BRF S.A. - Regulatory Filings 2020

6-K 1 brfitr2q20_6k.htm BRFITR2Q20_6K

FORM 6-K U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934

dated August 12, 2020

Commission File Number 1-15148

BRF S.A. (Exact Name as Specified in its Charter)

N/A (Translation of Registrant’s Name)

8501, Av. das Naçoes Unidas, 1st Floor Pinheiros - 05425-070-São Paulo – SP, Brazil (Address of principal executive offices) (Zip code)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F x Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o No x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable.

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This material includes certain forward-looking statements that are based principally on current expectations and on projections of future events and financial trends that currently affect or might affect the Company’s business, and are not guarantees of future performance. These forward-looking statements are based on management’s expectations, which involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the Company’s control and any of which could cause actual financial condition and results of operations to differ materially fom those set out in the Company’s forward-looking statements. You are cautioned not to put undue reliance on such forward-looking statements. The Company undertakes no obligation, and expressly disclaims any obligation, to update or revise any forward-looking statements. The risks and uncertainties relating to the forward-looking statements in this Report on Form 6-K, including Exhibit 1 hereto, include those described under the captions “Forward-Looking Statements” and “Item 3. Key Information — D. Risk Factors” in the Company’s annual report on Form 20-F for the year ended December 31, 2012.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 12, 2020
BRF S.A.
By:	/s/ Carlos Alberto Bezerra de Moura
	Name:	Carlos Alberto Bezerra de Moura
	Title:	Chief Financial and Investor Relations Officer

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EXHIBIT INDEX

Exhibit	Description of Exhibit
1	Financial Statements

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INDEX

STATEMENT OF FINANCIAL POSITION	4
STATEMENT OF INCOME (LOSS)	5
STATEMENT OF COMPREHENSIVE INCOME (LOSS)	6
STATEMENT OF CHANGES IN EQUITY	7
STATEMENT OF CASH FLOWS	8
STATEMENT OF VALUE ADDED	9
MANAGEMENT REPORT	10
1. COMPANY’S OPERATIONS	39
2. BASIS OF PREPARATION AND PRESENTATION OF INTERIM FINANCIAL STATEMENTS	44
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	44
4. CASH AND CASH EQUIVALENTS	46
5. MARKETABLE SECURITIES	46
6. TRADE ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES	47
7. INVENTORIES	48
8. BIOLOGICAL ASSETS	49
9. RECOVERABLE TAXES	51
10. INCOME AND SOCIAL CONTRIBUTION TAXES	52
11. JUDICIAL DEPOSITS	54
12. INVESTMENTS	55
13. PROPERTY, PLANT AND EQUIPMENT, NET	56
14. INTANGIBLE ASSETS	59
15. LOANS AND BORROWINGS	60
16. TRADE ACCOUNTS PAYABLE	63
17. SUPPLY CHAIN FINANCE	63
18. LEASES	64
19. SHARE-BASED PAYMENT	66
20. EMPLOYEES BENEFITS PLANS	68
21. PROVISION FOR TAX, CIVIL, LABOR AND OTHER RISKS	68
22. SHAREHOLDERS’ EQUITY	69
23. EARNINGS (LOSS) PER SHARE	70
24. FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT	71
25. SEGMENT INFORMATION	82
26. NET SALES	84
27. OTHER OPERATING INCOME (EXPENSES), NET	84
28. FINANCIAL INCOME (EXPENSES), NET	85

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BRF S.A. | INTERIM FINANCIAL INFORMATION - June 30, 2020 2

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29. STATEMENT OF INCOME BY NATURE	85
30. RELATED PARTIES – PARENT COMPANY	86
31. COMMITMENTS	89
32. TRANSACTIONS THAT DO NOT INVOLVE CASH	89
33. SUBSEQUENT EVENTS	89
34. APPROVAL OF THE INTERIM FINANCIAL INFORMATION	91
COMENTARY ABOUT THE COMPANY PROJECTIONS BEHAVIOUR	92
BREAKDOWN OF THE CAPITAL BY OWNER (NOT REVIEWED)	92
INDEPENDENT AUDITOR’S REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION	93
OPINION OF THE AUDIT AND INTEGRITY COMMITTEE	94
STATEMENT OF EXECUTIVE BOARD ON THE INTERIM FINANCIAL INFORMATION AND INDEPENDENT AUDITOR’S REPORT	95

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BRF S.A. | INTERIM FINANCIAL INFORMATION - June 30, 2020 3

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(in thousands of Brazilian Reais)

STATEMENT OF FINANCIAL POSITION

| ASSETS | Note | Parent company — 06.30.20 | 12.31.19 | Consolidated — 06.30.20 | 12.31.19 | LIABILITIES | Note | Parent company — 06.30.20 | 12.31.19 | Consolidated — 06.30.20 | 12.31.19 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | CURRENT ASSETS | | | | | | CURRENT LIABILITIES | | | | | | | Cash and cash equivalents | 4 | 4,469,307 | 1,368,980 | 9,671,275 | 4,237,785 | Loans and borrowings | 15 | 3,935,263 | 3,033,034 | 4,071,950 | 3,132,029 | | Marketable securities | 5 | 309,460 | 396,994 | 337,183 | 418,182 | Trade accounts payable | 16 | 5,958,687 | 5,270,762 | 6,725,495 | 5,784,419 | | Trade and other receivables | 6 | 6,578,951 | 6,153,937 | 2,848,634 | 3,090,691 | Supply chain finance | 17 | 982,237 | 842,037 | 982,237 | 842,037 | | Inventories | 7 | 3,447,795 | 2,786,147 | 5,103,218 | 3,887,916 | Lease liability | 18 | 244,450 | 313,058 | 317,435 | 376,628 | | Biological assets | 8 | 1,803,882 | 1,545,127 | 1,882,925 | 1,603,039 | Payroll, related charges and employee profit sharing | | 964,760 | 754,032 | 1,008,666 | 825,254 | | Recoverable taxes | 9 | 371,098 | 274,480 | 609,955 | 473,732 | Tax payable | | 205,701 | 268,193 | 489,833 | 517,208 | | Recoverable income tax and social contribution | 9 | 60,688 | 40,291 | 93,781 | 152,486 | Derivative financial instruments | 24 | 1,098,175 | 151,722 | 1,100,649 | 153,612 | | Derivative financial instruments | 24 | 237,757 | 193,740 | 244,362 | 195,324 | Provision for tax, civil and labor risks | 21 | 1,135,183 | 1,081,103 | 1,139,238 | 1,084,308 | | Restricted cash | | 1 | 296,294 | 1 | 296,294 | Employee benefits | 20 | 87,996 | 87,996 | 97,688 | 95,919 | | Assets held for sale | | 15,874 | 16,671 | 42,284 | 99,245 | Advances from related parties | 30 | 8,926,155 | 5,364,164 | - | - | | Other current assets | | 422,909 | 495,743 | 502,874 | 590,733 | Other current liabilities | | 226,488 | 329,166 | 952,824 | 512,591 | | Total current assets | | 17,717,722 | 13,568,404 | 21,336,492 | 15,045,427 | Total current liabilities | | 23,765,095 | 17,495,267 | 16,886,015 | 13,324,005 | | NON-CURRENT ASSETS | | | | | | NON-CURRENT LIABILITIES | | | | | | | LONG-TERM RECEIVALBLES | | | | | | Loans and borrowings | 15 | 17,730,549 | 13,395,970 | 20,791,601 | 15,488,250 | | Marketable securities | 5 | 14,728 | 14,891 | 415,456 | 307,352 | Trade accounts payable | 16 | 7,718 | 12,347 | 7,718 | 12,347 | | Trade and other receivables | 6 | 63,237 | 71,029 | 63,237 | 71,029 | Lease liability | 18 | 1,995,738 | 1,939,494 | 2,161,196 | 2,054,552 | | Recoverable taxes | 9 | 5,249,535 | 5,167,016 | 5,249,509 | 5,169,547 | Tax payable | | 182,924 | 190,257 | 182,924 | 190,257 | | Recoverable income tax and social contribution | 9 | 90,759 | 264,428 | 97,197 | 269,263 | Provision for tax, civil and labor risks | 21 | 709,199 | 709,760 | 709,546 | 710,061 | | Deferred income taxes | 10 | 2,131,882 | 1,808,494 | 2,180,059 | 1,845,862 | Deferred income tax | 10 | - | - | 120,589 | 85,310 | | Judicial deposits | 11 | 560,469 | 575,681 | 560,549 | 575,750 | Liabilities with related parties | 30 | 1,165,241 | 960,056 | - | - | | Biological assets | 8 | 1,065,330 | 1,016,642 | 1,146,000 | 1,081,025 | Employee benefits | 20 | 535,733 | 506,791 | 654,297 | 593,555 | | Receivables from related parties | 30 | 325 | 234 | - | - | Derivative financial instruments | 24 | 43,905 | 3 | 43,905 | 3 | | Derivative financial instruments | 24 | 4,881 | 49,991 | 4,881 | 49,991 | Other non-current liabilities | | 284,277 | 482,109 | 305,581 | 1,093,942 | | Restricted cash | | 24,178 | - | 24,178 | - | | | | | | | | Other non-current assets | | 65,881 | 78,516 | 70,990 | 85,537 | | | | | | | | Total long-term receivables | | 9,271,205 | 9,046,922 | 9,812,056 | 9,455,356 | Total non-current liabilities | | 22,655,284 | 18,196,787 | 24,977,357 | 20,228,277 | | | | | | | | EQUITY | 22 | | | | | | | | | | | | Capital | | 12,460,471 | 12,460,471 | 12,460,471 | 12,460,471 | | | | | | | | Capital reserves | | 147,280 | 192,845 | 147,280 | 192,845 | | Investments | 12 | 11,912,608 | 6,499,517 | 17,801 | 14,880 | Accumulated losses | | (3,739,036) | (3,996,985) | (3,739,036) | (3,996,985) | | Property, plant and equipment, net | 13 | 11,073,266 | 11,333,302 | 12,265,597 | 12,276,889 | Treasury shares | | (138,098) | (38,239) | (138,098) | (38,239) | | Intangible assets | 14 | 3,239,478 | 3,139,532 | 5,476,891 | 4,908,079 | Other comprehensive loss | | (1,936,717) | (722,469) | (1,936,717) | (722,469) | | | | | | | | Attributable to controlling shareholders | | 6,793,900 | 7,895,623 | 6,793,900 | 7,895,623 | | | | | | | | Non-controlling interests | | - | - | 251,565 | 252,726 | | Total non-current assets | | 35,496,557 | 30,019,273 | 27,572,345 | 26,655,204 | Total equity | | 6,793,900 | 7,895,623 | 7,045,465 | 8,148,349 | | TOTAL ASSETS | | 53,214,279 | 43,587,677 | 48,908,837 | 41,700,631 | TOTAL LIABILITIES AND EQUITY | | 53,214,279 | 43,587,677 | 48,908,837 | 41,700,631 |

