 |
Retention of the result
for tax incentive reserve |
|
140.369 |
121.180 |
67.431 |
Legal
reserve: Formed on the basis of 5% of net income in accordance
with art. 193 of Law 6,404/76, amended by Law Nº 11,638/07, limited to 20% of
the share capital. On 12.31.14 the allocation to the legal reserve was 3.09% of
the share capital (2.19% on 12.31.13).
Reservations for
capital increase: The reserve for capital increase was recorded based on
Article 30, item 3 of the bylaws approved by the shareholders on April 3, 2014,
in the amount corresponding to 20% of net income to be allocated presented
above, this reserve can not exceed the limit of 20% (twenty percent) of the
capital. On 12.31.14 In the balance of this reserve amounted to 10.23% of the
share capital (6.60% on 12.31.13).
63
Expansion
reserve: The reserve for expansion was established under Article
30, paragraph 4, of the bylaws approved by the shareholders on April 03, 2014,
in the amount that corresponds to the percentage up to 50% of net income for the
year to meet expansion plans, limited to 80% of the capital and aims to ensure
investments in fixed assets or working capital increases, including through
amortization of the Company's debt, independently of retention of income linked
to the budget capital, and its balance may be used: (i) absorbing losses
whenever necessary; (Ii) the distribution of dividends at any time; (Iii) the
redemption, repayment or purchase of shares, authorized by law; and (iv) for
incorporation into the capital, including through new stock dividends. 31.12.14
In the balance of this reserve amounted to 15.26% of the share capital (9.40% on
12.31.13). In 2013 there was no constitution of this reserve.
Tax incentive
reserve: Established under Article 195-A Law Nº 6,404/76,
amended by Law Nº 11,638/07, based on the amount of donations and government
grants for investments.
15. If retained
earnings provided in capital budget
a. Identify the
amount withheld
b. Provide a copy of
the capital budget
There will be no
retention of profits in the capital budget.
16. If income is
allocated to the reserve for tax incentives
a. Inform the amount
allocated to the reserve
On 12.31.2014 the
total amount allocated to the reserve incentives was R$140.369. The total amount
of the Company for the tax incentive reserve is R$385,522.
b. Explain the nature
of the allocation
The nature of the
allocation in question is from government donations or subsidies for investments
(state incentive programs that translate into ICMS credits).
64
Annex III - Information candidates to the positions of
Council members
Management and Supervisory Board
(Items 12.6 to 12.10, pursuant to CVM Instruction
480, of December 7, 2009)
Board
candidates:
12.6.
Abilio Diniz
78 years, Business
Administrator, CPF 001.454.918-20, nominated for Presidency of the Board for
election at the OEGM April 8, 2015, to serve until the OEGM of 2017. Mr. Abilio
never exercised any office in the BRF. Mr. Diniz was not indicated by a
controller. (Independent member).
A graduate in
Business Administration from the Fundação Getúlio Vargas (FGV), together with
his father, he was responsible for the establishment and development of the Pão
de Açúcar Group, a company of which he was Chairman until September 2013. He was
one of the founder members of the São Paulo Supermarkets Association (APAS) and
participated in the federal government between 1979 and 1989 as a member of the
National Monetary Council. Since 2010, he has been ministering a 360º Leadership
course in partnership with the FGV for developing young leaders. Currently,
Abilio is also president of the Board of Directors of Península Participações,
his family’s investment company, and has a seat on the Board of Directors of
Carrefour Brasil. (independent member)
12.7.
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
12.8. a.
i. 12.8.a.Main professional
experiences over the last 5 years
Company: BRF
S.A.
Position: Chairman of Board of
Directors
Functions of the office: Chairman of the Board of
Directors. In addition to the duties of the Board of Directors established by
law and the Company Statute, the Chairman shall preside at meetings of the Board
and General Meetings.
Company's core business:
Foods.
Company: Companhia Brasileira
de Distribuição
Position: Chairman of Board of
Directors
65
Functions of the office:
Chairman of the Board of Directors. In addition to the
duties of the Board of Directors established by law and the Company Statute, the
Chairman shall preside at meetings of the Board and General Meetings.
Company's core business:
Retail Trade.
Companies in the group of
shareholders with direct or indirect interest equal to or exceeding 5% of the
same class or kind of securities:
- Controlling: diffuse
control
- Other: diffuse
control
i.
Management positions that are or have in public
companies
Company: BRF
S.A.
Position: Chairman of Board of
Directors
Period: since 2013
Company: Companhia Brasileira
de Distribuição
Position: Chairman of Board of
Directors
Period: since 2003 till September
2013
12.9. Inform the existence of
marital relationship, marriage or kinship between second degree:
a. issuer's
management
Not applicable; the Board of
Directors has no relatives in the BRF.
b. (I) Directors of the Issuer
and (ii) managers of, directly or indirectly, the issuer
Not applicable; the Board of
Directors has no relatives in the BRF.
c. (I) directors of the
issuer or its direct or indirect subsidiaries and (ii) direct or indirect parent
of the Issuer
Not applicable; the Board of
Directors has no relatives in the BRF.
d. (I) Directors of the Issuer
and (ii) directors of the companies direct or indirect parent of the
Issuer
Not aplicable
66
12.10. Report relations of
subordination, rendering services or control maintained over the past 3 years,
between the issuer and administrators:
a. company controlled directly
or indirectly by the issuer
Not aplicable
b. direct or indirect parent of
the Issuer
Not aplicable
c. If relevant, supplier,
customer, debtor or creditor of the issuer, its subsidiary or parent companies
or subsidiaries of any of these people
Not aplicable
Any criminal conviction, any
conviction in CVM administrative proceedings and penalties imposed, any final
conviction, the judicial or administrative levels that have suspended or
disqualified to practice an occupation or commercial: No.
12.6.
Luiz Fernando
Furlan
67 years old,
Chemical Engineer and Business Administrator, CPF 019489978-00, appointed to the
Board of Directors for election at the OEGM April 8, 2015, to serve until the
OEGM of 2017. He hold a chair of Co-Chairman of the Board of Directors of BRF
between 2009 and 2011. He took office as Member of the Board of Directors on
April 2013, with a mandate until April, 2015. Additionally holding the
Coordinator of the Governance and Sustainability Committee. Mr. Furlan was not
indicated by a controller. (Independent member).
Member of the Board
of Directors of Telefônica Brasil S.A. (Brazil), Telefónica S.A. (Spain), AGCO
Corporation (USA) as well as a member of the Advisory Board of ABERTIS
Infraestruturas S.A. (Spain). Prior to this, he was Chairman of the Board of
Directors of Sadia S.A. from 1993 to 2002 and from 2008 to 2009, a company where
he also held several different executive posts in the period from 1976 to
1993. He was Co-Chairman of the Board of Directors of BRF S.A. from 2009
to 2011 as well as a member of the Board of AMIL Participações S.A. from 2008 to
2013 and Redecard S.A. from 2007 to 2010. He was Federal Government Minister at
the Ministry for Development, Industry and Trade from 2003 to 2007. Since
2008, he has been President of the Board of the Fundação Amazonas Sustentável
(FAS) and since 2013, also a member of the Global Commission for the
Conservation of Oceans (Global Ocean Commission – USA) and a Senior Council
Member for São Paulo Health Management. Mr. Furlan is a graduate in Chemical
Engineering from FEI (the Industrial Engineering Faculty) and in Business
Administration from the Universidade de Santana, São Paulo, having also
concluded extension and specialization courses in Brazil and overseas. Mr.
Furlan qualifies as an independent board member in accordance with Novo Mercado
listing regulations.
67
12.7.
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
12.8.a.
i. Main professional experiences
over the last 5 years
Company: BRF
S.A.
Position: Member of Board of
Directors
Functions of the office: Member of the Board of
Directors. In addition to the duties of the Board of Directors established by
law and the Company Statute, it is the counselor attend meetings of the
Board.
Main activity of the company: Production and Food
Processing.
Company: Telefônica Brasil
S.A.
Position: Chairman of Board of
Directors
Functions of the office: Chairman of the Board of
Directors. In addition to the duties of the Board of Directors established by
law and the Company Statute, the Chairman shall preside at meetings of the Board
and General Meetings.
Main activity of the company: Production and Food
Processing.
Companies in the group of
shareholders with direct or indirect interest equal to or exceeding 5% of the
same class or kind of securities:
- Controlling: diffuse
control
- Other: diffuse
control
ii. Management positions that
are or have in public companies
Company: BRF
SA
Title: Co-Chairman of the Board of
Directors
Period: 2009 to 2011 - Co-Chairman of
the Board of Directors, since 2011 - Member of the Board of
Directors;
Company: Sadia
SA
Position: Chairman of Board of
Directors
Period: 1988 to 1990 - Director of
Investor Relations, 1978 to 1988 - Member of the Board of
Directors;
Company: Amil Participações
SA
Position: Member of Board of
Directors
Period: from April 2009
68
Company:
Redecard S.A.
Position:
Member of Board of Directors
Period:
2008
to 2010
12.9. Inform the existence of marital
relationship, marriage or kinship between second degree:
a. issuer's
management
Mr. Eduardo Fontana, Mr. Walter
Fontana and Mr. Luiz Fernando Furlan are cousins in 1st grade.
b. (I) Directors of the Issuer
and (ii) managers of, directly or indirectly, the issuer
Not applicable; the Board of
Directors has no relatives in the BRF.
c. (I) directors of the issuer
or its direct or indirect subsidiaries and (ii) direct or indirect parent of the
Issuer
Not applicable.
d. (I) Directors of the Issuer
and (ii) directors of the companies direct or indirect parent of the
Issuer
Not applicable; the Board of
Directors has no relatives in the BRF.
12.10. Report relations of
subordination, rendering services or control maintained over the past 3 years,
between the issuer and administrators:
a.sociedade controlled directly
or indirectly by the issuer
Not applicable.
b.controlador issuer's direct or
indirect
Not applicable.
c.caso relevant, supplier,
customer, debtor or creditor of the issuer, its subsidiary or parent companies
or subsidiaries of any of these people.
Not applicable.
Any criminal conviction, any
conviction in CVM administrative proceedings and penalties imposed, any final
conviction, the judicial or administrative levels that have suspended or
disqualified to practice an occupation or commercial:
No.
Eduardo Rossi
42, Business
Administrator, CPF 162864248-30, indicated as alternate member of the Board of
Directors for election at the AGM / E April 8, 2015, to serve until the AGM /
EGM 2017. It has no other positions BRF. Additionally has the office of Member of
the Senior Advisory Board. Mr. Rossi was not indicated by a controller.
(independent member)
69
Business
Administration from Fundação Getúlio Vargas and Master with honors from Columbia
University in New York. Founding partner of Aria Consulting LTD, through which
performed the following activities: Responsible for financial strategy Ricardo
Brennand Group and the controlling family of the same from 2004 to 2010. Besides
investments, was responsible for risk management, and long-term planning group.
Since April 2010, responsible for the strategic management of the Peninsula and
the business of the controlling family. Responsible for the structuring and
implementation of global investments, including stakes relevant. Management of
real estate assets in the group, tax planning, family governance and corporate.
Advises shareholders in major strategic decisions of the group. Member of the
board of the NGO Child Safe and Institute Peninsula. (alternate member
Independent)
12.7.
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
12.8. a.
i. 12.8.a.Main professional
experiences over the last 5 years
Company: Fibria S.A. (formerly
Votorantim Pulp and Aracruz Cellulose)
Position: Member of Board of
Directors
Functions of the office: Member of the Board of
Directors. In addition to the duties of the Board of Directors established by
law and the Company Statute, it is the counselor attend meetings of the
board.
Main activity of the company: Forest
products.
Company: BRF
S.A
Position: Advisory
Board
Functions of the office: Member of the Advisory Board. In
addition to the duties of the Advisory Council on the Status of Society, where
is the advisor attend meetings of the board.
Main activity of the company:
Production and Processing Production and Food Processing
.
Companies in the group of
shareholders with direct or indirect interest equal to or exceeding 5% of the
same class or kind of securities:
- Controlling: diffuse
control
- Other: diffuse
control
ii. Management positions
that are or have in public companies
70
Company: Perdigão
SA
Position: Member of Board of
Directors
Period: 1994 to 2007 - Vice Chairman of
Finance, Controlling and Investor Relations
Company: Fibria S.A. (formerly
Votorantim Pulp and Aracruz Cellulose)
Position: Member of Board of
Directors
Period: Since 2008 - Director of Risk
Management of Votorantim Participações; Since 2009 - Board of Directors of
Aracruz Cellulose SA;
Company: BRF
S.A
Title: Advisory
Board
Period: Since 2008 - Senior Advisory
Board of Perdigão SA
12.9. Inform the existence of
marital relationship, marriage or kinship between second degree:
a.issuer's
management
Not applicable; the Board of
Directors has no relatives in the BRF.
b. (I) Directors of the Issuer
and (ii) managers of, directly or indirectly, the issuer
Not applicable; the Board of
Directors has no relatives in the BRF.
c. (I) directors of the issuer
or its direct or indirect subsidiaries and (ii) direct or indirect parent of the
Issuer
Not applicable; the Board of
Directors has no relatives in the BRF.
d. (I) Directors of the Issuer
and (ii) directors of the companies direct or indirect parent of the
Issuer
Not applicable; the Board of
Directors has no relatives in the BRF.
12.10. Report relations of
subordination, rendering services or control maintained over the past 3 years,
between the issuer and administrators:
a. company controlled directly
or indirectly by the issuer
Not applicable.
b. direct or indirect parent of
the Issuer
Not applicable.
c. If relevant, supplier,
customer, debtor or creditor of the issuer, its subsidiary or parent companies
or subsidiaries of any of these people
Not applicable.
71
Any criminal conviction, any
conviction in CVM administrative proceedings and penalties imposed, any final
conviction, the judicial or administrative levels that have suspended or
disqualified to practice an occupation or commercial: No.
12.6.
Marcos Geovanne
Tobias da Silva
49, Economist, CPF
263.225.791-34, nominated as a member of the Board of Directors for election at
the E/AGM of April 08, 2015 with term of office until the E/AGM of 2017.
Additionally he exercises the function as member of the Strategy and Markets
Committee of BRF. Mr.da Silva was nominated by the Caixa de
Previdência dos Funcionários do Banco do Brasil - Previ. (member)
President
of the Neoenergia Group. Participant in a course for Alternative Investments
Management for Pension Funds at Wharton University, Pennsylvania. At Banco do
Brasil he worked in Finance, Technical Consultancy, Marketing, Communication and
IR and in 2009 was elected the best IR professional in Brazil by the IR Awards.
He was a member of the Board of Directors of IBRI, President of the Fiscal
Council of Coelba, Director of IBEF-DF and Director of INI. Economist with
specialization in Marketing and Finance with a Master’s in Administration from
IBMEC. (member)
12.7.
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
12.8.a.
i. Principal
professional experience in the last 5 years
Company: Ária Consultoria
Ltda.
Position: Founding partner
Inherent functions of
the position: Founding partner. Functions
established in law and in the corporate bylaws.
Principal activity of
the company: Corporate consultancy
Corporations, which
are part of the shareholding group, directly or indirectly, equal or more
than 5% of a same class or type of
securities:
- Controlling Group:
dispersed control
- Others: dispersed
control
72
ii. Management positions he exercises or has exercised
in publicly held companies
Not
aplicable
12.9. Inform the existence of a
conjugal relationship, common law marriage or family relationship up to second
degree between:
a. members of the management of
the issuer
Not applicable; the Board
of Directors has no relatives in the BRF.
b. (i) members of management of
the issuer and (ii) members of the management of controlled companies, directly
or indirectly, of the issuer
Not
applicable; the Board of Directors has no relatives in the BRF.
c. (i)
members of management of the issuer or of its controlled companies, directly or
indirectly and (ii) controlling companies directly or indirectly of the
issue
Not applicable; the Board of Directors has no relatives in the
BRF.
d. (i) members of management of the issuer and (ii) the members of
management of the directly and indirectly controlling corporations of the
issuer
Not applicable; the Board of Directors
has no relatives in the BRF.
12.10. Inform as to
the relations of subordination, service rendering or control maintained in the
last 3 fiscal years between members of management of the issuer
and:
a.corporation controlled,
directly or indirectly by the issuer
Not
aplicable
b.controlling company directly or indirectly of the
issuer
Not aplicable
c.if relevant, supplier,
client, debtor or creditor of the issuer, its controlled company or controlling
or subsidiary companies of any of these people
Not
aplicable
Any criminal sentence; any sentence in an administrative
process of the CVM and the penalties imposed; any sentence without right of
appeal in the judicial or administrative spheres, which has suspended or
disqualified him from practicing any professional or commercial
activity: No.
12.6.
Sérgio Ricardo
Miranda Nazaré
49, Economist, CPF
263.225.791-34, CPF 263.225.791-34, nominated as a member of the Board of
Directors for election at the E/AGM of April 08, 2015 with term of office until
the E/AGM of 2017. Additionally he exercises the function as member of the
Strategy and Markets Committee of BRF. Mr. Nazaré
was nominated by the Caixa de Previdência dos Funcionários do Banco do Brasil -
Previ. (member)
73
Graduated
in Economic Sciences and has a Master’s in Financial Administration, both from
UNB. He has an executive MBA in Finance (IBMEC) and an MBA Controller
(FIPECAFI). He was Personal Clients Director and Director for Government in the
Banco do Brasil. He was statutory Director of Seguros BB, BrasilCap,
BrasilVeículos and Grupo Segurador BB MAPHRE. In addition to experience in
executive positions, Sérgio Nazaré is a professor at Universidade de Brasília,
in the Accounting and Actuarial Sciences Department. He also has
international experience in studies, research and businesses with large groups.
He has experience in the areas of administration of fixed assets, planning
commercial actions and management of client relationships, funds and government
programs, credit operations with the public sector, business strategy and
product strategy and management of shareholding participations. Sérgio Nazaré
has also been a Board Director and Fiscal Councilor of various companies such
as: Randon, Kepler Weber, Celesc, Telemar, Brasilcap, Brasilprev, Previ and
Aliança do Brasil. (alternate member)
12.7.
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
12.8.a.
i. Principal
professional experience in the last 5 years
Company: Banco de Brasília
Position: Vice President
Inherent functions of
the position: Responsible for the Finance and Financial Control,
Credit, Relationship with Investors, Control, Risk, People Management and
Administration area.
Principal activity of
the company: Financial services
Company: Grupo Segurador BBMapfre
S.A
Position: Director for Finance
and Administration
Inherent functions of
the position: Management of cash, payments, receivables and
investments/administration of reserves; administration of fixed assets,
Insurance Group purchase agreements
Principal activity of
the company: Insurance
Corporations, which
are part of the shareholding group, directly or indirectly, equal or more
than 5% of a same class or type of
securities:
- Controlling Group:
dispersed control
- Others: dispersed
control
ii. Management
positions he exercises or has exercised in publicly held companies
74
Company:
Banco do Brasil S.A.
Position: Director of Personal Clients
Period: 2011 to 2012
Company:
Banco do Brasil S.A.
Position: Director for
Government
Period: 2005 to 2010
12.9. Inform the existence of a
conjugal relationship, common law marriage or family relationship up to second
degree between:
a. members of the management of
the issuer
Not applicable; the Board of
Directors has no relatives in the BRF.
b. (i) members of management
of the issuer and (ii) members of the management of controlled companies,
directly or indirectly, of the issuer
Not applicable; the Board of Directors has no relatives in the BRF.
c. (i) members of management
of the issuer or of its controlled companies, directly or indirectly and (ii)
controlling companies directly or indirectly of the issuer
Not applicable; the
Board of Directors has no relatives in the BRF.
d. (i) members of
management of the issuer and (ii) the members of management of the directly and
indirectly controlling corporations of the
issuer
Not applicable; the Board of Directors
has no relatives in the BRF.
12.10. Inform as to the
relations of subordination, service rendering or control maintained in the last
3 fiscal years between members of management of the issuer and:
a.corporation controlled,
directly or indirectly by the issuer
Not
aplicable
b.controlling company directly or indirectly of the
issuer
Not aplicable
c.if relevant, supplier,
client, debtor or creditor of the issuer, its controlled company or controlling
or subsidiary companies of any of these people
Not
aplicable
Any criminal sentence; any sentence in an administrative
process of the CVM and the penalties imposed; any sentence without right of
appeal in the judicial or administrative spheres, which has suspended or
disqualified him from practicing any professional or commercial
activity: No.
75
12.6.
Henri Philippe
Reichstul
65, Economist, CPF
001.072.248/36, nominated as a member of the Board of Directors for election at
the E/AGM of April 08, 2015 with term of office until the E/AGM of 2017. He has
never exercised and does not exercise any function at BRF. Mr.
Reichstul was not nominated by a controller. (independent member).
Has been
involved in the Semco Group since 2006. He has a bachelor’s degree in economics
from the Universidade de São Paulo and a postgraduate degree from Hertford
College, Oxford. He was CEO of IPEA, Petrobras, Globopar and Brenco. Currently
he sits on the board of Peugeot Citroen S. A., Repsol YPF, Foster Wheeler and
Gafisa. He is also a member of the Consultative Board of: ABDIB, Coinfra, Lhoist
do Brasil Ltda., UTC and GVT; vice president of the Board of Directors of the
Foundation for Sustainable Development and vice president at Hospital
Einstein. Ex-member of the boards of Louis Dreyfus Brasil, Ashmore Energy
Internacional, BNDES, among others. (independent member)
12.7.
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
12.8.a.
i. Principal
professional experience in the last 5 years
Company: Semco
Partners
Position: Non-executive
partner
Inherent functions of
the position: Functions established in law and in the corporate
bylaws.
Principal activity of
the company: Asset manager.
