The accompanying notes are an
integral part of the condensed consolidated interim financial information.
Items above are stated net of tax and the
related taxes are disclosed in note 10.
The accompanying notes are an integral
part of the condensed consolidated interim financial information.
CONDENSED CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY
|
|
|
Attributed
to controlling shareholders
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
Paid-in
capital
|
|
Capital
reserve
|
|
Treasury
shares
|
|
Accumulated
foreign currency translation adjustments
|
|
Marketable
securities at FVTOCI
|
|
Gain
(losses) on cash flow hedge
|
|
Actuarial
losses
|
|
Retained
earnings (losses)
|
|
Total
equity
|
|
Non-controlling
interest
|
|
Total
shareholders' equity
(consolidated)
|
BALANCES AT JANUARY 1, 2020
|
|
|
12,460,471
|
|
192,845
|
|
(38,239)
|
|
(193,379)
|
|
4,454
|
|
(356,721)
|
|
(176,823)
|
|
(3,996,985)
|
|
7,895,623
|
|
252,726
|
|
8,148,349
|
Comprehensive
income (loss) (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
(loss) on foreign currency translation of foreign operations
|
|
|
-
|
|
-
|
|
-
|
|
(148,522)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(148,522)
|
|
42,825
|
|
(105,697)
|
Loss
on net investment hedge
|
|
|
-
|
|
-
|
|
-
|
|
(342,111)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(342,111)
|
|
-
|
|
(342,111)
|
Gains
on marketable securities measured at FVTOCI (2)
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
4,833
|
|
-
|
|
-
|
|
-
|
|
4,833
|
|
-
|
|
4,833
|
Unrealized
losses in cash flow hedge
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(741,483)
|
|
-
|
|
-
|
|
(741,483)
|
|
-
|
|
(741,483)
|
Actuarial
gains (losses) on pension and post-employment plans
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
13,035
|
|
-
|
|
13,035
|
|
(71)
|
|
12,964
|
Income
for the period
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
257,949
|
|
257,949
|
|
10,948
|
|
268,897
|
SUB-TOTAL
COMPREHENSIVE INCOME (LOSS)
|
|
|
-
|
|
-
|
|
-
|
|
(490,633)
|
|
4,833
|
|
(741,483)
|
|
13,035
|
|
257,949
|
|
(956,299)
|
|
53,702
|
|
(902,597)
|
Appropriation
of income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
payments
|
|
|
-
|
|
5,380
|
|
6,211
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
11,591
|
|
-
|
|
11,591
|
Acquisition
(sale) of non-controlling interests (3)
|
|
|
-
|
|
(50,945)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(50,945)
|
|
(54,863)
|
|
(105,808)
|
Acquisition
of treasury shares
|
|
|
-
|
|
-
|
|
(106,070)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(106,070)
|
|
-
|
|
(106,070)
|
BALANCES
AT JUNE 30, 2020
|
|
|
12,460,471
|
|
147,280
|
|
(138,098)
|
|
(684,012)
|
|
9,287
|
|
(1,098,204)
|
|
(163,788)
|
|
(3,739,036)
|
|
6,793,900
|
|
251,565
|
|
7,045,465
|
|
Attributed
to controlling shareholders
|
|
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
Paid-in
capital
|
|
Capital
reserve
|
|
Treasury
shares
|
|
Accumulated
foreign currency translation adjustments
|
|
Marketable
securities at FVTOCI
|
|
Gain
(losses) on cash flow hedge
|
|
Actuarial
losses
|
|
Retained
earnings (losses)
|
|
Total
equity
|
|
Non-controlling
interest
|
|
Total
shareholders' equity
(consolidated)
|
BALANCES
AT JANUARY 1, 2019
|
12,460,471
|
|
115,354
|
|
(56,676)
|
|
(752,815)
|
|
(98,451)
|
|
(396,165)
|
|
(28,088)
|
|
(4,279,003)
|
|
6,964,627
|
|
567,150
|
|
7,531,777
|
Comprehensive
income (loss) (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
(loss) on foreign currency translation of foreign operations
|
-
|
|
-
|
|
-
|
|
659,167
|
|
-
|
|
-
|
|
-
|
|
-
|
|
659,167
|
|
(41,331)
|
|
617,836
|
Gains
on marketable securities measured at FVTOCI (2)
|
-
|
|
-
|
|
-
|
|
-
|
|
81,882
|
|
-
|
|
-
|
|
-
|
|
81,882
|
|
-
|
|
81,882
|
Unrealized
gains in cash flow hedge
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
95,284
|
|
-
|
|
-
|
|
95,284
|
|
-
|
|
95,284
|
Actuarial
losses on pension and post-employment plans
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5,311
|
|
-
|
|
5,311
|
|
(355)
|
|
4,956
|
Income
(loss) for the year
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(678,110)
|
|
(678,110)
|
|
(9,267)
|
|
(687,377)
|
SUB-TOTAL
COMPREHENSIVE INCOME (LOSS)
|
-
|
|
-
|
|
-
|
|
659,167
|
|
81,882
|
|
95,284
|
|
5,311
|
|
(678,110)
|
|
163,534
|
|
(50,953)
|
|
112,581
|
Realized loss
in marketable securities at FVTOCI (2)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(23,120)
|
|
(23,120)
|
|
-
|
|
(23,120)
|
Appropriation
of income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(1,552)
|
|
(1,552)
|
Share-based
payments
|
-
|
|
11,691
|
|
5,981
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
17,672
|
|
-
|
|
17,672
|
Acquisition
(sale) of non-controlling interests
|
-
|
|
84,352
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
84,352
|
|
(276,824)
|
|
(192,472)
|
BALANCES AT JUNE 30, 2019
|
12,460,471
|
|
211,397
|
|
(50,695)
|
|
(93,648)
|
|
(16,569)
|
|
(300,881)
|
|
(22,777)
|
|
(4,980,233)
|
|
7,207,065
|
|
237,821
|
|
7,444,886
|
|
(1)
|
All changes in other comprehensive income are presented net of taxes.
|
|
(2)
|
FVTOCI: Fair Value Through Other Comprehensive Income.
|
|
(3)
|
Acquisition of remaining participation in the subsidiary Al Wafi (note
1.1).
|
The accompanying notes are an
integral part of the condensed consolidated interim financial information.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-7
|
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
January to June 2020
|
|
January to June 2019
|
OPERATING ACTIVITIES
|
|
|
|
|
Income from continuing operations
|
|
268,897
|
|
77,745
|
Adjustments for:
|
|
|
|
|
Depreciation and amortization
|
|
741,053
|
|
745,932
|
Depreciation and depletion of biological assets
|
|
420,747
|
|
396,053
|
Result on disposals of property, plant and equipments
|
|
7,409
|
|
(18,248)
|
Write-down of inventories to net realizable value
|
|
63,180
|
|
89,553
|
Provision for tax, civil and labor risks
|
|
182,108
|
|
505,675
|
Income from associates and joint ventures
|
|
-
|
|
1,025
|
Financial results, net
|
|
796,772
|
|
1,067,587
|
Tax recoveries and gains in tax lawsuits
|
|
(224,820)
|
|
(687,371)
|
Deferred income tax
|
|
37,865
|
|
(143,931)
|
Employee profit sharing
|
|
117,992
|
|
110,455
|
Other (1)
|
|
259,024
|
|
56,644
|
|
|
2,670,227
|
|
2,201,119
|
Trade accounts receivable
|
|
643,436
|
|
348,735
|
Inventories
|
|
(1,223,384)
|
|
(218,889)
|
Biological assets - current
|
|
(268,631)
|
|
(49,177)
|
Trade accounts payable
|
|
522,587
|
|
(381,973)
|
Supply chain finance
|
|
140,750
|
|
(299,575)
|
Cash (applied) generated by operating activities
|
|
2,484,985
|
|
1,600,240
|
Investments in securities at FVTPL (2)
|
|
-
|
|
(92,911)
|
Redemptions of securities at FVTPL (2)
|
|
102,172
|
|
20,244
|
Interest received
|
|
57,176
|
|
108,632
|
Dividends and interest on shareholders' equity received
|
|
-
|
|
15,551
|
Payment of tax, civil and labor provisions
|
|
(129,748)
|
|
(173,762)
|
Payment of interest
|
|
(553,441)
|
|
(557,228)
|
Derivative financial instruments
|
|
1,141,152
|
|
(109,092)
|
Payment of income tax and social contribution
|
|
(146)
|
|
(68)
|
Other operating assets and liabilities
|
|
450,922
|
|
(97,323)
|
Net cash (applied) provided by operating activities
|
|
3,553,072
|
|
714,283
|
Net cash (applied) provided by operating activities from discontinued operations
|
|
-
|
|
(109,234)
|
Net cash (applied) provided by operating activities
|
|
3,553,072
|
|
605,049
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
Investments in securities at amortized cost
|
|
-
|
|
(15,362)
|
Redemptions of securities at amortized cost
|
|
-
|
|
95,638
|
Redemptions of securities at FVTOCI (3)
|
|
-
|
|
131,997
|
Redemption (Investments) of restricted cash
|
|
285,622
|
|
30,522
|
Additions to property, plant and equipment
|
|
(285,323)
|
|
(178,085)
|
Additions to biological assets - non-current
|
|
(470,300)
|
|
(391,839)
|
Proceeds from disposals of property, plant, equipment and investments
|
|
65,717
|
|
1,789,751
|
Additions to intangible assets
|
|
(59,067)
|
|
(43,283)
|
Business combination, net of cash
|
|
-
|
|
(183,672)
|
Sale of participation in associated entities
|
|
38,546
|
|
-
|
Sale (acquisition) of participation in joint ventures and associated entities
|
|
(547)
|
|
1,971
|
Net cash provided (used in) investing activities
|
|
(425,352)
|
|
1,237,638
|
Net cash provided (used in) investing activities from discontinued operations
|
|
-
|
|
(58,782)
|
Net cash provided (used in) investing activities
|
|
(425,352)
|
|
1,178,856
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
Proceeds from debt issuance
|
|
3,357,785
|
|
1,783,550
|
Repayment of debt
|
|
(1,639,768)
|
|
(3,121,428)
|
Treasury shares acquisition
|
|
(106,070)
|
|
-
|
Acquisition of non-controlling interests
|
|
(100,390)
|
|
-
|
Payment of lease liabilities
|
|
(268,264)
|
|
(279,086)
|
Net cash provided (used in) by financing activities
|
|
1,243,293
|
|
(1,616,964)
|
Net cash provided (used in) by financing activities from discontinued operations
|
|
-
|
|
1,567
|
Net cash provided (used in) by financing activities
|
|
1,243,293
|
|
(1,615,397)
|
EFFECT OF EXCHANGE RATE VARIATION ON CASH AND CASH EQUIVALENTS
|
|
1,062,477
|
|
31,572
|
Net increase (decrease) in cash and cash equivalents
|
|
5,433,490
|
|
200,080
|
At the beginning of the period
|
|
4,237,785
|
|
5,036,011
|
At the end of the period
|
|
9,671,275
|
|
5,236,091
|
|
(1)
|
Includes provision for class action agreement (note 1.3).
|
|
(2)
|
FVTPL: Fair Value Through Profit and Loss.
|
|
(3)
|
FVTOCI: Fair Value Through Other Comprehensive Income.
|
The accompanying notes are an
integral part of the condensed consolidated interim financial information.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-8
|
BRF S.A. (“BRF”)
and its subsidiaries (collectively the “Company”) is a publicly traded company, listed on the segment Novo
Mercado of Brasil, Bolsa, Balcão (“B3”), under the ticker BRFS3, and listed on the New York Stock Exchange (“NYSE”),
under the ticker BRFS. The Company’s registered office is at Rua Jorge Tzachel, nº
475, Bairro Fazenda, Itajaí - Santa Catarina and the main business office is in the city of São Paulo.
BRF is a Brazilian multinational
company, with global presence, which owns a comprehensive portfolio of products, and it is one of the world’s largest companies
of food products. The Company operates by raising, producing and slaughtering poultry and pork for processing, production and sale
of fresh meat, processed products, pasta, margarine and others.
The Company holds as main brands
Sadia, Perdigão, Qualy, Chester®, Kidelli, Perdix and Banvit, present mainly in Brazil, Turkey and Middle Eastern countries.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-9
|
|
|
|
|
|
|
|
%
equity interest
|
Entity
|
|
|
Main
activity
|
|
Country
|
|
06.30.20
|
|
12.31.19
|
|
|
|
|
|
|
|
|
|
|
BRF Energia S.A.
|
|
|
Commercialization of eletric energy
|
|
Brazil
|
|
100.00
|
|
100.00
|
BRF
GmbH
|
|
|
Holding
|
|
Austria
|
|
100.00
|
|
100.00
|
BRF
Foods LLC
|
|
|
Import,
industrialization and commercialization of products
|
|
Russia
|
|
99.90
|
|
99.90
|
BRF
Global Company Nigeria Ltd.
|
(a)
|
|
Marketing
and logistics services
|
|
Nigeria
|
|
99.00
|
|
99.00
|
BRF
Global Company South Africa Proprietary Ltd.
|
|
|
Administrative,
marketing and logistics services
|
|
South
Africa
|
|
100.00
|
|
100.00
|
BRF
Global Company Nigeria Ltd.
|
(a)
|
|
Marketing
and logistics services
|
|
Nigeria
|
|
1.00
|
|
1.00
|
BRF
Global GmbH
|
|
|
Holding
and trading
|
|
Austria
|
|
100.00
|
|
100.00
|
BRF
Foods LLC
|
|
|
Import,
industrialization and commercialization of products
|
|
Russia
|
|
0.10
|
|
0.10
|
BRF
Japan KK
|
|
|
Marketing
and logistics services, import, export, industrialization and commercialization of products
|
|
Japan
|
|
100.00
|
|
100.00
|
BRF
Korea LLC
|
|
|
Marketing
and logistics services
|
|
Korea
|
|
100.00
|
|
100.00
|
BRF
Shanghai Management Consulting Co. Ltd.
|
|
|
Provision
of consultancy and marketing services
|
|
China
|
|
100.00
|
|
100.00
|
BRF
Shanghai Trading Co. Ltd.
|
|
|
Import,
export and commercialization of products
|
|
China
|
|
100.00
|
|
100.00
|
BRF
Singapore Foods PTE Ltd.
|
|
|
Administrative,
marketing and logistics services
|
|
Singapore
|
|
100.00
|
|
100.00
|
BRF
Hungary LLC
|
(c)
|
|
Import
and commercialization of products
|
|
Hungary
|
|
-
|
|
100.00
|
Compañía
Paraguaya Comercial S.A.
|
(a)
|
|
Import
and commercialization of products
|
|
Paraguay
|
|
99.00
|
|
99.00
|
Eclipse
Holding Cöoperatief U.A.
|
|
|
Holding
|
|
The
Netherlands
|
|
99.99
|
|
99.99
|
Buenos
Aires Fortune S.A.
|
|
|
Holding
|
|
Argentina
|
|
5.00
|
|
5.00
|
Eclipse
Latam Holdings
|
|
|
Holding
|
|
Spain
|
|
100.00
|
|
100.00
|
Buenos
Aires Fortune S.A.
|
|
|
Holding
|
|
Argentina
|
|
95.00
|
|
95.00
|
Perdigão
Europe Lda.
|
|
|
Import,
export of products and administrative services
|
|
Portugal
|
|
100.00
|
|
100.00
|
Perdigão
International Ltd.
|
|
|
Import
and export of products
|
|
Cayman
Island
|
|
100.00
|
|
100.00
|
BFF
International Ltd.
|
|
|
Financial
fundraising
|
|
Cayman
Island
|
|
100.00
|
|
100.00
|
Highline
International
|
|
|
Financial
fundraising
|
|
Cayman
Island
|
|
100.00
|
|
100.00
|
Sadia
Overseas Ltd.
|
(a)
|
|
Financial
fundraising
|
|
Cayman
Island
|
|
100.00
|
|
100.00
|
ProudFood
Lda
|
|
|
Import
and commercialization of products
|
|
Angola
|
|
90.00
|
|
90.00
|
Sadia
Chile S.A.
|
|
|
Import,
export and commercialization of products
|
|
Chile
|
|
40.00
|
|
40.00
|
BRF
Global Namíbia
|
(a)
|
|
Import
and commercialization of products
|
|
Namibia
|
|
100.00
|
|
100.00
|
Wellax
Food Logistics C.P.A.S.U. Lda.
|
|
|
Import,
commercialization of products and administrative services
|
|
Portugal
|
|
100.00
|
|
100.00
|
BRF
Austria GmbH
|
|
|
Holding
|
|
Austria
|
|
100.00
|
|
100.00
|
One
Foods Holdings Ltd
|
|
|
Holding
|
|
United
Arab Emirates
|
|
100.00
|
|
100.00
|
Al-Wafi
Food Products Factory LLC
|
|
|
Import,
export, industrialization and commercialization of products
|
|
United
Arab Emirates
|
|
49.00
|
|
49.00
|
Badi
Ltd.
|
|
|
Holding
|
|
United
Arab Emirates
|
|
100.00
|
|
100.00
|
Al-Wafi
Al-Takamol International for Foods Products
|
(b)
|
|
Import
and commercialization of products
|
|
Saudi
Arabia
|
|
100.00
|
|
75.00
|
BRF
Al Yasra Food K.S.C.C. ("BRF AFC")
|
|
|
Import,
commercialization and distribution of products
|
|
Kuwait
|
|
49.00
|
|
49.00
|
BRF
Foods GmbH
|
|
|
Industrialization,
import and commercialization of products
|
|
Austria
|
|
100.00
|
|
100.00
|
Al
Khan Foodstuff LLC ("AKF")
|
|
|
Import,
commercialization and distribution of products
|
|
Oman
|
|
70.00
|
|
70.00
|
FFM
Further Processing Sdn. Bhd.
|
(d)
|
|
Industrialization,
import and commercialization of products
|
|
Malaysia
|
|
-
|
|
70.00
|
FFQ
GmbH
|
|
|
Industrialization,
import and commercialization of products
|
|
Austria
|
|
100.00
|
|
100.00
|
TBQ
Foods GmbH
|
|
|
Holding
|
|
Austria
|
|
60.00
|
|
60.00
|
Banvit
Bandirma Vitaminli
|
|
|
Import,
industrialization and commercialization of products
|
|
Turkey
|
|
91.71
|
|
91.71
|
Banvit
Enerji ve Elektrik Üretim Ltd. Sti.
|
(a)
|
|
Generation
and commercialization of electric energy
|
|
Turkey
|
|
100.00
|
|
100.00
|
Banvit
Foods SRL
|
|
|
Industrialization
of grains and animal feed
|
|
Romania
|
|
0.01
|
|
0.01
|
Nutrinvestments
BV
|
|
|
Holding
|
|
The
Netherlands
|
|
100.00
|
|
100.00
|
Banvit
ME FZE
|
|
|
Marketing
and logistics services
|
|
United
Arab Emirates
|
|
100.00
|
|
100.00
|
Banvit
Foods SRL
|
|
|
Industrialization
of grains and animal feed
|
|
Romania
|
|
99.99
|
|
99.99
|
One
Foods Malaysia SDN. BHD.
|
|
|
Marketing
and logistics services
|
|
Malaysia
|
|
100.00
|
|
100.00
|
Federal
Foods LLC
|
|
|
Import,
commercialization and distribution of products
|
|
United
Arab Emirates
|
|
49.00
|
|
49.00
|
Federal
Foods Qatar
|
|
|
Import,
commercialization and distribution of products
|
|
Qatar
|
|
49.00
|
|
49.00
|
BRF
Hong Kong LLC
|
(a)
|
|
Import,
commercialization and distribution of products
|
|
Hong
Kong
|
|
100.00
|
|
100.00
|
Eclipse
Holding Cöoperatief U.A.
|
|
|
Holding
|
|
The
Netherlands
|
|
0.01
|
|
0.01
|
Establecimiento
Levino Zaccardi y Cia. S.A.
|
(a)
|
|
Industrialization
and commercialization of dairy products
|
|
Argentina
|
|
99.94
|
|
99.94
|
BRF
Pet S.A.
|
|
|
Industrialization,
commercialization and distribution of feed and nutrients for animals
|
|
Brazil
|
|
100.00
|
|
100.00
|
PP-BIO
Administração de bem próprio S.A.
|
|
|
Management
of assets
|
|
Brazil
|
|
33.33
|
|
33.33
|
PR-SAD
Administração de bem próprio S.A.
|
|
|
Management
of assets
|
|
Brazil
|
|
33.33
|
|
33.33
|
ProudFood
Lda
|
|
|
Import
and commercialization of products
|
|
Angola
|
|
10.00
|
|
10.00
|
PSA
Laboratório Veterinário Ltda.
|
|
|
Veterinary
activities
|
|
Brazil
|
|
99.99
|
|
99.99
|
Sino
dos Alpes Alimentos Ltda.
|
(a)
|
|
Industrialization
and commercialization of products
|
|
Brazil
|
|
99.99
|
|
99.99
|
Sadia
Alimentos S.A.
|
|
|
Holding
|
|
Argentina
|
|
43.10
|
|
43.10
|
Sadia
International Ltd.
|
|
|
Import
and commercialization of products
|
|
Cayman
Island
|
|
100.00
|
|
100.00
|
Sadia
Chile S.A.
|
|
|
Import,
export and marketing of products
|
|
Chile
|
|
60.00
|
|
60.00
|
Sadia
Uruguay S.A.
|
|
|
Import
and commercialization of products
|
|
Uruguay
|
|
5.10
|
|
5.10
|
Compañía
Paraguaya Comercial S.A.
|
(a)
|
|
Import
and commercialization of products
|
|
Paraguay
|
|
1.00
|
|
1.00
|
Sadia
Alimentos S.A.
|
|
|
Holding
|
|
Argentina
|
|
56.90
|
|
56.90
|
Sadia
Uruguay S.A.
|
|
|
Import
and commercialization of products
|
|
Uruguay
|
|
94.90
|
|
94.90
|
Vip
S.A. Empreendimentos e Participações Imobiliárias
|
|
|
Commercialization
of owned real state
|
|
Brazil
|
|
100.00
|
|
100.00
|
Establecimiento
Levino Zaccardi y Cia. S.A.
|
(a)
|
|
Industrialization
and commercialization of dairy products
|
|
Argentina
|
|
0.06
|
|
0.06
|
PSA
Laboratório Veterinário Ltda.
|
|
|
Veterinary
activities
|
|
Brazil
|
|
0.01
|
|
0.01
|
Sino
dos Alpes Alimentos Ltda.
|
(a)
|
|
Industrialization
and commercialization of products
|
|
Brazil
|
|
0.01
|
|
0.01
|
|
(a)
|
Dormant subsidiaries. The Company is evaluating the liquidation of
these subsidiaries.