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

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(in thousands of Brazilian Reais)

STATEMENT OF INCOME (LOSS)

| | Note | Parent company — April to June 2020 | January to June 2020 | April to June 2019 | January to June 2019 | Consolidated — April to June 2020 | January to June 2020 | April to June 2019 | January to June 2019 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | CONTINUING OPERATIONS | | | | | | | | | | | NET SALES | 26 | 7,063,409 | 14,512,454 | 7,025,848 | 13,443,794 | 9,103,926 | 18,052,991 | 8,338,009 | 15,697,259 | | Cost of sales | 29 | (6,182,886) | (12,011,795) | (5,649,846) | (10,919,670) | (7,125,034) | (13,821,122) | (6,246,360) | (12,088,540) | | GROSS PROFIT | | 880,523 | 2,500,659 | 1,376,002 | 2,524,124 | 1,978,892 | 4,231,869 | 2,091,649 | 3,608,719 | | OPERATING INCOME (EXPENSES) | | | | | | | | | | | Selling expenses | 29 | (1,057,781) | (2,090,348) | (987,445) | (1,887,936) | (1,360,889) | (2,645,223) | (1,256,777) | (2,392,072) | | General and administrative expenses | 29 | (122,609) | (209,890) | (85,753) | (177,433) | (190,465) | (333,025) | (136,157) | (277,386) | | Impairment loss on trade receivables | 29 | 22,024 | (9,078) | (1,035) | (7,573) | 21,096 | (11,755) | 1,709 | (3,798) | | Other operating income (expenses), net | 27 | 147,221 | (84,110) | 263,008 | 175,516 | 138,553 | (100,000) | 230,477 | 153,801 | | Income (loss) from associates and joint ventures | 12 | 2,086,260 | 6,073,512 | 137,670 | 350,038 | - | - | (860) | (1,025) | | INCOME BEFORE FINANCIAL RESULTS AND INCOME TAXES | | 1,955,638 | 6,180,745 | 702,447 | 976,736 | 587,187 | 1,141,866 | 930,041 | 1,088,239 | | Financial expenses | 28 | (577,883) | (1,192,623) | (982,549) | (1,494,651) | (166,563) | (735,913) | (1,048,018) | (1,551,277) | | Financial income | 28 | 66,332 | 173,109 | 460,656 | 540,550 | 81,833 | 194,711 | 474,668 | 560,729 | | Foreign exchange and monetary variations | 28 | (1,037,987) | (4,851,516) | 68,931 | (75,350) | (105,573) | (255,570) | (45,972) | (77,039) | | INCOME (LOSS) BEFORE TAXES | | 406,100 | 309,715 | 249,485 | (52,715) | 396,884 | 345,094 | 310,719 | 20,652 | | Income taxes | 10 | (102,230) | (51,766) | (61,591) | 128,546 | (89,755) | (76,197) | (119,696) | 57,093 | | INCOME FROM CONTINUING OPERATIONS | | 303,870 | 257,949 | 187,894 | 75,831 | 307,129 | 268,897 | 191,023 | 77,745 | | DISCONTINUED OPERATIONS | | | | | | | | | | | INCOME (LOSS) FROM DISCONTINUED OPERATIONS | | - | - | 134,931 | (753,941) | - | - | 133,931 | (765,122) | | INCOME (LOSS) FOR THE PERIOD | | 303,870 | 257,949 | 322,825 | (678,110) | 307,129 | 268,897 | 324,954 | (687,377) | | Net Income from Continuing Operation Attributable to | | | | | | | | | | | Controlling shareholders | | 303,870 | 257,949 | 187,894 | 75,831 | 303,870 | 257,949 | 187,894 | 75,831 | | Non-controlling interest | | - | - | - | - | 3,259 | 10,948 | 3,129 | 1,914 | | | | 303,870 | 257,949 | 187,894 | 75,831 | 307,129 | 268,897 | 191,023 | 77,745 | | Net Income (Loss) From Discontinued Operation Attributable to | | | | | | | | | | | Controlling shareholders | | - | - | 134,931 | (753,941) | - | - | 134,931 | (753,941) | | Non-controlling interest | | - | - | - | - | - | - | (1,000) | (11,181) | | | | - | - | 134,931 | (753,941) | - | - | 133,931 | (765,122) | | INCOME PER SHARE FROM CONTINUING OPERATIONS | | | | | | | | | | | Weighted average shares outstanding - basic | | | | | | 809,612,517 | 810,672,698 | 811,440,470 | 811,428,248 | | Income per share - basic | 23 | | | | | 0.38 | 0.32 | 0.23 | 0.09 | | Weighted average shares outstanding - diluted | | | | | | 809,875,209 | 810,935,390 | 811,440,470 | 811,428,248 | | Income per share - diluted | 23 | | | | | 0.38 | 0.32 | 0.23 | 0.09 | | INCOME (LOSSES) PER SHARE FROM DISCONTINUED OPERATIONS | | | | | | | | | | | Weighted average shares outstanding - basic | | | | | | 809,612,517 | 810,672,698 | 811,440,470 | 811,428,248 | | Income (losses) per share - basic | 23 | | | | | - | - | 0.17 | (0.93) | | Weighted average shares outstanding - diluted | | | | | | 809,612,517 | 810,672,698 | 811,440,470 | 811,428,248 | | Income (losses) per share - diluted | 23 | | | | | - | - | 0.17 | (0.93) |

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

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(in thousands of Brazilian Reais)

STATEMENT OF COMPREHENSIVE INCOME (LOSS)

| | Note | Parent company — April to June 2020 | January to June 2020 | April to June 2019 | January to June 2019 | Consolidated — April to June 2020 | January to June 2020 | April to June 2019 | January to June 2019 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Income (loss) for the period | | 303,870 | 257,949 | 322,825 | (678,110) | 307,129 | 268,897 | 324,954 | (687,377) | | Other comprehensive income (loss) | | | | | | | | | | | Gain (loss) on foreign currency translation of foreign operations | | (46,972) | (148,522) | (49,293) | 659,167 | (63,994) | (105,697) | (80,629) | 617,836 | | Loss on net investment hedge | | (69,236) | (342,111) | - | - | (69,236) | (342,111) | - | - | | Gain (loss) on cash flow hedge | 24 | 268,028 | (741,483) | 81,045 | 95,284 | 268,028 | (741,483) | 81,045 | 95,284 | | Gain (loss) on debt investments measured at FVTOCI (1) | 5 | 2,703 | (170) | 1,175 | 1,568 | 2,703 | (170) | 1,175 | 1,568 | | Net other comprehensive income (loss), to be reclassified to the statement of income in subsequent periods | | 154,523 | (1,232,286) | 32,927 | 756,019 | 137,501 | (1,189,461) | 1,591 | 714,688 | | Gain (loss) on equity investments measured at FVTOCI (1) | 5 | 4,636 | 5,003 | 19,298 | 80,314 | 4,636 | 5,003 | 19,298 | 80,314 | | Actuarial gains on pension and post-employment plans | 20 | 6,647 | 13,035 | 4,393 | 5,311 | 6,623 | 12,964 | 4,373 | 4,956 | | Net other comprehensive income, with no impact into subsequent statement of income | | 11,283 | 18,038 | 23,691 | 85,625 | 11,259 | 17,967 | 23,671 | 85,270 | | Total comprehensive income (loss), net of taxes | | 469,676 | (956,299) | 379,443 | 163,534 | 455,889 | (902,597) | 350,216 | 112,581 | | Attributable to | | | | | | | | | | | Controlling shareholders | | 469,676 | (956,299) | 379,443 | 163,534 | 469,676 | (956,299) | 379,443 | 163,534 | | Non-controlling interest | | - | - | - | - | (13,787) | 53,702 | (29,227) | (50,953) | | | | 469,676 | (956,299) | 379,443 | 163,534 | 455,889 | (902,597) | 350,216 | 112,581 |

(1) FVTOCI: Fair Value Through Other Comprehensive Income.