Corporations, which
are part of the shareholding group, directly or indirectly, equal or more
than 5% of a same class or type of
securities:
- Controlling Group:
dispersed control
- Others: dispersed
control
ii. Management positions
he exercises or has exercised in publicly held companies:
Company:
Consultative Board of AES Brasil
Position: Consultative
Director
Period:
since 2013
Company:
Gafisa S.A.
Position: Board Director
Period:
2011
to 2014
76
12.9. Inform the existence of a
conjugal relationship, common law marriage or family relationship up to second
degree between:
a. members of the management of
the issuer
Not applicable; the Board of
Directors has no relatives in the BRF.
b. (i) members of management
of the issuer and (ii) members of the management of controlled companies,
directly or indirectly, of the issuer
Not applicable; the Board of Directors has no relatives in the BRF.
c. (i) members of management
of the issuer or of its controlled companies, directly or indirectly and (ii)
controlling companies directly or indirectly of the issuer
Not applicable; the
Board of Directors has no relatives in the BRF.
d. (i) members of
management of the issuer and (ii) the members of management of the directly and
indirectly controlling corporations of the
issuer
Not applicable; the Board of Directors
has no relatives in the BRF.
12.10. Inform as to the
relations of subordination, service rendering or control maintained in the last
3 fiscal years between members of management of the issuer and:
a.corporation controlled,
directly or indirectly by the issuer
Not
aplicable
b.controlling company directly or indirectly of the
issuer
Not aplicable
c.if relevant, supplier,
client, debtor or creditor of the issuer, its controlled company or controlling
or subsidiary companies of any of these people
Not
aplicable
Any criminal sentence; any sentence in an administrative
process of the CVM and the penalties imposed; any sentence without right of
appeal in the judicial or administrative spheres, which has suspended or
disqualified him from practicing any professional or commercial
activity: No.
12.6.
José Violi Filho
61, Economist, CPF
001.072.248/36, nominated as a member of the Board of Directors for election at
the E/AGM of April 08, 2015 with term of office until the E/AGM of 2017. He has
never exercised and does not exercise any function at BRF. Mr. Violi
was not nominated by a controller. (independent member).
Executive
for the Semco group for more than 30 years. During this period he had
different responsibilities in the financial department of the company. He was
CEO and CFO of Semco Group and currently is a member of the board for the
joint ventures of Semco Partners. (Alternate independent member)
77
12.7.
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
12.8.a.
i. Principal
professional experience in the last 5 years
Company: Semco
Partners
Position: Partner
Inherent functions of
the position: Functions established in law and in the corporate
bylaws.
Principal activity of
the company: Asset manager.
ii. Management Positions
he exercises or has exercised in publicly held companies:
He
has not exercised functions in publicly held companies.
12.9. Inform the existence of a
conjugal relationship, common law marriage or family relationship up to second
degree between:
a. members of the management of
the issuer
Not applicable; the Board of
Directors has no relatives in the BRF.
b. (i) members of management
of the issuer and (ii) members of the management of controlled companies,
directly or indirectly, of the issuer
Not applicable; the Board of Directors has no relatives in the BRF.
c. (i) members of management
of the issuer or of its controlled companies, directly or indirectly and (ii)
controlling companies directly or indirectly of the issuer
Not applicable; the
Board of Directors has no relatives in the BRF.
d. (i) members of
management of the issuer and (ii) the members of management of the directly and
indirectly controlling corporations of the
issuer
Not applicable; the Board of Directors
has no relatives in the BRF.
12.10. Inform as to the
relations of subordination, service rendering or control maintained in the last
3 fiscal years between members of management of the issuer and:
a.corporation controlled,
directly or indirectly by the issuer
Not
aplicable
b.controlling company directly or indirectly of the
issuer
Not aplicable
c.if
relevant, supplier, client, debtor or creditor of the issuer, its controlled
company or controlling or subsidiary companies of any of these
people
Not aplicable
Any criminal
sentence; any sentence in an administrative process of the CVM and the penalties
imposed; any sentence without right of appeal in the judicial or administrative
spheres, which has suspended or disqualified him from practicing any
professional or commercial activity: No.
78
12.6.
Luiz Fernando
Furlan
67 years old,
Chemical Engineer and Business Administrator, CPF 019489978-00, appointed to the
Board of Directors for election at the OEGM April 8, 2015, to serve until the
OEGM of 2017. He hold a chair of Co-Chairman of the Board of Directors of BRF
between 2009 and 2011. He took office as Member of the Board of Directors on
April 2013, with a mandate until April, 2015. Additionally holding the
Coordinator of the Governance and Sustainability Committee. Mr. Furlan was not
indicated by a controller. (Independent member).
Membro do Conselho de
Administração da Telefônica Brasil S.A. (Brasil), Telefónica S.A. (Espanha),
AGCO Corporation (USA), bem como membro do Conselho Consultivo da ABERTIS
Infraestruturas S.A. (Espanha). Anteriormente, foi Presidente do Conselho de
Administração da Sadia S.A. de 1993 a 2002 e de 2008 a 2009, empresa em que
ocupou diversos cargos executivos no período de 1976 a 1993. Foi
Co-Presidente do Conselho de Administração da BRF S.A. de 2009 a 2011, bem como
membro do Conselho da AMIL Participações S.A. de 2008 a 2013 e Redecard S.A. de
2007 a 2010. Foi Ministro de Estado do Ministério de Desenvolvimento, Indústria
e Comércio Exterior do Brasil de 2003 a 2007. Desde 2008 é Presidente do
Conselho de Administração da Fundação Amazonas Sustentável (FAS) e a partir de
2013 também é membro da Comissão Global para Conservação dos Oceanos (Global
Ocean Commission – USA) e membro do Conselho Superior de Gestão em Saúde de São
Paulo. Graduado em Engenharia Química pela FEI (Faculdade de Engenharia
Industrial) e em Administração de Empresas pela Universidade de Santana em São
Paulo, com cursos de extensão e especialização no Brasil e no exterior. O Sr.
Furlan é qualificado como um membro independente de acordo com as regras do Novo
Mercado.
12.7.
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
12.8.a.
i. Main professional experiences
over the last 5 years
79
Company: BRF S.A.
Position: Member of Board of
Directors
Functions of the office:
Member of the Board of Directors. In addition to the
duties of the Board of Directors established by law and the Company Statute, it
is the counselor attend meetings of the Board.
Main activity of the company:
Production and Food Processing.
Company: Telefônica Brasil
S.A.
Position: Chairman of Board of
Directors
Functions of the office:
Chairman of the Board of Directors. In addition to the
duties of the Board of Directors established by law and the Company Statute, the
Chairman shall preside at meetings of the Board and General Meetings.
Main activity of the company:
Production and Food Processing.
Companies in the group of
shareholders with direct or indirect interest equal to or exceeding 5% of the
same class or kind of securities:
- Controlling: diffuse
control
- Other: diffuse
control
ii. Management positions that
are or have in public companies
Company: BRF SA
Title: Co-Chairman of the
Board of Directors
Period: 2009 to 2011 -
Co-Chairman of the Board of Directors, since 2011 - Member of the Board of
Directors;
Company: Sadia SA
Position: Chairman of Board of
Directors
Period: 1988 to 1990 -
Director of Investor Relations, 1978 to 1988 - Member of the Board of
Directors;
Company: Amil Participações
SA
Position: Member of Board of
Directors
Period: from April
2009
Company: Redecard
S.A.
Position: Member of Board of
Directors
Period: 2008 to
2010
12.9. Inform the existence of
marital relationship, marriage or kinship between second degree:
80
a. issuer's
management
Mr. Eduardo Fontana, Mr. Walter
Fontana and Mr. Luiz Fernando Furlan are cousins in 1st grade.
b. (I) Directors of the Issuer
and (ii) managers of, directly or indirectly, the issuer
Not applicable.
c. (I) directors of the issuer
or its direct or indirect subsidiaries and (ii) direct or indirect parent of the
Issuer
Not applicable.
d. (I) Directors of the Issuer
and (ii) directors of the companies direct or indirect parent of the
Issuer
Not applicable.
12.10. Report relations of
subordination, rendering services or control maintained over the past 3 years,
between the issuer and administrators:
a.sociedade controlled directly
or indirectly by the issuer
Not applicable.
b.controlador issuer's direct or
indirect
Not applicable.
c.caso relevant, supplier,
customer, debtor or creditor of the issuer, its subsidiary or parent companies
or subsidiaries of any of these people.
Not applicable.
Any criminal conviction, any
conviction in CVM administrative proceedings and penalties imposed, any final
conviction, the judicial or administrative levels that have suspended or
disqualified to practice an occupation or commercial: No.
12.6.
Roberto Faldini
66, Business Administrator, CPF
070206438-68, appointed as an alternate member of the Board of Directors for
election at the OEGM April 8, 2015, to serve until the OEGM of 2017. He took
office as member of the Board of Directors of BRF on December 17, 2009, with a
mandate until 29 April 2011. No other positions held in the BRF. Mr. Faldini was not
indicated by a controller. (alternate Independent member).
81
Business
Administrator, graduating from EAESP – Fundação Getulio Vargas - FGV, with
specialization in Advanced Management from the Fundação Dom Cabral and the
INSEAD Business School, France; in Entrepreneurship from the Babson College; in
Corporate Governance. He was Co-founder of the Brazilian Corporate Governance
Institute - IBGC and an Associate Member of IBEF–Brazilian Institute of
Financial Executives and the IEF–Family Company Institute. He was an Executive
Officer, Shareholder and Member of the Board of Directors of Metal Leve S.A. and
Chairman of the CVM–Brazilian Securities and Exchange Commission in 1992.
(alternate Independent member)
12.7.
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
12.8.a.
i. Main professional experiences
over the last 5 years
Company: Faldini Holdings,
Directors and Investimentos Ltda.
Title: Managing
Partner
Functions of the office:
Managing Partner. Consultant in Corporate Governance,
Family Succession, Mergers and Acquisitions (M & A) and preparation of
family businesses to receive and live with new shareholders and institutional
investors, including IPO.
Main activity of company:
Consultancy.
Company: Vulcabrás
S.A.
Position: Member of Board of
Directors
Functions of the office:
Member of the Board of Directors. In addition to the
duties of the Board of Directors established by law and the Company Statute, it
is the counselor attend meetings of the Board.
Main activity of the company:
Footwear and sportswear.
Companies in the group of
shareholders with direct or indirect interest equal to or exceeding 5% of the
same class or kind of securities:
- Controlling: diffuse
control
- Other: diffuse
control
ii. Management positions that
are or have in public companies
Company: Livraria Siciliano
S.A.;
Position: Member of Board of
Directors
82
Period: 2001 to
2004
Company: Hospital 9 Julho
S.A;
Position: Member of Board of
Directors
Period: 2006 to
2007
Company: CPFL - Companhia
Paulista SA
Position: Member of Board of
Directors
Period: 2006 to
2007
Company: INPAR S.A.
Position: Member of Board of
Directors
Period: 2007 to
2009
Company: Sadia SA
Position: Member of Board of
Directors
Period: from 2002 to 2005 and
from 2008 to 2009
Company: Vulcabrás
S.A;
Position: Member of Board of
Directors
Period: 2012 to
2013
12.9. Inform the existence of
marital relationship, marriage or kinship between second degree:
a. issuer's
management
Not applicable.
b. (I) Directors of the Issuer
and (ii) managers of, directly or indirectly, the issuer
Not applicable.
c. (I) directors of the issuer
or its direct or indirect subsidiaries and (ii) direct or indirect parent of the
Issuer
Not applicable.
d. (I) Directors of the Issuer
and (ii) directors of the companies direct or indirect parent of the
Issuer
Not applicable.
83
12.10.Report relations of
subordination, rendering services or control maintained over the past 3 years,
between the issuer and administrators:
a. company controlled directly
or indirectly by the issuer
Not applicable.
b. direct or indirect parent of
the Issuer
Not applicable.
c. If relevant, supplier,
customer, debtor or creditor of the issuer, its subsidiary or parent companies
or subsidiaries of any of these people
Not applicable.
Any criminal conviction, any
conviction in CVM administrative proceedings and penalties imposed, any final
conviction, the judicial or administrative levels that have suspended or
disqualified to practice an occupation or commercial: No.
12.6.
Paulo Guilherme Farah
Correa
46, Economist, CPF
000.303.317/14, nominated as a member of the Board of Directors for election at
the E/AGM of April 08, 2015 with term of office until the E/AGM of 2017. He has
never exercised and does not exercise any function at BRF. Mr. Correa
was nominated by the Caixa de Previdência dos Funcionários do Banco do Brasil -
Previ. (member)
Economist
graduating from Universidade Federal do Rio de Janeiro (UFRJ). He has a Master’s
degree from the Western Ontario University, Canada, and from the Instituto de
Economia of UFRJ. He held the position of head economist and manager for
Innovation and Entrepreneurship for International Trade and Competiveness at the
World Bank. He was assistant secretary for Economic Monitoring at the Finance
Ministry from 1999 to 2001, consultant for the Interamerican Development Bank
for the Infrastructure. Competition and International Trade and a researcher at
the Brazilian Development Bank (BNDES) and the Fundação Centro de Estudos
do Comércio Exterior. (member)
12.7.
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
12.8.a.
i. Principal
professional experience in the last 5 years
Company: World Bank – Washington (USA)
84
Position: Senior and Principal
Economist
Inherent functions of
the position: Missions in various countries.
Principal activity of
the company: Development bank
Company: Federal Government – Finance
Ministry
Position: Secretary
Inherent functions of
the position: responsible for monitoring prices in the economy,
providing input for decisions on public utility tariff readjustments and
revisions as well as examining monopolies among companies and containing
anticompetitive conduct.
Principal activity of
the company: Government
Corporations, which
are part of the shareholding group, directly or indirectly, equal or more
than 5% of a same class or type of
securities:
- Controlling Group:
dispersed control
- Others: dispersed
control
ii. Management Positions
he exercises or has exercised in publicly held companies:
He has never exercised positions
in publicly held companies.
12.9.Inform the existence of a
conjugal relationship, common law marriage or family relationship up to second
degree between:
a. members of the management of
the issuer
Not applicable; the Board of
Directors has no relatives in the BRF.
b. (i) members of management
of the issuer and (ii) members of the management of controlled companies,
directly or indirectly, of the issuer
Not applicable; the Board of Directors has no relatives in the BRF.
c. (i) members of management
of the issuer or of its controlled companies, directly or indirectly and (ii)
controlling companies directly or indirectly of the issuer
Not applicable; the
Board of Directors has no relatives in the BRF.
d. (i) members of
management of the issuer and (ii) the members of management of the directly and
indirectly controlling corporations of the
issuer
Not applicable; the Board of Directors
has no relatives in the BRF.
12.10. Inform as to the
relations of subordination, service rendering or control maintained in the last
3 fiscal years between members of management of the issuer and:
a.corporation controlled, directly or indirectly by the issuer
Not aplicable
b.controlling company directly or indirectly of the issuer
Not aplicable
c.if relevant, supplier, client, debtor or creditor of
the issuer, its controlled company or controlling or
subsidiary companies of any of these people
Not aplicable
Any criminal sentence; any sentence in an administrative
process of the CVM and the penalties imposed; any sentence without right of
appeal in the judicial or administrative spheres, which has suspended or
disqualified him from practicing any professional or commercial
activity: No.
85
12.6.
Arthur Prado
Silva
43, Company
administrator, CPF 991.897.047/20, nominated as a member of the Board of
Directors for election at the E/AGM of April 08, 2015 with term of office until
the E/AGM of 2017. He has never exercised and does not exercise any function at
BRF. Mr. Silva was nominated by the Caixa de
Previdência dos Funcionários do Banco do Brasil - Previ. (member)
Bachelor’s degree in
Law, postgraduate in financial control and finance, both from the Universidade
Candido Mendes. He also has an MBA in Corporate Finance from Fundação Getúlio
Vargas. Mr. Silva has been an Executive Manager at PREVI since 2013, and has
experience in working on Boards of Directors and Fiscal Councils of various
publicly held companies in Brazil. (member)
12.7.
The members of
statutory committees shall be elected at a meeting of the board to be held after
the annual general meeting to be set.
12.8.a.
i. Principal
professional experience in the last 5 years
Company: Caixa de Previdência
dos Funcionários do Banco do Brasil - Previ.
Position: Executive Manager
Inherent functions of
the position: Functions established in law and in the corporate
bylaws.
Principal activity of
the company: Private pension fund
Corporations, which
are part of the shareholding group, directly or indirectly, equal or more
than 5% of a same class or type of
securities:
- Controlling Group:
dispersed control
- Others: dispersed
control
ii. Management Positions
he exercises or has exercised in publicly held companies:
86
Company: 521 Participações
S.A.
Position: Board
Director
Period: since May
2016
Company: Celpe
Position: Board
Director
Period: since 2003
Company: Coelba
Position: Board
Director
Period: since 2003
Company: Invitel Legacy
S.A.
Position: Member of the Board
of Directors
Period: since 2008
12.9. Inform the
existence of a conjugal relationship, common law marriage or family relationship
up to second degree between:
a. members of the
management of the issuer
Not applicable; the Board
of Directors has no relatives in the BRF.
b. (i) members of
management of the issuer and (ii) members of the management of controlled
companies, directly or indirectly, of the issuer
Not applicable; the
Board of Directors has no relatives in the BRF.
c. (i) members of
management of the issuer or of its controlled companies, directly or indirectly
and (ii) controlling companies directly or indirectly of the issuer
Not applicable; the
Board of Directors has no relatives in the BRF.
d. (i) members of
management of the issuer and (ii) the members of management of the directly and
indirectly controlling corporations of the issuer
Not applicable; the Board of
Directors has no relatives in the BRF.
12.10. Inform as to the
relations of subordination, service rendering or control maintained in the last
3 fiscal years between members of management of the issuer and:
a.corporation controlled, directly or indirectly by the issuer
Not aplicable
b.controlling company directly or indirectly of the
issuer
87
Not aplicable
c.if
relevant, supplier, client, debtor or creditor of the issuer, its controlled
company or controlling or subsidiary companies of any of these people
Not aplicable
Any criminal sentence; any sentence in an administrative
process of the CVM and the penalties imposed; any sentence without right of
appeal in the judicial or administrative spheres, which has suspended or
disqualified him from practicing any professional or commercial
activity: No.
12.6.
Manoel Cordeiro Silva
Filho
60, Business
Administrator, CPF 253571747-68, appointed as member of the Board of Directors
for election at the OEGM April 8, 2015, to serve until the OEGM of 2017. He took
office as Member of the Board of Directors on April 2013, with a mandate until
April, 2015. Additionally serves as Coordinator of the Finance and Risks Policy
Committee and the Strategy and Markets Committee. The Manoel was not indicated
by a controller. (Independent member).
Mr. Silva Filho has
had 33 years of experience at Companhia Vale do Rio Doce, was an investment and
finance officer of VALIA and was a coordinator of the National Investment
Committee of Associação Brasileira das Entidades Fechadas de Previdência
Complementar, or ABRAPP. Mr. Silva Filho holds a degree in business
administration from Faculdade Moraes Júnior, Rio de Janeiro, a post-graduation
qualification in economic engineering from Faculdade Estácio de Sá, Rio de
Janeiro and an MBA in finance from IBMEC. Mr. Silva Filho was nominated to stand
for election to our board of directors by our shareholder VALIA. Mr. Silva Filho
qualifies as an independent director under the Brazilian Novo Mercado
rules.
12.7.
The members of
statutory committees shall be elected at a meeting of the board to be held after
the annual general meeting to be set.
12.8.a.
i. 12.8.a.Main
professional experiences over the last 5 years
Company:
BRF
S.A.
Position:
Member of Board of Directors
Functions of the
office: Member of the Board of Directors. In addition to the
duties of the Board of Directors established by law and the Company Statute, it
is the counselor attend meetings of the board.
Main activity of the
company: Production and Food Processing.
88
Company:
BR
Education
Title:
Founding Partner
Functions of the
office: Founding Partner. Holds the position of Director
Investor Relations and Manager of Educational BR FIP.
Main activity of
business: Fund investments.
Companies in the
group of shareholders with direct or indirect interest equal to or exceeding 5%
of the same class or kind of securities:
- Controlling:
diffuse control
- Other:
diffuse control
ii. Management positions
that are or have in public companies
Company:Vale do Rio Doce SA
Title: Chief Executive
Period: 1990 to 1994 -
General Manager in the area of Capital Markets, Investment Analysis Financial
Management - VALE SA, from 1994 to 1998 - Chief Financial Officer in a joint
venture between Vale and USINOR Sacilor Dunkerk in France, 1999 to 2007 - Chief
Financial and Investment of Surplus Value;
Company: BR Investments
Title: Founding Partner
Period: since 2008 - Founding
partner of BR Investimentos.
Company: BRF S.A
Position: Member of Board of Directors
Period:
since 2007
12.9. Inform the
existence of marital relationship, marriage or kinship between second
degree:
a. issuer's
management
Not applicable; the
Board of Directors has no relatives in the BRF.
b. (I) Directors of
the Issuer and (ii) managers of, directly or indirectly, the
issuer
Not applicable; the
Board of Directors has no relatives in the BRF.
c. (I) directors of
the issuer or its direct or indirect subsidiaries and (ii) direct or indirect
parent of the Issuer
Not applicable; the
Board of Directors has no relatives in the BRF.
d. (I) Directors of
the Issuer and (ii) directors of the companies direct or indirect parent of the
Issuer
Not applicable; the
Board of Directors has no relatives in the BRF.