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-10
|
On July 8, 2020, Sadia Overseas
Ltd. was liquidated.
|
(b)
|
On April 21, 2020, Badi Ltd. acquired the non-controlling portion
of Al-Wafi Al-Takamol International for Foods Products by the amount equivalent to R$100,390 (USD 19,000).
|
|
(c)
|
On June 10, 2020, BRF Hungary LLC was dissolved.
|
|
(d)
|
On June 24, 2020, BRF Foods GmbH sold all shares held of FFM Further
Processing Sdn. Bhd to FFM Berhad for the amount equivalent to R$38,546 (USD7,350). The amount paid is presented in the Investing
Activities on the Statement of Cash Flows.
|
On August 20, 2019, the Company’s
wholly-owned subsidiary Badi Limited executed a Share Purchase Agreement with Al Takamul International Company for Commercial Investment
Limited for the purchase of the remaining 25% of the capital stock owned by non-controlling shareholders in Al Wafi Al Takamul
International Company for Food Products Limited (“Wafi”), a company incorporated in the Kingdom of Saudi Arabia responsible
for distributing BRF products in that country. The transaction closed on April 21, 2020 for an amount equivalent to R$100,390 thousand
(USD19,000 thousand), at which point Wafi became a wholly-owned subsidiary of Badi Limited. The amount paid is presented in the
Financing Activities on the Statement of Cash Flows and the difference between the amount paid and the book value of the participation
in the subsidiary was recorded in Capital Reserves, in the amount of R$50,945.
On May 07, 2020, the Company
executed a share purchase agreement with Hungry Bunny Limited and others, establishing the terms and conditions for the acquisition
of 100% of the capital stock of Joody Al Sharqiya Food Production Factory, a food processing company in Saudi Arabia. The transaction
considered an enterprise value equivalent to R$43,808 (USD8,000). The closing of this transaction is subject to the satisfaction
of conditions precedent applicable to transactions of this nature, including the approval by regulatory authorities.
Except for the associates PP-BIO
and PR-SAD in which the Company records the investments by the equity method, all other entities shown in the table above were
consolidated.
|
1.2.
|
Investigations involving BRF
|
The Company has been subject
to two external investigations, denominated “Carne Fraca Operation” in 2017 and “Trapaça Operation”
in 2018, as detailed below. The Company’s Audit and Integrity Committee conducted independent investigations, along with
the Independent Investigation Committee, composed of external members and with external legal advisors in Brazil and abroad with
respect to the allegations involving BRF employees and former employees in the scope of the aforementioned operations and other
ongoing investigations.
For the six-month period ended
on June 30, 2020, the main impacts observed as result of the referred investigations were recorded in other operating expenses
in the amount of R$24,072 (R$42,320 in the same period of the previous year), and for three-month period ended on June 30, 2020
the referred impacts amounted R$11,771 (R$31,207 in the same period of the previous year) mostly related to expenditures with lawyers,
legal advisors and consultants.
In addition to the impacts already
registered, there are uncertainties about the outcome of these operations which may result in penalties, fines and normative sanctions,
right restrictions and other forms of liabilities, for which the Company is not able to make a reliable estimate of the potential
losses.
The outcomes may result in payments
of substantial amounts, which may cause a material adverse effect on the Company’s financial position, results and cash flows
in the future.
|
1.2.1.
|
Carne Fraca Operation
|
On March 17, 2017, BRF became
aware of a decision issued by a judge of the 14th Federal Court of Curitiba - Paraná, authorizing the search and seizure
of information and documents, and the detention of certain individuals in the context of the Carne Fraca Operation. Two
BRF employees were detained and subsequently released, as well as three others were identified for questioning.
In April 2017, the Brazilian
Federal Police and the Brazilian federal prosecutors filed charges against BRF employees, which were accepted by the judge responsible
for the process, and its main allegations in this phase involved misconduct related to improper offers and/or promises to government
inspectors.
On June 04, 2018, the Company
was informed about the establishment of a responsibility administrative process (“PAR”) by the Office of the Comptroller
General (“CGU”), under the Law Nº 12,846/2013
(“Anti-corruption Law”), which aims to verify eventual administrative responsibilities related to the facts object
of the criminal lawsuit Nº 5016879-04.2017.4.04.7000, (“Criminal
Lawsuit”) in progress under the 14th Federal Court of the subsection of Curitiba/PR, as a consequence of the Carne Fraca
Operation.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-11
|
BRF has informed certain regulators
and governmental entities, including the U.S. Securities and Exchange Commission (“SEC”) and the U.S. Department of
Justice (“DOJ”) about the Carne Fraca Operation and is cooperating with such authorities, which are conducting
their own investigations.
On September 28, 2018, the sentence
of the Criminal Lawsuit in first instance was published, discharging one of the BRF employees and convicting a former employee
for six months of detention with the possibility of substitution for a right-restricting penalty. The Brazilian federal prosecutors
presented appeal to the first instance decision. Since then, the appeal is being analyzed by the Federal Regional Court of the
4th region.
On March 5, 2018, the Company
learned of a decision issued by a judge of the 1st Federal Court of Ponta Grossa/PR, authorizing the search and seizure of information
and documents due to allegations involving misconduct relating to quality violations, improper use of feed components and falsification
of tests at certain BRF manufacturing plants and accredited labs. Such operation was denominated as Trapaça Operation.
On March 5, 2018, BRF received notice from the Ministry of Agriculture, Livestock and Food Supply (“MAPA”) immediately
suspending exports from its Rio Verde/GO, Carambeí/PR and Mineiros/GO plants to 12 countries that require specific sanitary
requirements for the control of the bacteria group Salmonella spp and Salmonella pullorum.
On May 14, 2018, the Company
received the formal notice that twelve plants located in Brazil were removed from the list that permits imports of animal origin
products by the European Union’s countries. The measure came into force as of May 16, 2018 and affects only the plants located
in Brazil and which have export licenses to the European Union, not affecting the supply to other markets or other BRF plants located
outside Brazil and that export to the European market.
On October 15, 2018, the Federal
Police Department submitted to the 1st Federal Criminal Court of the Judicial Branch of Ponta Grossa –
PR the final report of its investigation in connection to the Trapaça Operation. The police inquiry indicted 43 people,
including former key executives of the Company.
On December 04, 2019, the Public
Prosecution filed charges against eleven people related to allegations about Premix (compound of vitamins, minerals, and amino
acids for the inclusion of micro ingredients in the feed for the ideal nutrition of the animals) as outcome of the Trapaça
Operation. No administration member, director or executive in current management position has been identified.
BRF informed certain regulators and
government entities, including SEC and DOJ about the Trapaça Operation and has been cooperating with such authorities,
which are conducting their own investigations.
|
1.2.3.
|
Governance enhancement
|
The Company is cooperating with
the investigations and collaborates to the clarification of the facts. The Company has been taking actions to strengthen the compliance
with its policies, procedures and internal controls. In this sense, the Company has decided to move away, independently of the
results of the investigations, all employees mentioned in the Federal Police’s final report of the Trapaça
Operation until all facts are clarified.
The Company believes that its
efforts strengthens and consolidates its governance to ensure the highest levels of safety standards, integrity and quality.
Among the actions implemented, are:
(i) strengthening in the risk management, specially compliance, (ii) continuous strengthening of the Compliance, Internal Audit
and Internal Controls departments, (iii) review and issuance of new policies and procedures specifically related to applicable
anticorruption laws, (iv) review and enhancement of the procedures for reputational verification of business partners, (v) review
and enhancement of the processes of internal investigation, (vi) expansion of the independent reporting channel, (vii) review of
transactional controls, and (viii) review and issuance of new consequence policy for misconduct.
On March 12, 2018, a shareholder
class action lawsuit was filed against the Company, some of its former managers and one current officer before the United States
Federal District Court in the city of New York, on behalf of holders of American Depositary Receipts (“ADR”) between
April 4, 2013 and March 5, 2018. The suit alleged violations of the federal securities laws of the United States related to allegations
concerning, among other matters, Carne Fraca Operation and Trapaça Operation. On July 2, 2018, that Court
appointed the City of Birmingham Retirement and Relief System lead plaintiff in the action. On October 25, 2019, the Court granted
lead plaintiff leave to file a Fourth Amended Complaint, which was filed on November 8, 2019. On December 13, 2019, the served
defendants filed a motion to dismiss. On January 21, 2020, the Lead Plaintiff filed its opposition motion and, on February 11,
2020, the defendants filed a response.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-12
|
On
March 27, 2020, the parties reached an agreement to settle this class action by payment of an amount equivalent to R$204,436 (USD40,000),
to resolve all pending and prospective claims by individuals or entities who purchased or otherwise acquired BRF’s
ADRs between April 4, 2013 and March 5, 2018. On May 27, 2020, the amount was transferred to an escrow account in the name of the
lawyers of the Lead Plaintiff. The settlement is subject to court ratification and execution of final settlement documentation.
The agreement does not constitute
any admission of liability or wrongdoing by BRF or its executives and expressly provides that BRF denies any misconduct or that
any plaintiff has suffered any damages or was harmed by any conduct alleged in this action.
The
provision for the aforementioned amount was recognized in other operating expenses (note 27) in the first quarter of 2020.
|
1.4.
|
Coronavirus (COVID-19)
|
On January 31, 2020 the World
Health Organization announced that the COVID-19 is a global health emergency and on March 11, 2020 declared it a global pandemic.
The outbreak has triggered significant decisions from governments and private sector entities, which in addition to the potential
impact, increased the uncertainty level for the economic agents and may cause effects in the amounts recognized in the financial
statements.
BRF continues to operate its
industrial complexes, distribution centers, logistics, supply chain and administrative offices, even if temporarily and partially
under remote work regime in some of the corporate offices. Therefore, until the date of approval of the interim financial information,
there has been no relevant change in its production plan, operation and/or commercialization. Additionally, management has developed
and implemented contingency plans to maintain the operations and monitors the effects of the pandemic through a permanent multidisciplinary
monitoring committee, formed by executives, specialists in the public health area and consultants.
Due to the pandemic, the Company
has incurred in losses and additional expenditures, mainly related to idleness, personnel, prevention, control and donations, as
shown below:
|
|
April to June 2020
|
|
January to June 2020
|
Cost of sales
|
|
(173,674)
|
|
(174,288)
|
Selling expenses
|
|
(18,575)
|
|
(46,317)
|
General and administrative expenses
|
|
(25,893)
|
|
(26,066)
|
|
|
(218,142)
|
|
(246,671)
|
Aiming
to preventively strengthen its liquidity level, the Company contracted credit facilities with financial institutions in Brazil
in the aggregate amount of, approximately, R$2,430,000 and average term of one year, without any financial covenant clause. During
July and August of 2020, the Company prepaid part of the referred credit facilities in the aggregated notional and interest amount
of R$964,484 (note 33.3).
The management also understands that
the projections of results and cashflows used for the impairment test of the cash generating units are still substantially adequate
and there are no indications of possible impairment. Due to the high volatility and uncertainty around the length and the impact
of the pandemic, the Company will keep monitoring the situation and evaluating the impacts on assumptions and estimates used in
preparing our financial reporting.
During the months of November
and December of each year, the Company is impacted by seasonality in the Brazil operating segment due to Christmas and New Year’s
Celebrations. The products that are relevant contributors are: turkey, Chester®, ham and pork cuts (hind leg/pork loin).
In the International operating
segment, seasonality is due to Ramadan, which is the holy month of the Muslim calendar. The beginning of Ramadan depends on the
beginning of the moon cycle and in 2020 occurred between April 24, 2020 and May 23, 2020.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-13
|
Consequently to the pandemic, the
behavior of the Company’s seasonality has circumstantially changed, due to the decreased movement of people, redirection
of channels and changes in the consumption habits.
|
2.
|
BASIS OF PREPARATION AND PRESENTATION OF INTERIM FINANCIAL STATEMENTS
|
The condensed consolidated interim
financial information was prepared in accordance with the IAS 34 – Interim Financial Reporting issued by the International
Accounting Standards Board – IASB, as filed with the Securities and Exchange Commission of Brazil (Comissão de Valores
Mobiliários, or “CVM”).
The condensed consolidated interim
financial information is expressed in thousands of Brazilian Reais (“R$”) and the disclosures of amounts in other currencies,
when applicable, were also expressed in thousands, unless otherwise stated.
The preparation of the interim
financial information 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. The uncertainty inherent to
these judgments, assumptions and estimates could result in material adjustments to the carrying amount of certain assets and liabilities
in future periods.
Any judgments, estimates and
assumptions are reviewed at each reporting period.
The interim financial information
was prepared based on the recoverable historical cost, except for the following material items recognized in the statements of
financial position:
(i) derivative
financial instruments and non-derivative financial instruments measured at fair value;
(ii) share-based
payments and employee benefits measured at fair value;
(iii) biological
assets measured at fair value; and
(iv) assets
held for sale in the cases the fair value is lower than historical cost.
The Company prepared financial statements
under the going concern assumption and disclosed all relevant information in its explanatory notes, in order to clarify and complement
the accounting basis adopted.
|
3.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
The interim financial information
aims to provide updated information based on the last annual financial statements disclosed. Therefore, the quarterly financial
information focus on new activities, events and circumstances and do not duplicate the information previously disclosed, except
when Management judges that the maintenance of the information is relevant.
The interim financial information
was prepared based on the accounting policies and estimates calculation methodologies adopted in the preparation of the annual
financial statements for the year ended December 31, 2019 (note 3), except for the income tax expense, which was calculated according
to IAS 34 by applying the estimated annual effective tax rate to the pre-tax profit or loss for the interim period.
There were no changes on such policies
and estimates calculation methodologies. As allowed by IAS 34, Management decided not to disclose again the details of the accounting
policies adopted by the Company. Hence, the interim financial information should be read along with the annual financial statements
for the year ended December 31, 2019, in order to allow the users to further understand the Company’s financial conditions
and liquidity, as well as its capacity to generate profits and cash flows.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-14
|
|
4.
|
CASH AND CASH EQUIVALENTS
|
|
Average rate (p.a.)
|
|
|
|
|
06.30.20
|
|
12.31.19
|
Cash and bank accounts
|
|
|
|
|
|
U.S. Dollar
|
-
|
|
1,986,273
|
|
1,356,128
|
Brazilian Reais
|
-
|
|
55,886
|
|
167,051
|
Euro
|
-
|
|
61,634
|
|
71,626
|
Other currencies
|
-
|
|
1,254,978
|
|
694,982
|
|
|
|
3,358,771
|
|
2,289,787
|
Cash equivalents
|
|
|
|
|
|
In Brazilian Reais
|
|
|
|
|
|
Investment funds
|
0.27%
|
|
3,924
|
|
3,507
|
Bank deposit certificates
|
2.97%
|
|
4,104,358
|
|
879,758
|
|
|
|
4,108,282
|
|
883,265
|
In U.S. Dollar
|
|
|
|
|
|
Term deposit
|
0.90%
|
|
45,332
|
|
270,714
|
Overnight
|
0.07%
|
|
2,132,116
|
|
689,874
|
Other currencies
|
|
|
|
|
|
Term deposit
|
-
|
|
26,774
|
|
104,145
|
|
|
|
2,204,222
|
|
1,064,733
|
|
|
|
9,671,275
|
|
4,237,785
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-15
|
|
|
|
|
|
Average interest rate (p.a.)
|
|
|
|
WAM (1)
|
|
Currency
|
|
|
06.30.20
|
|
12.31.19
|
Fair value through other comprehensive income
|
|
|
|
|
|
|
|
|
|
Credit linked note
|
2.90
|
|
USD
|
|
3.85%
|
|
25,899
|
|
19,285
|
Stocks
|
-
|
|
R$ and HKD
|
|
-
|
|
42,307
|
|
26,678
|
|
|
|
|
|
|
|
68,206
|
|
45,963
|
Fair value through profit and loss
|
|
|
|
|
|
|
|
|
|
Financial treasury bills
|
3.89
|
|
R$
|
|
2.15%
|
|
309,460
|
|
396,994
|
Investment funds - FIDC BRF
|
3.46
|
|
R$
|
|
-
|
|
14,728
|
|
14,891
|
Investment funds
|
0.09
|
|
ARS
|
|
-
|
|
1,824
|
|
1,903
|
|
|
|
|
|
|
|
326,012
|
|
413,788
|
Amortized cost
|
|
|
|
|
|
|
|
|
|
Sovereign bonds and others (2)
|
2.83
|
|
AOA
|
|
3.82%
|
|
358,421
|
|
265,783
|
|
|
|
|
|
|
|
752,639
|
|
725,534
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
337,183
|
|
418,182
|
Non-current (3)
|
|
|
|
|
|
|
415,456
|
|
307,352
|
|
(1)
|
Weighted average maturity in years.
|
|
(2)
|
It’s comprised of private securities and sovereign securities
of the Angola Government and are presented net of expected losses in the amount of R$2,062 (R$1,983 on December 31, 2019).
|
|
(3)
|
Maturity
until December of 2023.
|
Additionally, as of June 30,
2020, the amount of R$88,098 (R$100,435 on December 31, 2019) was pledged as guarantee, with no use restrictions, for USD denominated
future contracts, traded on B3.
|
6.
|
TRADE ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES
|
|
|
|
06.30.20
|
|
12.31.19
|
Trade accounts receivable
|
|
|
|
Domestic customers
|
676,209
|
|
1,336,762
|
Foreign customers
|
2,773,937
|
|
2,215,050
|
|
3,450,146
|
|
3,551,812
|
( - ) Adjustment to present value
|
(6,522)
|
|
(10,121)
|
( - ) Expected credit losses
|
(647,057)
|
|
(503,848)
|
|
2,796,567
|
|
3,037,843
|
Current
|
2,790,113
|
|
3,031,046
|
Non-current
|
6,454
|
|
6,797
|
|
|
|
|
Other receivables
|
144,192
|
|
153,799
|
( - ) Adjustment to present value
|
(1,390)
|
|
(1,936)
|
( - ) Expected credit losses
|
(27,498)
|
|
(27,986)
|
|
115,304
|
|
123,877
|
Current
|
58,521
|
|
59,645
|
Non-current (1)
|
56,783
|
|
64,232
|
|
(1)
|
Weighted average maturity of 2.50 years.
|
The Company performs credit
assignments with no right of return to the BRF Clients’ Credit Rights Investment Fund (“FIDC BRF“), whose sole
purpose is to acquire credit rights arising from commercial transactions carried out between the Company and its clients in Brazil.
On June 30, 2020, FIDC BRF had an outstanding balance of R$650,761 (R$730,251 on December 31, 2019) related to such credit rights,
which are no longer recorded in the Company’s statement of financial position.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-16
|
On June 30, 2020, other receivables
are mainly represented by receivables from the sale of farms and various properties, with a balance of R$94,575 (R$109,419 on December
31, 2019).
The movements of the expected
credit losses are presented below:
|
06.30.20
|
|
12.31.19
|
Beginning balance
|
(503,848)
|
|
(508,848)
|
Provision
|
(11,790)
|
|
(23,899)
|
Write-offs
|
3,954
|
|
44,039
|
Exchange rate variation
|
(135,373)
|
|
(15,140)
|
Ending balance
|
(647,057)
|
|
(503,848)
|
The aging of trade accounts receivable
is as follows:
|
|
|
06.30.20
|
|
12.31.19
|
Not overdue
|
2,541,307
|
|
2,820,308
|
Overdue
|
|
|
|
01 to 60 days
|
234,327
|
|
143,303
|
61 to 90 days
|
23,589
|
|
19,409
|
91 to 120 days
|
16,261
|
|
3,723
|
121 to 180 days
|
9,200
|
|
3,934
|
181 to 360 days
|
12,772
|
|
20,748
|
More than 360 days
|
612,690
|
|
540,387
|
( - ) Adjustment to present value
|
(6,522)
|
|
(10,121)
|
( - ) Expected credit losses
|
(647,057)
|
|
(503,848)
|
|
2,796,567
|
|
3,037,843
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-17
|
|
|
|
|
|
06.30.20
|
|
12.31.19
|
Finished goods
|
|
3,074,295
|
|
2,257,119
|
Work in progress
|
|
171,668
|
|
149,470
|
Raw materials
|
|
954,796
|
|
803,520
|
Packaging materials
|
|
89,149
|
|
60,715
|
Secondary materials
|
|
476,762
|
|
375,744
|
Supplies
|
|
229,609
|
|
205,399
|
Imports in transit
|
|
105,470
|
|
61,021
|
Other
|
|
51,791
|
|
19,266
|
(-) Adjustment to present value
|
|
(50,322)
|
|
(44,338)
|
|
|
5,103,218
|
|
3,887,916
|
The additions and reversals
in the write-down of inventories to the net realizable value of inventories, which were recorded against the Cost of Sales, are
presented in the table below:
|
|
|
|
|
|
|
|
|
Realizable value through sale
|
|
Impaired inventories
|
|
Obsolete inventories
|
|
Total
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
Beginning balance
|
(10,712)
|
|
(65,490)
|
|
(42,526)
|
|
(60,586)
|
|
(14,919)
|
|
(12,029)
|
|
(68,157)
|
|
(138,105)
|
Additions
|
(46,146)
|
|
(81,988)
|
|
(40,638)
|
|
(153,881)
|
|
(5,284)
|
|
(9,529)
|
|
(92,068)
|
|
(245,398)
|
Reversals
|
28,888
|
|
95,881
|
|
-
|
|
-
|
|
-
|
|
-
|
|
28,888
|
|
95,881
|
Write-offs
|
-
|
|
41,156
|
|
57,640
|
|
171,637
|
|
4,413
|
|
6,360
|
|
62,053
|
|
219,153
|
Exchange rate variation
|
215
|
|
(271)
|
|
(219)
|
|
304
|
|
(328)
|
|
279
|
|
(332)
|
|
312
|
Ending balance
|
(27,755)
|
|
(10,712)
|
|
(25,743)
|
|
(42,526)
|
|
(16,118)
|
|
(14,919)
|
|
(69,616)
|
|
(68,157)
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-18
|
The live animals are represented
by poultry and pork and segregated into consumables and animals for production. The rollforward of the biological assets are presented
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
Non-current
|
|
Live
animals
|
|
Live
animals
|
|
|
|
|
|
|
|
|
Poultry
|
|
Pork
|
|
Total
|
|
Poultry
|
|
Pork
|
Forests
|
|
Total
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
Beginning
balance
|
615,685
|
|
582,853
|
|
987,354
|
|
930,280
|
|
1,603,039
|
|
1,513,133
|
|
414,668
|
|
381,236
|
|
337,804
|
|
317,185
|
328,553
|
|
362,893
|
|
1,081,025
|
|
1,061,314
|
Additions/Transfer
|
4,375,532
|
|
3,456,921
|
|
3,214,326
|
|
3,545,494
|
|
7,589,858
|
|
7,002,415
|
|
40,967
|
|
94,055
|
|
164,462
|
|
272,677
|
19,760
|
|
56,134
|
|
225,189
|
|
422,866
|
Changes
in fair value (1)
|
965,848
|
|
1,564,807
|
|
225,466
|
|
209,084
|
|
1,191,314
|
|
1,773,891
|
|
15,187
|
|
(6,516)
|
|
(83,491)
|
|
(174,903)
|
-
|
|
(28,119)
|
|
(68,304)
|
|
(209,538)
|
Harvest
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
(31,368)
|
|
(48,890)
|
|
(31,368)
|
|
(48,890)
|
Write-off
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
(37)
|
|
(11,810)
|
|
(37)
|
|
(11,810)
|
Transfer
between current and non-current
|
29,002
|
|
49,250
|
|
44,059
|
|
77,155
|
|
73,061
|
|
126,405
|
|
(29,002)
|
|
(49,250)
|
|
(44,059)
|
|
(77,155)
|
-
|
|
-
|
|
(73,061)
|
|
(126,405)
|
Transfer
between held for sale
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
109
|
|
(1,655)
|
|
109
|
|
(1,655)
|
Transfer
to inventories
|
(5,261,831)
|
|
(5,033,965)
|
|
(3,323,771)
|
|
(3,774,659)
|
|
(8,585,602)
|
|
(8,808,624)
|
|
-
|
|
-
|
|
-
|
|
-
|
-
|
|
-
|
|
-
|
|
-
|
Exchange
variation
|
11,255
|
|
(4,181)
|
|
-
|
|
-
|
|
11,255
|
|
(4,181)
|
|
12,447
|
|
(4,857)
|
|
-
|
|
-
|
-
|
|
-
|
|
12,447
|
|
(4,857)
|
Ending
balance
|
735,491
|
|
615,685
|
|
1,147,434
|
|
987,354
|
|
1,882,925
|
|
1,603,039
|
|
454,267
|
|
414,668
|
|
374,716
|
|
337,804
|
317,017
|
|
328,553
|
|
1,146,000
|
|
1,081,025
|
|
(1)
|
The change in the fair value of biological assets includes depreciation
of breeders and depletion of forests in the amount of R$420,747 (R$798,239 on December 31, 2019).