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 interim financial information.

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(in thousands of Brazilian Reais)

STATEMENT OF CHANGES IN EQUITY

| | Attributed to of 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 DECEMBER 31, 2018 | 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 | | Adoption of IFRS 16 | - | - | - | - | - | - | - | 6,287 | 6,287 | - | 6,287 | | Comprehensive income (loss) (1) | | | | | | | | | | | | | Gain (loss) on foreign currency translation of foreign operations | - | - | - | 626,254 | - | - | - | - | 626,254 | (30,666) | 595,588 | | Loss on net investment hedge | - | - | - | (66,818) | - | - | - | - | (66,818) | - | (66,818) | | Gains on marketable securities measured at FVTOCI (2) | - | - | - | - | 102,905 | - | - | - | 102,905 | - | 102,905 | | Unrealized gains in cash flow hedge | - | - | - | - | - | 39,444 | - | - | 39,444 | - | 39,444 | | Actuarial losses on pension and post-employment plans | - | - | - | - | - | - | (148,735) | - | (148,735) | (1,786) | (150,521) | | Income (loss) for the year | - | - | - | - | - | - | - | 297,612 | 297,612 | (160) | 297,452 | | SUB-TOTAL COMPREHENSIVE INCOME (LOSS) | - | - | - | 559,436 | 102,905 | 39,444 | (148,735) | 297,612 | 850,662 | (32,612) | 818,050 | | Realized loss in marketable securities at FVTOCI (2) | - | - | - | - | - | - | - | (52,493) | (52,493) | - | (52,493) | | Employee benefits remeasurement - defined benefit | - | - | - | - | - | - | - | 30,612 | 30,612 | - | 30,612 | | Appropriation of income (loss) | | | | | | | | | | | | | Dividends | - | - | - | - | - | - | - | - | - | (4,988) | (4,988) | | Share-based payments | - | (6,861) | 18,437 | - | - | - | - | - | 11,576 | - | 11,576 | | Acquisition (sale) of non-controlling interests | - | 84,352 | - | - | - | - | - | - | 84,352 | (276,824) | (192,472) | | BALANCES AT DECEMBER 31, 2019 | 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) | | 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 |

(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 interim financial information.

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(in thousands of Brazilian Reais)

STATEMENT OF CASH FLOWS

	Parent company — January to June 2020	January to June 2019	Consolidated — January to June 2020	January to June 2019
OPERATING ACTIVITIES
Income from continuing operations	257,949	75,831	268,897	77,745
Adjustments for:
Depreciation and amortization	610,390	635,429	741,053	745,932
Depreciation and depletion of biological assets	377,490	360,936	420,747	396,053
Result on disposals of property, plant and equipments	2,380	(24,223)	7,409	(18,248)
Write-down of inventories to net realizable value	40,021	83,670	63,180	89,553
Provision for tax, civil and labor risks	181,851	508,062	182,108	505,675
Income from associates and joint ventures	(6,073,512)	(350,038)	-	1,025
Financial results, net	5,871,030	1,029,451	796,772	1,067,587
Tax recoveries and gains in tax lawsuits	(224,820)	(687,371)	(224,820)	(687,371)
Deferred income tax	51,766	(128,546)	37,865	(143,931)
Employee profit sharing	121,399	101,684	117,992	110,455
Other (1)	251,911	82,466	259,024	56,644
	1,467,855	1,687,351	2,670,227	2,201,119
Trade accounts receivable	(395,989)	(901,666)	643,436	348,735
Inventories	(701,669)	(78,771)	(1,223,384)	(218,889)
Biological assets - current	(258,755)	(30,054)	(268,631)	(49,177)
Trade accounts payable	286,358	(195,476)	522,587	(381,973)
Supply chain finance	140,750	(299,603)	140,750	(299,575)
Cash (applied) generated by operating activities	538,550	181,781	2,484,985	1,600,240
Investments in securities at FVTPL (2)	2,800	(89,046)	-	(92,911)
Redemptions of securities at FVTPL (2)	99,264	19,866	102,172	20,244
Interest received	50,925	94,254	57,176	108,632
Dividends and interest on shareholders' equity received	196	8,247	-	15,551
Payment of tax, civil and labor provisions	(129,746)	(173,762)	(129,748)	(173,762)
Payment of interest	(474,804)	(486,667)	(553,441)	(557,228)
Derivative financial instruments	1,137,007	(94,366)	1,141,152	(109,092)
Payment of income tax and social contribution	-	-	(146)	(68)
Other operating assets and liabilities	947,290	(628,334)	450,922	(97,323)
Net cash (applied) provided by operating activities	2,171,482	(1,168,027)	3,553,072	714,283
Net cash (applied) provided by operating activities from discontinued operations	-	48,342	-	(109,234)
Net cash (applied) provided by operating activities	2,171,482	(1,119,685)	3,553,072	605,049
INVESTING ACTIVITIES
Investments in securities at amortized cost	-	-	-	(15,362)
Redemptions of securities at amortized cost	-	89,046	-	95,638
Redemptions of securities at FVTOCI (3)	-	100,547	-	131,997
Redemption (Investments) of restricted cash	285,622	9,834	285,622	30,522
Additions to property, plant and equipment	(274,851)	(162,159)	(285,323)	(178,085)
Additions to biological assets - non-current	(423,203)	(353,318)	(470,300)	(391,839)
Proceeds from disposals of property, plant, equipment and investments	65,717	379,256	65,717	1,789,751
Additions to intangible assets	(64,428)	(43,071)	(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	(547)	1,971
Capital increase (decrease) in associates and joint ventures	(5,000)	-	-	-
Advance for future capital increase	-	(1,559)	-	-
Net cash provided (used in) investing activities	(416,690)	20,547	(425,352)	1,237,638
Net cash provided (used in) investing activities from discontinued operations	-	-	-	(58,782)
Net cash provided (used in) investing activities	(416,690)	20,547	(425,352)	1,178,856
FINANCING ACTIVITIES
Proceeds from debt issuance	2,855,552	1,668,093	3,357,785	1,783,550
Repayment of debt	(1,381,422)	(2,395,287)	(1,639,768)	(3,121,428)
Treasury shares acquisition	(106,070)	-	(106,070)	-
Acquisition of non-controlling interests	-	-	(100,390)	-
Payment of lease liabilities	(221,046)	(238,305)	(268,264)	(279,086)
Net cash provided (used in) by financing activities	1,147,014	(965,499)	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	1,147,014	(965,499)	1,243,293	(1,615,397)
EFFECT OF EXCHANGE RATE VARIATION ON CASH AND CASH EQUIVALENTS	198,521	8,903	1,062,477	31,572
Net increase (decrease) in cash and cash equivalents	3,100,327	(2,055,734)	5,433,490	200,080
At the beginning of the period	1,368,980	3,826,698	4,237,785	5,036,011
At the end of the period	4,469,307	1,770,964	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 interim financial information.