89
12.10. Report
relations of subordination, rendering services or control maintained over the
past 3 years, between the issuer and administrators:
a.sociedade
controlled directly or indirectly by the issuer
Not
aplicable
b.controlador
issuer's direct or indirect
Not aplicable
c.caso relevant,
supplier, customer, debtor or creditor of the issuer, its subsidiary or parent
companies or subsidiaries of any of these people
Not
aplicable
Any criminal
conviction, any conviction in CVM administrative proceedings and penalties
imposed, any final conviction, the judicial or administrative levels that have
suspended or disqualified to practice an occupation or commercial:
No.
12.6
Mauricio Rocha
Wanderley
60, Economist, CPF
947648408-04, indicated as an alternate member of the Board of Directors for
election at the OEGM April 9, 2013, to serve until the OEGM of 2015. It is an
alternate member of the Board since April 2013, with a mandate until April,
2015. No other positions held in the BRF. Mr. Mauricio was not indicated by a
controller. (alternate member independent).
An economist with an MBA
for Executives in Finance IBMEC. 16 years of experience in the area of capital
markets, investment analysis, business valuation, business opportunities,
evaluating market risk and credit investments. Acts with the Board of Directors
of the companies: Grant Metroviária of Rio de Janeiro SA (Metro Rio); Marlin
Holdings SA; Rent Equipment Oil Company. (alternate Independent
member)
12.7.
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
12.8.a.
i. 12.8.a.Main professional
experiences over the last 5 years
Company: Vale do Rio Doce
Foundation Social - Valia
Title: Chief Investment and
Finance
Functions of the office:
Investment and Finance. Investment analysis, business
valuation, business opportunities, assessment of market risk and credit
investments.
90
Main activity of the company:
Retirement and pension Brazilian
Main activity of the company:
Companies in the group of shareholders with direct or indirect interest equal to
or exceeding 5% of the same class or kind of securities:
- Controlling: Foundation Vale do
Rio Doce Social - Valia
- Other: diffuse
control
ii. Management positions
that are or have in public companies
Company: Marlin Holdings
S.A.
Position: Member of Board of
Directors.
Period: since 2008
12.9. Inform the existence of
marital relationship, marriage or kinship between second degree:
a. issuer's
management
Not applicable; the Board of
Directors has no relatives in the BRF.
b. (I) Directors of the Issuer
and (ii) managers of, directly or indirectly, the issuer
Not applicable; the Board of
Directors has no relatives in the BRF.
c. (I) directors of the issuer
or its direct or indirect subsidiaries and (ii) direct or indirect parent of the
Issuer
Not applicable; the Board of
Directors has no relatives in the BRF.
d. (I) Directors of the Issuer
and (ii) directors of the companies direct or indirect parent of the
Issuer
Not applicable; the Board of
Directors has no relatives in the BRF.
12.10. Report relations of
subordination, rendering services or control maintained over the past 3 years,
between the issuer and administrators:
a.sociedade controlled directly
or indirectly by the issuer
Not aplicable
b.controlador issuer's direct or
indirect
Not
aplicable
c.caso relevant, supplier,
customer, debtor or creditor of the issuer, its subsidiary or parent companies
or subsidiaries of any of these people
91
Not aplicable
Any criminal conviction, any
conviction in CVM administrative proceedings and penalties imposed, any final
conviction, the judicial or administrative levels that have suspended or
disqualified to practice an occupation or commercial: No.
12.6.
Walter Fontana
Walter
60, Economist, CPF
947648408-04, appointed as a member of the Board of Directors for election at
the OEGM April 8, 2015, to serve until the OEGM of 2017. He took office as
Member of the Board of Directors on April 2013, with a mandate until April 2015.
He is a member of the People, Organization and Culture Committee and the Audit
Committee of BRF. Mr. Walter was not indicated by a controller. (Independent
member).
Bachelor’s and
Postgraduate degrees from PUC – Pontifícia Universidade Católica, São Paulo and
a specialization course in Marketing Administration from Fundação Getúlio
Vargas. Member of the Advisory Board of the newspaper O Estado de São Paulo from
1999 to 2013, currently Chairman of the Board of Directors. Board Member of ALGAR
– Algar S.A. Empreendimentos e Participações (since 2005), Member of the Board
of Martins Comércio e Serviços de Distribuição S/A (since 2013). He was a member of
the Board of Directors of WTorre Empreendimentos Imobiliários S.A. At Sadia, he
was Commercial Director – Domestic Market from 1983 to 1988, Commercial
Executive Vice President from 1988 to 1994, Chief Executive Officer from 1994 to
2005 and Chairman of the Board of Directors from 2005 to 2008. Mr. Fontana Filho
qualifies as an independent director under Novo Mercado listing regulations.
(Independent member)
12.7.
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
12.8.a.
i. 12.8.a.Main professional
experiences over the last 5 years
Company: BRF S.A
Position: Member of Board of
Directors
Functions of the office:
Member of the Board of Directors. Altribuições Board
established by law and the Company Statute, it is the counselor attend meetings
of the board.
Main activity of the company:
Production and Food Processing.
Company: Realty WTorre
S.A
Position: Member of Board of
Directors
92
Functions of the office:
Member of the Board of Directors. In addition to the
duties of the Board of Directors established by law and the Company Statute, it
is the counselor attend meetings of the board.
Main activity of the company:
Realty.
Company: Algar S.A
Position: Member of Board of
Directors
Functions of the office:
Member of the Board of Directors. Duties of the Board of
Directors established by law and the Statute of the Company rests with the
counselor attend meetings of the board.
Main activity of the company:
Realty.
Companies in the group of
shareholders with direct or indirect interest equal to or exceeding 5% of the
same class or kind of securities:
- Controlling: diffuse
control
- Other: diffuse
control
ii. Management positions
that are or have in public companies
Company: BRF S.A
Position: Member of Board of
Directors
Period: Since 2009
Company: Sadia SA
Position: Chairman of the Board
of Directors Member
Period: 1994 to 2005 - Chief
Executive Officer, from 2005 to 2008 - Chairman of the Board of
Directors.
Company: Algar S.A
Position: Member of Board of
Directors
Period: Since 2005 - Member
of the Board
Company: Realty WTorre
S.A
Position: Member of Board of
Directors
Period: Since 2007 - Member
of the Board of Directors
12.9. Inform the existence of
marital relationship, marriage or kinship between second degree:
a. issuer's
management
Mr. Eduardo Fontana D Avila and
Mr. Luiz Fernando Furlan are cousins in 1st degree.
b. (I) Directors of the Issuer
and (ii) managers of, directly or indirectly, the issuer
Not aplicable
93
c. (I) directors of the issuer
or its direct or indirect subsidiaries and (ii) direct or indirect parent of the
Issuer
Not aplicable
d. (I) Directors of the Issuer
and (ii) directors of the companies direct or indirect parent of the
Issuer
Not aplicable
12.10. Report relations of
subordination, rendering services or control maintained over the past 3 years,
between the issuer and administrators:
a.sociedade controlled directly
or indirectly by the issuer
Not aplicable
b.controlador issuer's direct or
indirect
Not aplicable.
c.caso relevant, supplier,
customer, debtor or creditor of the issuer, its subsidiary or parent companies
or subsidiaries of any of these people
Not aplicable.
Any criminal conviction, any
conviction in CVM administrative proceedings and penalties imposed, any final
conviction, the judicial or administrative levels that have suspended or
disqualified to practice an occupation or commercial: No.
12.6.
Eduardo Fontana D
Avila
60, Civil Engineer,
CPF 947648328-87, appointed as an alternate member of the Board of Directors for
election at the OEGM April 8, 2015, to serve until the OEGM of 2017. No other
positions held in the BRF. Mr. Eduardo was not indicated by a controller.
(alternate member independent).
Civil
Engineer, graduated at Mackenzie University and Postgraduate in Business
Administration at Fundação Getúlio Vargas. Vice President of Board of Directors
of Sadia S.A. Develop his carrier at Sadia, since February of 1977, always
directed for production activities. Mr. D Ávila is member of Board of Diretor of
Cremer S.A. (Alternate Independent member)
12.7.
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
94
12.8.a.
i. Main professional experiences
over the last 5 years
Company: Sadia SA
Position: Vice-Chairman of the
Board of Directors
Functions of the office:
Deputy Chairman of the Board of Directors. Duties of the
Board of Directors established by law and the Statute of the Company rests with
the counselor attend meetings of the board.
Main activity of the company:
Production and Food Processing.
Company: Cremer SA
Position: Member of Board of
Directors
Functions of the office:
Member of the Board of Directors. Duties of the Board of
Directors established by law and the Statute of the Company rests with the
counselor attend meetings of the board.
Main activity of the company:
Products facing health care in the areas of first aid,
surgery, treatment and hygiene for professional use.
Main activity of the company:
Companies in the group of shareholders with direct or indirect interest equal to
or exceeding 5% of the same class or kind of securities:
- Controlling: diffuse
control
- Other: diffuse
control
ii. Management positions
that are or have in public companies
Company: Sadia SA
Title: Vice Chairman Member
of the Board of Directors
Period: until 2004 -
Commercial Director; 2005 to 2008 - Vice Chairman Member of the Board of
Directors.
Company: Cremer SA
Position: Member of Board of
Directors
Period: Since 2012
12.9. Inform the existence of
marital relationship, marriage or kinship between second degree:
95
a. issuer's
management
Mr. Eduardo Fontana, Mr. Walter
Fontana and Mr. Luiz Fernando Furlan are cousins in 1st grade.
b. (I) Directors of the
Issuer and (ii) managers of, directly or indirectly, the issuer
Not aplicable.
c. (I) directors of the issuer
or its direct or indirect subsidiaries and (ii) direct or indirect parent of the
Issuer
Not aplicable.
d. (I) Directors of the Issuer
and (ii) directors of the companies direct or indirect parent of the
Issuer
Not aplicable.
12.10. Report relations of
subordination, rendering services or control maintained over the past 3 years,
between the issuer and administrators:
a.sociedade controlled directly
or indirectly by the issuer
Not aplicable.
b.controlador issuer's direct or
indirect
Not aplicable.
c.caso relevant, supplier,
customer, debtor or creditor of the issuer, its subsidiary or parent companies
or subsidiaries of any of these people
Not aplicable.
Any criminal conviction, any
conviction in CVM administrative proceedings and penalties imposed, any final
conviction, the judicial or administrative levels that have suspended or
disqualified to practice an occupation or commercial: No.
12.6.
José Carlos Reis de Magalhães
Neto
36, Business
Administrator, CPF 286951128-02, appointed as a member of the Board of Directors
for election at the OEGM April 8, 2015, to serve until the OEGM of 2017. He took
office as Member of the Board of Directors on April 29, 2011, with a mandate
until April 9, 2013. He is the Coordinator Strategy and Markets Committee and
member People, Organization and Culture Committee. Mr. Jose Carlos was nominated
by Tarpon Investimentos. (member).
96
Mr. Magalhães Neto is
a graduate in Business Administration from the Fundação Getúlio Vargas. He is a
founder member and Chairman of the Board of Directors of Tarpon Investimentos
S.A. He also sits on the Board of Omega Energia Renováveis. Mr. Magalhães Net
was nominated to stand for election to our Board of Directors by TARPON.
(member)
12.7.
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
12.8.a.
i. Main professional experiences
over the last 5 years
Company: Tarpon Investimentos
SA
Title: Chief Investment
Officer and Chairman of the Board of Directors
Functions of the office:
Chief Investment Officer and Chairman of the Board of
Directors. In addition to the duties of Director and Chairman of the Board of
Directors established by law and the Company Statute, it is the counselor attend
meetings of the board.
Company's core business:
investment fund.
Company: Marisa SA
Position: Member of Board of
Directors
Functions of the office:
Board of Directors. In addition to the duties of Vice
Chairman of the Board of Directors established by law and the Company Statute,
it is the counselor attend meetings of the board.
Main activity of the company:
Shop
specializing in women's fashion and women's underwear.
Company: Acqua Rosa Morena and
Clothing Industry and Trade SA
Position: Member of Board of
Directors
Functions of the office:
Member of the Board of Directors. Assignments Member of
the Board of Directors established by law and the Statute of the Company rests
with the counselor attend meetings of the board.
Main activity of the company:
Industria e Comercio SA Clothing
Companies in the group of
shareholders with direct or indirect interest equal to or exceeding 5% of the
same class or kind of securities:
- Controlling: Tarpon Investimentos
SA
- Other: diffuse
control
ii. Management positions
that are or have in public companies
Company: Tarpon Investimentos
SA
Position: Member of Board of
Directors
97
Period: since 2002
Company: Marisa SA
Position: Member of Board of
Directors
Period: since 2010
Company: BRF S.A
Position: Member of Board of
Directors
Period: since 2009
12.9. Inform the existence of
marital relationship, marriage or kinship between second degree:
a. issuer's
management
Not aplicable.
b. (I) Directors of the Issuer
and (ii) managers of, directly or indirectly, the issuer
Not aplicable.
c. (I) directors of the issuer
or its direct or indirect subsidiaries and (ii) direct or indirect parent of the
Issuer
Not aplicable.
d. (I) Directors of the Issuer
and (ii) directors of the companies direct or indirect parent of the
Issuer
Not aplicable.
12.10. Report relations of
subordination, rendering services or control maintained over the past 3 years,
between the issuer and administrators:
a. controlled society directly
or indirectly by the issuer
Not aplicable.
b. issuer's direct or
indirect
Not aplicable.
c.caso relevant, supplier,
customer, debtor or creditor of the issuer, its subsidiary or parent companies
or subsidiaries of any of these people
Not aplicable.
98
Any criminal conviction, any
conviction in CVM administrative proceedings and penalties imposed, any final
conviction, the judicial or administrative levels that have suspended or
disqualified to practice an occupation or commercial: No.
12.6.
Fernando Shayer
40, Lawyer and
Economist, CPF 066182178-14, appointed as an alternate member of the Board of
Directors for election at the OEGM April 8, 2015, to serve until the OEGM of
2017. Mr. Fernando never pursued a position at BRF. Mr. Shayer was indicated by
Tarpon Investimentos. (Alternate member).
Economics from the
University of São Paulo (USP) and in Law from the Pontifical Catholic University
of São Paulo (PUC), as well as a Master of Laws (LL.M) from Columbia University
in New York. Mr. Fernando is responsible for deal structuring and monitoring of
investee companies, also doing part of the Investment Committee at Tarpon.
Previously, he was a partner at the law firm Machado, Meyer, and Sendacz Opice
Lawyers. It was an international lawyer in Skadden, Arps, Slate, Meagher and
Flom LLP in New York, and Banco CCF in Brazil. Exerts adviser in business
administration Omega Renewable Energy SA, the Company and Acqua Rosa Morena
Clothing Industry and Trade SA (alternate member)
12.7.
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
12.8.a.
i. Main professional experiences
over the last 5 years
Company: Tarpon Investimentos
SA
Position: Member of Board of
Directors
Functions of the office:
Member of Board of Directors. Duties of Director and
Chairman of the Board of Directors established by law and the Company Statute,
it is the counselor attend meetings of the board.
Company's core business:
investment fund.
Company: Renewable Energy
Omega SA
Position: Member of Board of
Directors
Functions of the office:
Member of the Board of Directors. Assignments Member of
the Board of Directors established by law and the Statute of the Company rests
with the counselor attend meetings of the board.
Main activity of the company:
Electricity generation from renewable sources
Company: Acqua Rosa Morena and
Clothing Industry and Trade SA
Position: Member of Board of
Directors
99
Functions of the office:
Member of the Board of Directors. Assignments Member of
the Board of Directors established by law and the Statute of the Company rests
with the counselor attend meetings of the board.
Main activity of the company:
Industria e Comercio SA Clothing
Companies in the group of
shareholders with direct or indirect interest equal to or exceeding 5% of the
same class or kind of securities:
- Controlling: diffuse
control
- Other: diffuse
control
ii. Management positions
that are or have in public companies
Company: Tarpon Investimentos
SA
Position: Member of Board of
Directors
Period: since 2002
Company: Renewable Energy
Omega SA
Position: Member of Board of
Directors
Period: 2011 -
2013
Company: Acqua Rosa Morena and
Clothing Industry and Trade SA
Position: Member of Board of
Directors
Period: 2011 -
2013
12.9. Inform the existence of
marital relationship, marriage or kinship between second degree:
a. issuer's
management
Not aplicable.
b. (I) Directors of the
Issuer and (ii) managers of, directly or indirectly, the issuer
Not aplicable.
c. (I) directors of the
issuer or its direct or indirect subsidiaries and (ii) direct or indirect parent
of the Issuer
Not aplicable.
d. (I) Directors of the Issuer
and (ii) directors of the companies direct or indirect parent of the
Issuer
Not aplicable.
100
12.10. Report relations of
subordination, rendering services or control maintained over the past 3 years,
between the issuer and administrators:
a. controlled society directly
or indirectly by the issuer
Not aplicable.
b. issuer's direct or
indirect
Not
aplicable.
c. If relevant, supplier,
customer, debtor or creditor of the issuer, its subsidiary or parent companies
or subsidiaries of any of these people
Not aplicable.
Any criminal conviction, any
conviction in CVM administrative proceedings and penalties imposed, any final
conviction, the judicial or administrative levels that have suspended or
disqualified to practice an occupation or commercial: No.
12.6.
Vicente Falconi
Campos
69, Engineer, CPF
000.232.216-15, appointed to the Board of Directors election at the OEGM on
April 8, 2015, with a term of office until OEGM 2017. He took office as Board
Member administration in May 2014, with a term of office until April 2015. It
has no other positions in the BRF. Mr. Falconi was not indicated by a
controller. (member)
Mr. Falconi Campos is founder and Chairman of the Board
of Directors of FALCONI - Consultores de Resultados, the largest management
consulting company in Brazil. He is a consultant of the Brazilian Federal
Government and various State Governments and Municipal beyond the largest
Brazilian companies such as AmBev, Gerdau, Vale, AMIL (United Health),
PETROBRAS, B2W, among others. He graduated in Engineering in 1963 from the
Federal University of Minas Gerais (UFMG) and has the qualifications of M.Sc.
and Ph. D. in Engineering from the Colorado School of Mines, USA. He is
Professor Emeritus of UFMG. Awarded the Medal of the Order of Rio Branco for
services rendered to the nation. Chosen by the American Society for Quality
Control as one of the "21 voices of the XXI Century". (member)
12.7
Os membros dos
comitês estatutários serão eleitos em reunião do conselho de administração a ser
realizada após a assembleia geral ordinária a ser definida.
12.8. a.
101
i. Principal professional
experience in the last 5 years
Company:
BRF
SA
Position:
Chairman of the Board of Directors
Functions of the
office: Chairman of the Board of Directors. In addition to the
Board of Directors' duties according to the law and the Company's Bylaws, the
President shall preside at meetings of the Board and General
Meetings.
Main activity of the
company: Food
Company:
Falconi Results Consultants
Position:
Founding Partner
Functions of the
office: Board of Directors' Responsibilities established by law
and the Company's Bylaws.
Company's principal
activity: Consulting
Corporations, which
are part of the shareholding group, directly or indirectly, equal or more than
5% of a same class or type of securities:
- Controlling Group:
dispersed control
- Others:
dispersed control
ii. Management Positions
he exercises or has exercised in publicly held companies:
Company:
BRF
SA
Position:
Board of Directors Member
Period:
from 2014
Company:
Ambev SA
Position:
Board of Directors Member
Period:
since 1997
12.9. Inform the existence of a
conjugal relationship, common law marriage or family relationship up to second
degree between:
a. members of the management of
the issuer
Not aplicable.
b. (i) members of management
of the issuer and (ii) members of the management of controlled companies,
directly or indirectly, of the issuer
Not aplicable.
c. (i) members of management
of the issuer or of its controlled companies, directly or indirectly and (ii)
controlling companies directly or indirectly of the issuer
Not
aplicable.
d. (i) members of management of the issuer and (ii) the
members of management of the directly and indirectly
controlling corporations of the issuer
Not
aplicable.
12.10. Inform as to the relations of subordination,
service rendering or control maintained in the last 3 fiscal years between
members of management of the issuer and:
102
a. company controlled directly
or indirectly by the issuer
In 10.06.14 approved the
contraction of Falconi Consulting for the project: Guidelines for Management,
which aims to support the Company in the process of adding value and achieving
goals. The project investment is R$13.8 million.
On 07.31.14 approved the
hiring of Managerial Performance Institute for indicators of improvement
opportunity to check the international market, the amount of R$479,500
thousand.
b. direct or indirect parent
company
Yes. Mr. Falconi current Board
Member and nominated for another term on the Board, is President - Founding
Partner at Management Development Institute SA
c. If relevant, supplier,
customer, debtor or creditor of the Company, its subsidiaries or parent
companies or subsidiaries of any of these people
The Supplier is not relevant to
the BRF business
Any criminal sentence; any sentence in an administrative
process of the CVM and the penalties imposed; any sentence without right of
appeal in the judicial or administrative spheres, which has suspended or
disqualified him from practicing any professional or commercial
activity:
No.
12.6.
Mateus Afonso
Bandeira
45, Engineer, CPF
572.483.970-91, appointed as alternate member to the Board of Directors election
at the OEGM on April 8, 2015, with a term of office until OEGM 2017. Does not
hold and never held positions at BRF. It has no other positions in the BRF. Mr.
Bandeira was not indicated by a controller. (member)
Mateus holds a degree
in Computer Science from Catholic University of Pelotas, post-graduate degree in
Corporate Finance from the Getúlio Vargas Foundation (FGV) and IT Management
from the Federal University of Rio Grande do Sul (UFRGS). A master's degree in
Business Administration (MBA) by Wharton - University of Pennsylvania, USA.