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-19
|
The estimated balances and quantities
of live animal are set forth below:
|
|
|
06.30.20
|
|
12.31.19
|
|
Quantity
(thousand of heads)
|
|
Value
|
|
Quantity
(thousand of heads)
|
|
Value
|
Consumable biological assets
|
|
|
|
|
|
|
|
Immature poultry
|
187,799
|
|
735,491
|
|
189,602
|
|
615,685
|
Immature pork
|
4,200
|
|
1,147,434
|
|
4,098
|
|
987,354
|
Total current
|
191,999
|
|
1,882,925
|
|
193,700
|
|
1,603,039
|
|
|
|
|
|
|
|
|
Production biological assets
|
|
|
|
|
|
|
|
Immature poultry
|
6,663
|
|
160,006
|
|
7,042
|
|
160,415
|
Mature poultry
|
11,552
|
|
294,261
|
|
11,554
|
|
254,253
|
Immature pork
|
90
|
|
86,346
|
|
211
|
|
77,027
|
Mature pork
|
455
|
|
288,370
|
|
455
|
|
260,777
|
Total non-current
|
18,760
|
|
828,983
|
|
19,262
|
|
752,472
|
|
210,759
|
|
2,711,908
|
|
212,962
|
|
2,355,511
|
As of June 30, 2020, the Company
has forests pledged as collateral for financing and tax/civil contingencies in the amount of R$84,245 (R$62,408 at December 31,
2019).
|
|
|
06.30.20
|
|
12.31.19
|
Recoverable taxes
|
|
|
|
ICMS ("State VAT")
|
1,710,718
|
|
1,635,664
|
PIS and COFINS ("Federal Taxes to Social Fund Programs")
|
3,158,382
|
|
2,990,313
|
IPI ("Federal VAT")
|
869,245
|
|
848,865
|
INSS ("Brazilian Social Security")
|
257,031
|
|
255,967
|
Other
|
43,632
|
|
80,144
|
(-) Impairment on recoverable taxes
|
(179,544)
|
|
(167,674)
|
|
5,859,464
|
|
5,643,279
|
Current
|
609,955
|
|
473,732
|
Non-current
|
5,249,509
|
|
5,169,547
|
|
|
|
|
Recoverable income tax and social contribution
|
|
|
|
Income and social contribution tax ("IR/CS")
|
200,007
|
|
430,778
|
(-) Impairment on recoverable taxes
|
(9,029)
|
|
(9,029)
|
|
190,978
|
|
421,749
|
Current
|
93,781
|
|
152,486
|
Non-current
|
97,197
|
|
269,263
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-20
|
The rollforward of the impairment
on recoverable taxes are set forth below:
|
|
|
ICMS
|
|
PIS
and COFINS
|
|
IR/CS
|
|
IPI
|
|
Other
|
|
Total
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
Beginning
balance
|
(141,193)
|
|
(140,970)
|
|
(16,922)
|
|
(17,418)
|
|
(9,029)
|
|
(9,029)
|
|
(3,818)
|
|
(13,562)
|
|
(5,741)
|
|
(3,975)
|
|
(176,703)
|
|
(184,954)
|
Additions
|
(25,724)
|
|
(45,079)
|
|
-
|
|
(496)
|
|
-
|
|
-
|
|
(263)
|
|
-
|
|
-
|
|
(1,780)
|
|
(25,987)
|
|
(47,355)
|
Write-offs
|
5,654
|
|
44,856
|
|
2,694
|
|
992
|
|
-
|
|
-
|
|
2,097
|
|
9,744
|
|
3,677
|
|
2
|
|
14,122
|
|
55,594
|
Exchange
rate variation
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(5)
|
|
12
|
|
(5)
|
|
12
|
Ending
balance
|
(161,263)
|
|
(141,193)
|
|
(14,228)
|
|
(16,922)
|
|
(9,029)
|
|
(9,029)
|
|
(1,984)
|
|
(3,818)
|
|
(2,069)
|
|
(5,741)
|
|
(188,573)
|
|
(176,703)
|
|
10.
|
INCOME AND SOCIAL CONTRIBUTION TAX
|
|
10.1.
|
Deferred income
and social contribution taxes
|
|
|
|
|
|
06.30.20
|
|
12.31.19
|
Assets
|
|
|
|
Tax loss carryforwards (corporate income tax)
|
1,828,398
|
|
1,785,027
|
Negative calculation basis (social contribution tax)
|
678,953
|
|
682,175
|
|
|
|
|
Temporary differences - Assets
|
|
|
|
Provisions for tax, civil and labor risks
|
493,962
|
|
477,538
|
Suspended collection taxes
|
13,409
|
|
31,069
|
Expected credit losses
|
179,231
|
|
135,374
|
Impairment on tax credits
|
66,771
|
|
60,771
|
Provision for other obligations
|
83,578
|
|
93,619
|
Employees' profit sharing
|
49,551
|
|
66,166
|
Write-down to net realizable value of inventories
|
15,003
|
|
18,718
|
Employees' benefits plan
|
212,068
|
|
202,228
|
Difference on tax x accounting basis for leases
|
58,950
|
|
37,492
|
Unrealized losses on fair value measurement
|
193,200
|
|
-
|
Adjustment to estimated annual effective tax rate - IAS 34
|
275,051
|
|
-
|
Other temporary differences
|
33,246
|
|
66,458
|
|
4,181,371
|
|
3,656,635
|
|
|
|
|
Temporary differences - Liabilities
|
|
|
|
Unrealized fair value gains
|
-
|
|
(11,998)
|
Difference on tax x accounting basis for goodwill amortization
|
(320,160)
|
|
(319,592)
|
Difference on tax x accounting basis for depreciation (useful life)
|
(829,223)
|
|
(802,844)
|
Business combination - Sadia (1)
|
(691,855)
|
|
(640,318)
|
Unrealized gains on derivatives
|
(171,167)
|
|
(43,428)
|
Other - exchange rate variation
|
(85,957)
|
|
(69,142)
|
Other temporary differences
|
(23,539)
|
|
(8,761)
|
|
(2,121,901)
|
|
(1,896,083)
|
Total deferred tax
|
2,059,470
|
|
1,760,552
|
|
|
|
|
Total Assets
|
2,180,059
|
|
1,845,862
|
Total Liabilities
|
(120,589)
|
|
(85,310)
|
|
2,059,470
|
|
1,760,552
|
|
(1)
|
The deferred tax asset on the Sadia business combination was recorded
on the amortization difference between the accounting and tax goodwill calculated as of the purchase price allocation date. The
deferred tax liability on the Sadia business combination is substantially represented by the allocation of goodwill to property,
plant and equipment, brands and contingent liabilities.
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-21
|
The roll-forward of deferred
tax assets is set forth below:
|
|
|
|
|
January to June 2020
|
|
January to December 2019
|
|
|
|
|
Beginning balance
|
1,760,552
|
|
1,453,878
|
Deferred income and social contribution recognized in the statement of income
|
(76,197)
|
|
220,586
|
Deferred income and social contribution recognized in other comprehensive income
|
374,855
|
|
60
|
Deferred income and social contribution related to discontinued operations
|
-
|
|
116,883
|
Other
|
260
|
|
(30,855)
|
Ending balance
|
2,059,470
|
|
1,760,552
|
|
10.2.
|
Estimated
period of realization
|
Deferred tax assets arising
from temporary differences will be realized as they are settled or realized. The period of settlement or realization of such differences
is subject to externalities and is linked to several factors that are not under the control of Management.
In estimating the realization
of deferred tax credits recorded on tax losses and negative social contribution basis, Management considers its budget and strategic
plans, adjusted based on the estimates of the main tax additions and exclusions, which were approved by the Board of Directors,
as recommended by the Company’s Fiscal Council. Based on this estimate, Management believes that it is probable that these
deferred tax credits will be realized, as shown below:
|
|
2021
|
100,037
|
2022
|
159,307
|
2023
|
267,209
|
2024
|
291,568
|
2025 to 2027
|
945,298
|
2028 onwards
|
743,932
|
|
2,507,351
|
The deferred tax credits on
tax losses and negative social contribution basis related to the parent company and its subsidiaries domiciled in Brazil do not
expire.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-22
|
|
10.3.
|
Income
and social contribution taxes reconciliation
|
|
|
|
April to June 2020
|
|
January to June 2020
|
|
April to June 2019
|
|
January to June 2019
|
|
|
|
|
|
|
|
|
Income (loss) before income and social contribution taxes – continued operations
|
396,884
|
|
345,094
|
|
310,719
|
|
20,652
|
Nominal tax rate
|
34%
|
|
34%
|
|
34%
|
|
34%
|
Credit (expense) at nominal rate
|
(134,941)
|
|
(117,332)
|
|
(105,644)
|
|
(7,022)
|
Reconciling items
|
|
|
|
|
|
|
|
Income from associates and joint ventures
|
-
|
|
-
|
|
(12,635)
|
|
(16,691)
|
Difference of tax rates on results of foreign subsidiaries
|
435,282
|
|
998,676
|
|
35,600
|
|
106,590
|
Difference of funcional currency of foreign subsidiaries
|
283,238
|
|
1,053,917
|
|
(13,439)
|
|
(17,333)
|
Deferred tax assets not recognized (1)
|
(958,804)
|
|
(2,291,220)
|
|
26,427
|
|
(27,909)
|
Penalties
|
(2,117)
|
|
(6,181)
|
|
886
|
|
702
|
Investment grant
|
8,980
|
|
19,514
|
|
30,689
|
|
30,689
|
Estimated annual effective tax rate - IAS 34
|
279,691
|
|
275,051
|
|
(201,796)
|
|
(4,837)
|
Reversal (recognition) of provision with no deferred tax constituted
|
-
|
|
-
|
|
109,251
|
|
(21,139)
|
Other permanent differences
|
(1,084)
|
|
(8,622)
|
|
10,965
|
|
14,043
|
|
(89,755)
|
|
(76,197)
|
|
(119,696)
|
|
57,093
|
Current income tax
|
(21,983)
|
|
(38,332)
|
|
(62,738)
|
|
(86,838)
|
Deferred income tax
|
(67,772)
|
|
(37,865)
|
|
(56,958)
|
|
143,931
|
|
(1)
|
Amount related to the non-recognition of deferred tax on tax losses
and negative basis in the amount of R$6,738,883, due to limited capacity of realization (note 10.2).
|
The Company’s management
determined that the total profits recorded by the holdings of its wholly owned subsidiaries abroad will not be redistributed. Such
funds will be used for investments in the wholly owned subsidiaries.
Income tax returns in Brazil are subject
to review by the tax authorities for a period of five years from the date of their delivery. The Company may be subject to additional
collection of taxes, fines and interest as a result of these reviews. The results obtained by wholly owned subsidiaries abroad
are subject to taxation in accordance with the tax laws of each country.
The rollforward of the judicial
deposits is set forth below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
|
|
Labor
|
|
Civil, commercial and other
|
|
Total
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
Beginning balance
|
244,977
|
|
288,377
|
|
301,808
|
|
351,648
|
|
28,965
|
|
29,073
|
|
575,750
|
|
669,098
|
Additions
|
-
|
|
79,702
|
|
63,168
|
|
176,406
|
|
4,414
|
|
4,373
|
|
67,582
|
|
260,481
|
Reversals
|
(10,747)
|
|
(9,440)
|
|
(22,308)
|
|
(36,461)
|
|
(61)
|
|
(382)
|
|
(33,116)
|
|
(46,283)
|
Write-offs
|
(907)
|
|
(123,371)
|
|
(55,866)
|
|
(198,821)
|
|
(357)
|
|
(4,825)
|
|
(57,130)
|
|
(327,017)
|
Interest
|
2,863
|
|
9,709
|
|
4,183
|
|
9,056
|
|
406
|
|
726
|
|
7,452
|
|
19,491
|
Exchange rate variation
|
-
|
|
-
|
|
11
|
|
(20)
|
|
-
|
|
-
|
|
11
|
|
(20)
|
Ending balance
|
236,186
|
|
244,977
|
|
290,996
|
|
301,808
|
|
33,367
|
|
28,965
|
|
560,549
|
|
575,750
|
The Company owns other investments
in the amount of R$10,049 (R$7,676 as of December 31, 2019).
On June 30, 2020, these associates,
affiliates and joint ventures do not have any restriction to amortize their loans or advances to the Company.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-23
|
|
13.
|
PROPERTY, PLANT AND EQUIPMENT, NET
|
The rollforward of property,
plant and equipment is set forth below:
|
|
|
|
|
Weighted average depreciation rate (p.a.)
|
|
12.31.19
|
|
Additions
|
|
Disposals
|
|
Transfers (1)
|
|
Exchange rate variation
|
|
06.30.20
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
603,479
|
|
1,321
|
|
(6,514)
|
|
20,303
|
|
12,398
|
|
630,987
|
Buildings, facilities and improvements
|
|
|
10,148,798
|
|
133,333
|
|
(51,720)
|
|
76,936
|
|
202,541
|
|
10,509,888
|
Machinery and equipment
|
|
|
8,177,047
|
|
19,755
|
|
(54,369)
|
|
116,851
|
|
128,623
|
|
8,387,907
|
Furniture and fixtures
|
|
|
140,439
|
|
193
|
|
(640)
|
|
8,621
|
|
16,057
|
|
164,670
|
Vehicles
|
|
|
213,199
|
|
19,530
|
|
(51,994)
|
|
(1,360)
|
|
33,010
|
|
212,385
|
Construction in progress
|
|
|
348,907
|
|
264,438
|
|
-
|
|
(259,810)
|
|
2,359
|
|
355,894
|
Advances to suppliers
|
|
|
528
|
|
1,743
|
|
-
|
|
139
|
|
111
|
|
2,521
|
|
|
|
19,632,397
|
|
440,313
|
|
(165,237)
|
|
(38,320)
|
|
395,099
|
|
20,264,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land (2)
|
22.31%
|
|
(5,086)
|
|
(3,107)
|
|
605
|
|
(1,799)
|
|
(727)
|
|
(10,114)
|
Buildings, facilities and improvements
|
9.06%
|
|
(3,263,801)
|
|
(336,046)
|
|
40,046
|
|
(10,968)
|
|
(49,301)
|
|
(3,620,070)
|
Machinery and equipment
|
6.60%
|
|
(3,950,250)
|
|
(247,080)
|
|
30,368
|
|
10,703
|
|
(47,715)
|
|
(4,203,974)
|
Furniture and fixtures
|
6.67%
|
|
(71,779)
|
|
(5,807)
|
|
496
|
|
(745)
|
|
(5,379)
|
|
(83,214)
|
Vehicles
|
27.34%
|
|
(64,592)
|
|
(36,153)
|
|
39,287
|
|
(2,823)
|
|
(17,002)
|
|
(81,283)
|
|
|
|
(7,355,508)
|
|
(628,193)
|
|
110,802
|
|
(5,632)
|
|
(120,124)
|
|
(7,998,655)
|
|
|
|
12,276,889
|
|
(187,880)
|
|
(54,435)
|
|
(43,952)
|
|
274,975
|
|
12,265,597
|
|
(1)
|
Refers to the transfer
of R$39,532 for intangible assets, R$4,413 to held for sale and R$7 for biological assets.
|
|
(2)
|
Land depreciation refers
to right-of-use assets. The amount of R$2,095 of depreciation was recognized in the cost of formation of forests and will be realized
in the result according to the depletion (note 18.1).
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-24
|
|
|
|
|
|
Weighted average depreciation rate (p.a.)
|
|
12.31.18
|
|
Initial adoption
IFRS 16
|
|
Additions
|
|
Disposals
|
|
Transfers (1)
|
|
Exchange rate variation
|
|
12.31.19
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
536,878
|
|
23,453
|
|
1,986
|
|
(5,879)
|
|
50,980
|
|
(3,939)
|
|
603,479
|
Buildings, facilities and improvements
|
|
|
7,590,545
|
|
2,278,982
|
|
219,145
|
|
(149,866)
|
|
196,829
|
|
13,163
|
|
10,148,798
|
Machinery and equipment
|
|
|
8,272,920
|
|
1,182
|
|
45,682
|
|
(212,637)
|
|
83,812
|
|
(13,912)
|
|
8,177,047
|
Furniture and fixtures
|
|
|
159,902
|
|
-
|
|
2,834
|
|
(25,264)
|
|
3,515
|
|
(548)
|
|
140,439
|
Vehicles
|
|
|
17,402
|
|
94,065
|
|
119,520
|
|
(9,959)
|
|
(10,502)
|
|
2,673
|
|
213,199
|
Construction in progress
|
|
|
409,696
|
|
-
|
|
367,148
|
|
-
|
|
(427,737)
|
|
(200)
|
|
348,907
|
Advances to suppliers
|
|
|
13,425
|
|
-
|
|
898
|
|
(1,173)
|
|
(16,959)
|
|
4,337
|
|
528
|
|
|
|
17,000,768
|
|
2,397,682
|
|
757,213
|
|
(404,778)
|
|
(120,062)
|
|
1,574
|
|
19,632,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land (2)
|
22.31%
|
|
-
|
|
-
|
|
(5,134)
|
|
27
|
|
-
|
|
21
|
|
(5,086)
|
Buildings, facilities and improvements
|
5.83%
|
|
(2,602,188)
|
|
-
|
|
(667,622)
|
|
26,616
|
|
(15,167)
|
|
(5,440)
|
|
(3,263,801)
|
Machinery and equipment
|
6.57%
|
|
(3,620,421)
|
|
-
|
|
(527,007)
|
|
183,168
|
|
18,481
|
|
(4,471)
|
|
(3,950,250)
|
Furniture and fixtures
|
6.67%
|
|
(71,062)
|
|
-
|
|
(10,908)
|
|
6,331
|
|
2,665
|
|
1,195
|
|
(71,779)
|
Vehicles
|
32.37%
|
|
(10,099)
|
|
-
|
|
(59,348)
|
|
1,718
|
|
3,579
|
|
(442)
|
|
(64,592)
|
|
|
|
(6,303,770)
|
|
-
|
|
(1,270,019)
|
|
217,860
|
|
9,558
|
|
(9,137)
|
|
(7,355,508)
|
|
|
|
10,696,998
|
|
2,397,682
|
|
(512,806)
|
|
(186,918)
|
|
(110,504)
|
|
(7,563)
|
|
12,276,889
|
|
(1)
|
Refers to the transfer
of R$52,507 for intangible assets, R$34,466 to held for sale and R$23,531 for biological assets.
|
|
(2)
|
Land depreciation refers
to right-of-use assets. The amount of R$4,285 of depreciation was recognized in the cost of formation of forests and will be realized
in the result according to the depletion (note 18.1).
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-25
|
The amount of capitalized borrowing
costs during the six-month period ended on June 30, 2020 was of R$8,388 (R$10,543 in the same period of the previous year) and
during the three-month period ended on June 30, 2020 was of R$4,330 (R$5,219 in the same period of the previous year).
The weighted average rate used
to determine the amount of borrowing costs subject to capitalization was 6.09% p.a. (2.32% in the same period of the previous year).