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(in thousands of Brazilian Reais)

STATEMENT OF VALUE ADDED

	Parent company — January to June 2020	Restated (1) January to June 2019	Consolidated — January to June 2020	Restated (1) January to June 2019
1 - REVENUES	16,501,955	15,401,404	19,998,832	17,849,033
Sales of goods and products	16,317,046	14,960,053	19,859,521	17,386,060
Other income	38,180	277,842	18,082	266,806
Revenue related to construction of own assets	272,645	155,251	264,438	159,210
Expected credit losses	(125,916)	8,258	(143,209)	36,957
2 - RAW MATERIAL ACQUIRED FROM THIRD PARTIES	(10,837,295)	(9,701,424)	(12,834,954)	(11,121,046)
Costs of goods sold	(9,226,376)	(8,278,794)	(10,887,673)	(9,344,518)
Materials, energy, third parties services and other	(1,620,836)	(1,443,640)	(1,945,822)	(1,804,238)
Reversal for inventories losses	9,917	21,010	(1,459)	27,710
3 - GROSS ADDED VALUE (1-2)	5,664,660	5,699,980	7,163,878	6,727,987
4 - DEPRECIATION AND AMORTIZATION	(987,880)	(996,365)	(1,161,800)	(1,141,985)
5 - NET ADDED VALUE (3-4)	4,676,780	4,703,615	6,002,078	5,586,002
6 - RECEIVED FROM THIRD PARTIES	6,245,730	889,945	194,653	559,612
Income from associates and joint ventures	6,073,512	350,038	-	(1,025)
Financial income	173,109	540,550	194,711	560,729
Others	(891)	(643)	(58)	(92)
7 - ADDED VALUE TO BE DISTRIBUTED (5+6)	10,922,510	5,593,560	6,196,731	6,145,614
8 - DISTRIBUTION OF ADDED VALUE	10,922,510	5,593,560	6,196,731	6,145,614
Payroll	2,504,040	2,294,875	2,743,528	2,503,839
Salaries	1,829,075	1,718,794	2,021,894	1,890,010
Benefits	544,184	461,296	582,713	492,363
Government severance indemnity fund for employees	130,781	114,785	138,921	121,466
Taxes, Fees and Contributions	2,045,361	1,582,357	2,085,446	1,837,334
Federal	850,068	603,475	886,296	856,227
State	1,174,975	959,009	1,174,972	959,115
Municipal	20,318	19,873	24,178	21,992
Capital Remuneration from Third Parties	6,115,160	1,640,497	1,098,860	1,726,696
Interests, including exchange variation	6,052,527	1,580,544	999,871	1,638,859
Rents	62,633	59,953	98,989	87,837
Interest on Own-Capital	257,949	75,831	268,897	77,745
Income of the period	257,949	75,831	257,949	75,831
Non-controlling interest	-	-	10,948	1,914

(1) The comparative period was restated for better disclosure of exchange variations.

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

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COMPANY’S OPERATIONS

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, n º 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.

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1.1. Equity interest

| Entity | | Main activity | Country | % equity interest — 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.

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).

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(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 N º 12,846/2013 (“Anti-corruption Law”), which aims to verify eventual administrative responsibilities related to the facts object of the criminal lawsuit N º 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.

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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.

1.2.2. Trapaça Operation

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.

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1.3. U.S. Class Action

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.

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	Consolidated — 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).

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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.

1.5. Seasonality

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.

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.

BASIS OF PREPARATION AND PRESENTATION OF INTERIM FINANCIAL STATEMENTS

The parent company’s and consolidated interim financial information were prepared in accordance with the CPC 21 (R1) – Interim Financial Statements and the IAS 34 – Interim Financial Reporting issued by the International Accounting Standards Board - IASB as well as with the standards issued by the Brazilian Securities and Exchange Commission (“CVM”). All the relevant information applicable to the interim financial information, and only them, are being evidenced and correspond to those used by administration in its management.

The parent company’s and consolidated interim financial information are 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 parent company’s and consolidated interim financial information require 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 parent company’s and consolidated interim financial information were 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 parent company’s and consolidated 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.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The interim financial information, in this case quarterly financial information, aim 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.

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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).

There were no changes on such policies and estimates calculation methodologies. As allowed by CPC 21 (R1), 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.

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CASH AND CASH EQUIVALENTS

	Average rate (p.a.)	Parent company — 06.30.20	12.31.19	Consolidated — 06.30.20	12.31.19
Cash and bank accounts
U.S. Dollar	-	557	403	1,986,273	1,356,128
Brazilian Reais	-	55,070	166,506	55,886	167,051
Euro	-	16,065	3,813	61,634	71,626
Other currencies	-	219	180	1,254,978	694,982
		71,911	170,902	3,358,771	2,289,787
Cash equivalents
In Brazilian Reais
Investment funds	0.27%	3,924	3,507	3,924	3,507
Bank deposit certificates	2.97%	4,090,514	869,473	4,104,358	879,758
		4,094,438	872,980	4,108,282	883,265
In U.S. Dollar
Term deposit	0.90%	-	254,583	45,332	270,714
Overnight	0.07%	302,958	70,515	2,132,116	689,874
Other currencies
Term deposit	-	-	-	26,774	104,145
		302,958	325,098	2,204,222	1,064,733
		4,469,307	1,368,980	9,671,275	4,237,785

MARKETABLE SECURITIES

| | WAM (1) | Currency | Average interest rate (p.a.) | Parent company — 06.30.20 | 12.31.19 | Consolidated — 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 | 309,460 | 396,994 | | Investment funds - FIDC BRF | 3.46 | R$ | - | 14,728 | 14,891 | 14,728 | 14,891 | | Investment funds | 0.09 | ARS | - | - | - | 1,824 | 1,903 | | | | | | 324,188 | 411,885 | 326,012 | 413,788 | | Amortized cost | | | | | | | | | Sovereign bonds and others (2) | 2.83 | AOA | 3.82% | - | - | 358,421 | 265,783 | | | | | | 324,188 | 411,885 | 752,639 | 725,534 | | Current | | | | 309,460 | 396,994 | 337,183 | 418,182 | | Non-current (3) | | | | 14,728 | 14,891 | 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.

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TRADE ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

	Parent company — 06.30.20	12.31.19	Consolidated — 06.30.20	12.31.19
Trade accounts receivable
Domestic customers	660,003	1,333,344	676,209	1,336,762
Domestic related parties	2,091	800	-	-
Foreign customers	562,011	457,413	2,773,937	2,215,050
Foreign related parties	5,896,260	4,779,202	-	-
	7,120,365	6,570,759	3,450,146	3,551,812
( - ) Adjustment to present value	(5,174)	(8,522)	(6,522)	(10,121)
( - ) Expected credit losses	(583,421)	(457,505)	(647,057)	(503,848)
	6,531,770	6,104,732	2,796,567	3,037,843
Current	6,525,316	6,097,935	2,790,113	3,031,046
Non-current	6,454	6,797	6,454	6,797
Other receivables	139,306	150,156	144,192	153,799
( - ) Adjustment to present value	(1,390)	(1,936)	(1,390)	(1,936)
( - ) Expected credit losses	(27,498)	(27,986)	(27,498)	(27,986)
	110,418	120,234	115,304	123,877
Current	53,635	56,002	58,521	59,645
Non-current (1)	56,783	64,232	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.

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:

	Parent company	Consolidated
	06.30.20	06.30.20
Beginning balance	(457,505)	(503,848)
Provision	(9,077)	(11,790)
Write-offs	3,704	3,954
Exchange rate variation	(120,543)	(135,373)
Ending balance	(583,421)	(647,057)

The aging of trade accounts receivable is as follows:

	Parent company — 06.30.20	12.31.19	Consolidated — 06.30.20	12.31.19
Not overdue	6,529,758	6,028,415	2,541,307	2,820,308
Overdue
01 to 60 days	17,072	29,232	234,327	143,303
61 to 90 days	2,202	5,549	23,589	19,409
91 to 120 days	2,787	1,568	16,261	3,723
121 to 180 days	3,970	876	9,200	3,934
181 to 360 days	2,565	5,166	12,772	20,748
More than 360 days	562,011	499,953	612,690	540,387
( - ) Adjustment to present value	(5,174)	(8,522)	(6,522)	(10,121)
( - ) Expected credit losses	(583,421)	(457,505)	(647,057)	(503,848)
	6,531,770	6,104,732	2,796,567	3,037,843

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INVENTORIES

	Parent company — 06.30.20	12.31.19	Consolidated — 06.30.20	12.31.19
Finished goods	1,624,840	1,302,419	3,074,295	2,257,119
Work in progress	168,179	147,022	171,668	149,470
Raw materials	833,198	721,278	954,796	803,520
Packaging materials	79,442	57,915	89,149	60,715
Secondary materials	468,102	367,311	476,762	375,744
Supplies	192,776	168,248	229,609	205,399
Imports in transit	105,470	61,021	105,470	61,021
Other	26,103	5,252	51,791	19,266
(-) Adjustment to present value	(50,315)	(44,319)	(50,322)	(44,338)
	3,447,795	2,786,147	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:

	Parent company
				06.30.20
	Realizable value through sale	Impaired inventories	Obsolete inventories	Total
Beginning balance	(9,075)	(37,729)	(8,416)	(55,220)
Additions	(29,257)	(33,954)	(1,913)	(65,124)
Reversals	25,103	-	-	25,103
Write-offs	-	48,724	1,214	49,938
Ending balance	(13,229)	(22,959)	(9,115)	(45,303)
	Consolidated
				06.30.20
	Realizable value through sale	Impaired inventories	Obsolete inventories	Total
Beginning balance	(10,712)	(42,526)	(14,919)	(68,157)
Additions	(46,146)	(40,638)	(5,284)	(92,068)
Reversals	28,888	-	-	28,888
Write-offs	-	57,640	4,413	62,053
Exchange rate variation	215	(219)	(328)	(332)
Ending balance	(27,755)	(25,743)	(16,118)	(69,616)