Before assuming the presidency of FALCONI, Mr. Matthew Flag was CEO of Banrisul
- RS State Bank - and served for nearly 20 years in the public sector, having
accumulated experience in the Finance Ministry, the Senate and Government of Rio
Grande do South, where he was Secretary of State for Planning and Management and
undersecretary of State Treasury.
103
12.7
Os membros dos
comitês estatutários serão eleitos em reunião do conselho de administração a ser
realizada após a assembleia geral ordinária a ser definida.
12.8. a.
i. Principal professional
experience in the last 5 years
Company:
Falconi Results Consultants
Position:
Founding Partner
Functions of the
office: Board of Directors' Responsibilities established by law
and the Company's Bylaws.
Company's principal
activity: Consulting
Corporations, which
are part of the shareholding group, directly or indirectly, equal or more than
5% of a same class or type of securities:
- Controlling Group:
dispersed control
- Others:
dispersed control
ii. Management Positions
he exercises or has exercised in publicly held companies:
Company:
PDG
Realty S.A.
Position:
Board of Directors Member
Period:
since 2014
12.9. Inform the existence of a
conjugal relationship, common law marriage or family relationship up to second
degree between:
a. members of the management of
the issuer
Nothing to Declare.
b. (i) members of management
of the issuer and (ii) members of the management of controlled companies,
directly or indirectly, of the issuer
Nothing to Declare.
c. (i) members of management
of the issuer or of its controlled companies, directly or indirectly and (ii)
controlling companies directly or indirectly of the issuer
Nothing to
Declare.
d. (i) members of
management of the issuer and (ii) the members of management of the directly and
indirectly controlling corporations of the
issuer
Nothing to
Declare.
12.10. Inform as to the relations of subordination,
service rendering or control maintained in the last 3 fiscal years between
members of management of the issuer and:
104
a.corporation controlled, directly or indirectly by the issuer
Not Aplicable.
b.controlling company directly or indirectly of the issuer
Not Aplicable.
c.if relevant, supplier, client, debtor or creditor
of the issuer, its controlled company or controlling or
subsidiary companies of any of these people
Not Aplicable.
Any criminal
sentence; any sentence in an administrative process of the CVM and the penalties
imposed; any sentence without right of appeal in the judicial or administrative
spheres, which has suspended or disqualified him from practicing any
professional or commercial activity:
No.
Fiscal Council
Resumes of candidates for Fiscal Council - Members and
alternates:
Fiscal
Council Candidates - Members and alternates:
12.6.
Attilio
Guaspari
68 years, engineer,
security number 610.204.868/72, appointed as member of the Fiscal Council for
election at the OEGM April 8, 2015, to serve until the OEGM of 2016. Do not hold
other positions in BRF. Mr. Attilio was not indicated by a controller.
(independent member)
An
Engineer with a Master’s Degree in Management Sciences. He was Supervisor of the
Financial Area and Head of the Audit Department of the National Social and
Economic Development Bank - BNDES, as well as Financial-Administrative Director
of Embrafilme. Since 1986, he has sat on various boards of directors such as
Brasil Ferrovias S.A., FAPES, Indústrias Verolme-Ishibrás and Projeto Jarí.
Currently, he is a member of the Fiscal Council of BRF and the Audit Committee
of the BNDES. (Independent member)
105
12.7.
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
12.8.a.
i. 12.8.a.Main
professional experiences over the last 5 years
Company:
BRF
S.A.
Designation:
Member of the Fiscal Council of the BRF S.A. since April
2005.
Functions of the
office: Responsibilities established in Brazilian
legislation.
Main activity of
business: Production and Food Processing.
Companies in the
group of shareholders with a direct or indirect, less than 5% of the same class
or kind of securities:
-
Controlling: diffused control
- Others:
diffused control
iii.
Management positions who are or have in public companies
Company: BNDES – Banco
Nacional do Desenvolvimento Econômico e Social
Designation:
Member of the Audit Committee.
Company:
Proman
Designation: Member of the
Board of Directors, as Chief Executive Officer and as member since
2006.
Company:
Brasil Ferrovias S.A.
Designation:
Member of the Board of Directors of the holding of
the railroads Ferronorte, Ferroban and Novoeste from 2003 to 2006. Coordinator
of the Audit Committee from 2005 to 2006.
Company:
Verolme-Ishibrás S.A.
Designation:
Member of the
Board of Directors
12.9. Inform the existence
of marital relationship, marriage or kinship between second
degree:
a. issuer's
management
Not aplicable.
b. (I) Directors of the
Issuer and (ii) managers of, directly or indirectly, the issuer
Not aplicable.
106
c. (I) directors of the issuer
or its direct or indirect subsidiaries and (ii) direct or indirect parent of the
Issuer
Not aplicable.
d. (I) Directors of the Issuer
and (ii) directors of the companies direct or indirect parent of the
Issuer
Not aplicable.
12.10. Report relations of
subordination, rendering services or control maintained over the past 3 years,
between the issuer and administrators:
a. controlled society directly
or indirectly by the issuer
Not aplicable.
b. issuer's direct or
indirect
Not
aplicable.
c.caso relevant, supplier,
customer, debtor or creditor of the issuer, its subsidiary or parent companies
or subsidiaries of any of these people
Not aplicable.
Any criminal conviction, any
conviction in CVM administrative proceedings and penalties imposed, any final
conviction, the judicial or administrative levels that have suspended or
disqualified to practice an occupation or commercial: No.
12.6.
Susana Hanna Stiphan
Jabra
57 years, economist,
security number 037.148.408-18, appointed as an alternate member of the
Supervisory Board, the vote in the OEGM April 8, 2015, to serve until the OEGM
2016. He took office as member of the Supervisory Board in Aug / E April 3,
2014, with a mandate to the AGM / EGM 2015. Does not hold other positions in the
BRF. Mrs. Susana was not indicated by a controller. (independent
member).
Economist
with graduate specialization in Financial Administration, Susana has worked for
more than 30 years at large mid-sized companies, having participated in
important operations in the capital markets. She worked as an economist at Banco
Itaú S.A., was Planning and Control Manager at Agência Estado Ltda., Executive
Manager of Participation and a member of the PETROS Social Responsibility
Committee. She was an effective member of the Board of Directors at CPFL
Energia, at Companhia Paulista de Força e Luz, at Companhia Piratininga de Força
e Luz, at CPFL Geração de Energia S.A., at Telenorte Celular Participações and
at Bonaire Participações S.A. She is currently a member of the Supervisory Board
at BRF and JSL Logística. (Independent member)
12.7.
107
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
12.8.a.
i. 12.8.a.Main
professional experiences over the last 5 years
Company:
Fras-Le SA
Position:
Board of Directors
Functions of the
office: Board of Directors' Responsibilities set forth by
Brazilian law.
Main activity of the
company: Auto Parts.
Company:
CPFL
Energy SA
Position:
Board of Directors
Functions of the
office: Board of Directors' Responsibilities set forth by
Brazilian law.
Main activity of the
company: supply and transmission of power and light.
Company:
CPFL
Energy SA
Position:
Audit Committee
Functions of the
office: Role of the Audit Committee established in Brazilian
legislation and the Audit Committee established in the Sarbanes-Oxley
Act.
Main activity of the
company: supply and transmission of power and
light.
Company:
JSL
SA
Position:
Audit Committee
Functions of the
office: Role of the Audit Committee established in Brazilian
legislation and the Audit Committee established in the Sarbanes-Oxley
Act.
Main activity of the
company: Integrated logistics solutions.
ii. 12.8.a.Main
professional experiences over the last 5 years
Company:
Fras-Le SA
Position:
Member of the Board of Directors
Period:
2011-2012;
Company:
Bonaire Participações SA
Position:
Member of the Board of Directors
Period:
2009-2012
108
Company:
FERBASA - Ferro Alloys of Brazil SA
Position:
Member of the Supervisory Board
Period:
2010-2012
Company:
BRF
SA
Position:
Member of the Supervisory Board
Period:
Since 2012
Company:
JSL
SA
Position:
Member of the Supervisory Board
Period:
Since 2012
Companies in the
group of shareholders with a direct or indirect, less than 5% of the same class
or kind of securities:
-
Controlling: diffused control
- Others:
diffused control
12.9. Inform the existence of
marital relationship, marriage or kinship between second degree:
a. issuer's
management
Not aplicable.
b. (I) Directors of the
Issuer and (ii) managers of, directly or indirectly, the issuer
Not aplicable.
c. (I) directors of the issuer
or its direct or indirect subsidiaries and (ii) direct or indirect parent of the
Issuer
Not aplicable.
d. (I) Directors of the Issuer
and (ii) directors of the companies direct or indirect parent of the
Issuer
Not aplicable.
12.10. Report relations of
subordination, rendering services or control maintained over the past 3 years,
between the issuer and administrators:
109
a. controlled society directly
or indirectly by the issuer
Not aplicable.
b. issuer's direct or
indirect
Not
aplicable.
c. If relevant, supplier,
customer, debtor or creditor of the issuer, its subsidiary or parent companies
or subsidiaries of any of these people
Not aplicable.
Any criminal conviction, any
conviction in CVM administrative proceedings and penalties imposed, any final
conviction, the judicial or administrative levels that have suspended or
disqualified to practice an occupation or commercial: No.
12.6.
Marcus Vinicius Dias
Severini
57, Bachelor’s degree
in Accounting Sciences and Engineer, CPF 632.856.067/20, nominated as a Fiscal
Council Member in the election at the E/AGM of April 08, 2015, with a term of
office until the E/AGM of 2016. He has never exercised and does not exercise any
other positions at BRF. Mr. Severini was
nominated by Fundação Vale do Rio Doce de Seguridade Social - Valia.
(independent member).
Graduate
in Accounting Sciences and in Electrical Engineering, with a postgraduate
qualification in Engineering Economics. Severini is Director of the Financial
Control Department of Vale, which he joined in October 1994. From December 1981
to 1994, he held various positions at Arthur Andersen S/C leaving the
organization when he held the posts of Audit Manager and Accounting Consultant.
He has also held the position as effective member or alternate member on the
Fiscal Council of various companies and is president of the
Deliberative Council of Fundação Vale de Seguridade Social – VALIA. (independent
member)
12.7.
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
12.8.a.
i. Principal
professional experience over the last 5 years
Company: Vale S.A.
Position: Director of Financial
Control
Functions inherent to
the position: Internal controls and SOX, development of manuals of
procedures and for implementing concepts of Self Risk Assessment in the
accounting area.
Principal Activity of
the Company: Mining
110
Corporations which
are part of the shareholding group, directly or indirectly, equal or more
than 5% of a same class or type of
securities:
- Controlling Group:
dispersed control
- Others: dispersed
control
ii. Management Positions he
exercises or has exercised in publicly held companies:
Company: Vale S.A.
Position: Director of Financial
Control
Period: since 1994
Company: Usiminas
S.A.
Position: Fiscal Council
Member.
Period: 2011
Company:
Fósfertil S.A.
Position: Fiscal Council
Member
Period: 2010
Company:
Companhia Siderúrgica de Tubarão - CST
Position: Fiscal Council
Member
Period: 2012
12.9. Inform the existence of a
conjugal relationship, common law marriage or family relationship up to second
degree between:
a. members of the management of
the issuer
Not aplicable.
b. (i) members of management
of the issuer and (ii) members of the management of controlled companies,
directly or indirectly, of the issuer
Not aplicable.
c. (i) members of management
of the issuer or of its controlled companies, directly or indirectly and (ii)
controlling companies directly or indirectly of the issuer
Not
aplicable.
d. (i) members of management of the issuer and (ii) the
members of management of the directly and indirectly controlling corporations of
the issuer
Not
aplicable.
12.10. Inform as to the relations of subordination,
service rendering or control maintained in the last 3 fiscal years between
members of management of the issuer and:
111
a.corporation controlled,
directly or indirectly by the issuer
Not
aplicable.
b.controlling company directly or indirectly of the
issuer
Not aplicable.
c.if relevant,
supplier, client, debtor or creditor of the issuer, its controlled company or
controlling or subsidiary companies of any of these
people
Not aplicable.
Any criminal
sentence; any sentence in an administrative process of the CVM and the penalties
imposed; any sentence without right of appeal in the judicial or administrative
spheres, which has suspended or disqualified him from practicing any
professional or commercial activity: No.
12.6.
Marcos Tadeu
Siqueira
60, Company
Management, CPF 945.554.198/04, nominated as alternate member on the Fiscal
Council for the E/AGM of April 8, 2015, with a mandate until the E/AGM of 2016.
He has never exercised and does no exercise other positions at BRF.
Mr. Siqueira was nominated by the Caixa da Previdência
dos Funcionários do Banco do Brasil - Previ. (independent
member).
Graduate
in Company Management from Instituto Champagnat de Estudos Superiores with an
MBA in Administration from UFRJ COPPEAD. Mr. Siqueira is certified by IBGC –
Brazilian Institute for Corporate Governance to act as a Director. He is a full
member of the Fiscal Council of ALL – América Latina Logística and was a member
of the Board of Directors of Forjas Taurus. He is currently Operations Director
of SESI - Serviço Social da Indústria and a member of Collegiate bodies on the
CNI – National Confederation of Industry. (Alternate member)
12.7.
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
12.8.a.
i. Principal professional
experience over the last 5 years
Company: ALL – América Latina Logística
S.A.
Position: Fiscal Council
Member
Functions inherent to the
Position: Duties of the Fiscal Council as established in the
Brazilian legislation.
Principal Activity of the
Company: Mining
112
Company: Forjas Taurus
S.A.
Position: Board of
Directors
Functions inherent to the
Position: Duties of the Fiscal Council as established in the
Brazilian legislation..
Principal Activity of the
Company: Mining
Corporations which
are part of the shareholding group, directly or indirectly, equal or more
than 5% of a same class or type of
securities:
- Controlling
Group: dispersed control
- Others:
dispersed control
ii. Management Positions
he exercises or has exercised in publicly held companies:
Company: ALL – América Latina
Logística S.A.
Position: Fiscal Council
Member
Period: since 2012
Company: Forjas Taurus
S.A.
Position: Board
Director
Period: May 2013 to
July 2014
12.9. Inform the existence of a
conjugal relationship, common law marriage or family relationship up to second
degree between:
a. members of the management of
the issuer
Not aplicable.
b. (i) members of management
of the issuer and (ii) members of the management of controlled companies,
directly or indirectly, of the issuer
Not aplicable.
c. (i) members of management
of the issuer or of its controlled companies, directly or indirectly and (ii)
controlling companies directly or indirectly of the issuer
Not
aplicable.
d. (i) members of management of the issuer and (ii) the
members of management of the directly and indirectly controlling corporations of
the issuer
Not
aplicable.
12.10. Inform as to the
relations of subordination, service rendering or control maintained in the last
3 fiscal years between members of management of the issuer and:
113
a.corporation controlled,
directly or indirectly by the issuer
Not
aplicable.
b.controlling company directly or indirectly of the
issuer
Not aplicable.
c.if relevant,
supplier, client, debtor or creditor of the issuer, its controlled company or
controlling or subsidiary companies of any of these
people
Not aplicable.
Any criminal
sentence; any sentence in an administrative process of the CVM and the penalties
imposed; any sentence without right of appeal in the judicial or administrative
spheres, which has suspended or disqualified him from practicing any
professional or commercial activity: No.
12.6.
Reginaldo Ferreira
Alexandre
55, engineer, CPF
003.662.408/03, nominated as a member of the Fiscal Council for election in he
E/AGM of April 08, 2015, with a term of office to run until the E/AGM of 2016.
Has never held and does not hold other positions at BRF. Mr. Reginaldo was
not nominated by the controlling shareholder. (independent member).
Economist, with fifteen years of experience in the area
of investment analysis as analyst, organizer and director of research teams,
having held positions successively at Citibank, Unibanco, BBA (currently
Itaú-BBA) and Itaú Corretora de Valores. He has also worked as a corporate
credit analyst (Citibank) and as a consultant in the areas of strategy
(Accenture) and corporate finance (Deloitte). Today he works at ProxyCon
Consultoria Companyrial, a company dedicated to advisory and service activities
in the capital markets, finance and corporate governance areas.
(independent member)
12.7.
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
12.8.
a.
i. Principal
professional experience during the last 5 years
Company: Petrobras S.A.
Position: Full Member of the Fiscal
Council
Functions inherent to
the position: Duties of the Fiscal Council as established in
the Brazilian legislation.
Principal Activity of
the Company: Oil and derivatives.
Company: Paraná Banco S.A.
Position: Full Member of the Fiscal
Council
114
Functions inherent to
the position: Duties of the Fiscal Council as established in the
Brazilian legislation.
Principal Activity of
the Company: Financial Services
Company: Aliansce Shopping Centers
S.A.
Position: Full Member of the Fiscal
Council
Functions inherent to
the position: Duties of the Fiscal Council as established in the
Brazilian legislation.
Principal Activity of
the Company: Commercial and Services
Company: Iochpe Maxion
S.A.
Position: Full Member of the Fiscal
Council
Functions inherent to
the position: Duties of the Fiscal Council as established in the
Brazilian legislation.
Principal Activity of
the Company: Capital Goods
Corporations which
are part of the shareholding group, directly or indirectly, equal or more
than 5% of a same class or type of
securities:
- Controlling Group:
dispersed control
- Others: dispersed
control
ii. Management Positions he
exercises or has exercised in publicly held companies:
Company: Petrobras
S.A.
Position: Effective Member of the Fiscal
Council
Period: elected in April 2013 and
reelected in 2014
Company: Paraná Banco S.A.
Position: Member of the Fiscal
Council.
Period: elected in April 2011 and
reelected in April 2012, 2013 and 2014.
Company:
Aliansce Shopping Centers S.A.
Position: Member of the Fiscal
Council
Period: elected in April
2014
Company:
Iochpe Maxion
Position: Member of the Fiscal
Council
Periodo: elected in April 2013 and
reelected in April 2014
Company:
Cremer S.A.
Position: Fiscal Council
Member
Period: president of the Fiscal
Council; elected in April 2011 e reelected in April 2012
12.9. Inform the existence of a
conjugal relationship, common law marriage or family relationship up to second
degree between:
a. members of the management of
the issuer
Not aplicable.
115
b. (i) members of management
of the issuer and (ii) members of the management of controlled companies,
directly or indirectly, of the issuer
Not aplicable.
c. (i) members of management
of the issuer or of its controlled companies, directly or indirectly and (ii)
controlling companies directly or indirectly of the issuer
Not
aplicable.
d. (i) members of management of the issuer and (ii) the
members of management of the directly and indirectly controlling corporations of
the issuer
Not
aplicable.
12.10. Inform as to the relations of subordination,
service rendering or control maintained in the last 3 fiscal years between
members of management of the issuer and:
a.corporation controlled,
directly or indirectly, by the issuer
Not
aplicable.
b.controlling company directly or indirectly of the
issuer
Not aplicable.
c.if relevant,
supplier, client, debtor or creditor of the issuer, of its controlled
company or controlling or subsidiary companies of any of these
people
Not aplicable.
Any criminal
sentence; any sentence in an administrative process of the CVM and the penalties
imposed; any sentence without right of appeal in the judicial or administrative
spheres, which has suspended or disqualified him from practicing any
professional or commercial activity: No.
12.6.
Walter Mendes de Oliveira
Filho
60, Economist, CPF
68659652800, nominated as alternate member of the Fiscal Council for election at
the E/AGM of April 8, 2015, with term of office to the E/AGM of 2016. He has
never exercised and does not exercise other positions at BRF. Mr.
Oliveira Filho was not nominated by a controller. (independent
member).
Economist, graduate from the Faculdade de Economia,
Administração e Contabilidade of the Universidade de São Paulo (FEA-USP) with a
postgraduate qualification in Economics from PUC-SP. President of AMEC since
April 2009. He has been a member of the executive board of the association since
its creation in June 2006. He was been a senior manager for Equities at Itaú
Unibanco Banco Múltiplo S/A from 2003, responsible for buy-side research and
equity fund management. He has worked in the capital and financial markets since
1978, during which he has had spells at Unibanco as an investment analyst and
head of investment research and at Schroder Investment Management, where he was
responsible for the office in Brazil and as head of investment for Latin America
in London. Mendes was member of the Executive Board of Apimec-SP
(Associação dos Analistas e Profissionais de Investimento do Mercado de
Capitais) for the 2004/2006 period. (independent
alternate member)
116
12.7.
The members of statutory
committees shall be elected at a meeting of the board to be held after the
annual general meeting to be set.
12.8.a.
i. Principal professional
experience over the past 5 years
Company: Banco Itaú Unibanco
S/A
Position: Senior Manager Equity
Income
Functions inherent to the position: Responsible for
the management of Equity Funds and Portfolios distributed to
Institutional, Private Bank, Personnalité, Retail and Foreign clients. Important
highlights during this period were the reorganization of the Research and
Management process, the launch of an ample unique family of funds and the
internationalization of the area
Principal Activity of the
Company: Financial Services
Company: Cultinvest Asset
Management Ltda.
Position: Partner and Asset
Manager.
Functions inherent to the Position: Cultinvest, created
in 2010, manages Equity Funds, Fixed Income and Wines.
Principal Activity of
the Company: Investment Fund.
Company: CAF – Comitê de
Aquisições e Fusões
Position: Executive
Director
Functions inherent to the position: Responsible for
Technical Work, Administration and Liaison with the market for the
self-regulatory entity created and maintained by the following entities:
BM&FBovespa, ANBIMA, AMEC and IBGC.
Principal Activity of the
Company: Self-regulating entity for the Capital
Markets.
Corporations
which are part of the shareholding group, directly or indirectly, equal or more
than 5% of a same class or type of
securities:
- Controlling Group:
dispersed control
- Others: dispersed
control
ii. Management Positions he
exercises or has exercised in publicly held companies:
Company: Banco Itaú Unibanco
S/A.