The book value of the property,
plant and equipment items that are pledged as collateral for transactions of different natures are set forth below:
|
|
|
|
|
|
|
Type of collateral
|
|
06.30.20
|
|
12.31.19
|
Land
|
|
Financial/Tax
|
|
225,127
|
|
221,727
|
Buildings, facilities and improvements
|
|
Financial/Tax
|
|
1,487,465
|
|
1,499,808
|
Machinery and equipment
|
|
Financial/Labor/Tax/Civil
|
|
1,459,453
|
|
1,488,889
|
Furniture and fixtures
|
|
Financial/Tax
|
|
15,364
|
|
14,090
|
Vehicles
|
|
Financial/Tax
|
|
358
|
|
369
|
|
|
|
|
3,187,767
|
|
3,224,883
|
The intangible assets rollforward
is set forth below:
|
|
|
|
|
|
|
|
|
Weighted average amortization rate (p.a.)
|
|
12.31.19
|
|
Additions
|
|
Disposals
|
|
Transfers
|
|
Exchange rate variation
|
|
06.30.20
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
2,713,602
|
|
-
|
|
-
|
|
-
|
|
298,138
|
|
3,011,740
|
Trademarks
|
|
|
1,322,262
|
|
-
|
|
-
|
|
-
|
|
30,333
|
|
1,352,595
|
Non-compete agreement
|
|
|
99,229
|
|
-
|
|
(379)
|
|
-
|
|
9,485
|
|
108,335
|
Outgrowers relationship
|
|
|
14,604
|
|
-
|
|
-
|
|
-
|
|
-
|
|
14,604
|
Patents
|
|
|
6,305
|
|
-
|
|
(106)
|
|
-
|
|
6
|
|
6,205
|
Customer relationship
|
|
|
892,758
|
|
-
|
|
-
|
|
-
|
|
255,491
|
|
1,148,249
|
Software
|
|
|
523,615
|
|
74,453
|
|
(35,771)
|
|
71,744
|
|
10,437
|
|
644,478
|
Intangible in progress
|
|
|
12,151
|
|
57,380
|
|
-
|
|
(40,752)
|
|
208
|
|
28,987
|
|
|
|
5,584,526
|
|
131,833
|
|
(36,256)
|
|
30,992
|
|
604,098
|
|
6,315,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-compete agreement
|
27.10%
|
|
(74,190)
|
|
(10,285)
|
|
379
|
|
-
|
|
(6,051)
|
|
(90,147)
|
Outgrowers relationship
|
13.09%
|
|
(12,744)
|
|
(593)
|
|
-
|
|
-
|
|
-
|
|
(13,337)
|
Patents
|
19.05%
|
|
(5,626)
|
|
(237)
|
|
106
|
|
-
|
|
(14)
|
|
(5,771)
|
Customer relationship
|
7.34%
|
|
(242,263)
|
|
(39,177)
|
|
-
|
|
-
|
|
(76,955)
|
|
(358,395)
|
Software
|
32.06%
|
|
(341,624)
|
|
(64,662)
|
|
35,771
|
|
8,540
|
|
(8,677)
|
|
(370,652)
|
|
|
|
(676,447)
|
|
(114,954)
|
|
36,256
|
|
8,540
|
|
(91,697)
|
|
(838,302)
|
|
|
|
4,908,079
|
|
16,879
|
|
-
|
|
39,532
|
|
512,401
|
|
5,476,891
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average amortization rate (p.a.)
|
|
12.31.18
|
|
Initial adoption
IFRS 16
|
|
Additions
|
|
Disposals
|
|
Transfers
|
|
Exchange rate variation
|
|
12.31.19
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill for future profitability
|
|
|
2,694,967
|
|
-
|
|
-
|
|
-
|
|
-
|
|
18,635
|
|
2,713,602
|
Trademarks
|
|
|
1,336,162
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(13,900)
|
|
1,322,262
|
Non-compete agreement
|
|
|
90,012
|
|
-
|
|
8,105
|
|
-
|
|
-
|
|
1,112
|
|
99,229
|
Outgrowers relationship
|
|
|
15,022
|
|
-
|
|
-
|
|
(418)
|
|
-
|
|
-
|
|
14,604
|
Patents
|
|
|
6,066
|
|
-
|
|
-
|
|
-
|
|
235
|
|
4
|
|
6,305
|
Customer relationship
|
|
|
896,039
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(3,281)
|
|
892,758
|
Software
|
|
|
491,830
|
|
61
|
|
38,259
|
|
(95,275)
|
|
87,576
|
|
1,164
|
|
523,615
|
Intangible in progress
|
|
|
-
|
|
-
|
|
47,422
|
|
-
|
|
(35,294)
|
|
23
|
|
12,151
|
|
|
|
5,530,098
|
|
61
|
|
93,786
|
|
(95,693)
|
|
52,517
|
|
3,757
|
|
5,584,526
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-compete agreement
|
33.67%
|
|
(45,802)
|
|
-
|
|
(27,811)
|
|
-
|
|
-
|
|
(577)
|
|
(74,190)
|
Outgrowers relationship
|
13.02%
|
|
(11,552)
|
|
-
|
|
(1,546)
|
|
354
|
|
-
|
|
-
|
|
(12,744)
|
Patents
|
19.05%
|
|
(5,149)
|
|
-
|
|
(470)
|
|
-
|
|
-
|
|
(7)
|
|
(5,626)
|
Customer relationship
|
7.31%
|
|
(172,450)
|
|
-
|
|
(67,137)
|
|
-
|
|
-
|
|
(2,676)
|
|
(242,263)
|
Software
|
23.18%
|
|
(275,747)
|
|
-
|
|
(141,925)
|
|
77,027
|
|
(10)
|
|
(969)
|
|
(341,624)
|
|
|
|
(510,700)
|
|
-
|
|
(238,889)
|
|
77,381
|
|
(10)
|
|
(4,229)
|
|
(676,447)
|
|
|
|
5,019,398
|
|
61
|
|
(145,103)
|
|
(18,312)
|
|
52,507
|
|
(472)
|
|
4,908,079
|
During the six-month period
ended on June 30, 2020, Management did not identify any event that could indicate an impairment of such assets.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-27
|
|
|
|
|
|
Charges
(p.a.)
|
|
Weighted
average
interest rate (p.a.)
|
|
WAMT
(1)
|
|
12.31.19
|
|
Borrowing
|
|
Amortization
|
|
Interest
paid
|
|
Interest
accrued
|
|
Exchange
rate variation
|
|
06.30.20
|
Local
currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working
capital
|
Fixed
/ CDI
|
|
3.74%
(6.07% on 12.31.19)
|
|
0.9
|
|
3,312,639
|
|
800,000
|
|
(930,218)
|
|
(96,045)
|
|
101,284
|
|
-
|
|
3,187,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificate
of agribusiness receivables (2)
|
CDI
/ IPCA
|
|
5.03%
(6.73% on 12.31.19)
|
|
2.0
|
|
1,597,447
|
|
-
|
|
-
|
|
(23,819)
|
|
42,575
|
|
-
|
|
1,616,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development
bank credit lines
|
Fixed
/ Selic / TJLP
|
|
(5.09%
on 12.31.19)
|
|
-
|
|
45,516
|
|
-
|
|
(45,470)
|
|
(427)
|
|
381
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debentures
|
CDI
/ IPCA
|
|
5.63%
(7.40% on 12.31.19)
|
|
5.5
|
|
755,760
|
|
-
|
|
-
|
|
(20,579)
|
|
21,835
|
|
-
|
|
757,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Export
credit facility (3)
|
Fixed
/ CDI / USD
|
|
4.58%
|
|
5.4
|
|
1,612,365
|
|
1,492,084
|
|
-
|
|
(45,408)
|
|
79,214
|
|
483,672
|
|
3,621,927
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special
program asset restructuring
|
IGPM
|
|
(12.22%
on 12.31.19)
|
|
-
|
|
284,308
|
|
-
|
|
(287,621)
|
|
(5,142)
|
|
8,455
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
incentives
|
Fixed
|
|
2.40%
(2.40% on 12.31.19)
|
|
-
|
|
5,720
|
|
34,532
|
|
-
|
|
(338)
|
|
367
|
|
-
|
|
40,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,613,755
|
|
2,326,616
|
|
(1,263,309)
|
|
(191,758)
|
|
254,111
|
|
483,672
|
|
9,223,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds
|
Fixed
/ USD / EUR
|
|
4.37%
(4.36% on 12.31.19)
|
|
5.5
|
|
10,407,484
|
|
(275)
|
|
-
|
|
(326,755)
|
|
316,917
|
|
3,799,257
|
|
14,196,628
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Export
credit facility
|
Fixed
/ LIBOR / USD
|
|
4.13%
(5.77% on 12.31.19)
|
|
2.7
|
|
407,275
|
|
-
|
|
(118,113)
|
|
(12,782)
|
|
10,328
|
|
127,616
|
|
414,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advances
for foreign exchange rate contracts
|
Fixed
/ USD
|
|
3.88
|
|
0.8
|
|
-
|
|
529,211
|
|
-
|
|
-
|
|
4,262
|
|
17,865
|
|
551,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working
capital
|
Fixed
/ TRY
|
|
10.19%
(16.56% on 12.31.19)
|
|
1.4
|
|
191,765
|
|
502,233
|
|
(258,346)
|
|
(22,146)
|
|
23,294
|
|
41,374
|
|
478,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,006,524
|
|
1,031,169
|
|
(376,459)
|
|
(361,683)
|
|
354,801
|
|
3,986,112
|
|
15,640,464
|
|
|
|
|
|
|
|
18,620,279
|
|
3,357,785
|
|
(1,639,768)
|
|
(553,441)
|
|
608,912
|
|
4,469,784
|
|
24,863,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
3,132,029
|
|
|
|
|
|
|
|
|
|
|
|
4,071,950
|
Non-current
|
|
|
|
|
|
|
15,488,250
|
|
|
|
|
|
|
|
|
|
|
|
20,791,601
|
|
(1)
|
Weighted average maturity
in years.
|
|
(2)
|
The Certificate of Agribusiness
Receivable (“CRA”) issued by the Company are backed by receivables of BRF S.A. from certain subsidiaries abroad.
|
|
(3)
|
The Export Credit Facility
was issued in Reais simultaneously and in connection with a foreign exchange rate swap, resulting essentially in a net cash
flow in U.S. Dollars. As the transactions are inseparable, both are recorded together under Loans and Borrowings by their
amortized cost.
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges (p.a.)
|
|
Weighted average
interest rate (p.a.)
|
|
WAMT (1)
|
|
12.31.18
|
|
Borrowing
|
|
Amortization
|
|
Interest paid
|
|
Interest accrued
|
|
Exchange rate
variation
|
|
12.31.19
|
Local
currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working
capital
|
Pre-fixed
/ CDI
|
|
6.07%
(7.78% on 12.31.18)
|
|
1.2
|
|
5,863,023
|
|
1,193,616
|
|
(3,745,967)
|
|
(421,600)
|
|
423,567
|
|
-
|
|
3,312,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificate
of agribusiness receivables (2)
|
CDI
/ IPCA
|
|
6.73%
(6.08% on 12.31.18)
|
|
2.5
|
|
2,597,502
|
|
-
|
|
(999,905)
|
|
(139,633)
|
|
139,483
|
|
-
|
|
1,597,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development
bank credit lines
|
Pre-fixed
/ Selic / TJLP
|
|
5.09%
(6.16% on 12.31.18)
|
|
0.3
|
|
264,545
|
|
-
|
|
(223,077)
|
|
(7,005)
|
|
11,053
|
|
-
|
|
45,516
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debentures
|
CDI
/ IPCA
|
|
7.90%
|
|
6.2
|
|
-
|
|
742,250
|
|
(15)
|
|
(16,372)
|
|
29,897
|
|
-
|
|
755,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Export
credit facility
|
CDI
|
|
5.83%
(9.02% on 12.31.18)
|
|
8.7
|
|
1,625,327
|
|
(22,403)
|
|
(31,700)
|
|
(108,845)
|
|
149,986
|
|
-
|
|
1,612,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special
program asset restructuring
|
IGPM
|
|
12.22%
(12.45% on 12.31.18)
|
|
0.2
|
|
273,426
|
|
-
|
|
-
|
|
(8,554)
|
|
19,436
|
|
-
|
|
284,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
incentives
|
Pre-fixed
|
|
2.40%
(2.40% on 12.31.18)
|
|
-
|
|
3,317
|
|
70,203
|
|
(67,805)
|
|
(570)
|
|
575
|
|
-
|
|
5,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,627,140
|
|
1,983,666
|
|
(5,068,469)
|
|
(702,579)
|
|
773,997
|
|
-
|
|
7,613,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds
|
Pre-Fixed
+ e.r. USD and EUR
|
|
4.36%
(4.07% on 12.31.18)
|
|
6.0
|
|
9,746,446
|
|
3,082,040
|
|
(2,906,635)
|
|
(504,774)
|
|
648,991
|
|
341,416
|
|
10,407,484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Export
credit facility
|
LIBOR
+ e.r. USD
|
|
5.54%
(2.47% on 12.31.18)
|
|
3.2
|
|
1,383,192
|
|
-
|
|
(948,646)
|
|
(31,277)
|
|
28,937
|
|
(24,931)
|
|
407,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advances
for foreign exchange rate contracts
|
Pre-Fixed
+ e.r. USD
|
|
(4.67%
on 12.31.18)
|
|
-
|
|
214,192
|
|
92,750
|
|
(327,469)
|
|
(10,249)
|
|
12,831
|
|
17,945
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working
capital
|
Pre-Fixed
+ e.r. TRY
|
|
16.56%
(21.91% on 12.31.18)
|
|
1.1
|
|
194,474
|
|
240,702
|
|
(229,919)
|
|
(41,974)
|
|
42,237
|
|
(13,755)
|
|
191,765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,538,304
|
|
3,415,492
|
|
(4,412,669)
|
|
(588,274)
|
|
732,996
|
|
320,675
|
|
11,006,524
|
|
|
|
|
|
|
|
22,165,444
|
|
5,399,158
|
|
(9,481,138)
|
|
(1,290,853)
|
|
1,506,993
|
|
320,675
|
|
18,620,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
4,547,389
|
|
|
|
|
|
|
|
|
|
|
|
3,132,029
|
Non-current
|
|
|
|
|
|
|
17,618,055
|
|
|
|
|
|
|
|
|
|
|
|
15,488,250
|
|
(1)
|
Weighted average maturity
in years.
|
|
(2)
|
The Certificate of Agribusiness
Receivable (“CRA”) issued by the Company are backed by receivables of BRF S.A. from certain subsidiaries abroad.
|
As of December 31, 2019 and
June 30, 2020, the Company did not have any financial covenant clauses related to its loans and borrowings.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-29
|
|
15.1.
|
Revolving
Credit Facility
|
With the purpose of maintaining
a prudential and sustainable short-term liquidity position, continuing with the strategy of extending its average debt maturity
and reducing the cost of debt, on December 27, 2019, the Company retained from Banco do Brasil a revolving credit facility up to
the limit of R$1,500,000 for a period of three years. The referenced credit facility can be withdrawn totally or partially, at
the Company’s will, whenever necessary. As of June 30, 2020, the facility was available, but unused.
|
15.2.
|
Loans
and borrowings maturity schedule
|
The maturity schedule of the loans
and borrowings is as follows:
|
|
|
|
|
06.30.20
|
Current
|
4,071,950
|
Non-current
|
20,791,601
|
July to December 2021
|
1,959,689
|
2022
|
3,600,786
|
2023
|
3,157,739
|
2024
|
3,159,866
|
2025 onwards
|
8,913,521
|
|
24,863,551
|
|
|
|
|
|
06.30.20
|
|
12.31.19
|
Total of loans and financing
|
24,863,551
|
|
18,620,279
|
Mortgage guarantees
|
40,281
|
|
51,237
|
Related to FINEM-BNDES
|
-
|
|
45,516
|
Related to tax incentives and other
|
40,281
|
|
5,721
|
On
June 30, 2020, the amount of bank guarantees contracted by the Company was of R$593,028 (R$666,335
as of December 31, 2019) which were offered mainly in litigations involving the Company’s use of tax credits. These guarantees
have an average cost of 1.79% p.a. (1.77% p.a. as of December 31, 2019).
|
16.
|
TRADE ACCOUNTS PAYABLE
|
|
|
|
|
|
06.30.20
|
|
12.31.19
|
Domestic suppliers
|
|
|
|
Third parties
|
5,472,974
|
|
4,930,424
|
|
5,472,974
|
|
4,930,424
|
|
|
|
|
Foreign suppliers
|
|
|
|
Third parties
|
1,320,280
|
|
915,611
|
|
1,320,280
|
|
915,611
|
|
|
|
|
(-) Adjustment to present value
|
(60,041)
|
|
(49,269)
|
|
6,733,213
|
|
5,796,766
|
|
|
|
|
Current
|
6,725,495
|
|
5,784,419
|
Non-current
|
7,718
|
|
12,347
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-30
|
On
the trade accounts payable balance as of June 30, 2020, R$1,675,566 (R$1,435,025 as of December
31, 2019) corresponds to supply chain finance transactions in which there were no changes in the payment terms and prices negotiated
with the suppliers.
|
|
|
|
|
|
|
|
|
|
06.30.20
|
|
12.31.19
|
Supply chain finance - Domestic suppliers
|
|
694,136
|
|
671,869
|
Supply chain finance - Foreign suppliers
|
|
300,609
|
|
182,126
|
|
|
994,745
|
|
853,995
|
(-) Adjustment to present value
|
|
(12,508)
|
|
(11,958)
|
|
|
982,237
|
|
842,037
|
The Company has agreements with
several financial institutions that allow the suppliers to anticipate their receivables. The suppliers may choose whether to participate
and if so, with which institution. The anticipation allows the suppliers to better manage their cash flow needs. This flexibility
allows the Company to intensify its commercial relations with the network of suppliers by potentially leveraging benefits such
as preference for supply in case of restricted supply, better price conditions and/or more flexible payment terms, among others,
without changes in other commercial conditions. These operations are presented in the cash flow of operating activities.
On June 30, 2020, the discount
rates applied to the supply chain finance transactions agreed between our suppliers and the financial institutions in the domestic
market were set between 0.46% and 0.68% p.m. (0.38% to 0.67% p.m. on December 31, 2019).
On June 30, 2020, the discount
rates applied to the supply chain finance transactions agreed between our suppliers and the financial institutions in the external
market were set between 0.32% and 0.45% p.m. (0.32% to 0.46% p.m. on December 31, 2019).
The Company is lessee in several
lease agreements for forest lands, offices, distribution centers, integrated producers, vehicles, among others. Some contracts
have a renewal option for an additional period at the end of the agreement, established by contractual amendments. Automatic renewals
or renewals for undetermined periods are not allowed.
The contract clauses mentioned, with
respect to renewal, readjustment and purchase option, are contracted according to market practices. In addition, there are no clauses
of contingent payments or restrictions on dividends distribution, payments of interest on shareholders’ equity or obtaining
debt.
|
18.1.
|
Right-of-use
assets
|
The right-of-use assets as set forth
below are part of the balances of property, plant and equipment and intangible assets (notes 13 and 14).
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-31
|
|
|
|
|
|
Weighted average depreciation rate (p.a.)
|
|
12.31.19
|
|
Additions
|
|
Disposals
|
|
Exchange rate variation
|
|
Transfers
|
|
06.30.20
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
22,790
|
|
1,167
|
|
(751)
|
|
617
|
|
20,751
|
|
44,574
|
Buildings
|
|
|
2,615,883
|
|
133,093
|
|
(22,443)
|
|
61,134
|
|
(2,487)
|
|
2,785,180
|
Machinery and equipment
|
|
|
115,173
|
|
1,073
|
|
(7,729)
|
|
213
|
|
-
|
|
108,730
|
Vehicles
|
|
|
207,443
|
|
19,501
|
|
(51,975)
|
|
31,480
|
|
-
|
|
206,449
|
Software
|
|
|
55,705
|
|
72,766
|
|
(35,625)
|
|
-
|
|
(18,264)
|
|
74,582
|
|
|
|
3,016,994
|
|
227,600
|
|
(118,523)
|
|
93,444
|
|
-
|
|
3,219,515
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
16.54%
|
|
(5,086)
|
|
(3,107)
|
|
605
|
|
(727)
|
|
(1,799)
|
|
(10,114)
|
Buildings
|
28.61%
|
|
(512,836)
|
|
(223,884)
|
|
21,780
|
|
(21,910)
|
|
(6,765)
|
|
(743,615)
|
Machinery and equipment
|
40.99%
|
|
(96,958)
|
|
(13,727)
|
|
7,056
|
|
(114)
|
|
-
|
|
(103,743)
|
Vehicles
|
28.77%
|
|
(57,357)
|
|
(35,725)
|
|
39,271
|
|
(15,594)
|
|
-
|
|
(69,405)
|
Software
|
45.21%
|
|
(44,815)
|
|
(16,577)
|
|
35,624
|
|
-
|
|
8,564
|
|
(17,204)
|
|
|
|
(717,052)
|
|
(293,020)
|
|
104,336
|
|
(38,345)
|
|
-
|
|
(944,081)
|
|
|
|
2,299,942
|
|
(65,420)
|
|
(14,187)
|
|
55,099
|
|
-
|
|
2,275,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average depreciation rate (p.a.)
|
|
12.31.18
|
|
Initial adoption IFRS 16
|
|
Additions
|
|
Disposals
|
|
Exchange rate variation
|
|
Transfers
|
|
12.31.19
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
-
|
|
23,453
|
|
-
|
|
(421)
|
|
(42)
|
|
(200)
|
|
22,790
|
Buildings
|
|
|
214,171
|
|
2,278,982
|
|
216,514
|
|
(119,540)
|
|
4,650
|
|
21,106
|
|
2,615,883
|
Machinery and equipment
|
|
|
129,589
|
|
1,182
|
|
4,110
|
|
(13,321)
|
|
28
|
|
(6,415)
|
|
115,173
|
Facilities
|
|
|
14,492
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(14,492)
|
|
-
|
Vehicles
|
|
|
-
|
|
94,065
|
|
119,422
|
|
(8,751)
|
|
2,707
|
|
-
|
|
207,443
|
Software
|
|
|
68,424
|
|
61
|
|
(6,998)
|
|
(50,160)
|
|
-
|
|
44,378
|
|
55,705
|
|
|
|
426,676
|
|
2,397,743
|
|
333,048
|
|
(192,193)
|
|
7,343
|
|
44,377
|
|
3,016,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
22.31%
|
|
-
|
|
-
|
|
(5,134)
|
|
27
|
|
21
|
|
-
|
|
(5,086)
|
Buildings
|
17.79%
|
|
(74,527)
|
|
-
|
|
(429,600)
|
|
1,948
|
|
(644)
|
|
(10,013)
|
|
(512,836)
|
Machinery and equipment
|
36.32%
|
|
(75,422)
|
|
-
|
|
(39,361)
|
|
9,545
|
|
(8)
|
|
8,288
|
|
(96,958)
|
Facilities
|
-
|
|
(1,725)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1,725
|
|
-
|
Vehicles
|
34.32%
|
|
-
|
|
-
|
|
(58,325)
|
|
1,502
|
|
(534)
|
|
-
|
|
(57,357)
|
Software
|
67.81%
|
|
(57,486)
|
|
-
|
|
(37,489)
|
|
50,160
|
|
-
|
|
-
|
|
(44,815)
|
|
|
|
(209,160)
|
|
-
|
|
(569,909)
|
|
63,182
|
|
(1,165)
|
|
-
|
|
(717,052)
|
|
|
|
217,516
|
|
2,397,743
|
|
(236,861)
|
|
(129,011)
|
|
6,178
|
|
44,377
|
|
2,299,942
|
|
|
|
|
|
WAM (1)
|
|
12.31.19
|
|
Additions
|
|
Payments
|
|
Interest paid
|
|
Interest accrued
|
|
Disposals
|
|
Transfers
|
|
Exchange rate variation
|
|
06.30.20
|
Land
|
5.0
|
|
20,355
|
|
1,250
|
|
(3,861)
|
|
(2,458)
|
|
2,458
|
|
(210)
|
|
17,501
|
|
(42)
|
|
34,993
|
Buildings
|
4.5
|
|
2,227,026
|
|
141,525
|
|
(201,487)
|
|
(47,890)
|
|
84,939
|
|
(693)
|
|
(17,501)
|
|
40,905
|
|
2,226,824
|
Machinery and equipment
|
1.1
|
|
25,687
|
|
1,073
|
|
(16,267)
|
|
(6,704)
|
|
6,704
|
|
(747)
|
|
-
|
|
102
|
|
9,848
|
Vehicles
|
1.7
|
|
156,975
|
|
19,501
|
|
(31,238)
|
|
(7,318)
|
|
7,318
|
|
(13,388)
|
|
-
|
|
16,624
|
|
148,474
|
Software
|
2.0
|
|
1,137
|
|
72,766
|
|
(15,411)
|
|
(2,237)
|
|
2,237
|
|
-
|
|
-
|
|
-
|
|
58,492
|
|
|
|
2,431,180
|
|
236,115
|
|
(268,264)
|
|
(66,607)
|
|
103,656
|
|
(15,038)
|
|
-
|
|
57,589
|
|
2,478,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
376,628
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
317,435
|
Non-current
|
|
|
2,054,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,161,196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WAMT (1)
|
|
12.31.18
|
|
Initial adoption IFRS 16
|
|
Additions
|
|
Payments
|
|
Interest paid
|
|
Interest accrued
|
|
Disposals
|
|
Exchange rate variation
|
|
12.31.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
5.5
|
|
-
|
|
17,166
|
|
6,287
|
|
(4,505)
|
|
(762)
|
|
2,909
|
|
(421)
|
|
(319)
|
|
20,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings
|
4.3
|
|
167,012
|
|
2,278,982
|
|
216,514
|
|
(410,466)
|
|
(85,940)
|
|
167,165
|
|
(111,134)
|
|
4,369
|
|
2,226,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Machinery and equipment
|
1.3
|
|
66,534
|
|
1,182
|
|
4,110
|
|
(42,216)
|
|
(17,756)
|
|
17,757
|
|
(3,898)
|
|
(26)
|
|
25,687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vehicles
|
2.0
|
|
-
|
|
94,065
|
|
119,422
|
|
(51,263)
|
|
(11,359)
|
|
11,359
|
|
(7,438)
|
|
2,189
|
|
156,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software
|
1.3
|
|
8,263
|
|
61
|
|
37,379
|
|
(44,567)
|
|
(85)
|
|
86
|
|
-
|
|
-
|
|
1,137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
241,809
|
|
2,391,456
|
|
383,712
|
|
(553,017)
|
|
(115,902)
|
|
199,276
|
|
(122,891)
|
|
6,213
|
|
2,430,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
75,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
376,209
|
Non-current
|
|
|
166,516
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,054,447
|
|
(1)
|
Weighted average maturity in years.