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BIOLOGICAL ASSETS

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:

| | Parent company | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | 06.30.20 | | | Current | | | Non-current | | | | | | Live animals | | | Live animals | | | | | | Poultry | Pork | Total | Poultry | Pork | Forests | Total | | Beginning balance | 557,773 | 987,354 | 1,545,127 | 350,285 | 337,804 | 328,553 | 1,016,642 | | Additions/Transfer | 4,369,848 | 3,214,326 | 7,584,174 | 32,856 | 164,462 | 19,760 | 217,078 | | Changes in fair value (1) | 961,656 | 225,466 | 1,187,122 | 19,458 | (83,491) | - | (64,033) | | Harvest | - | - | - | - | - | (31,368) | (31,368) | | Write-off | - | - | - | - | - | (37) | (37) | | Transfer between current and non-current | 29,002 | 44,059 | 73,061 | (29,002) | (44,059) | - | (73,061) | | Transfer to assets held for sale | - | - | - | - | - | 109 | 109 | | Transfer to inventories | (5,261,831) | (3,323,771) | (8,585,602) | - | - | - | - | | Ending balance | 656,448 | 1,147,434 | 1,803,882 | 373,597 | 374,716 | 317,017 | 1,065,330 | | | Consolidated | | | | | | | | | | | | | | | 06.30.20 | | | Current | | | Non-current | | | | | | Live animals | | | Live animals | | | | | | Poultry | Pork | Total | Poultry | Pork | Forests | Total | | Beginning balance | 615,685 | 987,354 | 1,603,039 | 414,668 | 337,804 | 328,553 | 1,081,025 | | Additions/Transfer | 4,375,532 | 3,214,326 | 7,589,858 | 40,967 | 164,462 | 19,760 | 225,189 | | Changes in fair value (1) | 965,848 | 225,466 | 1,191,314 | 15,187 | (83,491) | - | (68,304) | | Harvest | - | - | - | - | - | (31,368) | (31,368) | | Write-off | - | - | - | - | - | (37) | (37) | | Transfer between current and non-current | 29,002 | 44,059 | 73,061 | (29,002) | (44,059) | - | (73,061) | | Transfer between held for sale | - | - | - | - | - | 109 | 109 | | Transfer to inventories | (5,261,831) | (3,323,771) | (8,585,602) | - | - | - | - | | Exchange variation | 11,255 | - | 11,255 | 12,447 | - | - | 12,447 | | Ending balance | 735,491 | 1,147,434 | 1,882,925 | 454,267 | 374,716 | 317,017 | 1,146,000 |

(1) The change in the fair value of biological assets includes depreciation of breeders and depletion of forests in the amount of R$377,490 (R$728,904 on December 31, 2019) in the parent company and R$420,747 (R$798,239 on December 31, 2019) in the consolidated.

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The quantities and balances of live animal are set forth below:

	Parent company — 06.30.20		12.31.19
	Quantity (thousand of heads)	Value	Quantity (thousand of heads)	Value
Consumable biological assets
Immature poultry	168,267	656,448	170,071	557,773
Immature pork	4,200	1,147,434	4,098	987,354
Total current	172,467	1,803,882	174,169	1,545,127
Production biological assets
Immature poultry	5,789	126,223	6,093	129,837
Mature poultry	10,188	247,374	10,329	220,448
Immature pork	90	86,346	211	77,027
Mature pork	455	288,370	455	260,777
Total non-current	16,522	748,313	17,088	688,089
	188,989	2,552,195	191,257	2,233,216
	Consolidated
	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 in the parent company and in the consolidated (R$62,408 in the parent company and in the consolidated at December 31, 2019).

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RECOVERABLE TAXES

	Parent company — 06.30.20	12.31.19	Consolidated — 06.30.20	12.31.19
Recoverable taxes
ICMS ("State VAT")	1,473,619	1,476,595	1,710,718	1,635,664
PIS and COFINS ("Federal Taxes to Social Fund Programs")	3,157,052	2,986,235	3,158,382	2,990,313
IPI ("Federal VAT")	869,242	848,862	869,245	848,865
INSS ("Brazilian Social Security")	257,025	255,950	257,031	255,967
Other	42,754	41,048	43,632	80,144
(-) Impairment on recoverable taxes	(179,059)	(167,194)	(179,544)	(167,674)
	5,620,633	5,441,496	5,859,464	5,643,279
Current	371,098	274,480	609,955	473,732
Non-current	5,249,535	5,167,016	5,249,509	5,169,547
Recoverable income tax and social contribution
Income and social contribution tax ("IR/CS")	160,432	313,704	200,007	430,778
(-) Impairment on recoverable taxes	(8,985)	(8,985)	(9,029)	(9,029)
	151,447	304,719	190,978	421,749
Current	60,688	40,291	93,781	152,486
Non-current	90,759	264,428	97,197	269,263

The rollforward of the impairment on recoverable taxes are set forth below:

	Parent company
						06.30.20
	ICMS	PIS and COFINS	IR/CS	IPI	Other	Total
Beginning balance	(141,193)	(16,922)	(8,985)	(3,818)	(5,261)	(176,179)
Additions	(25,724)	-	-	(263)	-	(25,987)
Write-offs	5,654	2,694	-	2,097	3,677	14,122
Ending balance	(161,263)	(14,228)	(8,985)	(1,984)	(1,584)	(188,044)
	Consolidated
						06.30.20
	ICMS	PIS and COFINS	IR/CS	IPI	Other	Total
Beginning balance	(141,193)	(16,922)	(9,029)	(3,818)	(5,741)	(176,703)
Additions	(25,724)	-	-	(263.00)	-	(25,987)
Write-offs	5,654	2,694	-	2,097	3,677	14,122
Exchange rate variation	-	-	-	-	(5)	(5)
Ending balance	(161,263)	(14,228)	(9,029)	(1,984)	(2,069)	(188,573)

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INCOME AND SOCIAL CONTRIBUTION TAXES

10.1. Deferred income and social contribution taxes

	Parent company — 06.30.20	12.31.19	Consolidated — 06.30.20	12.31.19
Assets
Tax loss carryforwards (corporate income tax)	1,784,359	1,780,424	1,828,398	1,785,027
Negative calculation basis (social contribution tax)	676,882	680,518	678,953	682,175
Temporary differences - Assets
Provisions for tax, civil and labor risks	493,962	477,538	493,962	477,538
Suspended collection taxes	13,409	31,069	13,409	31,069
Expected credit losses	179,231	135,219	179,231	135,374
Impairment on tax credits	66,771	60,771	66,771	60,771
Provision for other obligations	83,578	93,619	83,578	93,619
Employees' profit sharing	49,551	66,166	49,551	66,166
Write-down to net realizable value of inventories	15,003	18,657	15,003	18,718
Employees' benefits plan	212,068	202,228	212,068	202,228
Difference on tax x accounting basis for leases	58,950	37,492	58,950	37,492
Unrealized losses on fair value measurement	193,200	-	193,200	-
Adjustment to estimated annual effective tax rate - CPC 21	275,051	-	275,051	-
Other temporary differences	32,927	35,568	33,246	66,458
	4,134,942	3,619,269	4,181,371	3,656,635
Temporary differences - Liabilities
Unrealized fair value gains	-	(11,998)	-	(11,998)
Difference on tax x accounting basis for goodwill amortization	(320,160)	(319,592)	(320,160)	(319,592)
Difference on tax x accounting basis for depreciation (useful life)	(829,223)	(802,844)	(829,223)	(802,844)
Business combination - Sadia (1)	(668,458)	(622,203)	(691,855)	(640,318)
Unrealized gains on derivatives	(171,167)	(43,428)	(171,167)	(43,428)
Other - exchange rate variation	-	-	(85,957)	(69,142)
Other temporary differences	(14,052)	(10,710)	(23,539)	(8,761)
	(2,003,060)	(1,810,775)	(2,121,901)	(1,896,083)
Total deferred tax	2,131,882	1,808,494	2,059,470	1,760,552
Total Assets	2,131,882	1,808,494	2,180,059	1,845,862
Total Liabilities	-	-	(120,589)	(85,310)
	2,131,882	1,808,494	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.

The roll-forward of deferred tax assets is set forth below:

	Parent company	Consolidated
	January to June 2020	January to June 2020
Beginning balance	1,808,494	1,760,552
Deferred income and social contribution recognized in the statement of income	(51,766)	(76,197)
Deferred income and social contribution recognized in other comprehensive income	374,855	374,855
Other	299	260
Ending balance	2,131,882	2,059,470

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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:

	Parent company	Consolidated
2021	100,037	100,037
2022	159,307	159,307
2023	267,209	267,209
2024	291,568	291,568
2025 to 2027	945,298	945,298
2028 onwards	697,822	743,932
	2,461,241	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.