Position: Senior Manager for Equity
Income
Period: 2000 to 2010;
12.9. Inform the existence of a
conjugal relationship, common law marriage or family relationship up to second
degree between:
117
a. members of the management of
the issuer
Not aplicable.
b. (i) members of management
of the issuer and (ii) members of the management of controlled companies,
directly or indirectly, of the issuer
Not aplicable.
c. (i) members of management
of the issuer or of its controlled companies, directly or indirectly and (ii)
controlling companies directly or indirectly of the issuer
Not
aplicable.
d. (i) members of management of the issuer and (ii) the
members of management of the directly and indirectly controllin corporations of
the issuer
Not aplicable.
12.10. Inform as to the
relations of subordination, service rendering or control maintained in the last
3 fiscal years between members of management of the issuer and:
a.corporation controlled,
directly or indirectly by the issuer
Not
aplicable.
b.controlling company directly or indirectly of the
issuer
Not aplicable.
c.if relevant,
supplier, client, debtor or creditor of the issuer, its controlled company or
controlling or subsidiary companies of any of these
people
Not aplicable.
Any criminal
sentence; any sentence in an administrative process of the CVM and the penalties
imposed; any sentence without right of appeal in the judicial or administrative
spheres, which has suspended or disqualified him from practicing any
professional or commercial activity: No.
118
Annex IV - Remuneration of Directors
(Items 13.1 to 13:16, pursuant to CVM Instruction
480, of December 7, 2009)
13. OFFICERS’
COMPENSATION
13.1. Describe the
compensation policy or practice of the Board, the statutory and non-statutory
executive board, the fiscal committee, the statutory committees and the audit,
risk, financial and compensation committees, addressing the following
aspects:
a. Objectives of the
compensation policy or practice
The Company's
remuneration policy for its officers, including members of the Board of
Directors and statutory and non-statutory directors, and members of the Fiscal
Council, is aligned to market practices and management and corporate governance
system in order to attract and retain professionals who hold qualifications,
competence and line profile the characteristics and needs of the business. The
remuneration is established based on market research and the Company's strategic
alignment. For details on the methodology had adopted, see part (b) (iii)
below.
The statutory board
has variable compensation tied to performance targets and indicators to be
achieved in the year. That method promotes the sharing of strategic planning and
results in a consistent, transparent and geared to the interests of the
organization, executives and shareholders themselves.
b. Compensation
Breakdown:
i.
description of compensation elements and their
purpose
a)
Board of Directors:
All members of the
Board of Directors receive fixed compensation, which is established in
accordance with legislation and industry standards, plus reimbursement of all
subsistence expenses and transportation linked to the fulfillment of the duties
for which they were elected. The President receives different values of the
other members in order to function performed by the same.
b)
Fiscal Committee:
All members of the
Supervisory Board receive fixed remuneration in addition to reimbursement of all
living expenses and transportation linked to the fulfillment of the duties for
which they were elected. The remuneration is fixed in its general meeting
approving his election and can not be lower, for each member in office, ten
percent of which on average is assigned to Statutory Board, benefits and profit
sharing not considered, according to Law 6,406/76.
c)
Executive Board
The members of the
Statutory Board receive fixed and variable compensation. The remuneration policy
is formulated in accordance with market practice and that the variable
remuneration is linked to the
achievement of
pre-set targets and approved at the beginning of each financial year which are
called "short-term incentives."
119
Additionally, on
March 31, 2010, our shareholders approved and April 24, 2012 and April 09, 2013
and April 04, 2014 changed a long-term stock option plan that includes the
executive officers of BRF ("Plan of BRF"), covering newly issued shares or
treasury BRF. For details about the BRF Plan, see their full content in the
link.
BRF´s Plan aims to
attract, retain and motivate executives to generate value for the company as
well as being an important alignment mechanism to the interests of our
shareholders.
Such remuneration
policy encourages the search results by the Board and recognizes the scope and
exceeded pre-defined goals, generating drivers and attention to indicators that
are critical to the strategy and company results, and finally also corresponds
to the interests of shareholders.
BRF SA has a
Personnel Committee, Organization and Culture analyzing the fixed remuneration
and variable strategy to be adopted, sending its recommendations and
adjustments, to be later submitted for consideration, deliberation and approval
of the Board of Directors.
Participants of the
permanent advisory committees are members of the Board of Directors and
Statutory Board, and do not receive additional compensation for being
participants in these committees.
ii.
what is the proportion of each element in the total
compensation
The Board of
Directors, Tax and Advisory Board, the fixed remuneration corresponds to 100% of
total compensation, as described above.
Regarding the
Statutory Board, the fixed remuneration corresponds, on average, 48% of the
total remuneration and the variable remuneration is, on average, 52% of the
total compensation if the set goals are achieved.
The percentage of
variable compensation may be buoyant and variations due to linking and direct
linkage to the risks and results planned by the Company.
iii.
Calculation and restatement methodology for each
compensation element
The remuneration of
directors and members of the Supervisory Board is regularly compared with market
practices (large companies selection, mostly consumer goods, which have
structured policies and best practices in human capital management, with good
conditions employment at all organizational levels and having a balanced
remuneration composition) through salary surveys conducted by specialized
consultants, beyond the period of inflation monitoring, evaluating the need for
adjustment to the remuneration components, as needed.
The remuneration of
members of boards of directors, audit committee and the board office is defined
in assembly, taking into account the factors mentioned in the previous
paragraph.
iv.
Reasons that justify the Compensation
Breakdown
120
The policy of the
BRF, distribute equitably the fixed remuneration components to ensure alignment
with market practices and governance system. Variable remuneration aims to reach
and overcome corporate and individual goals, which leads to the sharing of risks
and results.
c. key performance
indicators used to determine each compensation element
To determine the
values of the variable compensation of the executive officers is considered
their performance by pre-establishment of individual and collective goals, such
as EBITDA and GV BRF (Value Creation).
d. how compensation
is built to reflect the behavior of performance indicators
As for the fixed
remuneration follows the criteria already mentioned above. The variable
remuneration, or Short Term Incentive (Annual), this element is fully linked to
the Company's performance indicators (Global Targets) and performance indicators
Individual (Individual Goals). However, for the program participant to live up
to receive the potential value or part (proportional) the overall results of
EBITDA and GV BRF (Value Creation) to reach a minimum pre-established by the
Board of Directors value, under penalty of not payment of any amount under this
heading.
e. how the
compensation policy or practice fits the issuer’s short- , medium- and long-term
interests
The practice adopted
by the company for the various components of remuneration is aligned with the
interests of short, medium and long term to the extent that when defining the
components of remuneration seeks to align the interests of the company and the
executive. The fixed remuneration is set in accordance with market practices, as
described above, aiming at professional restraint and avoid interest thereof by
another company that best remunerate. The variable remuneration, which
represents a significant portion of total compensation is linked to performance
indicators achievable within a year aiming, likewise, pay according to the
market, but mainly the growth of the company since the established goals if
achieved design the company to a level of growth and profitability required by
shareholders.
Was approved by the
Shareholders 'General Meeting of 03.31.2010 and modified Shareholders' General
Meeting of 04.24.2012, 09.04.2013 and 03.04.2014, the Plan of Stock Option to
BRF executives SA For details on this plan, see his full content the
link.
It was also approved
by the General Meeting of Shareholders 03.04.2014 the Stock Option Plan
(Performance Stock Options). For details on this plan, see his full content of
the link.
These plans are
designed to strengthen the company's shareholder's expectation of creating the
vision and the long-term commitment in the executive, promoting knowledge,
skills and behavior necessary for the longevity of the business as well as
increase the level of attraction and retention of its top executives.
f. compensation
supported by subsidiaries, controlled companies or controlling shareholders,
direct or indirect
No portion of
compensation supported by subsidiaries or direct or indirect members of the
board of directors, fiscal and statutory board.
121
g. compensation or
benefits hitched to a specific corporate event, such as sale of the Company’s
controlling stake
There is no
compensation or benefit linked to the occurrence of certain corporate events,
such as the sale of the Company's control.
13.2. As regards the
compensation of the Board, Statutory Board and Fiscal Committee posted to the
books over the past 3 fiscal years and that forecast for the current fiscal
year:
122
|
|
|
|
|
YEAR:
2014 |
Board
of |
Audit |
Statutary
Board |
Total |
|
Directors |
Commitee |
|
|
number of
members |
11,67 |
3,00 |
7,58 |
22,25 |
compensation (in
R$) |
|
|
|
|
i
- Annual Fix Compensations |
|
|
|
|
salary or
pro-labor |
6.405.366,697 |
461.174,160 |
19.090.003,190 |
25.956.544,05 |
direct and
indirect benetis |
1.836,910 |
0,000 |
1.255.888,640 |
1.257.725,55 |
participation on
committeess |
348.032,863 |
0,000 |
0,000 |
348.032,86 |
other |
1.350.679,910 |
92.234,880 |
4.951.179,480 |
6.394.094,27 |
ii
- Variable Compensation |
|
|
|
|
bonus |
0 |
0 |
0 |
- |
participation on
results |
0 |
0 |
13.561.000,00 |
13.561.000,00 |
participations on
meetings |
0 |
0 |
0 |
- |
comission |
0 |
0 |
0 |
- |
iii - Post-job
benefits |
0 |
0 |
168.291,45 |
168.291,45 |
iv
- Cessation of exercise of position |
4.392.541,58 |
- |
24.018.344,59 |
28.410.886,17 |
v
– Based on shares |
0 |
0 |
8614614,676 |
8.614.614,68 |
TOTAL |
12.498.457,96 |
553.409,04 |
71.659.322,03 |
84.711.189,03 |
123
|
|
|
|
|
|
|
|
|
|
YEAR:
2015 |
Board
of |
Audit |
Statutary
Board |
Total |
|
Directors |
Commitee |
|
|
number of
members |
13,00 |
3,00 |
8,00 |
24,00 |
compensation (in
R$) |
|
|
|
|
i
- Annual Fix Compensations |
|
|
|
|
salary or
pro-labor |
4.508.328,370 |
527.483,610 |
14.440.482,277 |
19.476.294,26 |
direct and
indirect benetis |
0,000 |
0,000 |
796.225,115 |
796.225,11 |
participation on
committeess |
0,000 |
0,000 |
0,000 |
- |
other |
1.127.082,097 |
105.496,722 |
5.066.395,990 |
6.298.974,81 |
ii
- Variable Compensation |
|
|
|
|
bonus |
0 |
0 |
0 |
- |
participation on
results |
0 |
0 |
23662000 |
23.662.000,00 |
participations on
meetings |
0 |
0 |
0 |
- |
comission |
0 |
0 |
0 |
- |
iii - Post-job
benefits |
0 |
0 |
0 |
- |
iv
- Cessation of exercise of position |
4.688.979,79 |
- |
25.911.316,63 |
30.600.296,42 |
v
– Based on shares |
0 |
0 |
- |
- |
TOTAL |
10.324.390,26 |
632.980,33 |
69.876.420,01 |
80.833.790,60 |
¹ values reported in
the "Other" refers to social security contributions:
Charges
|
Lien BRF (%)
|
Sat |
2.00 |
INSS
Company |
20.00 |
SENA Adicional
|
0.20 |
Third
prties |
5.80 |
FGTS* |
8.00 |
Total |
36.00
|
|
|
* Effect on fees to
the Statutory Board.
124
13.3. As regards the variable compensation of the
Board, Statutory Board and Fiscal Committee over the past 3 fiscal years and
that forecast for the current fiscal year:
|
|
|
|
|
|
|
|
|
|
YEAR: 2012 |
Board of |
Audit |
Statutary
Board |
Total |
|
Directors |
Commitee |
|
|
Number of
members |
10,00 |
3,00 |
10,67 |
23,67 |
Regarding
bonus |
|
|
|
|
i - Minimum value forecasted on
the |
|
|
|
|
remuneration plan |
NA |
NA |
NA |
NA |
ii - Maximum value forescated on
the |
NA |
NA |
NA |
NA |
remuneration plan |
|
|
|
|
iii- Forecasted value on the
remuneration plan, |
NA |
NA |
NA |
NA |
if established targets and
reached |
|
|
|
|
iv- Effective value reconized on
the results of |
|
|
|
|
exercise |
NA |
NA |
NA |
NA |
Regarding participation on
the results |
|
|
|
|
i - Minimum value forecasted on
the |
|
|
|
|
remuneration plan |
NA |
NA |
- |
- |
ii - Maximum value forescated on
the |
NA |
NA |
19.267.566,00 |
19.267.566,00 |
remuneration plan |
|
|
|
|
iii- Forecasted value on the
remuneration plan, |
NA |
NA |
9.633.783,00 |
9.633.783,00 |
if established targets and
reached |
|
|
|
|
iv- Effective value reconized on
the results of |
|
|
|
|
exercise |
NA |
NA |
15.254.421,88 |
15.254.421,88 |
|
|
|
|
|
|
|
|
|
|
YEAR: 2013 |
Board of |
Audit |
Statutary
Board |
Total |
|
Directors |
Commitee |
|
|
Number of
members |
10,92 |
3,00 |
9,50 |
23,42 |
Regarding
bonus |
|
|
|
|
i - Minimum value forecasted on
the |
NA |
NA |
NA |
NA |
remuneration plan |
|
|
|
|
ii - Maximum value forescated on
the |
NA |
NA |
NA |
NA |
remuneration plan |
|
|
|
|
iii- Forecasted value on the
remuneration plan, |
NA |
NA |
NA |
NA |
if established targets and
reached |
|
|
|
|
iv- Effective value reconized on
the results of |
|
|
|
|
exercise |
NA |
NA |
NA |
NA |
Regarding participation on
the results |
|
|
|
|
i - Minimum value forecasted on
the |
NA |
NA |
5.182.337,22 |
5.182.337,22 |
remuneration plan |
|
|
|
|
ii - Maximum value forescated on
the |
|
|
|
|
remuneration plan |
NA |
NA |
17.274.457,40 |
17.274.457,40 |
iii- Forecasted value on the
remuneration plan, |
NA |
NA |
8.637.228,70 |
8.637.228,70 |
if established targets and
reached |
|
|
|
|
iv- Effective value reconized on
the results of |
|
|
|
|
exercise |
NA |
NA |
7.565.081,00 |
7.565.081,00 |
125
|
|
|
|
|
|
|
|
|
|
YEAR: 2014 |
Board of |
Audit |
Statutary
Board |
Total |
|
Directors |
Commitee |
|
|
Number of
members |
11,67 |
3,00 |
7,58 |
22,00 |
Regarding
bonus |
|
|
|
|
i - Minimum value forecasted on
the |
|
|
|
|
remuneration plan |
NA |
NA |
NA |
NA |
ii - Maximum value forescated on
the |
NA |
NA |
NA |
NA |
remuneration plan |
|
|
|
|
iii- Forecasted value on the
remuneration plan, |
|
|
|
|
if established targets and
reached |
NA |
NA |
NA |
NA |
iv- Effective value reconized on
the results of |
|
|
|
|
exercise |
NA |
NA |
NA |
NA |
Regarding participation on
the results |
|
|
|
|
i - Minimum value forecasted on
the |
NA |
NA |
8.136.600,00 |
8.136.600,00 |
remuneration plan |
|
|
|
|
ii - Maximum value forescated on
the |
|
|
|
|
remuneration plan |
NA |
NA |
27.122.000,00 |
27.122.000,00 |
iii- Forecasted value on the
remuneration plan, |
NA |
NA |
13.561.000,00 |
13.561.000,00 |
if established targets and
reached |
|
|
|
|
iv- Effective value reconized on
the results of |
|
|
|
|
exercise |
NA |
NA |
13.561.000,00 |
13.561.000,00 |
|
|
|
|
|
|
|
|
|
|
YEAR: 2015 |
Board of |
Audit |
Statutary
Board |
Total |
|
Directors |
Commitee |
|
|
Number of
members |
13,00 |
3,00 |
8,00 |
24,00 |
Regarding
bonus |
|
|
|
|
i - Minimum value forecasted on
the |
NA |
NA |
NA |
NA |
remuneration plan |
|
|
|
|
ii - Maximum value forescated on
the |
NA |
NA |
NA |
NA |
remuneration plan |
|
|
|
|
iii- Forecasted value on the
remuneration plan, |
|
|
|
|
if established targets and
reached |
NA |
NA |
NA |
NA |
iv- Effective value reconized on
the results of |
|
|
|
|
exercise |
NA |
NA |
NA |
NA |
Regarding participation on
the results |
|
|
|
|
i - Minimum value forecasted on
the |
NA |
NA |
23.662.000,00 |
23.662.000,00 |
remuneration plan |
|
|
|
|
ii - Maximum value forescated on
the |
|
|
|
|
remuneration plan |
NA |
NA |
23.662.000,00 |
23.662.000,00 |
iii- Forecasted value on the
remuneration plan, |
NA |
NA |
23.662.000,00 |
23.662.000,00 |
if established targets and
reached |
|
|
|
|
iv- Effective value reconized on
the results of |
|
|
|
|
exercise |
NA |
NA |
- |
- |
13.4. As regards the
share-based compensation plan of the Board and statutory board in effect over
the previous fiscal year and forecast for the current fiscal
year:
First, it is
important to emphasize that, as existing case law in Brazil, the Company
believes that its plans to Share Purchase Option not have compensatory nature.
Subject to and for information purposes only, will be included along that item
13.4, the provisions of the plan.
a.
Overall terms and conditions
126
The Stock Option Plan
of BRF SA, approved by the General Shareholders Meeting held on 31/03/2010 and
amended on 24/04/2012, 04/09/2013 and 04/03/2014, consists of 2 instruments,
"Plan of Stock Option" and "Plan of Share Purchase Additional Option" with the
public eligible Statutory Directors or not and others, the SA and / or its
subsidiaries.
The first instrument
is based on the concept of stock options (stock options), which is granted by
the company to the executive a right (not an obligation) to buy company shares
at prices (exercise price) and terms predefined.
The second
instrument, optional to the executive, is the grant of Stock Options in
accordance with the ratio of the amount spent by the participant eligible to
purchase the Company's Shares on the stock exchange market in which the Company
trades its shares and the value net of profit sharing received by the Company or
the Subsidiary Beneficiary, as applicable, in the year of
acquisition.
Approval of the list
of participants and the number of Options to be granted will be determined by
the Board annually and will be linked to achieving predefined results for the
Company and the appreciation of the Company. The involvement of the executive in
a grant cycle does not guarantee their participation in subsequent
grants.
To determine the
number of Stock Options in first instrument "Plan of Stock Option" is used the
concept of calculation that achieved an expected appreciation of the Company's
issued share within the stipulated grace period (vesting) the gain resulting
from the option is equal to the target level of the Executive award. In this
concept, the Participant only reaches its potential gain if the expectations of
shareholders in terms of business valuation is reached.
In the second
instrument "Plan of Additional Shares Option" the number of Options to be
granted to each participant will be the result of the proportion of the amount
paid by the participant eligible to purchase the Company's shares on the stock
exchange market, buying through the notes brokerage, in which the company trades
its shares and the net value of participation in hiring bonus results and / or
other amounts (not including cash) received by the Company or the Subsidiary
Beneficiary, as applicable, in the year of acquisition, as follows
form:
·
To
Beneficiaries who shell out a higher proportional amount not exceeding 50% of
the net value of participation in results, will be granted options equivalent to
4 times the number of Parity Shares.
·
To
Beneficiaries who shell out a higher amount proportional or equal to 25% but
less than 50% of the net value of participation in results, will be granted
options equal to 2, since the number of Parity Shares.
·
To
Beneficiaries that disburse a proportionate amount less than 25% of the net
value of participation in results, will be granted options equivalent to 1 veze
the number of Parity Shares.
Plan participants
shall conclude with the Company individual contracts Grant of Option to Purchase
Shares, through which the participant acquires the right to option the company's
shares, a right personal and not transferable.
The plan
administration the Board of Directors of the company, within the applicable
legal requirements and maximum dilution limits authorized in Shareholders
Meeting. Will be given the same if you use the Personnel Committee, Organization
and Culture to assist them in this activity.
127
b.
Key objectives of the plan
The Plan of BRF, aims
to: (a) attract, retain and motivate participants; (b) create value for the
shareholders of the Company; and (c) encourage business entrepreneur's
vision.
c.
how the plan contributes to these
objectives
BRF SA, to establish
a differentiated and competitive investment opportunity for executives of BRF
SA, expects to align the actions of participants in this long-term option plan
to the vision of the shareholders and investors of the Company, affecting the
long-term variable remuneration executive to the continuation of business and
thereby promoting sustainable and committed attitude of the participants in this
plan.
d.
how the plan fits the issuer’s compensation
policy
The Stock Option Plan
intends to complement the remuneration package of its executives, reinforcing
the level of attraction and retention of its top executives, as described in
item 13.1.
e.
how the plan aligns officers’ and issuer’s interest in the short, medium and
long terms.
The Plan Options
Option strengthens the expectation of the shareholder and the company's investor
to create the vision and the long-term commitment in the executive, promoting
knowledge, skills and behaviors necessary to the continuation of
business.
The exercise of the
Options granted to both instruments can only occur from one (1) year from the
grant date representing a maximum 1/3 of the options each year, and may do so
for a period of up to 5 years, making the beneficiaries are committed to the
continued appreciation of the company's shares in the short, medium and long
term.
f.
maximum number of shares included
The maximum number of
shares covered that may be subject to stock option grants, considered on a
consolidated basis of all the Company's plans, is equivalent to 2.5% of the
total number of shares issued by BRF SA, corresponding to 21,811. 831 shares on
the date of this reference document.
g.
maximum number of options to be distributed
The maximum number of
options to be granted will not exceed the maximum amount of shares that can be
covered object of stock option grants, considered on a consolidated basis of all
the Company's plans, equivalent to 2.5% of the total number of shares of issued
by BRF SA, corresponding to 21,811,831 shares on the date of this reference
document .
h.
share acquisition terms
For the acquisition
of Shares, as the contract grants the Beneficiary shall respect the grace period
(Vesting) according to the described in the letter "J" this form. Respected the
grace period and having the Beneficiary's interest in exercise, it must do so by
an express written notice.