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-32
|
|
18.3.
|
Lease
liabilities maturity schedule
|
The minimum future payments required
for these finance leases are segregated as follows, and were recorded in current and non-current liabilities:
|
|
|
|
|
06.30.20
|
Current
|
317,435
|
Non-current
|
2,161,196
|
July to December 2021
|
714,004
|
2022
|
368,428
|
2023
|
284,173
|
2024
|
217,127
|
2025 onwards
|
577,464
|
|
2,478,631
|
|
18.4.
|
Incremental
borrowing rate
|
The Company
uses nominal incremental borrowing rates to measure its lease liabilities. The nominal and real interest rates are presented below.
|
|
|
|
|
|
|
|
|
|
|
06.30.20
|
|
12.31.19
|
Contract Terms
|
|
Nominal rate% p.a.
|
|
Actual rate% p.a.
|
|
Nominal rate% p.a.
|
|
Actual rate% p.a.
|
|
|
|
|
|
|
|
|
|
1 year
|
|
5.69%
|
|
1.05%
|
|
8.46%
|
|
4.97%
|
2 years
|
|
6.64%
|
|
2.38%
|
|
9.49%
|
|
5.37%
|
3 years
|
|
6.81%
|
|
2.60%
|
|
10.60%
|
|
6.28%
|
4 years
|
|
-
|
|
-
|
|
11.43%
|
|
7.01%
|
5 years
|
|
-
|
|
-
|
|
11.84%
|
|
7.28%
|
6 years
|
|
-
|
|
-
|
|
12.13%
|
|
7.48%
|
8 years
|
|
-
|
|
-
|
|
12.43%
|
|
7.67%
|
9 years
|
|
-
|
|
-
|
|
12.51%
|
|
7.78%
|
10 years
|
|
-
|
|
-
|
|
12.61%
|
|
7.84%
|
11 years
|
|
-
|
|
-
|
|
12.68%
|
|
7.86%
|
13 years
|
|
-
|
|
-
|
|
12.81%
|
|
7.93%
|
14 years
|
|
-
|
|
-
|
|
12.86%
|
|
7.96%
|
15 years
|
|
-
|
|
-
|
|
12.90%
|
|
7.97%
|
18 years
|
|
-
|
|
-
|
|
13.01%
|
|
8.03%
|
20 years
|
|
13.26%
|
|
9.00%
|
|
13.12%
|
|
8.12%
|
The rates
presented above as of June 30, 2020 refer to the incremental borrowing rates used in contracts recognized in the first six months
of 2020 and the rates as of December 31, 2019 refer to the rates used in contracts recognized in 2019.
|
18.5.
|
Amounts
recognized in the statement of income
|
Below are the amounts directly
recognized in the statement of income related to items exempt of recognition: low-value assets, short-term leases and leases with
variable payments.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April to June 2020
|
|
January to June 2020
|
|
April to June 2019
|
|
January to June 2019
|
Variable payments not included in the lease liabilities
|
|
|
79,202
|
|
161,730
|
|
46,004
|
|
94,897
|
Expenses related to short-term assets
|
|
|
42,045
|
|
84,249
|
|
43,187
|
|
95,180
|
Expenses related to low-value assets
|
|
|
1,406
|
|
1,707
|
|
2,554
|
|
3,034
|
|
|
|
122,653
|
|
247,686
|
|
91,745
|
|
193,111
|
|
18.6.
|
Sale-and-leaseback transactions
|
During the six-month period
ended on June 30, 2020 three sale-and-leaseback transactions of grain warehouses were concluded. These warehouses are located in:
(i) Campo Erê – Santa Catarina, (ii) Pato Branco, and (iii) Medianeira, both in the state of Paraná; which were
analyzed according to the IFRS 16 premises and the right-of-use assets were recognized, as well as the lease liabilities of each
contract. These transactions contained in the addition movements of the Buildings class.
The rules for the stock options
and restricted shares plans granted to executives were disclosed in the financial statements for the year ended on December 31,
2019 (note 20). On April 27, 2020, the general shareholder’s meeting approved changes to the plans, increasing the limit
of grants from 0.5% to 2.5% of the common, registered, book-entry shares with no par value, representative of the Company’s
total capital stock.
The breakdown of the outstanding
granted stock options is set forth as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
Quantity
|
|
Grant (1)
|
|
Strike price (1)
|
Grant date
|
|
Beggining of exercise
|
|
End of the exercise
|
|
Options granted
|
|
Outstanding options
|
|
Fair value of the option
|
|
Granting date
|
|
Updated IPCA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
04.26.16
|
|
04.30.17
|
|
04.30.21
|
|
8,724,733
|
|
1,325,000
|
|
9.21
|
|
56.00
|
|
66.73
|
05.31.16
|
|
05.31.17
|
|
05.31.21
|
|
3,351,220
|
|
1,156,990
|
|
10.97
|
|
46.68
|
|
55.20
|
|
|
|
|
|
|
12,075,953
|
|
2,481,990
|
|
|
|
|
|
|
|
(1)
|
Amounts expressed in Brazilian Reais.
|
The breakdown of the outstanding
granted restricted shares is set forth as follows:
|
|
|
|
|
|
|
|
|
Date
|
|
Quantity
|
|
Grant (1)
|
Grant
|
|
Vesting date
|
|
Shares granted
|
|
Outstanding shares
|
|
Fair value of the shares
|
|
|
|
|
|
|
|
|
|
10.01.18
|
|
10.01.21
|
|
2,311,394
|
|
1,293,330
|
|
21.44
|
07.01.19
|
|
07.01.22
|
|
1,815,649
|
|
1,306,455
|
|
30.61
|
09.16.19
|
|
10.01.22
|
|
68,605
|
|
68,605
|
|
30.61
|
04.01.20
|
|
04.01.22
|
|
359,293
|
|
359,293
|
|
18.40
|
06.01.20
|
|
06.01.23
|
|
3,571,736
|
|
3,571,736
|
|
21.28
|
|
|
|
|
8,126,677
|
|
6,599,419
|
|
|
|
(1)
|
Amounts expressed in Brazilian Reais.
|
The rollforward of the granted
options and shares for the six-month period ended on June 30, 2020, is presented as follows:
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-34
|
|
|
|
|
|
|
Outstanding options/shares as of December 31, 2019
|
|
4,722,734
|
Granted
|
|
|
Restricted shares - June 2020
|
|
1,315,566
|
Restricted shares - April 2020
|
|
359,293
|
Exercised / Delivered:
|
|
|
Restricted Shares – grant of June, 2019
|
|
(140,945)
|
Restricted Shares – grant of June, 2018
|
|
(97,875)
|
Forfeiture:
|
|
|
Restricted shares - Grant of 2019
|
|
(83,824)
|
Restricted shares - Grant of 2018
|
|
(95,128)
|
Stock options - Grant of 2016
|
|
(11,510)
|
Outstanding options/shares as of June 30, 2020
|
|
5,968,311
|
The weighted average exercise
price of the outstanding options conditioned to services is R$60.98 (sixty Brazilian Reais and ninety-eight cents) (R$60.96 as
of December 31, 2019), and the weighted average remaining vesting term is 11 months (17 months as of December 31, 2019).
The
Company has registered as capital reserve, under shareholders’ equity, the fair value of share-based compensation
plans in the amount of R$260,825 (R$255,445 as of December 31, 2019). In the statement of
income for the six-month period ended on June 30, 2020 the amount recognized as expense was R$5,380 (R$11,691
in the same period of the previous year), and during the three-month period ended
on June 30, 2020 the amount recognized as expense was R$1,209 (R$1,351 in the same period
of the previous year).
|
20.
|
EMPLOYEES BENEFITS PLANS
|
The Company offers pension and
other post-employment plans to the employees. The characteristics of such benefits were disclosed in the annual financial statements
for the year ended on December 31, 2019 (note 21) and have not been changed during the following periods. The actuarial liabilities
are presented below:
|
|
|
|
|
|
|
Liabilities
|
|
06.30.20
|
|
12.31.19
|
Medical assistance
|
194,067
|
|
187,274
|
F.G.T.S. Penalty (1)
|
260,840
|
|
247,485
|
Award for length of service
|
109,292
|
|
103,284
|
Other
|
187,786
|
|
151,431
|
|
751,985
|
|
689,474
|
Current
|
97,688
|
|
95,919
|
Non-current
|
654,297
|
|
593,555
|
|
(1)
|
FGTS –
Government Severance Indemnity Fund for Employees
|
The Company estimated costs
for the year of 2020 according to an appraisal report prepared in 2019 by an actuarial expert and recorded in the statement of
income for the six-month period ended on June 30, 2020 against other comprehensive income a gain of R$12,964 (R$4,956 in the same
period of the previous year) and for the three-month period ended on June 30, 2020 a gain of R$6,623 (R$4,373 in the same period
of the previous year).
|
21.
|
PROVISION FOR TAX, CIVIL, LABOR AND OTHER RISKS
|
The Company and its subsidiaries
are involved in certain legal matters arising in the normal course of business, which include civil, tax, social security, labor,
commercial and other processes.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-35
|
Company’s Management believes
that, based on the elements existing at the base date of the interim financial information, the provision for tax, civil, labor,
commercial and other risks, is sufficient to cover eventual losses with administrative and legal proceedings, as set forth below.
|
21.1.
|
Contingencies with probable losses
|
The rollforward of the provisions
for tax, labor, civil, commercial and other risks classified as with probable loss, and contingent liabilities is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
|
|
Labor
|
|
Civil, commercial and other
|
|
Contingent liabilities (Business combination)
|
|
Total
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
Beginning balance
|
583,464
|
|
230,149
|
|
603,074
|
|
468,513
|
|
307,177
|
|
281,958
|
|
300,654
|
|
369,631
|
|
1,794,369
|
|
1,350,251
|
Additions
|
54,363
|
|
451,190
|
|
160,535
|
|
633,623
|
|
19,112
|
|
48,576
|
|
-
|
|
124
|
|
234,010
|
|
1,133,513
|
Reversals
|
(6,641)
|
|
(83,098)
|
|
(61,375)
|
|
(268,043)
|
|
(17,237)
|
|
(34,774)
|
|
(1,388)
|
|
(69,070)
|
|
(86,641)
|
|
(454,985)
|
Payments
|
(37,809)
|
|
(457,349)
|
|
(134,174)
|
|
(413,727)
|
|
(14,895)
|
|
(20,283)
|
|
-
|
|
-
|
|
(186,878)
|
|
(891,359)
|
Interest
|
30,115
|
|
442,622
|
|
43,707
|
|
182,749
|
|
19,465
|
|
32,058
|
|
-
|
|
-
|
|
93,287
|
|
657,429
|
Exchange rate variation
|
23
|
|
(50)
|
|
474
|
|
(41)
|
|
126
|
|
(358)
|
|
14
|
|
(31)
|
|
637
|
|
(480)
|
Ending balance
|
623,515
|
|
583,464
|
|
612,241
|
|
603,074
|
|
313,748
|
|
307,177
|
|
299,280
|
|
300,654
|
|
1,848,784
|
|
1,794,369
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,139,238
|
|
1,084,308
|
Non-current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
709,546
|
|
710,061
|
|
21.2.
|
Contingencies with possible losses
|
The Company is involved in contingencies
for which losses have been assessed as possible by Management with support from legal advisors, and for which no provision has
been recorded. On June 30, 2020, the total amount of contingencies classified as possible was R$14,304,807 (R$13,299,190 as of
December 31, 2019), of which R$299,280 (R$300,654 as of December 31, 2019) were recorded at fair value as a result of the business
combination with Sadia, presented in the table above.
On June 30, 2020, the subscribed
and paid capital of the Company was R$12,553,418, which is composed of 812,473,246 common book-entry shares with no par value.
The value of the capital stock is net of the public offering expenses of R$92,947, made on July 22, 2009.
The Company is authorized to increase
the capital stock, irrespective of amendment to the bylaws, up to the limit of 1,000,000,000 common book-entry shares with no par
value.
|
22.1.1.
|
Breakdown of capital stock by nature
|
|
|
|
|
06.30.20
|
|
12.31.19
|
Common shares
|
812,473,246
|
|
812,473,246
|
Treasury shares
|
(5,310,626)
|
|
(713,446)
|
Outstanding shares
|
807,162,620
|
|
811,759,800
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-36
|
|
22.1.2.
|
Rollforward of outstanding shares
|
|
|
|
|
|
|
Quantity of outstanding of shares
|
|
|
06.30.20
|
|
12.31.19
|
Shares at the beginning of the year
|
|
811,759,800
|
|
811,416,022
|
Purchase of treasury shares
|
|
(4,836,000)
|
|
-
|
Delivery of restricted shares
|
|
238,820
|
|
343,778
|
Shares at the end of the year
|
|
807,162,620
|
|
811,759,800
|
The Company has 5,310,626 shares
held in treasury, with an average cost of R$26.00 (twenty-six Brazilian Reais) per share, and market value corresponding to R$112,904.
|
|
|
|
|
|
Quantity of outstanding of shares
|
|
|
06.30.20
|
|
12.31.19
|
Shares at the beggining of the exercise
|
|
713,446
|
|
1,057,224
|
Purchase of treasury shares
|
|
4,836,000
|
|
-
|
Delivery of restricted shares
|
|
(238,820)
|
|
(343,778)
|
Shares at the end of the exercise
|
|
5,310,626
|
|
713,446
|
The program of repurchase of
own shares, which was approved by the Board of Directors on March 26, 2020, was concluded on May 22, 2020. The Company purchased
4,836,000 common shares, representing 0,60% of its capital stock, at the cost of R$106,070, with the purpose to maintain in treasury
for eventual disposal, cancellation, as well as to comply with obligations and commitments made under the Stock Option Plan
and the Restricted Stocks Plan.
|
23.
|
EARNINGS (LOSS) PER SHARE
|
The basic earnings (losses)
per share are calculated by dividing the earnings (losses) attributable to the owners of ordinary shares, by the weighted average
quantity of available ordinary shares during the period.
The diluted earnings (losses)
per share are calculated by dividing the earnings (losses) attributable to the owners of ordinary shares by the weighted average
quantity of available ordinary shares during the period summed to the weighted average quantity of ordinary shares that would be
available on the conversion of all potential dilutive ordinary shares (stock options and restricted shares).
|
|
|
|
|
|
|
|
|
|
|
|
|
Continued
operations
|
|
Discontinued
operations
|
|
Continued
and discontinued operations
|
|
April
to June 2020
|
|
January
to June 2020
|
|
April
to June 2019
|
|
January
to June 2019
|
|
April
to June 2019
|
|
January
to June 2019
|
|
April
to June 2019
|
|
January
to June 2019
|
Basic numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings (loss) for the exercise attributable to controlling shareholders
|
303,870
|
|
257,949
|
|
187,894
|
|
75,831
|
|
134,931
|
|
(753,941)
|
|
322,825
|
|
(678,110)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
shares
|
812,473,246
|
|
812,473,246
|
|
812,473,246
|
|
812,473,246
|
|
812,473,246
|
|
812,473,246
|
|
812,473,246
|
|
812,473,246
|
Weighted
average number of outstanding shares - basic
(except treasury shares)
|
809,612,517
|
|
810,672,698
|
|
811,440,470
|
|
811,428,248
|
|
811,440,470
|
|
811,428,248
|
|
811,440,470
|
|
811,428,248
|
Net earnings (loss) per share basic - R$
|
0.38
|
|
0.32
|
|
0.23
|
|
0.09
|
|
0.17
|
|
(0.93)
|
|
0.40
|
|
(0.84)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings (loss) for the exercise attributable to controlling shareholders
|
303,870
|
|
257,949
|
|
187,894
|
|
75,831
|
|
134,931
|
|
(753,941)
|
|
322,825
|
|
(678,110)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of outstanding shares - basic
(except treasury shares)
|
809,612,517
|
|
810,672,698
|
|
811,440,470
|
|
811,428,248
|
|
811,440,470
|
|
811,428,248
|
|
811,440,470
|
|
811,428,248
|
Number
of potential shares
|
262,692
|
|
262,692
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Weighted
average number of outstanding shares - diluted
|
809,875,209
|
|
810,935,390
|
|
811,440,470
|
|
811,428,248
|
|
811,440,470
|
|
811,428,248
|
|
811,440,470
|
|
811,428,248
|
Net
earnings (loss) per share diluted - R$
|
0.38
|
|
0.32
|
|
0.23
|
|
0.09
|
|
0.17
|
|
(0.93)
|
|
0.40
|
|
(0.84)
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-37
|
|
24.
|
FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT
|
In the ordinary course of business,
the Company is exposed to credit, liquidity and market risks, which are actively managed in compliance with the Financial Risk
Management Policy (“Risk Policy”) and internal guidelines and strategic documents subject to such policy, executing
the formal designation of its hedge accounting relations in accordance with IFRS 09, as disclosed in the financial statements for
the year ended on December 31, 2019.
|
24.2.
|
Credit risk management
|
The Company is exposed to the
credit risk related to the financial assets held: trade and non-trade accounts receivable, marketable securities, derivative instruments
and cash and equivalents.
On June 30, 2020, the Company
held financial investments over R$100,000 at the following financial institutions: Banco Bradesco, Banco BIC, Banco BNP Paribas,
Banco do Brasil, Banco BTG Pactual, Banco Itaú, Banco Safra, Banco Santander, Banco Votorantim, Caixa Econômica Federal,
Citibank, HSBC, J.P. Morgan Chase Bank, National Commercial Bank, T.Garanti Bankasi A.Ş. and Vakiflar Bankasi.
The Company also held derivative
contracts with the following financial institutions: Banco Bradesco, Banco Itaú, Banco Safra, Banco Santander, Banco Votorantim,
Bank of America Merrill Lynch, Banco BNP Paribas, Citibank, Deutsche Bank, ING Bank, J.P. Morgan Chase Bank, Morgan Stanley and
Rabobank.
|
24.3.
|
Capital management and liquidity risk
|
On June 30, 2020, the long-term
gross debt represented 80.1% (82.5% as of December 31, 2019) of the total gross indebtedness, which has an average term higher
than four years.
The Company monitors the gross
debt and net debt as set forth below:
|
|
|
|
|
|
|
|
|
|
|
06.30.20
|
|
12.31.19
|
|
Current
|
|
Non-current
|
|
Total
|
|
Total
|
Foreign currency debt
|
(940,938)
|
|
(14,699,526)
|
|
(15,640,464)
|
|
(11,006,524)
|
Local currency debt
|
(3,131,012)
|
|
(6,092,075)
|
|
(9,223,087)
|
|
(7,613,755)
|
Derivative financial liabilities
|
(1,100,649)
|
|
(43,905)
|
|
(1,144,554)
|
|
(153,612)
|
Gross debt
|
(5,172,599)
|
|
(20,835,506)
|
|
(26,008,105)
|
|
(18,773,891)
|
|
|
|
|
|
|
|
|
Marketable securities and cash and cash equivalents
|
10,008,458
|
|
415,456
|
|
10,423,914
|
|
4,963,319
|
Derivative financial assets
|
244,362
|
|
4,881
|
|
249,243
|
|
245,315
|
Restricted cash
|
1
|
|
24,178
|
|
24,179
|
|
296,294
|
Net debt
|
|
|
|
|
(15,310,769)
|
|
(13,268,963)
|
The table below summarizes the
significant commitments and contractual obligations that may impact the Company’s liquidity:
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06.30.20
|
|
Book
value
|
|
Contractual cash flow
|
|
Up to 12 months
|
|
July to december 2021
|
|
2022
|
|
2023
|
|
2024
|
|
2025 onwards
|
Non derivative financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing
|
24,863,551
|
|
30,288,641
|
|
4,855,431
|
|
2,450,753
|
|
4,574,209
|
|
3,987,075
|
|
3,781,574
|
|
10,639,599
|
Trade accounts payable
|
6,733,213
|
|
6,793,254
|
|
6,785,526
|
|
2,011
|
|
2,913
|
|
2,697
|
|
107
|
|
-
|
Supply chain finance
|
982,237
|
|
994,745
|
|
994,745
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Lease payables
|
2,478,631
|
|
3,044,828
|
|
339,179
|
|
788,610
|
|
434,799
|
|
358,339
|
|
292,549
|
|
831,352
|
Derivative financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial instruments designated as cash flow hedge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate derivatives
|
35,561
|
|
35,561
|
|
-
|
|
35,561
|
|
-
|
|
-
|
|
-
|
|
-
|
Currency derivatives
|
1,008,908
|
|
1,008,908
|
|
1,004,188
|
|
4,720
|
|
-
|
|
-
|
|
-
|
|
-
|
Commodities derivatives
|
28,799
|
|
28,799
|
|
25,174
|
|
3,625
|
|
-
|
|
-
|
|
-
|
|
-
|
Financial instruments not designated as cash flow hedge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency derivatives
|
71,286
|
|
71,286
|
|
71,286
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
The Company does not expect
that the cash outflows to fulfill the obligations shown above will be significantly anticipated, by factors unrelated to its best
interests, or substantially modified outside the normal course of business.
|
24.4.
|
Market risk management
|
|
24.4.1.
|
Interest rate risk
|
The indebtedness is essentially
linked to fixed coupons (R$, USD, EUR and TRY), Interbank Deposit Certificate (“CDI”), Broad Consumer Price Index (“IPCA”)
and London Interbank Offered Rate (“LIBOR”). In situations of adverse market changes that result in an increase in
these rates, the cost of floating-rate debt rises and on the other hand, the cost of fixed-rate debt decreases in relative terms.
Regarding the marketable securities,
the Company holds, mainly, instruments indexed by the CDI for investments in Brazil and fixed coupon in USD for investments in
the foreign market.
The Company’s exposure
to interest rates can be assessed in notes 5 and 15.