10.3. Income and social contribution taxes reconciliation

| | Parent company — April to June 2020 | January to June 2020 | April to June 2019 | January to June 2019 | Consolidated — 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 | 406,100 | 309,715 | 249,485 | (52,715) | 396,884 | 345,094 | 310,719 | 20,652 | | Nominal tax rate | 34% | 34% | 34% | 34% | 34% | 34% | 34% | 34% | | Credit (expense) at nominal rate | (138,074) | (105,303) | (84,825) | 17,923 | (134,941) | (117,332) | (105,644) | (7,022) | | Reconciling items | | | | | | | | | | Income from associates and joint ventures | 709,328 | 2,064,994 | 46,808 | 119,013 | - | - | (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) | (958,804) | (2,291,220) | 26,427 | (27,909) | | Penalties | (2,117) | (6,181) | 885 | 702 | (2,117) | (6,181) | 886 | 702 | | Investment grant | 8,980 | 19,514 | 30,689 | 30,689 | 8,980 | 19,514 | 30,689 | 30,689 | | Estimated annual effective tax rate - CPC 21 | 279,691 | 275,051 | (201,796) | (4,837) | 279,691 | 275,051 | (201,796) | (4,837) | | Reversal (recognition) of provision with no deferred tax constituted | - | - | 109,251 | (21,139) | - | - | 109,251 | (21,139) | | Other permanent differences | (1,234) | (8,621) | 10,970 | 14,104 | (1,084) | (8,622) | 10,965 | 14,043 | | | (102,230) | (51,766) | (61,591) | 128,546 | (89,755) | (76,197) | (119,696) | 57,093 | | Current income tax | - | - | - | - | (21,983) | (38,332) | (62,738) | (86,838) | | Deferred income tax | (102,230) | (51,766) | (61,591) | 128,546 | (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 in the parent company and in the consolidated, 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.

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JUDICIAL DEPOSITS

The rollforward of the judicial deposits is set forth below:

	Parent company
				06.30.20
	Tax	Labor	Civil, commercial and other	Total
Beginning balance	244,977	301,739	28,965	575,681
Additions	-	63,168	4,414	67,582
Reversals	(10,747)	(22,308)	(61)	(33,116)
Write-offs	(907)	(55,866)	(357)	(57,130)
Interest	2,863	4,183	406	7,452
Ending balance	236,186	290,916	33,367	560,469
	Consolidated
				06.30.20
	Tax	Labor	Civil, commercial and other	Total
Beginning balance	244,977	301,808	28,965	575,750
Additions	-	63,168	4,414	67,582
Reversals	(10,747)	(22,308)	(61)	(33,116)
Write-offs	(907)	(55,866)	(357)	(57,130)
Interest	2,863	4,183	406	7,452
Exchange rate variation	-	11	-	11
Ending balance	236,186	290,996	33,367	560,549

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INVESTMENTS

The rollforward of the direct investments in subsidiaries and affiliates of the parent company is set forth below:

| | Subsidiaries — BRF Energia S.A. | BRF GmbH | Establec. Levino Zaccardi | BRF Pet S.A. | BRF Austria GmbH | PSA Labor. Veter. Ltda | Sadia Alimentos S.A. | Proud Food Lda | Sadia International Ltd. | Sadia Uruguay S.A. | Eclipse Holding Cooperatief | VIP S.A. Empr. e Particip. Imob | Affiliates — PP-BIO Adm. Bem próprio S.A. | PR-SAD Adm. Bem próprio S.A. | Total | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | 06.30.20 | 12.31.19 | | a) Participation as of june 30, 2019 | | | | | | | | | | | | | | | | | | % of participation | 100.00% | 100.00% | 99.94% | 100.00% | 100.00% | 99.99% | 43.10% | 10.00% | 100.00% | 94.90% | 0.01% | 100.00% | 33.33% | 33.33% | | | | Total quantity of shares and quotas | 7,176,530 | 1 | 100 | 18,741,856 | 100 | 5,463,850 | 594,576,682 | 150,000 | 900,000 | 2,444,753,091 | 10,000 | 14,249,459 | - | - | | | | Quantity of shares and quotas held | 7,176,530 | 1 | 100 | 18,741,856 | 100 | 5,463,849 | 256,253,695 | 15,000 | 900,000 | 2,319,989,778 | 1 | 14,249,459 | - | - | | | | | | | | | | | | | | | | | - | | | | | b) Information as of june 30, 2019 | | | | | | | | | | | | | | | | | | Share capital | 7,177 | 6,523 | 1,186 | 32,664 | 120 | 5,564 | 338,054 | 3 | 2,933 | 497,012 | 334,999 | 50 | - | - | | | | Shareholders' equity | 607 | 11,337,111 | (305) | 19,698 | 135,707 | 5,369 | 9,786 | (254) | 313,739 | 90,068 | (29,937) | 2,382 | - | - | | | | Income (loss) for the year | (423) | 2,561,650 | (175) | (4,316) | 477,442 | (195) | (2,890) | (141) | (2,652) | (4,179) | (708) | 26 | - | - | | | | c) Movements of investments | | | | | | | | | | | | | | | | | | Beginning balance (12.31.19) | 1,031 | 6,148,777 | - | 19,083 | - | 5,564 | 4,791 | - | 235,307 | 74,821 | - | 2,355 | 2,354 | 4,851 | 6,498,934 | 4,042,451 | | Result Movements | | | | | | | | | | | | | | | | | | Income (loss) | (423) | 5,538,499 | (163) | (4,385) | 477,566 | (195) | 21 | (14) | 66,742 | (4,162) | - | 26 | - | - | 6,073,512 | 1,186,569 | | Dividends and interests on shareholders' equity | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (8,665) | | Capital movements | | | | | | | | | | | | | | | | | | Capital increase | - | - | - | 5,000 | - | - | - | - | - | - | - | - | 121 | 426 | 5,547 | 2,385 | | Capital transaction between subsidiaries | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 1,314,596 | | Acquisition (sale) of equity interest | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (67,444) | | Liquidation of subsidiary | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 90,834 | | Goodwill on acquisition of non-controlling interests | - | - | - | - | (50,945) | - | - | - | - | - | - | - | - | - | (50,945) | - | | Other | | | | | | | | | | | | | | | | | | Other comprehensive income | - | (350,166) | (30) | - | (162,268) | - | (595) | (1) | 11,690 | 14,785 | (1) | - | - | - | (486,586) | (81,086) | | Provision for losses on investments | - | - | 193 | - | - | - | - | 15 | - | - | 1 | - | - | - | 209 | 128,757 | | Reversal of provision for losses on investments | - | - | - | - | (128,646) | - | - | - | - | - | - | - | - | - | (128,646) | (109,463) | | Ending balance (06.30.20) | 608 | 11,337,110 | - | 19,698 | 135,707 | 5,369 | 4,217 | - | 313,739 | 85,444 | - | 2,381 | 2,475 | 5,277 | 11,912,025 | 6,498,934 |

The Company owns other investments in the amount of R$583 in the parent company and R$10,049 in the consolidated (R$583 at parent company and R$7,676 in the consolidated 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.

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PROPERTY, PLANT AND EQUIPMENT, NET

The rollforward of property, plant and equipment is set forth below:

| | Parent company — Weighted average depreciation rate (p.a.) | 12.31.19 | Additions | Disposals | Transfers (1) | 06.30.20 | | --- | --- | --- | --- | --- | --- | --- | | Cost | | | | | | | | Land | | 546,976 | - | (5,945) | 21,519 | 562,550 | | Buildings, facilities and improvements | | 9,558,475 | 81,210 | (30,617) | 77,614 | 9,686,682 | | Machinery and equipment | | 7,669,528 | 2,939 | (51,718) | 115,064 | 7,735,813 | | Furniture and fixtures | | 101,855 | 193 | (584) | 5,067 | 106,531 | | Vehicles | | 121,079 | 16,625 | (7,633) | (87) | 129,984 | | Construction in progress | | 335,872 | 272,645 | - | (257,496) | 351,021 | | Advances to suppliers | | - | 141 | - | - | 141 | | | | 18,333,785 | 373,753 | (96,497) | (38,319) | 18,572,722 | | Depreciation | | | | | | | | Land (2) | 20.77% | (4,258) | (3,085) | 37 | (1,799) | (9,105) | | Buildings, facilities and improvements | 9.53% | (3,126,532) | (294,102) | 18,977 | (5,307) | (3,406,964) | | Machinery and equipment | 6.65% | (3,790,298) | (224,938) | 28,962 | 1,341 | (3,984,933) | | Furniture and fixtures | 6.67% | (54,854) | (2,556) | 454 | 48 | (56,908) | | Vehicles | 27.85% | (24,541) | (18,130) | 1,041 | 84 | (41,546) | | | | (7,000,483) | (542,811) | 49,471 | (5,633) | (7,499,456) | | | | 11,333,302 | (169,058) | (47,026) | (43,952) | 11,073,266 |

(1) Refers to the transfer of R$39,532 for intangible assets, R$4,413 for assets 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).

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| | Consolidated — 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.