Not checked any legal
impediments, the Board of Directors at the annual meeting of the month
immediately following receipt of the Exercise Notice, promote their increase of
the share capital of the Company, within the
authorized capital limit; or perform all acts necessary to authorize the private
trading of the Shares held in treasury in order to give to the Participant
regarding the actions to Mature Options exercised.
128
The Company will
practice all acts necessary in order the registration of the Shares subscribed
or purchased by the Participant with the financial institution responsible for
the bookkeeping of the Shares.
Shares purchased or
subscribed shall be entitled to dividends and other income as if they had been
acquired on the same date, the BMF & Bovespa.
The option exercise,
conducted under the terms of this item, will be formalized by the signing of the
Subscription Agreement; Agreement of Purchase and Sale of Shares; or any other
document that may be determined by the Board of Directors and / or the financial
institution responsible for the Shares, which shall contain, necessarily, the
following information: (a) the number of Shares acquired or subscribed; (B) the
Exercise Price; and (c) the method of payment.
Payment can be made
by the Beneficiary within 5 (five) working days after registration of the Shares
on your behalf, and made available to the beneficiary using the net balance of
taxes of trading of the Shares acquired by exercising the options for payment of
the Price Exercise.
i.
criteria to set the acquisition or strike price
The Exercise Price of
the Stock Options will be determined by the Board of Directors and will be equal
to the average of the closing price of the Shares in the 20 trading days prior
to signing of the Grant Agreement, this rule valid for 2 plans: "Plan option to
Purchase Shares "and" Plan of Share Purchase Additional Option ".
The Exercise Price
shall be adjusted monthly based on the IPCA, or any other index chosen by the
Board of Directors, from the date of Grant to the month prior to sending the
Notice of Exercise of Options by the Beneficiary.
j.
criteria to set the option term
The setting of the
exercise period took into account market practices and the criterion of
reasonableness in terms of time necessary for the management actions
beneficiaries may impact the business in terms of growth and appreciation of the
shares, thus established in the proposal of two (2) levels:
The options granted
under the Stock Option Plan may be exercised by the Participants, subject to the
minimum vesting periods set forth below:
(a)
Up to one third (1/3) of all
Options may be exercised after one (1) year of the signing of the Grant
Agreement;
(b)
By two thirds (2/3) of all
Options may be exercised after two (2) years from the signing of the Grant
Agreement; and
(c)
All of the options may be
exercised after three (3) years from the signing of the Grant
Agreement.
129
Passed the time
limits set forth above, which may be extended at the sole discretion of the
Board of Directors in the Grant Agreement, the exercisable options will be
considered Mature Options, and thus the beneficiary acquired the right to
exercise them in its sole discretion , subject to the maximum period of validity
of the established options.
The Options granted
under the Additional Share Purchase Option Plan may be exercised by the
beneficiaries, the following provisions apply:
(a)
Up to 1/3 of the total options
may be exercised after one (1) year of the signing of the Agreement of
Additional Shares Option;
(b)
Up to 2/3 of the total options
may be exercised after two (2) years from the signing of the Agreement of
Additional Shares Option; and
(c)
All of the options may be
exercised after three (3) years of the signing of the Additional Stock Purchase
Option Agreement.
k.
settlement
To meet the options,
the Board of Directors may, under the Act and specific regulations (notably CVM
Instruction. 390/03 and Law 6.404 / 76, as amended), proceed with the issuance
of new shares within the limits of authorized capital or negotiate privately
Shares held in treasury.
l.
restrictions on Share transfers
The shares acquired
or subscribed in accordance with the rules of the plans "Plan of Stock Option"
and "Plan of Share Purchase Additional Option" and individual grants contracts
are not subject to any restriction period and the beneficiary negotiate freely
at any time.
m. criteria
and events that can lead to suspension, changes or dismissal of the
plan
In the event of
corporate restructuring, whether by merger, consolidation or transformation of
the Company, or in the output hypothesis of the Novo Mercado segment of the
Company, the Management Board shall act as the effects of corporate
restructuring for the Options granted to the event date.
And, in case of
changing the number of shares, either by grouping, split or bonus shares, the
options and the exercise price adjustment may also be at the discretion of the
Board of Directors, in order to avoid any distortions and damage to the Company
and / or the Beneficiaries.
n.
effect of officers’ departure from the issuer’s entities on their rights
under the stock compensation plan
According to the
proposed plan "Plan of Stock Option" and "Plan of Share Purchase Additional
Option" the rules for the departure by disconnections of the company
are:
1.
In the event of
termination or voluntary initiative of the Company without cause, the Mature
Options shall have its validity period anticipated and must be exercised within
a maximum of thirty (30) days of shutdown notification; and not ripe yet Options
will be canceled.
130
2.
In the event of
termination of the Company's initiative be for cause, all options granted to the
Beneficiary, including but not limited to the Mature Options will be canceled
after the shutdown notification.
3.
Options canceled as
provided in items 1 and 2 above shall not entail any right of indemnity to the
Beneficiary.
4.
Grant Agreements or
the Additional Shares Option Contracts will be terminated from the date of the
Beneficiary's shutdown, and such termination shall not entail any right of
indemnity to the Beneficiary.
5.
Do not apply the
above provisions in the event of statutory directors not re-elected to their
respective positions, provided they still remain on the staff of the Company and
/ or its Subsidiaries, in which event the Concession Contracts or Option
Contracts of Additional Shares, as applicable, will remain in effect with the
same terms and conditions.
For cases of
retirement for length of service or permanent disability of the beneficiary, the
Mature Options may be exercised within the period of validity laid down in the
Grant Agreement or the Additional Shares Purchase Option Agreement, as
applicable; and not yet mature options will automatically be considered Mature
options immediately exercisable within within the expiry date sixty (60 days)
months from the date of departure companhia.No Beneficiary's death case, the
options will be transferred to the heirs and / or legatees of the Beneficiary,
and the Mature Options may be exercised within a further period of validity of
twelve (12) months from the Beneficiary's death date; and options not yet
exercisable will be considered immediately Mature Options, and may be exercised
within the validity period of twelve (12) months from the Beneficiary's death
date.
Stock Option Plan
(Performance Stock Options)
a.
general terms and conditions
The Stock Option Plan
(Performance Stock Options) BRF SA, approved by the General Shareholders Meeting
held on 04.03.2014 has the public eligible Statutory Directors or not and
others, the SA and / or its subsidiaries .
The instrument is
based on the concept of stock option (Performance Stock Options), which is
granted by the company to the executive a right (not an obligation) to buy
company shares at prices (exercise price), deadlines and predefined conditions
by achieving goals.
Approval of the list
of participants and the number of Options to be granted will be determined by
the Board annually and will be linked to achieving predefined results for the
Company, the valuation of the Company and the determination of corporate goals.
The involvement of the executive in a grant cycle does not guarantee their
participation in subsequent grants.
To determine the
number of Stock Options is used the concept of calculation that achieved an
expected appreciation of the Company's issued share within the stipulated grace
period (vesting) and the attainment of corporate goals, the gain resulting from
the option is equal to the level of the target to the Executive award. In this
concept, the Participant only reaches its potential gain if the expectations of
shareholders in terms of business valuation is reached.
131
b.
Major Plan Objectives
The Plan aims to
allow the Beneficiaries, subject to certain conditions, to acquire shares of the
Company, in order to: (a) stimulating the expansion, success and the achievement
of social objectives of the Company; (b) aligning the interests of shareholders
of the Company to the Beneficiaries; and (c) allow the Company or other
companies under its control to attract and retain (s) linked the
Beneficiaries.
c. How the plan
contributes to these objectives
The Company, to
establish a differentiated and competitive investment opportunity for its
executives, in order to align the actions of the Beneficiaries of the Plan to
the vision of the shareholders and investors of the Company and thereby
promoting sustainable and committed attitude of the beneficiaries of the
Plan.
d. how the plan is
included in the issuer's compensation policy
The issuer believes
that its Stock Option Plan does not have compensatory nature.
The Plan aims to
increase the level of attraction and retention of key executives of the Company,
as described in item 13.1.
e. how the plan
aligns the interests of management and the Company in the short, medium and long
term.
The Plan seeks to
strengthen the expectation of shareholders and the Company's investor to create
the vision and the long-term commitment in the executive, and the commitment of
business to generate value and sustainable results for the Company in the
short
f. maximum number of
shares covered
The maximum number of
shares covered that may be subject to stock option grants, considered on a
consolidated basis of all the Company's plans, is equivalent to 0.5% of the
total number of shares issued by BRF SA, corresponding to 4,362. 366 shares on
the date of this reference document.
g. maximum number of
options to be granted
The maximum number of
options to be granted will not exceed the maximum amount of shares that can be
covered object of stock option grants, considered on a consolidated basis of all
the Company's plans, equivalent to 0.5% of the total number of shares of issued
by BRF SA, corresponding to 4,362,366 shares on the date of this reference
document.
h. of shares
conditions
The Board of
Directors annually or at the frequency it deems appropriate, shall determine the
exercise price of each option and the payment conditions, establishing terms and
conditions of exercise of each option and impose any other conditions related to
the options.
132
Each stock option
entitles the beneficiary to acquire one (1) share of the Company, subject to the
terms and conditions set forth in the Option Agreement.
The granting of stock
options under the Plan is carried out by the conclusion of stock option
agreements between the Company and the Beneficiaries ("Option Agreement"), which
shall, without prejudice to other conditions determined by the Board
Administration: (a) the amount of the grant object options; (B) the Company's
performance goals and other terms and conditions for acquiring the right to
exercise the options; (C) the deadline for exercising the options; and (d) the
Exercise Price and payment terms.
The Board of
Directors, may make the exercise of option to certain conditions, as well as
impose blackout periods for trading (lock-up) part of the Shares and other
restrictions on the transfer of shares acquired through the exercise of options,
and can also book for the Company repurchase options and / or preemptive rights
in case of transfer by the Beneficiary of those shares.
The Option Agreements
shall be concluded individually with each Beneficiary, and the Board of
Directors, establish different terms and conditions for each Option Agreement,
without application of any rule of equality or analogy between the
Beneficiaries, even if they are in similar situations or identical.
The Beneficiary who
wishes to exercise their Options shall notify the Company in writing of its
intention to do so and indicate the number of options that you wish to pursue,
in accordance with the notice template to be disclosed by the Board of
Directors.
i. criteria for
setting the acquisition or exercise price
The exercise price of
the purchase options granted under the Plan will be determined by the Board of
Directors on the grant date, provided that it will never be less than the
average price of the Company's shares on the BM & FBOVESPA SA - Securities,
Commodities and Futures, weighted by trading volume, in twenty (20) last trading
sessions prior grant date, adjusted for inflation according to the given index
by the Board of Directors.
j. criteria for
setting the exercise period
Without prejudice to
other terms and conditions set forth in the respective Stock Option Agreements,
the options become exercisable after a vesting period of at least eighteen (18)
months and a maximum of 24 (twenty four) months from the Date of Grant, as may
be set by the Board of Directors.
The options will be
exercisable until the last business day of the calendar year in which to
complete the 4th anniversary of the Grant Date. Unexercised options within the
stipulated terms and conditions shall be considered automatically terminated,
without any compensation.
The Plan shall become
effective on the date of its approval by the Company's General Meeting and shall
remain in force for an indefinite period and may be terminated at any time by
decision of the General Assembly. The Plan shall end not affect the
effectiveness of the options still in force granted based on it.
k. form of
settlement
The options shall be
settled by delivery of the Company's shares. In order to satisfy the exercise of
stock options under the Plan, the Company may, at the discretion of the Board of
Directors, issue new shares within the limit of the authorized capital or
dispose of treasury shares.
133
l. restrictions
on transfer of shares
The Board of
Directors, may make the exercise of option to certain conditions, as well as
impose blackout periods for trading (lock-up) part of the Shares and other
restrictions on the transfer of shares acquired through the exercise of options,
and can also book for the Company repurchase options and / or preemptive rights
in case of transfer by the Beneficiary of those shares.
m. criteria and
events that, when checked, will cause the suspension, modification or
termination of the plan
Suspension: The Board
of Directors may decide to suspend the right to exercise the options, whenever
situations that, under the law or regulations, restrict or prevent the trading
of shares by the Beneficiaries.
Change: The Board of
Directors, in the interest of the Company and its shareholders, may revise the
terms of the Plan, provided it does not change its basic principles. Any
significant legal change regarding the regulation of corporations, public
companies, in labor legislation and / or tax effects of a plan of options, may
cause the full review of the Plan.
Extinction: The Plan
may be terminated at any time by the General Meeting of Shareholders of the
Company.
n. Administrator out
of the effects of the issuer on their rights provided for in the compensation
plan based on shares
If at any time the
Beneficiary:
(a)
leaves the Company as a result
of being fired for cause or removal from office for violating the duties and
administrator assignments, all Options exercisable or not yet exercisable in
accordance with the respective Option Agreement on the date its shutdown shall
be automatically canceled by operation of law, without prior warning or notice,
and without any right to compensation;
(b)
leaves the Company as a result
of being fired without cause or removal from office without violation of the
duties and administrator assignments, or will the beneficiary himself, resigning
from his job or resigning his position as manager: (i) Options not exercised in
accordance with the respective Option Agreement, on the date of Termination,
will become exercisable in proportion to the vesting period of time in which the
beneficiary has worked for the Company, provided that they meet the specified
requirements the Option Agreement, and may be exercised within [30] ([thirty])
days from the date of completion of grace, after which will be automatically
canceled by operation of law, regardless of prior notice or notification, and
without the right to indemnification; and (ii) Options exercisable according to
the respective Option Agreement, on the date of Termination, may be exercised,
within the thirty (30) days from the date of Termination, after which they will
be automatically extinguished, as of right, without prior warning or notice, and
without any right to compensation;
13.5. Inform the
number of shares or quotas directly or indirectly held in Brazil or abroad, and
other securities convertible into shares or quotas issued by the issuer, its
direct or indirect parent companies, subsidiaries or companies under common
control, for board members of administration, the executive board or the
supervisory board, grouped by body, on the closing date of the last fiscal
year.
134
|
Total of Ordinary Shares |
Board of Directors |
35,117,782 |
Diretors |
56,226 |
Fiscal Council |
2 |
*
Base of January 31, 2015
13.6. Regarding
share-based compensation recognized in the books over the past three fiscal
years and that forecast for the current fiscal year payable to the board and the
statutory board.
|
|
|
|
|
|
YEAR: 2012 |
Board of
Directors |
Fiscal
Council |
|
Statutory
Board |
|
b. number of
members |
10 |
3,00 |
8,00 |
11,00 |
10,67 |
c. related to the options
still non-exercisable |
|
|
Grant 2010 |
Grant 2011 |
Grant 2012 |
i - date of grant |
NA |
NA |
3/5/2010 |
2/5/2011 |
2/5/2012 |
ii - amount of granted
options |
NA |
NA |
555.000 |
1.129.140 |
1.032.710 |
|
|
|
2011 - 1/3
of options |
2012 - 1/3
of options |
2013 - 1/3
of options |
iii- term so that the options
become exercisable |
NA |
NA |
2012 - 2/3
of options |
2013 - 2/3
of options |
2014 - 2/3
of options |
|
|
|
2013 - 3/3
of options |
2014 - 3/3
of options |
2015 - 3/3
of options |
iv- term of restriction on
transfer of shares |
NA |
NA |
NA |
NA |
NA |
v- Weighted average exercise price
of each of |
|
|
|
|
|
the following groups of
options: |
|
|
|
|
|
• open at the beginning of fiscal
year |
NA |
NA |
25,90 |
32,01 |
- |
• lost during the fiscal
year |
NA |
NA |
- |
32,84 |
35,40 |
• exercised during the fiscal
year |
NA |
NA |
26,89 |
33,22 |
- |
• expired during the fiscal
year |
NA |
NA |
- |
- |
- |
d. fair value of options at
the grant date |
NA |
NA |
R$ 7,77 |
R$ 11,36 |
R$ 7,82 |
e. potential dilution in the
event of exercise of all |
|
|
0,06% of
the total |
0,13% of
the total |
0,12% of
the total |
options granted |
NA |
NA |
shares of the Company |
shares of the Company |
shares of the Company |
135
|
|
|
|
|
|
|
YEAR: 2013 |
Board of
Directors |
Fiscal
Council |
Statutory
Board |
b. number of
members |
11,00 |
3,00 |
8,00 |
11,00 |
10,67 |
10,00 |
c. related to the options
still non-exercisable |
|
|
Grant 2010 |
Grant 2011 |
Grant 2012 |
Grant 2013 |
i - date of grant |
NA |
NA |
40301 |
02/05/2011 |
02/05/2012 |
02/05/2013 |
ii - amount of granted
options |
NA |
NA |
555.000 |
1.129.140 |
1.032.710 |
698.510 |
|
|
|
2011 - 1/3
of options |
2012 - 1/3
of options |
2013 - 1/3
of options |
2014 - 1/3
of options |
iii- term so that the options
become exercisable |
NA |
NA |
2012 - 2/3
of options |
2013 - 2/3
of options |
2014 - 2/3
of options |
2015 - 2/3
of options |
|
|
|
2013 - 3/3
of options |
2014 - 3/3
of options |
2015 - 3/3
of options |
2016 - 3/3
of options |
iv- term of restriction on
transfer of shares |
NA |
NA |
NA |
NA |
NA |
NA |
v- Weighted average exercise price
of each of |
|
|
|
|
|
|
the following groups of
options: |
|
|
|
|
|
|
• open at the beginning of fiscal
year |
NA |
NA |
27,50 |
33,98 |
36,84 |
- |
• lost during the fiscal
year |
NA |
NA |
- |
34,84 |
37,56 |
47,28 |
• exercised during the fiscal
year |
NA |
NA |
28,12 |
34,49 |
37,45 |
- |
• expired during the fiscal
year |
NA |
NA |
- |
- |
- |
- |
d. fair value of options at
the grant date |
NA |
NA |
7,77 |
R$ 11,36 |
R$7,82 |
R$11,88 |
e. potential dilution in the
event of exercise of all |
|
|
0,06% of
the total |
0,13% of
the total |
0,12% of
the total |
0,08% of
the total |
options
granted |
NA |
NA |
shares of the Company |
shares of the Company |
shares of the Company |
shares of the Company |
|
|
|
|
|
|
|
|
|
YEAR: 2014 |
Board of
Directors |
Fiscal
Council |
Statutory
Board |
b. number of
members |
11,67 |
3,00 |
8,00 |
11,00 |
10,67 |
10,00 |
6,00 |
7,00 |
c. related to the options
still non-exercisable |
|
|
Grant 2010 |
Grant 2011 |
Grant 2012 |
Grant 2013 |
Grant 2014 |
Grant 2014 II |
i - date of grant |
NA |
NA |
03/05/2010 |
02/05/2011 |
02/05/2012 |
02/05/2013 |
04/04/2014 |
18/12/2014 |
ii - amount of granted
options |
NA |
NA |
555.000,00 |
1.129.140,00 |
1.032.710,00 |
855.184,00 |
511.744,00 |
2.226.270,00 |
|
|
|
2011 - 1/3 of options |
2012 - 1/3
of options |
2013 - 1/3
of options |
2014 - 1/3
of options |
2015 - 1/3
of options |
2015 - 1/3
of options |
iii- term so that the options
become exercisable |
NA |
NA |
2012 - 2/3 of options |
2013 - 2/3
of options |
2014 - 2/3
of options |
2015 - 2/3
of options |
2016 - 2/3
of options |
2016 - 2/3
of options |
|
|
|
2013 - 3/3 of options |
2014 - 3/3
of options |
2015 - 3/3
of options |
2016 - 3/3
of options |
2017 - 3/3
of options |
2017 - 3/3
of options |
iv- term of restriction on
transfer of shares |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
v- Weighted average exercise price
of each of |
|
|
|
|
|
|
|
|
the following groups of
options: |
|
|
|
|
|
|
|
|
• open at the beginning of fiscal
year |
NA |
NA |
29,03 |
35,87 |
38,67 |
46,86 |
- |
- |
• lost during the fiscal
year |
NA |
NA |
- |
35,87 |
38,67 |
46,86 |
45,66 |
- |
• exercised during the fiscal
year |
NA |
NA |
29,28 |
36,50 |
38,86 |
49,02 |
- |
- |
• expired during the fiscal
year |
NA |
NA |
- |
- |
- |
- |
- |
- |
d. fair value of options at
the grant date |
NA |
NA |
R$7,77 |
R$ 11,36 |
R$ 7,82 |
R$11,88 |
R$12,56 |
R$ 14,58 |
e. potential dilution in the
event of exercise of all options
granted |
NA |
NA |
0,06% of
the total shares of the Company |
0,13% of the total shares of
the Company |
0,12% of the total shares of
the Company |
0,10% of the total shares of
the Company |
0,06% of the total shares of the
Company |
0,26% of the total shares of the Company |
Note: There is no
grant planned for the year 2015
13.7. Regarding the
Board’s and the statutory board’s outstanding options at the end of the last
fiscal year.