The derivative financial instruments
hired to hedge the exposure to interest rates as of June 30, 2020 were designated as hedge accounting and are shown in the table
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06.30.20
|
Cash flow hedges - Derivative instruments
|
|
Maturity
|
|
Hedged Object
|
|
Asset
|
|
Liability
|
|
Notional
|
|
Fair value (R$)
|
Interest rate swap
|
|
3rd Qtr. 2021
|
|
Debt
|
|
118.00% CDI
|
|
5.60% p.a.
|
|
810,000
|
BRL
|
|
(28,212)
|
Interest rate swap
|
|
4th Qtr. 2021
|
|
Debt
|
|
118.00% CDI
|
|
5.72% p.a.
|
|
180,000
|
BRL
|
|
(7,349)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(35,561)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments not designated
|
|
Maturity
|
|
Hedged Object
|
|
Asset
|
|
Liability
|
|
Notional
|
|
Fair value (R$)
|
Interest rate swap
|
|
2th Qtr. 2021
|
|
Debt
|
|
E.R. + 2.80% p.a.
|
|
CDI + 2.27% p.a.
|
|
49,900
|
USD
|
|
(380)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(380)
|
|
24.4.2.
|
Foreign exchange risk
|
This risk is the one that may
cause unexpected losses to the Company resulting from volatility of the FX rates, reducing its assets and revenues or increasing
its liabilities and costs. The Company’s exposure is managed in three dimensions: statement of financial position exposure,
operating income exposure and investments exposure.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-39
|
|
i.
|
Statement of financial position exposure
|
Assets and liabilities denominated
in foreign currency for which the exchange variations are recognized in the Financial Results are as follows, summarized in Brazilian
Reais:
|
|
|
|
|
|
|
|
|
|
06.30.20
|
|
12.31.19 (1)
|
Cash and cash equivalents
|
|
4,458,051
|
|
2,591,746
|
Trade accounts receivable
|
|
6,473,734
|
|
4,892,708
|
Trade accounts payable
|
|
(900,875)
|
|
(601,007)
|
Loans and financing
|
|
(14,562,591)
|
|
(8,854,826)
|
Other assets and liabilities, net
|
|
(234,839)
|
|
(162,341)
|
Exposure of assets and liabilities in foreign currencies
|
|
(4,766,520)
|
|
(2,133,720)
|
Derivative financial instruments (hedge)
|
|
4,489,296
|
|
1,734,517
|
Exposure in result, net
|
|
(277,224)
|
|
(399,203)
|
|
(1)
|
Restated for better presentation of the amount previously classified
in Investments, which was relocated to the corresponding assets and liabilities.
|
The net P&L exposure is mainly
composed of the following currencies:
|
|
|
|
|
Net P&L Exposure
|
|
06.30.20
|
|
12.31.19
|
Argentinian Peso (ARS)
|
|
(12,499)
|
|
(13,236)
|
Euros (EUR)
|
|
(60,808)
|
|
23,624
|
Pound Sterling (GBP)
|
|
8,980
|
|
6,949
|
Yen (JPY)
|
|
(34,361)
|
|
(17,285)
|
Rubles (RUB)
|
|
23,907
|
|
2,780
|
Turkish Liras (TRY)
|
|
(16,571)
|
|
(418,576)
|
U.S. Dollars (USD)
|
|
(185,872)
|
|
16,541
|
Total
|
|
(277,224)
|
|
(399,203)
|
The derivative financial instruments
hired to hedge the foreign currency statement of financial position exposure on June 30, 2020 are not designated as hedge accounting
and are set forth below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06.30.20
|
Derivative instruments not designated
|
|
Asset
|
|
Liability
|
|
Maturity
|
|
Notional
|
|
Exercise rate
|
|
Fair value (R$)
|
Non-deliverable forward
|
|
EUR
|
|
BRL
|
|
3nd Qtr. 2020
|
|
EUR
|
265,000
|
|
6.1570
|
|
(6,379)
|
Non-deliverable forward
|
|
USD
|
|
BRL
|
|
3nd Qtr. 2020
|
|
USD
|
340,000
|
|
5.4778
|
|
(9,569)
|
Non-deliverable forward
|
|
USD
|
|
BRL
|
|
2nd Qtr. 2021
|
|
USD
|
50,000
|
|
5.2800
|
|
9,772
|
Non-deliverable forward
|
|
BRL
|
|
USD
|
|
3th Qtr. 2020
|
|
USD
|
9,000
|
|
4.3210
|
|
(10,064)
|
Non-deliverable forward
|
|
BRL
|
|
USD
|
|
4th Qtr. 2020
|
|
USD
|
6,000
|
|
4.3314
|
|
(6,677)
|
Collar
|
|
BRL
|
|
USD
|
|
4th Qtr. 2020
|
|
USD
|
31,000
|
|
4.2996
|
|
(35,672)
|
Futures - B3
|
|
USD
|
|
BRL
|
|
3nd Qtr. 2020
|
|
USD
|
128,250
|
|
5.4400
|
|
309
|
Non-deliverable forward
|
|
EUR
|
|
JPY
|
|
3nd Qtr. 2020
|
|
EUR
|
20,773
|
|
120.3499
|
|
1,119
|
Non-deliverable forward
|
|
EUR
|
|
USD
|
|
3nd Qtr. 2020
|
|
EUR
|
55,000
|
|
1.1237
|
|
535
|
Non-deliverable forward
|
|
EUR
|
|
RUB
|
|
3nd Qtr. 2020
|
|
EUR
|
18,887
|
|
79.4177
|
|
2,578
|
Collar
|
|
TRY
|
|
USD
|
|
3nd Qtr. 2020
|
|
USD
|
50,000
|
|
7.1875
|
|
(101)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(54,149)
|
|
ii.
|
Operating income exposure
|
The derivative and non-derivative
financial instruments designated as cash flow hedges for foreing exchange operating income exposure on June 30, 2020 are set forth
below:
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06.30.20
|
Cash flow hedge - Derivative instruments
|
|
Hedged object
|
|
Asset
|
|
Liability
|
|
Maturity
|
|
Notional
|
|
Designation rate
|
|
Fair value
|
Non-deliverable forward
|
|
USD Exports
|
|
BRL
|
|
USD
|
|
3rd Qtr. 2020
|
|
USD
|
66,000
|
|
5.0223
|
|
(27,975)
|
Non-deliverable forward
|
|
USD Exports
|
|
BRL
|
|
USD
|
|
4th Qtr. 2020
|
|
USD
|
9,000
|
|
4.1090
|
|
(12,012)
|
Collar
|
|
USD Exports
|
|
BRL
|
|
USD
|
|
3nd Qtr. 2020
|
|
USD
|
531,000
|
|
4.9460
|
|
(297,160)
|
Collar
|
|
USD Exports
|
|
BRL
|
|
USD
|
|
4rd Qtr. 2020
|
|
USD
|
254,000
|
|
4.5206
|
|
(242,225)
|
Collar
|
|
USD Exports
|
|
BRL
|
|
USD
|
|
1th Qtr. 2021
|
|
USD
|
172,000
|
|
4.9970
|
|
(95,138)
|
Collar
|
|
USD Exports
|
|
BRL
|
|
USD
|
|
2st Qtr. 2021
|
|
USD
|
65,000
|
|
5.6098
|
|
5,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(669,271)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06.30.20
|
Cash flow hedge - Non-derivative instruments
|
|
Hedged object
|
|
Asset
|
|
Liability
|
|
Maturity
|
|
Notional
|
|
Designation rate
|
|
Fair value (1)
|
Bond BRF SA BRFSBZ5 (2)
|
|
USD Exports
|
|
-
|
|
USD
|
|
2nd Qtr. 2022
|
|
USD
|
109,312
|
|
2.0213
|
|
(436,066)
|
Bond BRF SA BRFSBZ3
|
|
USD Exports
|
|
-
|
|
USD
|
|
2nd Qtr. 2023
|
|
USD
|
150,000
|
|
2.0387
|
|
(515,595)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(951,661)
|
|
(1)
|
Corresponds to the effective portion of the hedge result accumulated
in Other Comprehensive Income.
|
|
(2)
|
For this instrument, the initial designation was of USD150,000, however
there were repurchases with corresponding revocation of the designation in the amounts of USD31,338 at the rate of 3.2408 and USD9,350
at the rate of 4.1827. The accumulated exchange rate variation of the revoked portions is fixed and reserved in Other Comprehensive
Income until the recognition of the hedge object in the second quarter of 2022.
|
|
iii.
|
Investments exposure
|
The non-derivative financial instruments
designated as net investment hedge instruments on June 30, 2020 are set forth below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06.30.20
|
Net investment hedge -
Non-derivative instruments
|
|
Protection (Investment)
|
|
Asset
|
|
Liability
|
|
Maturity
|
|
Notional
|
|
Rate
|
|
Fair value (1)
|
Bond - BRF SA BRFSBZ4
|
|
Federal Foods LLC
|
|
-
|
|
USD
|
|
3rd Qtr. 2026
|
|
USD
|
75,673
|
|
3.7649
|
|
(130,129)
|
Bond - BRF SA BRFSBZ4
|
|
BRF Al Yasra Food
|
|
-
|
|
USD
|
|
3rd Qtr. 2026
|
|
USD
|
108,757
|
|
3.7649
|
|
(167,003)
|
Bond - BRF SA BRFSBZ4
|
|
Al Khan Foodstuff LLC
|
|
-
|
|
USD
|
|
3rd Qtr. 2026
|
|
USD
|
65,570
|
|
3.7649
|
|
(111,797)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(408,929)
|
|
(1)
|
Corresponds to the effective portion of the hedge result accumulated
in Other Comprehensive Income.
|
|
24.4.3.
|
Commodities price risk
|
The financial instruments designated
as cash flow hedges and fair value hedges for the commodities price exposure on June 30, 2020 are set forth below:
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06.30.20
|
Cash flow hedge - Derivative instruments
|
|
Hedged object
|
|
Index
|
|
Maturity
|
|
Quantity
|
|
Exercise rate (USD/Ton)
|
|
Fair value
|
Non-deliverable forward - buy
|
|
Soybean meal purchase - floating price
|
|
Soybean meal - CBOT
|
|
3nd Qtr. 2020
|
|
54,985
|
ton
|
|
123.25
|
|
(7,814)
|
Non-deliverable forward - buy
|
|
Soybean meal purchase - floating price
|
|
Soybean meal - CBOT
|
|
4rd Qtr. 2020
|
|
19,997
|
ton
|
|
118.46
|
|
(578)
|
Non-deliverable forward - buy
|
|
Soybean meal purchase - floating price
|
|
Soybean meal - CBOT
|
|
1th Qtr. 2021
|
|
34,993
|
ton
|
|
117.08
|
|
(442)
|
Non-deliverable forward - buy
|
|
Soybean meal purchase - floating price
|
|
Soybean meal - CBOT
|
|
2st Qtr. 2021
|
|
59,999
|
ton
|
|
115.31
|
|
572
|
Non-deliverable forward - buy
|
|
Soybean purchase - floating price
|
|
Soybean - CBOT
|
|
3nd Qtr. 2020
|
|
5,001
|
ton
|
|
334.67
|
|
(323)
|
Collar - buy
|
|
Soybean purchase - floating price
|
|
Soybean - CBOT
|
|
3nd Qtr. 2020
|
|
4,001
|
ton
|
|
331.06
|
|
(222)
|
Non-deliverable forward - buy
|
|
Corn purchase - floating price
|
|
Corn - CBOT
|
|
4nd Qtr. 2020
|
|
39,999
|
ton
|
|
131.55
|
|
1,406
|
Non-deliverable forward - buy
|
|
Corn purchase - floating price
|
|
Corn - CBOT
|
|
1nd Qtr. 2021
|
|
59,999
|
ton
|
|
136.96
|
|
1,722
|
Non-deliverable forward - buy
|
|
Soybean oil purchase - floating price
|
|
Soybean oil - CBOT
|
|
3rd Qtr. 2020
|
|
21,697
|
ton
|
|
629.39
|
|
(624)
|
Non-deliverable forward - buy
|
|
Soybean oil purchase - floating price
|
|
Soybean oil - CBOT
|
|
4rd Qtr. 2020
|
|
20,495
|
ton
|
|
616.65
|
|
2,249
|
Non-deliverable forward - buy
|
|
Soybean oil purchase - floating price
|
|
Soybean oil - CBOT
|
|
1st Qtr. 2021
|
|
10,297
|
ton
|
|
626.18
|
|
938
|
Non-deliverable forward - buy
|
|
Soybean oil purchase - floating price
|
|
Soybean oil - CBOT
|
|
2st Qtr. 2021
|
|
5,999
|
ton
|
|
645.92
|
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,122)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06.30.20
|
Fair value hedge - Derivative instruments
|
|
Hedged object
|
|
Index
|
|
Maturity
|
|
Quantity
|
|
Exercise rate (USD/Ton)
|
|
Fair value
|
Non-deliverable forward - sell
|
|
Soybean purchase - fixed price
|
|
Soybean - CBOT
|
|
3rd Qtr. 2020
|
|
30,488
|
ton
|
|
339.75
|
|
2,918
|
Non-deliverable forward - sell
|
|
Soybean purchase - fixed price
|
|
Soybean - CBOT
|
|
4th Qtr. 2020
|
|
39,488
|
ton
|
|
340.82
|
|
3,596
|
Non-deliverable forward - sell
|
|
Soybean purchase - fixed price
|
|
Soybean - CBOT
|
|
1st Qtr. 2021
|
|
5,998
|
ton
|
|
317.10
|
|
(189)
|
Non-deliverable forward - sell
|
|
Corn purchase - fixed price
|
|
Corn - CBOT
|
|
3rd Qtr. 2020
|
|
298,898
|
ton
|
|
157.20
|
|
37,237
|
Non-deliverable forward - sell
|
|
Corn purchase - fixed price
|
|
Corn - CBOT
|
|
4th Qtr. 2020
|
|
549,034
|
ton
|
|
152.20
|
|
42,680
|
Non-deliverable forward - sell
|
|
Corn purchase - fixed price
|
|
Corn - CBOT
|
|
1st Qtr. 2021
|
|
299,131
|
ton
|
|
153.96
|
|
19,176
|
Non-deliverable forward - sell
|
|
Corn purchase - fixed price
|
|
Corn - CBOT
|
|
2nd Qtr. 2021
|
|
584,548
|
ton
|
|
147.62
|
|
4,158
|
Non-deliverable forward - sell
|
|
Corn purchase - fixed price
|
|
Corn - CBOT
|
|
3rd Qtr. 2021
|
|
209,303
|
ton
|
|
141.70
|
|
(3,156)
|
Non-deliverable forward - sell
|
|
Corn purchase - fixed price
|
|
Corn - CBOT
|
|
4rd Qtr. 2021
|
|
33,391
|
ton
|
|
145.56
|
|
(233)
|
Corn future - sell
|
|
Corn purchase - fixed price
|
|
Corn - B3
|
|
3rd Qtr. 2020
|
|
32,319
|
ton
|
|
710.75
|
|
(539)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06.30.20
|
Fair value hedge -
Derivative instruments
|
|
Protection object
|
|
Assets
|
|
Liabilities
|
|
Maturity
|
|
Notional
|
|
Exercise rate
|
|
Fair value
|
Non-deliverable forward
|
|
Cost in USD
|
|
BRL
|
|
USD
|
USD
|
3rd Qtr. 2020
|
|
USD
|
57,352
|
|
4.2031
|
|
(70,947)
|
Non-deliverable forward
|
|
Cost in USD
|
|
BRL
|
|
USD
|
USD
|
4th Qtr. 2020
|
|
USD
|
97,022
|
|
4.4466
|
|
(97,261)
|
Non-deliverable forward
|
|
Cost in USD
|
|
BRL
|
|
USD
|
USD
|
1st Qtr. 2021
|
|
USD
|
47,949
|
|
4.5868
|
|
(41,737)
|
Non-deliverable forward
|
|
Cost in USD
|
|
BRL
|
|
USD
|
USD
|
2nd Qtr. 2021
|
|
USD
|
86,290
|
|
5.1581
|
|
(28,458)
|
Non-deliverable forward
|
|
Cost in USD
|
|
BRL
|
|
USD
|
USD
|
3rd Qtr. 2021
|
|
USD
|
28,601
|
|
5.5164
|
|
(116)
|
Non-deliverable forward
|
|
Cost in USD
|
|
BRL
|
|
USD
|
USD
|
4rd Qtr. 2021
|
|
USD
|
5,918
|
|
5.5659
|
|
43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(238,476)
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-42
|
|
24.5.
|
Effects of hedge instruments on financial information
|
The effects of financial instruments
for hedging exchange rate, commodities price and interest rates in the income for the period, in other comprehensive income and
in the financial position are set forth below:
|
|
|
|
|
|
|
|
|
|
|
Income for the period
|
|
|
|
|
|
|
|
|
|
|
April to June 2020
|
|
Note
|
|
Exposure
|
|
Hedge accounting
|
|
Foreign Exchange
|
|
Commodities
|
|
Interest Rate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
|
|
|
|
|
|
9,798,045
|
|
-
|
|
-
|
|
9,798,045
|
Derivatives result
|
|
|
|
Operating Results
|
|
Cash flow
|
|
(694,119)
|
|
-
|
|
-
|
|
(694,119)
|
Net Revenue
|
|
26
|
|
|
|
|
|
9,103,926
|
|
-
|
|
-
|
|
9,103,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods Sold
|
|
|
|
|
|
|
|
-
|
|
(7,085,743)
|
|
-
|
|
(7,085,743)
|
Derivatives result
|
|
|
|
Operating Results
|
|
Cash flow / Fair value
|
|
-
|
|
(39,291)
|
|
-
|
|
(39,291)
|
Cost of Goods Sold
|
|
|
|
|
|
|
|
-
|
|
(7,125,034)
|
|
-
|
|
(7,125,034)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interests on Loans and Financing
|
|
|
|
|
|
|
|
-
|
|
-
|
|
(317,077)
|
|
(317,077)
|
Interest Rate Derivatives result
|
|
|
|
Interest expenses
|
|
Cash flow
|
|
-
|
|
-
|
|
(4,164)
|
|
(4,164)
|
Foreign Exchange variation on assets and liabilities
|
|
|
|
|
|
|
|
(334,800)
|
|
-
|
|
-
|
|
(334,800)
|
Foreign Exchange Derivatives result
|
|
|
|
Financial Position
|
|
Not designated
|
|
233,391
|
|
-
|
|
-
|
|
233,391
|
Financial Results
|
|
28
|
|
|
|
|
|
(101,409)
|
|
-
|
|
(321,241)
|
|
(422,650)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
April to June 2020
|
|
|
|
Exposure
|
|
Hedge accounting
|
|
Foreign Exchange
|
|
Commodities
|
|
Interest Rate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Instruments - current
|
|
|
|
Operating Results
|
|
Cash flow
|
|
451,206
|
|
40,059
|
|
(13,125)
|
|
478,140
|
Derivative Instruments - non-current
|
|
|
|
Operating Results
|
|
Cash flow
|
|
(71,907)
|
|
-
|
|
-
|
|
(71,907)
|
Non-derivative Instruments - non-current
|
|
|
|
Foreign investments
|
|
Net investment
|
|
(69,236)
|
|
-
|
|
-
|
|
(69,236)
|
Other Comprehensive Income (1)
|
|
|
|
|
|
|
|
310,063
|
|
40,059
|
|
(13,125)
|
|
336,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income for the period
|
|
|
|
|
|
|
|
|
|
|
January to June 2020
|
|
Note
|
|
Exposure
|
|
Hedge accounting
|
|
Foreign Exchange
|
|
Commodities
|
|
Interest Rate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
|
|
|
|
|
|
18,963,157
|
|
-
|
|
-
|
|
18,963,157
|
Derivatives result
|
|
|
|
Operating Results
|
|
Cash flow
|
|
(910,166)
|
|
-
|
|
-
|
|
(910,166)
|
Net Revenue
|
|
26
|
|
|
|
|
|
18,052,991
|
|
-
|
|
-
|
|
18,052,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods Sold
|
|
|
|
|
|
|
|
-
|
|
(13,754,387)
|
|
-
|
|
(13,754,387)
|
Derivatives result
|
|
|
|
Operating Results
|
|
Cash flow / Fair value
|
|
-
|
|
(66,735)
|
|
-
|
|
(66,735)
|
Cost of Goods Sold
|
|
|
|
|
|
|
|
-
|
|
(13,821,122)
|
|
-
|
|
(13,821,122)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interests on Loans and Financing
|
|
|
|
|
|
|
|
-
|
|
-
|
|
(631,570)
|
|
(631,570)
|
Interest Rate Derivatives result
|
|
|
|
Interest expenses
|
|
Cash flow
|
|
-
|
|
-
|
|
(399)
|
|
(399)
|
Foreign Exchange variation on assets and liabilities
|
|
|
|
|
|
|
|
(1,533,734)
|
|
-
|
|
-
|
|
(1,533,734)
|
Foreign Exchange Derivatives result
|
|
|
|
Financial Position
|
|
Not designated
|
|
1,278,563
|
|
-
|
|
-
|
|
1,278,563
|
Financial Results
|
|
28
|
|
|
|
|
|
(255,171)
|
|
-
|
|
(631,969)
|
|
(887,140)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
January to June 2020
|
|
|
|
Exposure
|
|
Hedge accounting
|
|
Foreign Exchange
|
|
Commodities
|
|
Interest Rate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Instruments - current
|
|
|
|
Operating Results
|
|
Cash flow
|
|
(751,260)
|
|
32,673
|
|
(29,954)
|
|
(748,541)
|
Derivative Instruments - non-current
|
|
|
|
Operating Results
|
|
Cash flow
|
|
(374,784)
|
|
-
|
|
-
|
|
(374,784)
|
Non-derivative Instruments - non-current
|
|
|
|
Foreign investments
|
|
Net investment
|
|
(342,111)
|
|
-
|
|
-
|
|
(342,111)
|
Other Comprehensive Income (1)
|
|
|
|
|
|
|
|
(1,468,155)
|
|
32,673
|
|
(29,954)
|
|
(1,465,436)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity balances
|
|
|
|
|
|
|
|
|
|
|
06.30.20
|
|
Note
|
|
Exposure
|
|
Hedge accounting
|
|
Foreign Exchange
|
|
Commodities
|
|
Interest Rate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Designated derivatives
|
|
|
|
Operating Results
|
|
Cash flow / Fair value
|
|
(907,747)
|
|
102,526
|
|
(35,561)
|
|
(840,782)
|
Not designated derivatives
|
|
|
|
Financial Position
|
|
Not designated
|
|
(54,149)
|
|
-
|
|
(380)
|
|
(54,529)
|
Asset / (Liability) net
|
|
|
|
|
|
|
|
(961,896)
|
|
102,526
|
|
(35,941)
|
|
(895,311)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Instruments - current (2)
|
|
|
|
Operating Results
|
|
Cash flow
|
|
(674,424)
|
|
(7,772)
|
|
(29,954)
|
|
(712,150)
|
Derivative Instruments - non-current
|
|
|
|
Operating Results
|
|
Cash flow
|
|
(951,661)
|
|
-
|
|
-
|
|
(951,661)
|
Non-derivative Instruments - non-current
|
|
|
|
Foreign investments
|
|
Net investment
|
|
(408,929)
|
|
-
|
|
-
|
|
(408,929)
|
Other Comprehensive Income (1)
|
|
|
|
|
|
|
|
(2,035,014)
|
|
(7,772)
|
|
(29,954)
|
|
(2,072,740)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives result
|
|
|
|
Operating Results
|
|
Cash flow / Fair value
|
|
-
|
|
196,590
|
|
-
|
|
196,590
|
Inventories
|
|
7
|
|
|
|
|
|
-
|
|
196,590
|
|
-
|
|
196,590
|
|
(1)
|
All effects are shown gross of taxes.
|
|
(2)
|
Includes R$40,401 related to the time value of the foreign exchange option
contracts.