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The amount of capitalized borrowing costs during the six-month period ended on June 30, 2020 was of R$8,388 in the parent company and in the consolidated (R$10,543 in the parent company and in the consolidated in the same period of the previous year) and during the three-month period ended on June 30, 2020 was of R$4,330 in the parent company and in the consolidated (R$5,241 in the parent company and R$5,219 in the consolidated 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. in the parent company and in the consolidated (6.41% p.a. in the parent company and 2.32% in the consolidated 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	Parent company and Consolidated — 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

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INTANGIBLE ASSETS

The intangible assets rollforward is set forth below:

| | Weighted average amortization rate (p.a.) | Parent company — 12.31.19 | Additions | Disposals | Transfers | 06.30.20 | | --- | --- | --- | --- | --- | --- | --- | | Cost | | | | | | | | Goodwill | | 1,783,655 | - | - | - | 1,783,655 | | Trademarks | | 1,152,885 | - | - | - | 1,152,885 | | Non-compete agreement | | 71,729 | - | (379) | - | 71,350 | | Outgrowers relationship | | 14,604 | - | - | - | 14,604 | | Patents | | 6,205 | - | - | - | 6,205 | | Software | | 491,682 | 72,766 | (35,744) | 70,775 | 599,479 | | Intangible in progress | | 11,450 | 57,321 | - | (39,784) | 28,987 | | | | 3,532,210 | 130,087 | (36,123) | 30,991 | 3,657,165 | | Amortization | | | | | | | | Non-compete agreement | 35.65% | (57,690) | (6,946) | 379 | - | (64,257) | | Outgrowers relationship | 13.09% | (12,744) | (593) | - | - | (13,337) | | Patents | 19.05% | (5,524) | (237) | - | - | (5,761) | | Software | 32.44% | (316,720) | (61,896) | 35,744 | 8,540 | (334,332) | | | | (392,678) | (69,672) | 36,123 | 8,540 | (417,687) | | | | 3,139,532 | 60,415 | - | 39,531 | 3,239,478 |

| | Weighted average amortization rate (p.a.) | Consolidated — 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 |

During the six-month period ended on June 30, 2020, Management did not identify any event that could indicate an impairment of such assets.

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LOANS AND BORROWINGS

| | Parent company — 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 | - | - | | Export credit facility (3) | Fixed / CDI / USD | 5.58% | 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 | - | - | | Debentures | CDI / IPCA | 5.63% (7.40% on 12.31.19) | 5.5 | 755,760 | - | - | (20,579) | 21,835 | - | 757,016 | | 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) | 5.3 | 8,407,975 | (275) | - | (270,264) | 281,185 | 3,058,442 | 11,477,063 | | Export credit facility | Fixed / LIBOR / USD | 4.13% (5.77% on 12.31.19) | 2.7 | 407,274 | - | (118,113) | (12,782) | 10,328 | 127,617 | 414,324 | | Advances for foreign exchange rate contracts | Fixed / USD | 3.88 | 0.8 | - | 529,211 | - | - | 4,262 | 17,865 | 551,338 | | | | | | 8,815,249 | 528,936 | (118,113) | (283,046) | 295,775 | 3,203,924 | 12,442,725 | | | | | | 16,429,004 | 2,855,552 | (1,381,422) | (474,804) | 549,886 | 3,687,596 | 21,665,812 | | Current | | | | 3,033,034 | | | | | | 3,935,263 | | Non-current | | | | 13,395,970 | | | | | | 17,730,549 |

(1) Weighted average maturity in years.

(2) The Certificates of Agribusiness Receivables (“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.

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| | Consolidated — 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.

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.

As of December 31, 2019 and June 30, 2020, the Company did not have any financial covenant clauses related to its loans and borrowings agreements.

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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 disbursed 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:

	Parent company	Consolidated
	06.30.20	06.30.20
Current	3,935,263	4,071,950
Non-current	17,730,549	20,791,601
July to december 2021	1,850,633	1,959,689
2022	3,365,885	3,600,786
2023	3,157,481	3,157,739
2024	3,167,562	3,159,866
2025 onwards	6,188,988	8,913,521
	21,665,812	24,863,551

15.3. Guarantees

	Parent company — 06.30.20	12.31.19	Consolidated — 06.30.20	12.31.19
Total of loans and financing	21,665,812	16,429,004	24,863,551	18,620,279
Mortgage guarantees	40,281	51,237	40,281	51,237
Related to FINEM-BNDES	-	45,516	-	45,516
Related to tax incentives and other	40,281	5,721	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).

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TRADE ACCOUNTS PAYABLE

	Parent company — 06.30.20	12.31.19	Consolidated — 06.30.20	12.31.19
Domestic suppliers
Third parties	5,460,334	4,921,902	5,472,974	4,930,424
Related parties	9,850	6,392	-	-
	5,470,184	4,928,294	5,472,974	4,930,424
Foreign suppliers
Third parties	556,241	404,068	1,320,280	915,611
	556,241	404,068	1,320,280	915,611
(-) Adjustment to present value	(60,020)	(49,253)	(60,041)	(49,269)
	5,966,405	5,283,109	6,733,213	5,796,766
Current	5,958,687	5,270,762	6,725,495	5,784,419
Non-current	7,718	12,347	7,718	12,347

On the trade accounts payable balance as of June 30, 2020, R$ 1,674,014 in the parent company and R$ 1,675,566 in the consolidated (R$1,434,152 in the parent company and R$1,435,025 in the consolidated 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.

SUPPLY CHAIN FINANCE

	Parent company and Consolidated — 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 partnerships 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).

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LEASES

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).

	Parent company — Weighted average depreciation rate (p.a.)	12.31.19	Additions	Disposals	Transfers	06.30.20
Cost
Land		20,499	-	(182)	20,751	41,068
Buildings		2,446,641	81,205	(1,387)	(2,487)	2,523,972
Machinery and equipment		114,571	1,073	(7,681)	-	107,963
Vehicles		112,917	16,625	(7,616)	-	121,926
Software		55,705	72,766	(35,624)	(18,264)	74,583
		2,750,333	171,669	(52,490)	-	2,869,512
Depreciation
Land	14.77%	(4,258)	(3,086)	37	(1,799)	(9,106)
Buildings	28.79%	(459,122)	(190,934)	723	(6,765)	(656,098)
Machinery and equipment	40.97%	(96,684)	(13,573)	7,024	-	(103,233)
Vehicles	28.75%	(18,550)	(17,886)	1,025	-	(35,411)
Software	45.21%	(44,815)	(16,577)	35,624	8,564	(17,204)
		(623,429)	(242,056)	44,433	-	(821,052)
		2,126,904	(70,387)	(8,057)	-	2,048,460

	Consolidated — 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

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18.2. Lease liabilities

| | Parent company — WAM (1) | 12.31.19 | Additions | Payments | Interest paid | Interest accrued | Disposals | Transfers | 06.30.20 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Land | 6.6 | 18,707 | 83 | (3,543) | (2,169) | 2,169 | (210) | 17,501 | 32,538 | | Buildings | 7.4 | 2,106,997 | 89,637 | (170,175) | (41,931) | 78,980 | (693) | (17,501) | 2,045,314 | | Machinery and equipment | 1.1 | 25,349 | 1,073 | (16,111) | (6,694) | 6,694 | (733) | - | 9,578 | | Vehicles | 2.5 | 100,362 | 16,625 | (15,806) | (4,972) | 4,972 | (6,915) | - | 94,266 | | Software | 2.0 | 1,137 | 72,766 | (15,411) | (2,237) | 2,237 | - | - | 58,492 | | | | 2,252,552 | 180,184 | (221,046) | (58,003) | 95,052 | (8,551) | - | 2,240,188 | | Current | | 313,058 | | | | | | | 244,450 | | Non-current | | 1,939,494 | | | | | | | 1,995,738 |

(1) Weighted average maturity in years.

| | Consolidated — 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 |

(1) Weighted average maturity in years.

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:

	Parent company	Consolidated
	06.30.20	06.30.20
Current	244,450	317,435
Non-current	1,995,738	2,161,196
July to december 2021	670,047	714,004
2022	325,344	368,428
2023	266,158	284,173
2024	211,437	217,127
2025 onwards	522,752	577,464
	2,240,188	2,478,631

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18.4. Incremental rate

The Company uses nominal incremental rates to measure its lease liabilities. The nominal and real interest rates are presented below.

Contract Terms	06.30.20 — Nominal rate% p.a.	Actual rate% p.a.	12.31.19 — 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 rates used in contracts recognized in the first semester 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.

	Parent Company — April to June 2020	January to June 2020	Consolidated — April to June 2020	January to June 2020
Variable payments not included in the lease liabilities	11,403	22,151	79,202	161,730
Expenses related to short-term assets	12,805	28,539	42,045	84,249
Expenses related to low-value assets	1,188	1,264	1,406	1,707
	25,396	51,954	122,653	247,686

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.