|
|
|
|
|
|
|
|
2014 |
Board of
Directors |
Statutory
Board |
Year of award |
|
2010 |
2011 |
2012 |
2013 |
2014 |
2014 II |
b. number of
members |
- |
1,00 |
4,00 |
2,00 |
2,00 |
6,00 |
7,00 |
c. related to the options
still non-exercisable |
|
|
|
|
|
|
|
i - quantity |
- |
- |
- |
47.295,00 |
129.148,00 |
511.744,00 |
2.226.270,00 |
|
|
|
|
|
64.892 in
05/02/2015 |
170.581 in 05/03/2015 |
742.090 in 05/03/2015 |
ii - date that it will become
exercisable |
- |
- |
- |
05/02/2015 |
|
170.581 in 05/03/2016 |
742.090 in 05/03/2016 |
|
|
|
|
|
64.892 in
05/02/2016 |
170.581 in 05/03/2017 |
742.090 in 05/03/2017 |
iii- deadline for the exercise
option |
- |
05/02/2015 |
05/01/2016 |
05/01/2017 |
05/01/2018 |
05/01/2019 |
12/18/2019 |
iv- transfer of shares restriction
time |
- |
NA |
NA |
NA |
NA. |
NA |
NA |
v- weighted average price of the
exercise² |
- |
29,92 |
36,97 |
39,85 |
50,17 |
45,13 |
63,49 |
vi-options fair value in the last
day of the fiscal |
|
|
|
|
|
|
|
year³ |
- |
R$ 7,77 |
R$ 11,36 |
R$ 7,82 |
R$ 11,88 |
R$12,56 |
R$ 14,58 |
d. related to the exercisable
options¹ |
|
|
|
|
|
|
|
i - quantity |
- |
39.333,00 |
174.928,00 |
94.589,00 |
64.892,00 |
- |
- |
ii - deadline for the exercise
option |
- |
05/02/2015 |
05/01/2016 |
05/01/2017 |
05/01/2018 |
05/01/2019 |
12/18/2019 |
iii- transfer of shares
restriction time |
- |
NA |
NA |
NA |
NA |
NA |
NA |
iv- weighted average price of the
exercise |
- |
29,92 |
36,97 |
39,85 |
50,17 |
45,13 |
63,49 |
v- options fair value in the last
day of fiscal |
- |
7,77 |
11,36 |
7,82 |
11,88 |
12,56 |
14,58 |
year³ |
|
|
|
|
|
|
|
vi- total options fair value in
the last day of the |
|
|
|
|
|
|
|
fiscal year |
- |
R$305.617,41 |
R$1.987.182,08 |
R$ 739.685,98 |
R$770.916,96 |
R$ - |
R$ - |
¹ As Regulation of the Stock
Option Plan, options may be only exercised within 30 days following the
disclosure of annual results or after the |
² Preço médio ponderado do último
exercício social |
³ Fair value of options defined on
the grant date. |
13.8. Regarding
options exercised and shares delivered to the Board and the statutory board
under the share-based compensation scheme over the past 3 fiscal years. (In
R$)
136
|
|
|
Options Exercised - Year
Ended 12/31/2012 |
Board of
Directors |
Statutory
Board |
Number of
members |
0 |
7 |
Options
Exercised |
|
|
Number of shares |
NA |
297.700 |
Weighted average price of the
year |
NA |
R$ 29,42 |
total value of the difference
between the exercise value |
NA |
|
and market value of shares related
to options exercise |
|
3.349.426 |
Shares
Delivered |
|
|
Number of shares |
NA |
NA |
Weighted average price of the
year |
NA |
NA |
total value of the difference
between the exercise value |
NA |
NA |
and market value of shares related
to options exercise |
|
|
|
|
Options Exercised - Year
Ended 12/31/2013 |
Board of
Directors |
Statutory
Board |
Number of
members |
0 |
7,00 |
Options
Exercised |
|
|
Number of shares |
NA |
301.267 |
Weighted average price of the
year |
NA |
R$ 33,10 |
total value of the difference
between the exercise value |
NA |
|
and market value of shares related
to options exercise |
|
4.437.773 |
Shares
Delivered |
|
|
Number of shares |
NA |
NA |
Weighted average price of the
year |
NA |
NA |
total value of the difference
between the exercise value |
|
|
and market value of shares related
to options exercise |
NA |
NA |
|
|
Options Exercised - Year
Ended 12/31/2014 |
Board of
Directors |
Statutory
Board |
Number of
members |
0 |
6,00 |
Options
Exercised |
|
|
Number of shares |
NA |
1.209.712,00 |
Weighted average price of the
year |
NA |
36,68 |
total value of the difference
between the exercise value |
NA |
|
and market value of shares related
to options exercise |
|
16.492.317,86 |
Shares
Delivered |
|
|
Number of shares |
NA |
NA |
Weighted average price of the
year |
NA |
NA |
total value of the difference
between the exercise value |
|
|
and market value of shares related
to options exercise |
NA |
NA |
13.9. Summary
description of the information that understanding the data presented in items
13.6 through 13.8 requires, such as an explanation of the pricing method used
for shares and options.
137
a. pricing
model
The
Black-Scholes-Merton model was used to price the Options under the Stock Option
Plan of BRF S.A.
b. data and
assumptions used in the pricing model, including average weighted price of the
shares, strike price, expected volatility , option term, expected dividends and
risk-free rate of return.
Whereas the figures
for grants cycle these are options granted to the date of this form, the
following assumptions for the pricing of target options of the Plan of BRF
Shares Option were used:
Share
Price: the closing price in the trading session prior to the
date of distribution (BMF&BOVESPA - ticker BRFS3);
Strike
price: Results from the average closing price (BMF&BOVESPA
– ticker BRFS3) of the last 20 trading sessions prior to the date of
distribution of the options, restated by the IPCA;
Option
term: The Options distributed under the terms of the Stock
Option Plan may be exercised by Participants observing the minimum vesting
period designated below: (a) Up to one-third ( 1/3) of the Options total may be
exercised after one (01) year from execution of the Distribution Contract; (b) )
Up to two-thirds (2/3) of the Options total may be exercised after two (2) years
from execution of the Distribution Contract; (c) All the Options may be
exercised after three 3years from execution of the Distribution Contract; and
(d) The maximum term is five years after distribution for exercising the
options;
Risk-free Rate of
Return: The risk-free rate of return of choice is the NTN-B
(Brazilian Treasury Note) available on the date of pricing and holding the same
maturity as the options;
Dividends
rate: the Company’s dividend distribution track record over
the past 4 years was taken into account; and
Volatility of nominal
shares issued by the Company: BRF used the track record of the Company’s nominal
shares to set the volatility rate.
c. method used and
assumptions adopted to incorporate the expected effects of early
strike.
According to the
pricing methodology of the options at hand (Black-Scholes-Merton) and the
features of BRF’s Stock Option Plan no assumptions were used to incorporate the
effects of early strikes.
d. how to
determine the expected volatility.
BRF uses the track
record of the Company’s nominal shares to set the volatility rate.
e. any other
option characteristic that has been included in the assessment of fair
value.
No other
characteristic of the option was incorporated into the measurement of fair value
than those mentioned in item 13.9 above.
13.10. Regarding the
active pension plans granted to board members and statutory officers, provide
the following information in table format:
138
|
|
|
|
|
Board of
Directors |
Statutory
Board |
b. number of
members |
N/A |
2 |
2 |
|
|
Brasil
Foods Pension Plan II |
Benefit
Plan of Foundation |
c. Plan name |
N/A |
(closed to new members) |
"Atilio
Francisco Xavier |
|
|
|
Fontana" |
d. amount of directors that
comprises conditions |
|
|
|
for retirment
¹ |
N/A |
02 |
00 |
|
|
- reaching the age of 55
years |
- Fulfill the term of 10 years
of |
|
|
old; |
contribution to the
plan |
|
|
- 3 years of credited
service |
-joy the retirement benefit
by |
e. conditions for early
retirement |
N/A |
(participating on the
plan); |
time of
contribution granted by |
|
|
- termination of
employment |
Welfare
Regime Official |
|
|
with the
sponsor |
- termination of
employement |
|
|
|
with the sponsor |
f. updated value of
accumulated contributions in |
|
|
³ |
the pension plan until the
end of last fiscal year |
N/A |
R$
1.312.171,82 |
|
less the portion relating to
contributions made |
|
|
|
directly by
administrators² |
|
|
|
g. cumulative total value of
contributions made |
|
|
|
during the last social year,
less the portion relating |
N/A |
R$
189.959,98 |
R$
0,00 |
to contributions made
directly by administrators |
|
|
|
|
|
There is no
provision for |
There is no
provision for |
h. if there is the
possibility of redemption and |
N/A |
redemption,
except on the |
redemption,
except on the |
what
conditions |
|
termination of
employment |
termination of
employment |
¹ Fulfills the conditions,
however, it is necessary to assure the termination of
employment |
|
² Total value of
contributions forms sponsor (since joining the plan) plus
profitability |
³ The
FAF Benefit Plan is structured as defined benefit, which is characterized
by mutualism. Thus, the contributions made to the plan by both the sponsor
and the participants |
13.11. In table
format, provide the following information on the board, statutory board and
fiscal committee over the past 3 years:
|
|
|
|
|
|
|
|
YEAR:
2012 |
Board
of |
Fiscal
Council |
Estatutory |
|
Directors |
|
Executives |
b. number of
members |
10,00 |
3,00 |
10,67 |
c. value of the highest personal
income |
594.402,84 |
178.077,24 |
5.349.669,17 |
d. value of the lowest personal
income |
297.234,60 |
118.731,00 |
1.439.130,10 |
e. average value of
individual |
|
|
|
compensation |
326.951,42 |
138.403,14 |
3.481.976,16 |
|
|
|
|
|
YEAR:
2013 |
Board
of |
Fiscal
Council |
Estatutory |
|
Directors |
|
Executives |
b. number of
members |
10,92 |
3,00 |
9,50 |
c. value of the highest personal
income |
2.973.191,39 |
213.692,69 |
5.933.663,65 |
d. value of the lowest personal
income |
821.451,07 |
142.477,20 |
2.741.490,48 |
e. average value of
individual |
|
|
|
compensation |
639.360,18 |
167.736,85 |
3.815.097,44 |
¹ For all organs, the member with
the highest personal income held the position for 12 months |
² For the lowest personal
income, we excluded members who have served for less than
12 months |
139
|
|
|
|
|
|
|
|
YEAR:
2014 |
Board
of |
Fiscal
Council |
Estatutory |
|
Directors |
|
Executives |
b. number of
members |
11,67 |
3,00 |
7,58 |
c. value of the highest personal
income |
3.240.904,20 |
233.261,45 |
5.771.733,33 |
d. value of the lowest personal
income |
1.056.000,00 |
155.510,28 |
3.094.400,65 |
e. average value of
individual |
|
|
|
compensation |
1.071.296,40 |
184.469,68 |
9.449.580,93 |
¹ For all organs, the member with
the highest personal income held the position for 12 months |
² For the lowest personal
income, we excluded members who have served for less than
12 months |
13.12. Describe
agreements, insurance policies or other instruments that make up mechanisms of
compensation or indemnification for officers in the event of severance or
retirement, indicating the financial consequences to the issuer.
There are no
instruments that make up mechanisms of compensation or indemnification for
officers in the event of severance or retirement.
13.13. regarding the
past 3 fiscal years, indicate the percentages of total compensation of each
entity posted to the issuer’s books in reference to the members of the board,
statutory board or fiscal committee that are related to controlling
shareholders, direct or indirect, as established in the accounting standards
pertinent to the topic.
On 12.31.2012,
13.31.2013 and 12.31.2014 in, there was no percentage of total compensation of
each body recognized in that they are related parties to the controllers,
director or indirect, considering that the Company's control is diffuse and,
therefore has no direct or indirect controlling.
13.14. regarding the
past 3 fiscal years, indicate the amounts posted to issuer’s books as
compensation to board , statutory board or fiscal committee members, grouped by
entity, for any reason other than performance of their
corporate function, such as for instance, commissions and advisory or
consultancy services rendered.
140
There is no amount
posted to issuer’s books as compensation to board members, statutory officers or
fiscal committee members, for any reason other than performance of their
corporate function, such as for instance, commissions and advisory or
consultancy services rendered.
13.15. Regarding the
past 3 fiscal years, indicate the amounts appearing in the books of controlling
shareholders, direct or indirect, companies under shared control and companies
controlled by the issuer, as compensation to the issuers’ board , statutory
board or fiscal committee members, grouped by entity, specifying the reasons why
those amounts were paid to these individuals.
There are no amounts
appearing in the books of controlling shareholders, direct or indirect,
companies under shared control and companies controlled by the issuer, as
compensation to the issuers’ board, statutory board or fiscal committee
members.
13.16. Provide other information that
the issuer deems it relevant
All relevant
information was included in the preceding items.
141
Annex VI – Stock Option Grant
Plan
(As Annex
13 of CVM Instruction 481 of December 17, 2009)
1.
Provide copy of the proposed plan
Here attached to this
copy of the proposed Stock Option Grant Plan, to be submitted for approval by
the Annual and Extraordinary General Meeting to be held on April 8, 2015 (the
"Plan").
2. Inform
main features of the proposed plan, identifying:
a.
Potential beneficiaries
May be elected as
beneficiaries of stock option grants the directors, statutory or not, and other
people occupying positions at the Company, or other companies under its control,
all proposed members made subject to approval by the Board of the Company
("Beneficiaries").
b.
Maximum number of options to be granted
The maximum number of
stocks subject to the Plan Shall not Exceed 2% (two percent) of the common
stocks, with the par value, the total stocks capital Representing of the
Company, Corresponding on this date to 17,449,465 (seventeen million four
hundred and forty -nine thousand, four hundred sixty-five) common stocks,
registered, with the par value Issued by the Company, provided the total number
of Issued stocks or Likely to be Issued under the Plan is always Within
the Company's authorized capital limit.
c.
Maximum number of stocks covered by the plan
142
See item 2.b.
above
d.
Terms of purchase
The Board of Directors
annually or at the frequency it deems appropriate, shall determine the exercise
price of each option and the payment conditions, establishing terms and
conditions of exercise of each option and impose any other conditions related to
these options, provided that he will never be lower than the average Company's
share quotation at the BM & FBOVESPA, weighted by trading volume, in twenty
(20) last trading sessions prior grant date, restated by IPCA, or another index
to be determined the Board of Directors.
Each stock option
entitles the beneficiary to acquire one (1) stock of the Company, subject to the
terms and conditions set forth in the Option Agreement.
The
granting of stock options under the Plan is carried out by the conclusion of
stock option agreements between the Company and the Beneficiaries ("Option
Agreement"), which shall, without prejudice to other conditions determined by
the Board Administration: (a) the amount of the grant object options; (B) the
Company's performance goals and other terms and conditions for acquiring the
right to exercise the options; (C) the deadline for exercising the
options; and (d) the Exercise Price and payment terms.
The
Board of Directors, may make the exercise of option to certain conditions and
restrictions on the transfer of shares acquired through the exercise of options,
and may also reserve for the Company repurchase options and / or preemptive
rights in case of sale by Beneficiary of those shares.
Notwithstanding
the foregoing, during the period of one (1) year from the exercise date of the
option, the Beneficiaries may not sell, assign and / or offer for sale of shares
acquired through the exercise of options. If the Beneficiary does not have the
resources to fund the exercise of the options shall be transmitted to sell the
necessary shares to pay the exercise of options plus costs and taxes. The number
of shares subject to sale restriction will be calculated according to the
terms and conditions set forth in the Plan.
The
Option Agreements shall be concluded individually with each Beneficiary, and the
Board of Directors, establish different terms and conditions for each Option
Agreement, without application of any rule of equality or analogy between the
Beneficiaries, even if they are in
similar situations or identical.
The Beneficiary who
wishes to exercise their Options shall notify the Company in writing of its
intention to do so and
indicate the number of options that you wish to pursue, in accordance with the
communication model to be timely disclosed by the Board of Directors.
143
e.
Detailed criteria for setting the exercise price
The exercise price of
the purchase options granted under the Plan will be determined by the Board of
Directors on the grant date, provided that it will never be less than the
average price of the Company's stocks on the BM & FBOVESPA SA - Securities,
Commodities and Futures, weighted by trading volume, in twenty (20) last trading
sessions prior grant date, restated by the variation of the Consumer Price Index
Broad, released by the Brazilian Institute of Geography and Statistics (IPCA) or
another index to be determined by the Board of Directors.
f.
Criteria for determining the time of exercise
Without prejudice to
other terms and conditions set forth in the respective Stock Option Agreements,
the options become exercisable to the extent that their beneficiaries remain
continuously related as an administrator or employee of the Company or other
companies under its control, the period between the date the options were
granted and the dates specified below, as follows:
(a)
1/4 (one quarter) of the options may be exercised from the first (1st)
anniversary of the grant date;
(b)
1/4 (one quarter) of the options may be exercised from the second (2nd)
anniversary of the grant date;
(c)
1/4 (one quarter) of the options may be exercised from the third (3rd)
anniversary of the grant date; and
(d)
1/4 (one quarter) of the options may be exercised from the first (4th)
anniversary of the grant date;
The options will be
exercisable until the last business day of the calendar year in which to
complete the sixth (6th) anniversary of the grant date. Options not exercised within the
stipulated terms and conditions shall be considered automatically terminated,
without any compensation.
The Plan shall become
effective on the date of its approval by the Company's General Shareholder
Meeting and shall remain in force for an indefinite period and may be terminated
at any time by decision of the General Assembly. The Plan shall end not affect
the effectiveness of the options still in force granted based on it, nor the
validity of any repurchase options and / or preemptive rights in case of
transfer by the Beneficiary of those stocks and seal the sale mentioned in item
2.d above.
g.
Form of options settlement
144
The options shall be
settled by delivery of the Company's stocks. In order to satisfy the exercise of
stock options under the Plan, the Company may, at the discretion of the Board of
Directors, issue new shares within the limit of the authorized capital or
dispose of treasury shares.
h.
Criteria and events that, when checked, will cause the suspension, modification
or termination of the plan
Suspension:
The
Board of Directors may determine the suspension of the right to exercise the
options, whenever situations that, under the law or regulations, restrict or
prevent the trading of stocks by the Beneficiaries
Change: The Board of Directors,
in the interest of the Company and its shareholders, may revise the terms of the
Plan, provided it does not change its basic principles. Any significant legal
change regarding the regulation of corporations, public companies, in labor
legislation and / or tax effects of a plan of options, may cause the full review
of the Plan.
Extinction:
The
Plan may be terminated at any time by the General Meeting of Shareholders of the
Company.
3.
Justify the proposed plan, explaining:
a.
The main objectives of the plan
The Plan aims to allow
the Beneficiaries, subject to certain conditions, to acquire stocks of the
Company, in order to: (a) stimulating the expansion, success and the achievement
of social objectives of the Company; (b) aligning the interests of shareholders
of the Company to the Beneficiaries; and (c) allow the Company or other
companies under its control to attract and retain (s) linked the Beneficiaries
and encourage the creation of value; and (d) stock risks and gains and equally
between shareholders and the Beneficiaries.
b.
The way the plan contributes to these
goals
The Company, to
establish a differentiated and competitive investment opportunity for its
executives, expected to align the actions of the Beneficiaries of the Plan to
the vision of the shareholders and investors of the Company, conditioning gain
long-term executive to the continuation of business and, therefore, promoting
sustainable and committed attitude of the beneficiaries of the Plan.
c.
How the plane falls into the remuneration policy of the
company
145
The Plan is not intended
to supplement the executives compensation package, but increase the level of
attraction and retention of its key executives.
d.
How the Plan aligns to the interests of beneficiaries
and the company's on short, medium and long term
The implementation of
the Plan strengthens the expectation of the shareholder and the company's
investor to create the vision and the long-term commitment in the executive,
promoting knowledge, skills and behaviors necessary to the continuation of
business.
4.
Estimating the costs of the company under the plan, according to accounting
rules that address this issue
To calculate the
estimated expenses of the Plan, we use the Black & Scholes model for
valuation. Model this, considering the following variables for the
calculation:
1)
Share price
on the grant date;
2) Exercise Price of Share Option;
3) Grace Period
(Vesting) for Exercise of Share Option;
4) Risk-free rate;
5) Dividend
rate of the Shares;
6) Volatility of Action.
In this way the value
established for the Plan, the grant date until the maturity of the option
exercise period (06 years after grant) is BRL 83,165,000.00 (eighty-three
million, one hundred and sixty-five thousand reals).
146
STOCK OPTION GRANT PLAN
OF
BRF
S.A.
(Approved by the Ordinary and Extraordinary
General Shareholders Meeting held on April 8, 2015)
|
147
STOCK OPTION GRANT PLAN
The current Stock
Option Plan is governed by the following provisions and the applicable
legislation.
1.
Definitions
1.1. The terms
below, when used here with initials in capital letters shall have the meanings
assigned to them below, unless expressly provided otherwise:
“Stock” means ordinary,
nominative, book entry stocks without Compy’s nominal issue amount granted to
the Beneficiaries;
“Beneficiaries” means the Eligibles elected by
the Board of Directors, pursuant to paragraph 4.2 (b) below, and in favor of
which the Company grant one or more Stock Options under this Plan;
“BM&FBOVESPA” means the BM&FBOVESPA S.A.