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-43
|
The cash effect of hedge instruments
is presented in the Statement of Cash Flows, as Derivative Financial Instruments.
Summarized financial position
of derivative financial instruments:
|
|
|
|
|
06.30.20
|
|
12.31.19
|
Asset
|
|
|
|
Designated as hedge accounting
|
|
|
|
Currency derivatives
|
101,161
|
|
166,729
|
Commodities derivatives
|
131,325
|
|
25,191
|
Not designated as hedge accounting
|
|
|
|
Currency derivatives
|
16,757
|
|
53,395
|
|
249,243
|
|
245,315
|
Current assets
|
244,362
|
|
195,324
|
Non-current assets
|
4,881
|
|
49,991
|
|
|
|
|
Liabilities
|
|
|
|
Designated as hedge accounting
|
|
|
|
Currency derivatives
|
(1,008,908)
|
|
(73,417)
|
Commodities derivatives
|
(28,799)
|
|
(48,829)
|
Interest rate derivatives
|
(35,561)
|
|
-
|
Not designated as hedge accounting
|
|
|
|
Currency derivatives
|
(70,906)
|
|
(31,369)
|
Interest rate derivatives
|
(380)
|
|
-
|
|
(1,144,554)
|
|
(153,615)
|
Current liabilities
|
(1,100,649)
|
|
(153,612)
|
Non-current liabilities
|
(43,905)
|
|
(3)
|
|
24.6.
|
Sensitivity analysis
|
Management understands that
the most relevant risks that may affect the Company’s results are the volatility of commodities prices and foreign exchange
rates. Currently the fluctuation of the interest rates does not affect significantly the Company’s results since Management
has chosen to keep at fixed rates a considerable portion of its debts.
The scenarios below present
the possible impacts of the financial instruments considering situations of increase and decrease in the selected risk factors.
The amounts of exports used correspond to the notional amount of the financial instruments designated for hedge accounting.
The information used in the
preparation of the analysis is based on the position as of June 30, 2020, which has been described in the items above. The future
results may diverge significantly of the estimated values if the reality presents different than the considered premises. Positive
values indicate gains and negative values indicate losses.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parity - R$ x USD
|
|
5.4760
|
|
4.9284
|
|
4.1070
|
|
6.8450
|
|
8.2140
|
|
|
|
|
Current
|
|
Scenario I
|
|
Scenario II
|
|
Scenario III
|
|
Scenario IV
|
Transaction/Instrument
|
|
Risk
|
|
Scenario
|
|
10% appreciation
|
|
25% appreciation
|
|
25% devaluation
|
|
50% devaluation
|
Designated as hedge accouting
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-deliverable forward
|
|
Devaluation of R$
|
|
(283,508)
|
|
(65,491)
|
|
261,535
|
|
(828,550)
|
|
(1,373,593)
|
Options - currencies
|
|
Devaluation of R$
|
|
(636,684)
|
|
(141,392)
|
|
593,057
|
|
(1,987,147)
|
|
(3,386,265)
|
Bonds
|
|
Devaluation of R$
|
|
(893,235)
|
|
(751,236)
|
|
(538,237)
|
|
(1,248,233)
|
|
(1,603,231)
|
Exports (object)
|
|
Appreciation of R$
|
|
1,572,169
|
|
893,808
|
|
(115,245)
|
|
3,380,305
|
|
5,237,096
|
Cost (object)
|
|
Appreciation of R$
|
|
241,258
|
|
64,311
|
|
(201,110)
|
|
683,625
|
|
1,125,993
|
Not designated as hedge accouting
|
|
|
|
|
|
|
|
|
|
|
|
|
NDF - Purchase
|
|
Appreciation of R$
|
|
(612)
|
|
(186,796)
|
|
(466,072)
|
|
464,848
|
|
930,308
|
NDF - Sale
|
|
Devaluation of R$
|
|
17,262
|
|
9,048
|
|
(3,273)
|
|
37,797
|
|
58,332
|
Options - currencies
|
|
Devaluation of R$
|
|
(36,467)
|
|
(19,491)
|
|
496
|
|
(78,906)
|
|
(121,345)
|
Future purchase - B3
|
|
Appreciation of R$
|
|
4,612
|
|
(65,617)
|
|
(170,962)
|
|
180,187
|
|
355,761
|
Net effect
|
|
|
|
(15,205)
|
|
(262,856)
|
|
(639,811)
|
|
603,926
|
|
1,223,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parity - R$ x EUR
|
|
|
|
6.1539
|
|
5.5385
|
|
4.6154
|
|
7.6924
|
|
9.2309
|
|
|
|
|
Current
|
|
Scenario I
|
|
Scenario II
|
|
Scenario III
|
|
Scenario IV
|
Transaction/Instrument
|
|
Risk
|
|
Scenario
|
|
10% appreciation
|
|
25% appreciation
|
|
25% devaluation
|
|
50% devaluation
|
Not designated as hedge accouting
|
|
|
|
|
|
|
|
|
|
|
|
|
NDF - Purchase EUR x USD
|
|
Appreciation of EUR
|
|
41
|
|
(33,806)
|
|
(84,575)
|
|
84,658
|
|
169,274
|
NDF - Purchase EUR x RUB
|
|
Appreciation of EUR
|
|
900
|
|
(9,654)
|
|
(21,124)
|
|
37,456
|
|
88,546
|
NDF - Purchase
|
|
Appreciation of R$
|
|
(817)
|
|
(163,895)
|
|
(408,513)
|
|
406,879
|
|
814,575
|
Net effect
|
|
|
|
124
|
|
(207,355)
|
|
(514,212)
|
|
528,993
|
|
1,072,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price parity CBOT - Corn - USD/Ton
|
|
|
|
141.35
|
|
127.22
|
|
106.01
|
|
176.69
|
|
212.03
|
|
|
|
|
Current
|
|
Scenario I
|
|
Scenario II
|
|
Scenario III
|
|
Scenario IV
|
Transaction/Instrument
|
|
Risk
|
|
Scenario
|
|
Decrease 10%
|
|
Decrease 25%
|
|
Increase 25%
|
|
Increase 50%
|
Designated as hedge accounting
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-deliverable forward - Corn sale
|
|
Increase in the price of corn
|
|
100,447
|
|
253,266
|
|
482,495
|
|
(281,601)
|
|
(663,650)
|
Non-deliverable forward - Corn purchase
|
|
Decrease in the price of corn
|
|
3,589
|
|
(4,151)
|
|
(15,761)
|
|
22,940
|
|
42,291
|
Cost (object)
|
|
Increase in the price of corn
|
|
(104,036)
|
|
(249,115)
|
|
(466,734)
|
|
258,661
|
|
621,359
|
Net effect
|
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price parity CBOT - Soybean meal - USD/Ton
|
|
|
|
115.44
|
|
103.90
|
|
86.58
|
|
144.30
|
|
173.17
|
|
|
|
|
Current
|
|
Scenario I
|
|
Scenario II
|
|
Scenario III
|
|
Scenario IV
|
Transaction/Instrument
|
|
Risk
|
|
Scenario
|
|
Decrease 10%
|
|
Decrease 25%
|
|
Increase 25%
|
|
Increase 50%
|
Designated as hedge accounting
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-deliverable forward - Soybeal meal purchase
|
|
Decrease in the price of soybean meal
|
|
(2,951)
|
|
(13,696)
|
|
(29,814)
|
|
23,912
|
|
50,775
|
Cost (object)
|
|
Increase in the price of soybean meal
|
|
2,951
|
|
13,696
|
|
29,814
|
|
(23,912)
|
|
(50,775)
|
Net effect
|
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price parity CBOT - Soybean - USD/Ton
|
|
|
|
323.28
|
|
290.95
|
|
242.46
|
|
404.10
|
|
484.92
|
|
|
|
|
Current
|
|
Scenario I
|
|
Scenario II
|
|
Scenario III
|
|
Scenario IV
|
Transaction/Instrument
|
|
Risk
|
|
Scenario
|
|
Decrease 10%
|
|
Decrease 25%
|
|
Increase 25%
|
|
Increase 50%
|
Designated as hedge accounting
|
|
|
|
|
|
|
|
|
|
|
|
|
NDF - Soybean sale
|
|
Increase in the price of soybean
|
|
6,340
|
|
19,789
|
|
39,964
|
|
(27,284)
|
|
(60,908)
|
NDF - Soybean purchase
|
|
Decrease in the price of soybean
|
|
(312)
|
|
(1,197)
|
|
(2,525)
|
|
1,901
|
|
4,114
|
Soybean options
|
|
Decrease in the price of soybean
|
|
(179)
|
|
(886)
|
|
(1,948)
|
|
1,275
|
|
3,044
|
Cost (object)
|
|
Increase in the price of soybean
|
|
(5,849)
|
|
(17,706)
|
|
(35,491)
|
|
24,108
|
|
53,750
|
Net effect
|
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price parity CBOT - Soybean oil - USD/Ton
|
|
|
|
634.10
|
|
570.69
|
|
475.58
|
|
792.63
|
|
951.15
|
|
|
|
|
Current
|
|
Scenario I
|
|
Scenario II
|
|
Scenario III
|
|
Scenario IV
|
Transaction/Instrument
|
|
Risk
|
|
Scenario
|
|
Decrease 10%
|
|
Decrease 25%
|
|
Increase 25%
|
|
Increase 50%
|
Designated as hedge accounting
|
|
|
|
|
|
|
|
|
|
|
|
|
NDF - Soybean oil purchase
|
|
Decrease in the price of soybean oil
|
|
2,576
|
|
(17,733)
|
|
(48,196)
|
|
53,348
|
|
104,120
|
Cost (object)
|
|
Increase in the price of soybean oil
|
|
(2,576)
|
|
17,733
|
|
48,196
|
|
(53,348)
|
|
(104,120)
|
Net effect
|
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-45
|
|
24.7.
|
Financial instruments by category
|
|
|
|
|
|
06.30.20
|
|
Amortized cost
|
|
Fair value through other comprehensive income
|
|
Fair value through profit and loss
|
|
Total
|
|
|
Equity instruments
|
|
Debt instruments
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash and bank
|
3,358,771
|
|
-
|
|
-
|
|
-
|
|
3,358,771
|
Cash equivalents
|
-
|
|
-
|
|
-
|
|
6,312,504
|
|
6,312,504
|
Marketable securities
|
358,421
|
|
42,307
|
|
25,899
|
|
326,012
|
|
752,639
|
Restricted cash
|
24,179
|
|
-
|
|
-
|
|
-
|
|
24,179
|
Trade accounts receivable
|
2,600,004
|
|
-
|
|
-
|
|
196,563
|
|
2,796,567
|
Other receivables
|
115,304
|
|
-
|
|
-
|
|
-
|
|
115,304
|
Derivatives not designated
|
-
|
|
-
|
|
-
|
|
16,757
|
|
16,757
|
Derivatives designated as hedge accounting (1)
|
-
|
|
-
|
|
-
|
|
232,486
|
|
232,486
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Trade accounts payable
|
(6,733,213)
|
|
-
|
|
-
|
|
-
|
|
(6,733,213)
|
Supply chain finance
|
(982,237)
|
|
-
|
|
-
|
|
-
|
|
(982,237)
|
Loans and financing (2)
|
(24,863,551)
|
|
-
|
|
-
|
|
-
|
|
(24,863,551)
|
Derivatives not designated
|
-
|
|
-
|
|
-
|
|
(71,286)
|
|
(71,286)
|
Derivatives designated as hedge accounting (1)
|
-
|
|
-
|
|
-
|
|
(1,073,268)
|
|
(1,073,268)
|
Written option– business combination
|
-
|
|
-
|
|
-
|
|
(422,188)
|
|
(422,188)
|
|
(26,122,322)
|
|
42,307
|
|
25,899
|
|
5,517,580
|
|
(20,536,536)
|
|
(1)
|
All derivatives are measured at fair value. Those designated as hedge
accounting have their gains and losses also affecting other comprehensive income and inventories.
|
|
(2)
|
All loans and borrowings are measured at amortized cost. Those designated
as hedge accounting have their gains and losses also affecting shareholders’ equity.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.19
|
|
Amortized cost
|
|
Fair value through other comprehensive income
|
|
Fair value through profit and loss
|
|
Total
|
|
|
Equity instruments
|
|
Debt instruments
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash and bank
|
2,289,787
|
|
-
|
|
-
|
|
-
|
|
2,289,787
|
Cash equivalents
|
-
|
|
-
|
|
-
|
|
1,947,998
|
|
1,947,998
|
Marketable securities
|
265,783
|
|
26,678
|
|
19,285
|
|
413,788
|
|
725,534
|
Restricted cash
|
296,294
|
|
-
|
|
-
|
|
-
|
|
296,294
|
Trade accounts receivable
|
2,811,902
|
|
-
|
|
-
|
|
225,941
|
|
3,037,843
|
Other receivables
|
123,877
|
|
-
|
|
-
|
|
-
|
|
123,877
|
Derivatives not designated
|
-
|
|
-
|
|
-
|
|
53,395
|
|
53,395
|
Derivatives designated as hedge accounting
|
-
|
|
-
|
|
-
|
|
191,920
|
|
191,920
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Trade accounts payable - Restated
|
(5,796,766)
|
|
-
|
|
-
|
|
-
|
|
(5,796,766)
|
Supply chain finance
|
(842,037)
|
|
-
|
|
-
|
|
-
|
|
(842,037)
|
Loans and financing
|
(18,620,279)
|
|
-
|
|
-
|
|
-
|
|
(18,620,279)
|
Derivatives not designated
|
-
|
|
-
|
|
-
|
|
(31,369)
|
|
(31,369)
|
Derivatives designated as hedge accounting
|
-
|
|
-
|
|
-
|
|
(122,246)
|
|
(122,246)
|
Written option– business combination
|
-
|
|
-
|
|
-
|
|
(706,920)
|
|
(706,920)
|
|
(19,471,439)
|
|
26,678
|
|
19,285
|
|
1,972,507
|
|
(17,452,969)
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-46
|
|
24.8.
|
Fair value of financial instruments
|
The fair value is the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at
the measurement date.
Depending on the inputs used
for measurement, the financial instruments at fair value may be classified into 3 hierarchy levels:
|
»
|
Level 1 – Uses quoted prices (unadjusted) for identical instruments in active markets. In
this category are classified investments in stocks, credit linked notes, savings accounts, overnights, term deposits, Financial
Treasury Bills (“LFT”) and investment funds;
|
|
»
|
Level 2 – Uses prices quoted in active markets for similar instruments, prices quoted for
identical or similar instruments in non-active markets and evaluation models for which inputs are observable. In this level are
classified the investments in Bank Deposit Certificates (“CDB”) and derivatives, which are measured by well-known pricing
models: discounted cash flows and Black-Scholes. The observable inputs are interest rates and curves, volatility factors and foreign
exchange rates;
|
|
»
|
Level 3 – Instruments for which significant inputs are non-observable. The Company has a
financial liability arising from a put option written in the context of a business combination. This option gives the non-controlling
shareholder the right to sell its equity stake in the subsidiary for an amount equivalent to a multiple of the income before taxes,
interests, depreciation and amortization of the economic group of this subsidiary in the last 12 months prior to the exercise.
The exercise period is comprised of the six-month period beginning on May 25, 2021. This liability is measured at fair value using
internal assumptions regarding the results of that economic group. The effects of the remeasurement resulted in a gain in financial
results of R$390,353 in the six-month period ended on June 30, 2020 (loss of R$19,967 in the same period of the prior year), as
per note 28.
|
The table below presents the
overall classification of financial instruments measured at fair value by measurement hierarchy. For the six-month period ended
on June 30, 2020, there were no changes among the 3 levels of hierarchy.
|
|
|
|
|
|
|
06.30.20
|
|
12.31.19
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value through other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit linked notes
|
25,899
|
|
-
|
|
-
|
|
25,899
|
|
19,285
|
|
-
|
|
-
|
|
19,285
|
Stocks
|
42,307
|
|
-
|
|
-
|
|
42,307
|
|
26,678
|
|
-
|
|
-
|
|
26,678
|
Fair value through profit and loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings account and overnight
|
2,132,116
|
|
-
|
|
-
|
|
2,132,116
|
|
689,874
|
|
-
|
|
-
|
|
689,874
|
Term deposits
|
72,106
|
|
-
|
|
|
|
72,106
|
|
374,859
|
|
-
|
|
-
|
|
374,859
|
Bank deposit certificates
|
-
|
|
4,104,358
|
|
-
|
|
4,104,358
|
|
-
|
|
879,758
|
|
-
|
|
879,758
|
Financial treasury bills
|
309,460
|
|
-
|
|
-
|
|
309,460
|
|
396,994
|
|
-
|
|
-
|
|
396,994
|
Investment funds
|
20,476
|
|
-
|
|
-
|
|
20,476
|
|
20,301
|
|
-
|
|
-
|
|
20,301
|
Trade accounts receivable
|
-
|
|
196,563
|
|
-
|
|
196,563
|
|
-
|
|
225,941
|
|
-
|
|
225,941
|
Derivatives
|
-
|
|
249,243
|
|
-
|
|
249,243
|
|
-
|
|
245,315
|
|
-
|
|
245,315
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value through profit and loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
-
|
|
(1,144,554)
|
|
-
|
|
(1,144,554)
|
|
-
|
|
(153,615)
|
|
-
|
|
(153,615)
|
Written option– business combination
|
-
|
|
-
|
|
(422,188)
|
|
(422,188)
|
|
-
|
|
-
|
|
(706,920)
|
|
(706,920)
|
|
2,602,364
|
|
3,405,610
|
|
(422,188)
|
|
5,585,786
|
|
1,527,991
|
|
1,197,399
|
|
(706,920)
|
|
2,018,470
|
Except for the items set forth
below, the fair value of all other financial instruments is approximate to their book value. The fair value of the bonds set forth
below is based in prices observed in active markets, level 1 of the fair value hierarchy, while the debentures are based in level
2 and are measured by discounted cash flows.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-47
|
|
|
|
|
|
|
|
06.30.20
|
|
12.31.19
|
|
Maturity
|
|
Book
value
|
|
Fair
value
|
|
Book
value
|
|
Fair
value
|
BRF bonds
|
|
|
|
|
|
|
|
|
|
BRF SA BRFSBZ5
|
2022
|
|
(595,863)
|
|
(623,833)
|
|
(435,934)
|
|
(460,606)
|
BRF SA BRFSBZ4
|
2024
|
|
(2,840,225)
|
|
(2,878,792)
|
|
(2,086,169)
|
|
(2,191,726)
|
BRF SA BRFSBZ3
|
2023
|
|
(1,877,298)
|
|
(1,897,818)
|
|
(1,370,446)
|
|
(1,427,754)
|
BRF SA BRFSBZ2
|
2022
|
|
(2,000,452)
|
|
(1,996,879)
|
|
(1,492,653)
|
|
(1,559,476)
|
BRF SA BRFSBZ4 7/8
|
2030
|
|
(4,163,225)
|
|
(3,992,887)
|
|
(3,022,773)
|
|
(3,160,573)
|
Debentures
|
2030
|
|
(757,016)
|
|
(822,166)
|
|
(755,760)
|
|
(832,213)
|
BRF GmbH bonds
|
|
|
|
|
|
|
|
|
|
BRF SA BRFSBZ4
|
2026
|
|
(2,719,565)
|
|
(2,683,338)
|
|
(1,999,509)
|
|
(2,101,175)
|
|
|
|
(14,953,644)
|
|
(14,895,713)
|
|
(11,163,244)
|
|
(11,733,523)
|
The operating segments are reported
consistently with the management reports provided to the main strategic and operational decision makers for assessing the performance
of each segment and allocation of resources. The operating segments information are elaborated considering three reportable segments,
being: Brazil, International and Other Segments.
The operating segments include
the sales of all distribution channels and are subdivided according to the nature of the products whose characteristics are described
below:
|
»
|
Poultry: production and sale of whole poultry and in-natura cuts.
|
|
»
|
Pork and other: production and sale of in-natura cuts.
|
|
»
|
Processed: production and sale of processed food, frozen and processed products derived
from poultry, pork and beef, margarine, vegetables and soybean-based products.
|
|
»
|
Other sales: sale of flour for food service and others.
|
Other segments are comprised
of commercialization and development of animal nutrition ingredients, human nutrition, plant nutrition (fertilizers) and health
care (health and wellness), as well as commercialization of agricultural products.
The net sales for each reportable
operating segment is set forth below:
|
|
|
|
|
|
Net sales
|
|
April to June 2020
|
|
January to June 2020
|
|
April to June 2019
|
|
January to June 2019
|
Brazil
|
|
|
|
|
|
|
|
|
In-natura
|
|
1,093,445
|
|
2,350,532
|
|
1,140,672
|
|
2,239,820
|
Poultry
|
|
793,689
|
|
1,763,725
|
|
908,900
|
|
1,794,305
|
Pork and other
|
|
299,756
|
|
586,807
|
|
231,772
|
|
445,515
|
Processed
|
|
3,541,008
|
|
6,933,812
|
|
2,937,848
|
|
5,775,094
|
Other sales
|
|
8,402
|
|
13,665
|
|
3,176
|
|
7,249
|
|
|
4,642,855
|
|
9,298,009
|
|
4,081,696
|
|
8,022,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
In-natura
|
|
3,563,006
|
|
7,016,267
|
|
3,373,477
|
|
6,009,675
|
Poultry
|
|
3,007,661
|
|
5,978,347
|
|
3,040,066
|
|
5,449,083
|
Pork and other
|
|
555,345
|
|
1,037,920
|
|
333,411
|
|
560,592
|
Processed
|
|
563,054
|
|
1,074,175
|
|
547,066
|
|
1,048,979
|
Other sales
|
|
81,226
|
|
132,547
|
|
64,955
|
|
120,715
|
|
|
4,207,286
|
|
8,222,989
|
|
3,985,498
|
|
7,179,369
|
|
|
|
|
|
|
|
|
|
Other segments
|
|
253,785
|
|
531,993
|
|
270,815
|
|
495,727
|
|
|
9,103,926
|
|
18,052,991
|
|
8,338,009
|
|
15,697,259
|
|
|
|
|
|
|
|
|
|
The operating income (loss)
for each segment is set forth below:
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April to June 2020
|
|
January to June 2020
|
|
April to June 2019
|
|
January to June 2019
|
Brazil
|
|
352,266
|
|
716,145
|
|
490,325
|
|
556,933
|
International
|
|
227,685
|
|
668,333
|
|
425,668
|
|
551,134
|
Other segments
|
|
22,628
|
|
60,157
|
|
40,557
|
|
40,531
|
Sub total
|
|
602,579
|
|
1,444,635
|
|
956,550
|
|
1,148,598
|
Corporate
|
|
(15,392)
|
|
(302,769)
|
|
(26,509)
|
|
(60,359)
|
|
|
587,187
|
|
1,141,866
|
|
930,041
|
|
1,088,239
|
The items presented above as
Corporate refer to relevant events not attributable to the normal course of business neither to the operating segments. The composition
of the main effects in the Corporate segment is set forth below:
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
April to June 2020
|
|
January to June 2020
|
|
April to June 2019
|
|
January to June 2019
|
Investigations involving the Company (note 1.2)
|
|
(11,771)
|
|
(24,072)
|
|
(31,207)
|
|
(42,320)
|
Agreement - Class Action (note 1.3)
|
|
-
|
|
(204,436)
|
|
-
|
|
-
|
Tax and Civil Contingencies
|
|
(19,263)
|
|
(59,889)
|
|
4,503
|
|
4,246
|
Arbitration reversal
|
|
14,520
|
|
14,520
|
|
-
|
|
-
|
Restructuring plan
|
|
-
|
|
-
|
|
-
|
|
(16,431)
|
Other
|
|
1,122
|
|
(28,892)
|
|
195
|
|
(5,854)
|
|
|
(15,392)
|
|
(302,769)
|
|
(26,509)
|
|
(60,359)
|
No customer individually or
in aggregate (economic group) accounted for more than 5% of net sales for the six-month period ended on June 30, 2020 and 2019.