- Stock Exchange, Commodities and Futures;
"Committee" means the
committee established to advise the Board of Directors of the Plan, pursuant to
item 4.1 below;
"Company" means the
BRF SA publicly-held company, headquartered in Jorge Tzachel Street, 475, Bairro
Fazenda, CEP: 88301-600, City of Itajaí, Santa Catarina State, CNPJ / MF under
No. 01838 .723 / 0001-27;
"Board of Directors"
means the Company's Board of Directors;
"Stock Option
Agreement" means the particular instrument of stock options granting agreement
between the Company and the Beneficiary, through which the Company grants
options to the Beneficiary;
"Grant Date" except
as otherwise expressly provided in this Plan or in the Stock Option Agreement,
means, in respect of options granted to each of the beneficiaries, the signing
date of the Stock Option Agreement by which such options are granted;
"Termination" means
the termination of the legal relationship administrator or employee between the
Beneficiary and the Company or company controlled, for any reason, including
without limitation resignation, removal, replacement or termination of office
without re-election to the position of manager, application for resignation or
dismissal, with or without cause, termination of contract of service,
retirement, permanent disability and death. For clarity, it is established that
any shutdown of the office of director or employee of the Beneficiary, or other
companies under its control, followed by election and investiture or hiring such
Beneficiary to another post of director, statutory or otherwise, does not
characterize Termination, for purposes of this Plan;
148
“IPCA” means Price Index
on Broad Consumer, published by the Brazilian Institute of Geography and
Statistics;
“Stocks” means stock Options stocks
granted by the Company to the Beneficiaries, under this Plan;
"Eligible
Persons" means people who can be chosen as beneficiaries under
item 3.1 below;
“Plan” means the present
Stock Options Grant Plan;
“Strike
Price” means the price to be paid by the Beneficiary to the
Company in payment of the Stocks to acquire through the exercise of their
options, as determined in section 7.1 below; and
"Prohibition of
Trading" means the prohibition on sale or offer for sale of Stocks, as set out
in item 5.4.1 below.
2.
Plan Objectives
2.1. The Plan aims
to allow the Eligible Persons, subject to certain conditions, to acquire Stocks,
in order to: (a) stimulating the expansion, success and the achievement of
social objectives of the Company; (b) aligning the interests of shareholders of
the Company to the Eligible Persons; (c) allow the Company or other companies
under its control to attract and retain (s) linked the Eligible Persons and
encourage the creation of value; and (d) share risks and gains equally between
shareholders and Eligible Persons.
3.
Eligible Persons
3.1. May be
elected by the Board of Directors as Beneficiaries of stock options under the
Plan, the directors, statutory or otherwise, and people occupying other
positions in the Company or other companies under its control, in accordance
with item 4.2 (b) below.
3.2. Members of
the Board of Directors may not be elected as beneficiaries of stock options.
Nevertheless, members of the Board of Directors who are also members of the
board may, acting as directors, receive grants of Company stock
options.
149
4.
Plan Administration
4.1. The Plan will
be administered by the Board of Directors, which may, the relevant legal
provisions observed, constitute a Committee specially created to advise it in
the administration of the Plan.
4.2. In compliance
with the general conditions of the Plan and the guidelines established by the
Company's General Shareholders Meeting, the Board of Directors shall have broad
powers to take all necessary and appropriate measures for the administration of
the Plan, including:
(a)
the creation and application of general rules for the granting of stock options
under the Plan, and the doubts solution of interpretation of the
Plan;
(b)
the election of the Beneficiaries among the Eligible Persons, and the
authorization to grant stock options in their favor, establishing all the
conditions of the Stock Options to be granted as well as the modification of
such conditions when necessary or appropriate;
(c)
the issuance of new Stocks within the limit of the authorized capital or the
authorization for the sale of treasury Stocks to satisfy the exercise of options
granted under the Plan; and
(d)
approve the Stock Option Agreements to be entered into between the Company and
each Beneficiary, subject to the provisions of the Plan.
4.3.
In exercising its authority, the board of directors will be subject only to the
limits of the law and the regulations of the securities and exchange commission
and the terms of the plan, it being understood that the board of directors may
treat differently administrators and employees or other companies under its
control that are in a similar situation and is not bound by any rule of equality
or analogy to extend to all beneficiaries the conditions that it deems
applicable only to one or some, in its sole discretion. The board of directors
may also establish special treatment for exceptional cases for the effectiveness
of each option right, provided that the rights already granted are not affected
to the beneficiaries or the basic principles of the plan. Such exceptional
circumstance shall not constitute a precedent for other beneficiaries.
4.4.
The deliberations of the board of directors are binding for the company in
respect of all matters relating to the plan.
150
5.
Stock Options Grant
5.1. Annually, or
whenever it deems appropriate, the Board of Directors will approve the granting
of stock options, choosing the Beneficiaries in favor of whom will be granted
stock options under the Plan, setting the exercise price of the stock options
and the payment conditions, establishing the terms and conditions of exercise of
the Options and imposing any other conditions related to such stock
options.
5.2. Each Stock
Option will entitle the beneficiary to acquire one (1) Stock, subject to the
terms and conditions set forth in the Stock Option Agreement.
5.3. The Stock
Options grants under the Plan is carried out by entering into Stock Option
Agreements between the Company and the Beneficiaries, which shall, without
prejudice to other conditions determined by the Board of Directors: (a) the
amount of the grant object stock options ; (b) the Company's performance goals
and other terms and conditions for acquiring the right to exercise the stock
options; (c) the deadline for exercising the stock options; and (d) the Exercise
Price and payment terms.
5.4.
The
Board of Directors, may make the exercise of stock option to certain conditions
and restrictions on the transfer of shares acquired through the exercise of
stock options, and may also reserve for the Company repurchase stock options and
/ or preemptive rights in case of sale by beneficiary of those
Stocks.
5.4.1. Without prejudice to
item 5.4 above, for a period of one (1) year of their exercise date stock
option, the Beneficiaries may not sell, assign and / or offer to sell the Stocks
acquired through the exercise of stock options. If the Beneficiary does not have
the resources to fund the exercise of the Options shall be transmitted to sell
the necessary Stocks to pay the exercise of the costs and taxes of the stock
options. The number of Stocks subject to sale restriction will be calculated
according to the formula below:
N = Q - V1
Where:
N = number of Stocks
subject to the Prohibition of Trading
Q = number of Stocks
available for exercise
V = amount of any
necessary actions to fund the exercise of the stock options plus costs and taxes
on the sale.
V = Ep x Q / { Sp - [
IT x (Sp – Ep) ] }
Where:
Ep = Exercise Price
of stock options;
Sp = Sell Price of
stock options;
C = costs of the
stocks sale transaction as a percentage of the total sales value;
151
IT = income tax rate
on selling stocks.
5.5. The Stock
Option Agreements shall be concluded individually with each Beneficiary, and the
Board of Directors to establish differentiated terms and conditions for each
Stock Option Agreement, without application of any rule of equality or analogy
between the Beneficiaries, even if they are in similar or identical situations.
5.6.
The Plan is legal transaction consideration
of exclusively mercantile nature and does not create any obligation of labor or
social security nature between the Company and the Beneficiaries, whether
directors, statutory or otherwise, and people occupying other positions in the
Company or other companies under its control.
5.7.
This Plan and related Stock
Option Agreements (i) do not create any rights other than those expressly
provided for in its own terms, (ii) do not give stability or guarantee
employment or stay in the condition of administrator or employee, (iii) or harm
the right of the Company or other companies under its control, at any time and
as appropriate, terminate the employment contract or to terminate the mandate or
the relationship with the Beneficiary, (iv) do not guarantee the right to
re-election or reappointment functions in the Company or other companies under
its control.
5.8.
The
Stock Options granted under the Plan, as well as their exercise by the
Beneficiaries, have no connection or are linked to the legal relationship
between the parties, their remuneration, fixed or variable, or any profit
sharing, not even the implementation of their employment contracts.
5.9. Nevertheless
anything to the contrary in the Plan or in the Option Agreement, the Stock
options granted under the Plan shall be extinguished automatically, stopping all
its full effects right in the following cases:
(a)
upon their full exercise;
(b)
after the expiration of the Stock Option;
(c)
by of the Stock Option Agreement termination;
(d)
by decision of the General Shareholders Meeting, under item 10.1
below;
(e)
if the Company is dissolved, liquidated or declared bankrupt; or
(f)
the Beneficiary's severance of cases, subject to the provisions of section 9.2
of this Plan.
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6.
Stocks Subject to the Plan
6.1. Subject to
the adjustments provided for in section 11.2 below, the total number of Stocks
that may be acquired under the Plan shall not exceed 2% (two percent) of the
common stocks, with no par value, representing the total share capital of the
Company , corresponding on this date to 17,449,465 (seventeen million four
hundred and forty-nine thousand, four hundred sixty-five) common stocks,
registered, with no par value issued by the Company, provided that the total
number of issued Stocks or to be issued under the Plan is always within the
Company's authorized capital limit. If any stock option is terminated or
canceled without having been fully exercised, the Stocks related to such stock
options become available will again for future grants of stock
options.
6.2. In order to
satisfy the exercise of Stock options granted under the Plan, the Company may,
at the discretion of the Board of Directors, issue new Stocks within the
authorized capital limit or sell shares held in treasury.
6.3. Shareholders
will not have preemptive rights in the granting or exercise of Stock options
under the Plan, as provided for in Article 171, Paragraph 3, of Law 6,404 /
76.
6.4. The Shares
acquired as a result of the exercise of stock options under the Plan will
maintain all the rights of their species, except for the prohibition periods
trading of Stocks as provided by law and applicable regulations, the provisions
of item 5.4.1 above, as well as possible as otherwise determined by the Board of
Directors.
7.
Exercise Price
7.1. The exercise
price of the granted under the Plan stock options will be determined by the
Board of Directors on the Grant Date, provided that it will never be lower than
the average Company's Stocks quotation at the BM & FBOVESPA, weighted by
trading volume, in twenty (20) recent trading sessions prior Granting Date,
restated by IPCA, or other content that may be determined by the Board of
Directors.
7.2.
The
Exercise Price shall be paid by the Beneficiaries as determined by the Board of
Directors.
8.
Exercise of Stock Options
8.1. Without
prejudice to other terms and conditions set forth in the respective Stock Option
Agreements, the stock options become exercisable to the extent that their
beneficiaries remain continuously connected as an administrator or employee of
the Company or other companies under its control, the period between the date
Grant and the dates specified below, as follows:
153
(a)
1/4 (a fourth) of Stock Options may be exercised from the first (1st)
anniversary of the Grant Date;
(b)
1/4 (a fourth) of Stock Options may be exercised from the second (2nd)
anniversary of the Grant Date;
(c)
1/4 (a fourth) of Stock Options may be exercised from the third (1st)
anniversary of the Grant Date; and
(d)
1/4 (a fourth) of Stock Options may be exercised from the fourth (4th)
anniversary of the Grant Date.
8.1.1. The
stock options will be exercisable until the last business day of the calendar
year in which to complete the sixth (6th) anniversary of the Grant Date. Stock
Options not exercised within the stipulated terms and conditions shall be
considered automatically terminated, without any compensation.
8.2. The
Beneficiary who wishes to exercise their Stock Options shall notify the Company
in writing of its intention to do so and indicate the number of stock options
that you wish to pursue, in accordance with the communication model to be timely
disclosed by the Board of Directors.
8.3. The Board of
Directors may decide to suspend the right to exercise the stock options,
whenever situations that, under the law or regulations, restrict or prevent the
trading of Stocks by the Beneficiaries.
8.4. No
Beneficiary shall have any rights and shareholder of the Company privileges
until their Stock Options are duly exercised and their Stocks acquired or
subscribed under the Plan and respective Stock Option Agreement. No action will
be delivered to the Beneficiary through the exercise of the Stock Option unless
all legal and regulatory requirements have been fully complied with.
9.
Hypothesis of Termination and its Effects
9.1. In the
Beneficiary's severance of cases, the rights granted to him in accordance with
the Plan may be terminated or modified, as set forth in item 9.2
below.
9.2. If, at any
time, the Beneficiary:
(a)
is dismissed from the Company as a result of being (i) dismissal with cause, as
provided in the Consolidation of Labor Laws; or (ii) removal from office for
violating the duties and administrator assignments, such as those provided for
in art. 153 to 157 of Law 6,404 / 76 and its subsequent amendments; or (iii)
Beneficiary's negligence in the performance of duties arising from his officer;
or (iv) criminal conviction related to felonies; or (v) the practice,
by the Beneficiary, of dishonest or fraudulent acts against the Company or
against companies under its control; or (vi) any act or omission resulting from
fraud or Beneficiary's fault and that is prejudicial to the business, image, or
financial condition, its shareholders, or any companies under its control; or
(vii) significant violation of the act governing the exercise of statutory
company officer signed by the Beneficiary with the Company and / or the
companies under its control or any amendments to such an agreement or contract;
or (viii) failure of the Company's Bylaws and / or companies under its control
and other corporate provisions applicable to the Beneficiary, as administrator,
all options exercisable or not yet exercisable in accordance with the respective
Stock Option Agreement, on the date of Termination, shall be automatically
canceled by operation of law, without prior warning or notice, and without any
right to compensation;
154
(b)
is dismissed from the Company as a result of being fired without cause or
removal from office without violation of the duties and administrator
assignments, or will the beneficiary himself, resigning from his job or
resigning his office of director: (i) the outstanding exercisable Stock Options
according to the respective Stock Option Agreement, on the date of Termination,
shall be automatically canceled by operation of law, without prior warning or
notice, and without any right to compensation; and (ii) exercisable Stock
Options according to the respective Stock Option Agreement, on the date of
Termination, may be exercised, within the thirty (30) days from the date of
Termination, after which they will be automatically extinguished, as of right,
without prior warning or notice, and without any right to
compensation;
(c)
leaves the Company due to retirement or permanent disability: (i) the stock
options not yet exercisable in accordance with the respective Stock Option
Agreement, on the date of dismissal, they shall be automatically terminated, and
(ii) exercisable Stock Options in accordance with respective Stock Option
Agreement, on the date of Termination, may be exercised within 60 (sixty) days
from the shutdown date, after which the same shall be automatically canceled by
operation of law, regardless of prior notice or notification, and without any
right to compensation; and
(d)
leaves the Company due to death: (i) the outstanding exercisable Stock Options
according to the respective Stock Option Agreement on the date of its dismissal,
automatically become exercisable and may be exercised by the Beneficiary's legal
successors within six (6) months from the date of Termination, after which will
be automatically canceled by operation of law, without prior warning or notice,
and without any right to compensation; and (ii) exercisable Stock Options
according to the respective Stock Option Agreement on the date of death may be
exercised by the Beneficiary's legal successors, within six (6) months from the
date shutdown after that they will be automatically canceled by operation of
law, without prior warning or notice, and without any right to
compensation.
155
9.3. Nevertheless
provisions of item 9.2 above, the Board of Directors may, at its sole
discretion, whenever it deems that social interests are better served by such a
measure, fails to observe the rules stipulated in item 9.2, giving particular
the differential treatment beneficiary, provided they do not bring harm to the
beneficiary.
10.
Effective Term of the Plan
10.1. The Plan shall become
effective on the date of its approval by the Company's General Shareholders
Meeting and shall remain in force for an indefinite period and may be terminated
at any time by decision of the General Shareholders Meeting. The Plan shall end
not affect the effectiveness of the stock options still in force granted based
on it, nor the validity of any repurchase stock options and / or preemptive
rights in case of transfer by the Beneficiary of those Stocks and the
Prohibition of Sale in terms of items 5.4 and 5.4.1 above.
11.
General Provisions
11.1. The Stock Options grants
under the Plan shall not prevent the Company from engaging in corporate
restructuring operations, such as transformation, merger, spin-off and merger of
shares. The Board of Directors and the companies involved in such operations
may, at its discretion, decide on the effects of the operation to the Stock
options granted to the event date.
11.2. If the number, type and
class of existing Stocks on the date of approval of the Plan be changed as a
result of bonuses, splits, reverse splits or conversion of shares of a type or
class into another or conversion into shares of other securities issued by the
Company , the Board of Directors, to make the corresponding adjustment in the
number, type and class of shares covered by the Stock options granted and their
respective exercise price, in order to maintain the balance of relations between
the parties, avoiding distortions in the implementation of the Plan.
11.3. No provision of the Plan
or Stock Option granted under the Plan shall grant to any Beneficiary the right
to remain as administrator and / or employee of the Company, nor interfere in
any way the right of the Company, at any time and subject to legal conditions
and contract, terminate the employee's employment contract and / or discontinue
the trustee's mandate.
11.4. Each Beneficiary shall
expressly adhere to the terms of the Plan, by written declaration, without any
exception, as defined by the Board of Directors.
11.5. The Board of Directors,
in the interest of the Company and its shareholders, may revise the terms of the
Plan, provided it does not change its basic principles.
156
11.6. Any significant legal
change regarding the regulation of corporations, public companies, in labor
legislation and / or tax effects of a plan of options, may cause the full review
of the Plan.
11.7. The Stock Options granted
under this Plan are personal and not transferable, the Beneficiary may not,
under any circumstances, assign, transfer or otherwise dispose of any third
party the stock options, or the rights and obligations inherent to
them.
11.8. The cases shall be
governed by the Board of Directors, asked when he deems it appropriate, the
General Shareholders Meeting. Any Stock Option granted under the Plan is subject
to all the terms and conditions set forth herein, terms and conditions shall
prevail in case of inconsistency regarding the provisions of any agreement or
document mentioned in this Plan.
157
Anexo VI – Restricted Stocks Plan
(As Annex 13 of CVM Instruction 481 of
December 17, 2009)
1.
Provide copy of the proposed plan
Here attached to this
copy of the proposed Restricted Stock Plan of the Company, to be submitted for
approval by the Annual and Extraordinary General Shareholders Meeting to be held
on April 8, 2015 (the "Plan").
2.
Inform main features of the proposed plan, identifying:
a.
Potential beneficiaries
May be elected as
beneficiaries of grants of restricted stock the directors, statutory or not, and
other persons performing positions at the Company, or other companies under its
control, all proposed members made subject to approval by the Board of Directors
("Beneficiaries").
b.
Maximum number of options to be granted
The Plan involves the
granting of stocks and not of stock options.
c.
Maximum number of stocks covered by the plan
The maximum number of
stocks that may be granted under the Plan shall not exceed 0.5% (half percent)
of the common stocks, with no par value, representing the total stock capital of
the Company, corresponding on this date, the 4,362,366 (four million, three
hundred sixty-two thousand, three hundred sixty-six) common shares, registered,
with no par value issued by the Company.
d.
Terms of purchase
The Board of Directors
will determine the granting of restricted stocks to investment by the
beneficiary in the acquisition of the Company's stocks with the use of their
variable compensation under the terms and conditions set forth in the
Plan.
The rights of beneficiaries in relation to the restricted stocks
will only be fully acquired is checked, all of the following
conditions:
(i)
Beneficiaries remain continuously connected as an
administrator or employee of the Company for the period between the grant date
and the third (3rd) anniversary of the grant date; and
158
(ii)
Company
achieve the “Total Share Return” - TSR (indicator of total return to
shareholders, calculated from the price of the Company's shares on the last
business day of each fiscal year, plus the dividends per share paid by the
Company since the date of grant, with the premise that dividends will be
reinvested the Company itself, and such indicator obtained through consultation
to information from Bloomberg news agency or, failing that, for an equivalent)
to be set by the Board of Directors in their grant agreements, which must be
determined at the end of each anniversary of the grant date during the period
between the grant date and the third (3rd) anniversary of the grant
date.
Additionally, the Board
of Directors may make the acquisition of rights related to restricted stocks to
certain conditions, and impose restrictions on transfer, and may also reserve
for the Company repurchase options and / or preemptive rights in case of sale by
such Beneficiary same restricted stock.
While the restricted
stock rights are not fully acquired under the terms and conditions set out
above, the Beneficiary may not engage, sell, assign, sell or transfer, directly
or indirectly, the Company's stocks acquired with their variable
compensation.
e.
Detailed criteria for setting the exercise price
The plan provides for
the grant of stocks and not of stock options. The stocks will be granted on
payment of variable remuneration to which they are entitled Beneficiaries, and
there is therefore, exercise price.
f.
Criteria for determining the time of exercise
See item 2
(d).
g.
Form of options settlement
Not applicable
h.
Criteria and events that, when checked, will cause the suspension, modification
or termination of the plan
Change: Any significant
legal change regarding the laws and regulations of corporations, public
companies, in labor legislation and / or tax effects of a grant plan actions,
may cause the full review of the Plan.
Extinction: The Plan may
be terminated at any time by decision of the Company's General Shareholders
Meeting.
159
3.
Justify the proposed plan, explaining:
e.
The main objectives of the plan
The Plan aims to grant
restricted stock to eligible persons as beneficiaries, with a view to: (a)
stimulating the expansion, success and the achievement of social objectives of
the Company; (b) aligning the interests of shareholders of the Company to
eligible persons; and (c) allow the Company or the companies under its control
to attract and retain tied eligible persons.
f.
The way the plan contributes to these
goals
The Company, to
establish a differentiated and competitive investment opportunity for its
executives, expected to align the actions of participants in this long-term
stocks plan to the vision of the shareholders and investors of the Company,
conditioning gain long-term executive to the continuation of business and
thereby promoting sustainable and committed attitude of the participants in this
plan.
g.
How the plane falls into the remuneration policy of the
company
The Plan intends to
complement the compensation of its executives package, enhancing the level of
alignment and retention of its key executives.
h.
How the Plan aligns to the interests of beneficiaries
and the company's on short, medium and long term
The implementation of
the Plan strengthens the expectation of the shareholder and the company's
investor to create the vision and the long-term commitment in the executive,
promoting knowledge, skills and behaviors necessary to the continuation of
business.
4.
Estimating the costs of the company under the plan, according to accounting
rules that address this issue
To calculate the
estimated expenses of the Plan, was considered:
1) Stock price
on the grant date;
2) Labor
charges and FGTS
Thus, the value
determined for the plan is BRL 52,899,000.00 (fifty-two million, eight hundred
and ninety-nine thousand reais).
160
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