The goodwill arising from business
combinations and the intangible assets with indefinite useful life (trademarks) were allocated to the reportable operating segments,
considering the economic benefits generated by such intangible assets. The allocation of these intangible assets is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
Trademarks
|
|
Total
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
|
06.30.20
|
|
12.31.19
|
Brazil
|
1,151,498
|
|
1,151,498
|
|
982,478
|
|
982,478
|
|
2,133,976
|
|
2,133,976
|
International
|
1,860,242
|
|
1,562,104
|
|
370,117
|
|
339,784
|
|
2,230,359
|
|
1,901,888
|
|
3,011,740
|
|
2,713,602
|
|
1,352,595
|
|
1,322,262
|
|
4,364,335
|
|
4,035,864
|
Information related to total
assets by reportable segment is not disclosed, as it is not included in the set of information made available to the Company’s
administration, which makes investment decisions and determine allocation of resources based on information about the consolidated
assets.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-49
|
|
|
|
|
|
|
|
April to June 2020
|
|
January to June 2020
|
|
April to June 2019
|
|
January to June 2019
|
Gross sales
|
|
|
|
|
|
|
|
Brazil
|
5,739,830
|
|
11,506,128
|
|
5,069,822
|
|
9,951,942
|
International
|
4,537,513
|
|
8,804,578
|
|
4,289,643
|
|
7,745,612
|
Other segments
|
283,285
|
|
590,579
|
|
305,893
|
|
554,970
|
|
10,560,628
|
|
20,901,285
|
|
9,665,358
|
|
18,252,524
|
|
|
|
|
|
|
|
|
Sales deductions
|
|
|
|
|
|
|
|
Brazil
|
(1,096,975)
|
|
(2,208,119)
|
|
(988,126)
|
|
(1,929,779)
|
International
|
(330,227)
|
|
(581,589)
|
|
(304,145)
|
|
(566,243)
|
Other segments
|
(29,500)
|
|
(58,586)
|
|
(35,078)
|
|
(59,243)
|
|
(1,456,702)
|
|
(2,848,294)
|
|
(1,327,349)
|
|
(2,555,265)
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
|
|
|
|
|
Brazil
|
4,642,855
|
|
9,298,009
|
|
4,081,696
|
|
8,022,163
|
International
|
4,207,286
|
|
8,222,989
|
|
3,985,498
|
|
7,179,369
|
Other segments
|
253,785
|
|
531,993
|
|
270,815
|
|
495,727
|
|
9,103,926
|
|
18,052,991
|
|
8,338,009
|
|
15,697,259
|
|
27.
|
OTHER OPERATING INCOME (EXPENSES), NET
|
|
|
|
|
|
|
|
April to June 2020
|
|
January to June 2020
|
|
April to June 2019
|
|
January to June 2019
|
Recovery of expenses (1)
|
156,370
|
|
235,057
|
|
695,814
|
|
704,811
|
Provision reversal
|
70,625
|
|
70,625
|
|
357
|
|
14,085
|
Scrap sales
|
2,787
|
|
5,562
|
|
3,221
|
|
6,837
|
Provision for civil and tax risks (2)
|
(23,045)
|
|
(65,520)
|
|
(356,210)
|
|
(363,918)
|
Other employees benefits
|
(8,214)
|
|
(15,649)
|
|
(9,918)
|
|
(17,374)
|
Insurance claims costs
|
(828)
|
|
(2,517)
|
|
(2,193)
|
|
(14,977)
|
Net gains (losses) from the disposals of investments
|
223
|
|
256
|
|
(2,354)
|
|
(2,354)
|
Net gains (losses) from the disposals of property, plant and equipment
|
3,467
|
|
(7,409)
|
|
9,128
|
|
18,248
|
Employee participation and bonuses
|
(71,347)
|
|
(117,992)
|
|
(52,843)
|
|
(110,455)
|
Demobilization expenses
|
(1,998)
|
|
(6,255)
|
|
(10,949)
|
|
(21,932)
|
Expenses with investigations and class action (3)
|
(11,771)
|
|
(209,151)
|
|
(31,207)
|
|
(42,320)
|
Expected credit losses in other receivables
|
308
|
|
(3,157)
|
|
-
|
|
-
|
Other
|
21,976
|
|
16,150
|
|
(12,369)
|
|
(16,850)
|
|
138,553
|
|
(100,000)
|
|
230,477
|
|
153,801
|
|
(1)
|
Includes recovery of PIS and COFINS taxes on marketing, rebates and
benefit expenses in the amount of R$224,466 for the six-month period ended on June 30, 2020 and R$150,509 for the three-month period
ended on June 30,2020. For the three-month and six-month periods ended on June 30, 2019, includes the effects of the final decision
related to the exclusion of ICMS from the PIS and COFINS calculation base of R$696,127.
|
|
(2)
|
For the three-month and six-month periods ended on June 30, 2019,
includes the effects of the tax contingency on ICMS credit in the basic food basket products of R$358,935.
|
|
(3)
|
Includes provision for class action agreement (note 1.3) in the first
quarter of 2020.
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-50
|
|
28.
|
FINANCIAL INCOME (EXPENSES), NET
|
|
|
|
|
|
|
|
|
|
Note
|
|
April to June 2020
|
|
January to June 2020
|
|
Restated (1)
April to June 2019
|
|
Restated (1)
January to June 2019
|
Financial income
|
|
|
81,833
|
|
194,711
|
|
474,668
|
|
560,729
|
Interest on cash and cash equivalents
|
4
|
|
21,474
|
|
51,029
|
|
34,901
|
|
69,451
|
Revenues from marketable securities
|
5
|
|
28,800
|
|
45,387
|
|
27,868
|
|
54,404
|
Fair value throught other comprehensive income
|
|
|
243
|
|
454
|
|
152
|
|
323
|
Fair value throught profit and loss
|
|
|
2,305
|
|
5,716
|
|
5,352
|
|
9,856
|
Amortized cost
|
|
|
26,252
|
|
39,217
|
|
22,364
|
|
44,225
|
Interest on recoverable taxes
|
9
|
|
23,704
|
|
80,340
|
|
401,797
|
|
419,467
|
Interest on other assets
|
|
|
7,855
|
|
17,955
|
|
10,102
|
|
17,407
|
Financial expenses
|
|
|
(166,563)
|
|
(735,913)
|
|
(1,048,018)
|
|
(1,551,277)
|
Interest on loans and financing
|
15
|
|
(317,077)
|
|
(631,570)
|
|
(340,960)
|
|
(674,531)
|
Interest on contingencies
|
21
|
|
(39,042)
|
|
(105,940)
|
|
(437,637)
|
|
(457,436)
|
Interest on leases
|
18
|
|
(51,494)
|
|
(103,863)
|
|
(49,651)
|
|
(99,707)
|
Interest on other liabilities
|
|
|
3,977
|
|
5,384
|
|
(21,320)
|
|
(4,984)
|
Written option - Business combination (2)
|
|
|
337,677
|
|
390,353
|
|
(20,056)
|
|
(19,967)
|
Adjustment to present value
|
6 e 16
|
|
(90,557)
|
|
(181,498)
|
|
(76,634)
|
|
(145,092)
|
Other
|
|
|
(10,047)
|
|
(108,779)
|
|
(101,760)
|
|
(149,560)
|
Foreign exchange variation and derivative results, net
|
|
|
(105,573)
|
|
(255,570)
|
|
(45,972)
|
|
(77,039)
|
Exchange rate variation on monetary assets and liabilities
|
|
|
(334,800)
|
|
(1,533,734)
|
|
46,854
|
|
82,544
|
Derivative results
|
|
|
229,227
|
|
1,278,164
|
|
(92,826)
|
|
(159,583)
|
|
|
|
(190,303)
|
|
(796,772)
|
|
(619,322)
|
|
(1,067,587)
|
|
(1)
|
The comparative period was restated for better disclosure of exchange
variations effects and derivative results.
|
|
(2)
|
Refers to the fair value remeasurement of the written option recorded
from business combination (note 24.8). The deterioration of the results of the economic group of the referred subsidiary resulted
in a reduction of the liability with the corresponding increase in financial results in the six-month period ended on June 30,
2020.
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-51
|
|
29.
|
STATEMENT OF INCOME BY NATURE
|
The Company has chosen to disclose
its statement of income by function and thus presents below the details by nature:
|
|
|
|
|
|
|
April to June 2020
|
|
January to June 2020
|
|
April to June 2019
|
|
January to June 2019
|
Costs of sales
|
|
|
|
|
|
|
|
Raw materials and consumables (1)
|
5,047,664
|
|
9,722,981
|
|
4,298,158
|
|
8,224,665
|
Salaries and employees benefits
|
1,002,007
|
|
1,947,175
|
|
910,021
|
|
1,785,418
|
Depreciation
|
460,821
|
|
913,052
|
|
448,822
|
|
893,489
|
Amortization
|
29,238
|
|
57,583
|
|
33,630
|
|
62,820
|
Others
|
585,304
|
|
1,180,331
|
|
555,729
|
|
1,122,148
|
|
7,125,034
|
|
13,821,122
|
|
6,246,360
|
|
12,088,540
|
|
|
|
|
|
|
|
|
Sales expenses
|
|
|
|
|
|
|
|
Indirect and direct logistics expenses
|
624,692
|
|
1,208,409
|
|
503,961
|
|
1,002,381
|
Marketing
|
136,138
|
|
290,233
|
|
198,023
|
|
337,448
|
Salaries and employees benefits
|
353,584
|
|
671,734
|
|
319,209
|
|
631,950
|
Depreciation
|
57,533
|
|
111,113
|
|
45,376
|
|
89,795
|
Amortization
|
22,753
|
|
42,712
|
|
22,990
|
|
43,325
|
Others
|
166,189
|
|
321,022
|
|
167,218
|
|
287,173
|
|
1,360,889
|
|
2,645,223
|
|
1,256,777
|
|
2,392,072
|
|
|
|
|
|
|
|
|
Administrative expenses
|
|
|
|
|
|
|
|
Salaries and employees benefits
|
85,617
|
|
155,839
|
|
72,505
|
|
142,882
|
Fees
|
17,350
|
|
29,213
|
|
7,954
|
|
14,215
|
Depreciation
|
12,130
|
|
21,627
|
|
6,203
|
|
12,305
|
Amortization
|
7,505
|
|
15,713
|
|
7,011
|
|
15,438
|
Others
|
67,863
|
|
110,633
|
|
42,484
|
|
92,546
|
|
190,465
|
|
333,025
|
|
136,157
|
|
277,386
|
|
(1)
|
Includes abnormal losses in the production chain.
|
The Company incurred in expenses
with internal research and development of new products of R$31,187 for the six-month period ended on June 30, 2020 (R$31,516 in
the same period of the previous year) and R$14,872 for the three-month period ended on June 30, 2020 (R$16,851 in the same period
of the previous year).
In the normal course of business,
rights and obligations arise between related parties, resulting from transactions of sale and purchase of products, as well as
from financial operations.
The Company holds a Related
Parties Transactions Policy, which was reviewed and approved by the Board of Executive Officers and applies to all subsidiaries
of the group.
The policy mentioned above provides
the conditions that must be observed for the realization of a transaction between related parties, as well as establishes approval
hierarchies according to the value and nature of the transactions involved. The policy also foresees situations of conflict of
interests and how they must be handled.
The
Company leased properties owned by BRF Previdência, for the six-month period ended on June 30, 2020, the total amount paid
as rent was R$9,764 (R$8,462 in the same period of the previous year)
for the three-month ended on June 30, 2020, the total amount paid as rent was of R$4,882 (R$4,231
in the same period of the previous year).
Due to the acquisition of biodigesters
from Instituto Sadia de Sustentabilidade, the Company has an outstanding payable to this entity of R$1,962 on June 30, 2020 (R$3,053
as of December 31, 2019) included in Other Liabilities.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-52
|
The Company recorded a liability
in the amount of R$543 (R$844 as of December 31, 2019) related to the fair value of the guarantees offered to BNDES concerning
a loan made by Instituto Sadia de Sustentabilidade.
The Company is the guarantor
of loans related to a special program that aims the local development and were obtained by outgrowers in the central region of
Brazil. The proceeds of such loans are utilized by the outgrowers to improve farm conditions and will be paid by them in 10 years,
taking as collateral the land and equipment acquired through this program. The value of these guarantees on June 30, 2020 totaled
R$6,195 (R$12,949 as of December 31, 2019).
|
30.2.
|
Management remuneration
|
The total remuneration and benefits
expense with board members, statutory directors and the head of internal audit are set forth below:
|
|
|
|
|
|
|
April to June 2020
|
|
January to June 2020
|
|
April to June 2019
|
|
January to June 2019
|
Salary and profit sharing
|
23,638
|
|
35,605
|
|
12,752
|
|
22,722
|
Short term benefits (1)
|
1,492
|
|
1,611
|
|
114
|
|
131
|
Private pension
|
589
|
|
896
|
|
180
|
|
302
|
Post-employment benefits
|
-
|
|
-
|
|
-
|
|
47
|
Termination benefits
|
1,439
|
|
4,403
|
|
3,484
|
|
8,169
|
Share-based payment
|
4,360
|
|
8,394
|
|
2,155
|
|
3,983
|
|
31,518
|
|
50,909
|
|
18,685
|
|
35,354
|
|
(1)
|
Comprises: medical assistance, educational expenses and others.
|
In addition, the executive officers,
who are also part of the key personnel, received among remuneration and benefits the total amount of R$9,435 for the six-month
period ended on June 30, 2020 (R$23,051 in the same period of the previous year) and R$4,835 for the three-month period ended on
June 30, 2020 (R$9,230 in the same period of the previous year).
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-53
|
In the normal course of the
business, the Company enters into agreements with third parties for the purchase of raw material, mainly corn and soymeal. The
agreed prices in these agreements can be fixed or variable. The Company also enters into other agreements, such as electricity
supply, packaging supplies, construction of buildings and others for the supply of its manufacturing activities. The firm commitments
schedule is set forth below:
|
|
|
|
|
|
|
|
06.30.20
|
Current
|
|
5,123,497
|
Non-current
|
|
1,890,505
|
July to december 2021
|
|
634,736
|
2022
|
|
309,828
|
2023
|
|
200,098
|
2024
|
|
192,744
|
2025 onwards
|
|
553,099
|
|
|
7,014,002
|
|
32.
|
TRANSACTIONS THAT DO NOT INVOLVE CASH
|
The following transactions did
not involve cash or cash equivalents during the six-month period ended on June 30, 2020:
|
(i)
|
Capitalized loan interest: as referred in note 13.
|
|
(ii)
|
Addition of lease by right-of-use assets and respective lease liability: in the six-month period
ended on June 30, 2020, amounted to R$227,600 (R$65,518 in the same period of the previous year) and in the three-month period
ended on June 30, 2020, amounted to R$21,463 (R$17,541 in the same period of the previous year). For the six-month period ended
on June 30, 2019 there was the initial adoption of IFRS 16 with an impact of R$2,357,151.
|
|
33.
|
EVENTS AFTER THE REPORTING DATE
|
|
33.1.
|
Issuance of Debentures
|
On July 17, 2020, 2,200,000
(two million, two hundred thousand) Debentures were subscribed with a notional value of R$ 1,000.00 (one thousand Brazilian Reais),
in a total amount of R$2,200,000 (two billion and two hundred million Brazilian Reais), in two series as shown in the table below.
The Debentures are simple, not convertible into shares, unsecured and for private placement. The Debentures were privately placed
with VERT Companhia Securitizadora, to back its forty-sixth issuance of Agribusiness Receivables Certificates, in two series, which
were object of public distribution with restricted placement efforts.
|
|
|
|
|
|
|
|
|
|
|
|
06.30.20
|
Operation
|
|
Series
|
|
Issue date
|
|
Maturity
|
|
Rate
|
|
Notional
|
Debenture - 2nd Issue
|
|
1st Series
|
|
07.14.20
|
|
07.14.27
|
|
IPCA + 5.30% p.a.
|
|
705,000
|
Debenture - 2nd Issue
|
|
2nd Series
|
|
07.14.20
|
|
07.12.30
|
|
IPCA + 5.60% p.a.
|
|
1,495,000
|
|
|
|
|
|
|
|
|
|
|
2,200,000
|
The issuance costs of R$75,275
will be recognized on the statement of income over the term of the debt according to the effective interest rate method.
This transaction is adherent
to the Company’s capital structure management strategy, which includes, among other aspects, the sustaining of liquidity,
the lengthening of the average tenor of its indebtedness, and the diversification of its sources of financing.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-54
|
|
33.2.
|
Tender offer for Senior Notes
|
Between July 17 and July 24,
2020 the Company executed an offer to repurchase any and all outstanding (i) (a) 5.875% Senior Notes due 2022, (b) 2.750% Senior
Notes due 2022, (c) 3.950% Senior Notes due 2023; and (d) 4.750% Senior Notes due 2024 all issued by BRF; and (ii) 4.350% Senior
Notes due 2026, issued by BRF GmbH and guaranteed by BRF. The offer was conditioned on the aggregate amount of the repurchase price
of the equivalent to R$1,556,670 (USD300,000) and the results are shown in the table below:
|
|
|
|
|
|
|
|
|
|
|
Instrument
|
|
Maturity
|
|
Notional repurchased
|
|
Outstanding notional (1)
|
|
|
(debt currency)
|
|
(Reais) (2)
|
|
(debt currency)
|
|
(Reais) (2)
|
BRF SA BRFSBZ2 - 5.875% - USD
|
|
2022
|
|
27,190
|
|
141,086
|
|
82,122
|
|
426,123
|
BRF SA BRFSBZ3 - 3.950% - USD
|
|
2023
|
|
60,567
|
|
314,276
|
|
285,422
|
|
1,481,026
|
BRF SA BRFSBZ4 - 4.750% - USD
|
|
2024
|
|
64,144
|
|
332,837
|
|
453,714
|
|
2,354,277
|
BRF SA BRFSBZ5 - 2.750% - EUR
|
|
2022
|
|
119,061
|
|
723,355
|
|
205,720
|
|
1,249,852
|
|
(1)
|
Outstanding notional after the tender offer.
|
|
(2)
|
Represented by the amount in the original debt currency, translated
by the foreign exchange rate at the settlement date of the repurchase.
|
|
(3)
|
Loan fully designated as hedge accounting instrument (note 24.4.2.ii).
The exchange rate variation between the designation date and the settlement date of the repurchased portion will remain in Other
Comprehensive Income until the realization of the highly probable sales (hedge object).
|
On July 27, 2020 and on July 28, 2020,
the Company paid the amount equivalent to R$1,554,850 for the repurchase of these liabilities, which includes notional, interest
and premium. The Company incurred in financial expenses with the repurchase in the amount of R$34,033 for the premium paid, R$5,998
with taxes and R$8,961 with the write-off of the costs of issuance.
|
33.3.
|
Prepayment of credit facilities
|
Additionally to the tender offer
described above, in July and August 2020, the Company prepaid certain bilateral credit facilities in Brasil with original maturity
between September 2020 and August 2021, in the aggregated notional and interest amount of R$1,593,176, being R$964,484 related
to the facilities described in note 1.4.
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-55
|
|
34.
|
APPROVAL OF THE INTERIM FINANCIAL INFORMATION
|
The condensed consolidated interim
financial information was approved and the issuance authorized by the Board of Directors on August 12, 2020.
|
|
BOARD OF DIRECTORS
|
|
|
|
Chairman (Independent)
|
Pedro Pullen Parente
|
Vice-Chairman (Independent)
|
Augusto Marques da Cruz Filho
|
Independent Member
|
Dan Ioschpe
|
Independent Member
|
Flavia Buarque de Almeida
|
Independent Member
|
Flavia Maria Bittencourt
|
Non-Independent Member
|
Ivandré Motiel da Silva
|
Independent Member
|
José Luiz Osório de Almeida Filho
|
Independent Member
|
Luiz Fernando Furlan
|
Independent Member
|
Marcelo Feriozzi Bacci
|
Independent Member
|
Roberto Rodrigues
|
|
|
FISCAL COUNCIL
|
|
|
|
Chairman
|
Attílio Guaspari
|
Member
|
Maria Paula Soares Aranha
|
Member
|
André Vicentini
|
|
|
AUDIT AND INTEGRITY COMMITTEE
|
|
|
|
Comittee Coordinator (Independent)
|
Augusto Marques da Cruz Filho
|
Non-Independent Member
|
Ivandré Motiel da Silva
|
Independent Member
|
Marcelo Feriozzi Bacci
|
External Member
|
Valmir Pedro Rossi
|
External Member
|
Jerônimo Antunes
|
|
|
BOARD OF EXECUTIVE OFFICERS
|
|
|
|
Global Chief Executive Officer
|
Lorival Nogueira Luz Júnior
|
Vice-President of Finance and Investor Relations
|
Carlos Alberto Bezerra de Moura
|
Vice-President of Operations and Procurement Officer
|
Vinícius Guimarães Barbosa
|
Vice-President of Commercial Brazil Market
|
Sidney Rogério Manzaro
|
Vice-President of Human Resources and Shared Services
|
Alessandro Rosa Bonorino
|
Vice-President of Strategy, Managing and Innovation
|
Rubens Fernandes Pereira
|
Vice-President of Quality and Sustainability
|
Neil Hamilton dos Guimarães Peixoto Jr.
|
Vice-President of Sales & Operations Planning and Supply Chain
|
Leonardo Campo Dallorto
|
|
|
|
|
|
|
Marcos Roberto Badollato
|
Joloir Nieblas Cavichini
|
Accounting Director
|
Accountant – CRC 1SP257406/O-5
|
BRF S.A. | CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION - June 30, 2020
|
F-56
|