SHARE-BASED PAYMENT

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:

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Date — Grant date	Beggining of exercise	End of the exercise	Quantity — Options granted	Outstanding options	Grant (1) — Fair value of the option	Strike price (1) — 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 — Grant	Vesting date	Quantity — Shares granted	Outstanding shares	Grant (1) — 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:

	Consolidated
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).

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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:

	Parent company — Liabilities		Consolidated — Liabilities
	06.30.20	12.31.19	06.30.20	12.31.19
Medical assistance	194,067	187,274	194,067	187,274
F.G.T.S. Penalty (1)	260,840	247,485	260,840	247,485
Award for length of service	109,292	103,284	109,292	103,284
Other	59,530	56,744	187,786	151,431
	623,729	594,787	751,985	689,474
Current	87,996	87,996	97,688	95,919
Non-current	535,733	506,791	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$13,035 in the parent company and R$12,964 in consolidated (R$5,311 in the parent company and 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$6,647 in the parent company and R$6,623 in consolidated (R$4,393 in the parent company and R$4,373 in consolidated in the same period of the previous year).

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.

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:

	Parent company
					06.30.20
	Tax	Labor	Civil, commercial and other	Contingent liabilities (Business combination)	Total
Beginning balance	583,316	600,510	306,476	300,561	1,790,863
Additions	54,362	160,277	19,112	-	233,751
Reversals	(6,641)	(61,375)	(17,237)	(1,388)	(86,641)
Payments	(37,809)	(134,174)	(14,895)	-	(186,878)
Interest	30,115	43,707	19,465	-	93,287
Ending balance	623,343	608,945	312,921	299,173	1,844,382
Current					1,135,183
Non-current					709,199

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	Consolidated
					06.30.20
	Tax	Labor	Civil, commercial and other	Contingent liabilities (Business combination)	Total
Beginning balance	583,464	603,074	307,177	300,654	1,794,369
Additions	54,363	160,535	19,112	-	234,010
Reversals	(6,641)	(61,375)	(17,237)	(1,388)	(86,641)
Payments	(37,809)	(134,174)	(14,895)	-	(186,878)
Interest	30,115	43,707	19,465	-	93,287
Exchange rate variation	23	474	126	14	637
Ending balance	623,515	612,241	313,748	299,280	1,848,784
Current					1,139,238
Non-current					709,546

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.

SHAREHOLDERS’ EQUITY

22.1. Capital Stock

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

Parent company and Consolidated	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

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22.1.2. Rollforward of outstanding shares

	Parent company
	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

22.2. Treasury shares

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.

	Parent company
	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.

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 — April to June 2020 | January to June 2020 | April to June 2019 | January to June 2019 | Discontinued operations — April to June 2019 | January to June 2019 | Continued and discontinued operations — 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) |

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FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT

24.1. Overview

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 CPC 48 / 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 consolidated 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:

	Consolidated — 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	5,080,222	(20,390,991)	(15,310,769)	(13,268,963)

The table below summarizes the significant commitments and contractual obligations that may impact the Company’s liquidity:

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| | Parent company | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 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 | 21,665,812 | 26,231,999 | 4,579,708 | 2,263,004 | 4,203,614 | 3,859,809 | 3,662,471 | 7,663,393 | | Trade accounts payable | 5,966,405 | 6,026,425 | 6,018,697 | 2,011 | 2,913 | 2,697 | 107 | - | | Supply chain finance | 982,237 | 994,745 | 994,745 | - | - | - | - | - | | Lease payables | 2,240,188 | 2,758,299 | 261,195 | 740,060 | 383,954 | 335,622 | 284,883 | 752,585 | | 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 | 68,812 | 68,812 | 68,812 | - | - | - | - | - |

	Consolidated
	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:

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| 06.30.20 — Cash flow hedges - Derivative instruments | Maturity | Hedged Object | Asset | Liability | Notional | | Fair value (R$) | | --- | --- | --- | --- | --- | --- | --- | --- | | Subsidiaries | | | | | | | | | Interest rate swap | 3rd Qtr. 2021 | Debt | 118,00% CDI | 5.60% p.a. | 810,000 | BRL | (28,212) | | Interest rate swap | 4th Qtr. 2021 | Debt | 118,00% CDI | 5.72% p.a. | 180,000 | BRL | (7,349) | | | | | | | | | (35,561) | | Derivative instruments not designated | Maturity | Hedged Object | Asset | Liability | Notional | | Fair value (R$) | | Parent company and Consolidated | | | | | | | | | 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.

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:

	Consolidated — 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:

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| 06.30.20 — Derivative instruments not designated | Asset | Liability | Maturity | Notional | | Exercise rate | Fair value (R$) | | --- | --- | --- | --- | --- | --- | --- | --- | | Parent company | | | | | | | | | 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 | | | | | | | | | (58,280) | | Subsidiaries | | | | | | | | | 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) | | Total Consolidated | | | | | | | (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:

| 06.30.20 — Cash flow hedge - Derivative instruments | Hedged object | Asset | Liability | Maturity | Notional | | Designation rate | Fair value | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Parent company and consolidated | | | | | | | | | | 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) | | Parent company and consolidated | | | | | | | | | | 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:

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| 06.30.20 — Net investment hedge - Non-derivative instruments | Protection (Investment) | Asset | Liability | Maturity | Notional | | Rate | Fair value (1) | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Parent company and consolidated | | | | | | | | | | 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:

| 06.30.20 — Cash flow hedge - Derivative instruments | Hedged object | Index | Maturity | Quantity | | Exercise rate (USD/Ton) | Fair value | | --- | --- | --- | --- | --- | --- | --- | --- | | Parent company and consolidated | | | | | | | | | 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 | | Parent company and consolidated | | | | | | | | | 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 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Parent company and consolidated | | | | | | | | | | Non-deliverable forward | Cost in USD | BRL | USD | 3rd Qtr. 2020 | USD | 57,352 | 4.2031 | (70,947) | | Non-deliverable forward | Cost in USD | BRL | USD | 4th Qtr. 2020 | USD | 97,022 | 4.4466 | (97,261) | | Non-deliverable forward | Cost in USD | BRL | USD | 1st Qtr. 2021 | USD | 47,949 | 4.5868 | (41,737) | | Non-deliverable forward | Cost in USD | BRL | USD | 2nd Qtr. 2021 | USD | 86,290 | 5.1581 | (28,458) | | Non-deliverable forward | Cost in USD | BRL | USD | 3rd Qtr. 2021 | USD | 28,601 | 5.5164 | (116) | | Non-deliverable forward | Cost in USD | BRL | USD | 4rd Qtr. 2021 | USD | 5,918 | 5.5659 | 43 | | | | | | | | | | (238,476) |

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:

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| Income for the period — April to June 2020 | Reference | Exposure | Hedge accounting | Foreign Exchange | Commodities | Interest Rate | Consolidated — 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 | | | | | | | Consolidated | | April to June 2020 | Reference | 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 | | | | | | | Consolidated | | January to June 2020 | Reference | 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 | | | | | | | Consolidated | | January to June 2020 | Reference | 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 | | | | | | | Consolidado | | 06.30.20 | Reference | 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.

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:

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	Parent company — 06.30.20	12.31.19	Consolidated — 06.30.20	12.31.19
Asset
Designated as hedge accounting
Currency derivatives	101,161	166,729	101,161	166,729
Commodities derivatives	131,325	25,191	131,325	25,191
Not designated as hedge accounting
Currency derivatives	10,152	51,811	16,757	53,395
	242,638	243,731	249,243	245,315
Current assets	237,757	193,740	244,362	195,324
Non-current assets	4,881	49,991	4,881	49,991
Liabilities
Designated as hedge accounting
Currency derivatives	(1,008,908)	(73,417)	(1,008,908)	(73,417)
Commodities derivatives	(28,799)	(48,829)	(28,799)	(48,829)
Interest rate derivatives	(35,561)	-	(35,561)	-
Not designated as hedge accounting
Currency derivatives	(68,432)	(29,479)	(70,906)	(31,369)
Interest rate derivatives	(380)	-	(380)	-
	(1,142,080)	(151,725)	(1,144,554)	(153,615)
Current liabilities	(1,098,175)	(151,722)	(1,100,649)	(153,612)
Non-current liabilities	(43,905)	(3)	(43,905)	(3)

24.6. Sensitivity analysis

The 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.

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| 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 | | - | - | - | - | - |

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24.7. Financial instruments by category

	Parent company
	06.30.20
	Amortized cost	Fair value through profit and loss	Total
Assets
Cash and bank	71,911	-	71,911
Cash equivalents	-	4,397,396	4,397,396
Marketable securities	-	324,188	324,188
Restricted cash	24,179	-	24,179
Trade accounts receivable	6,335,207	196,563	6,531,770
Other receivables	110,418	-	110,418
Derivatives not designated	-	10,152	10,152
Derivatives designated as hedge accounting (1)	-	232,486	232,486
Liabilities
Trade accounts payable	(5,966,405)	-	(5,966,405)
Supply chain finance	(982,237)	-	(982,237)
Loans and financing (2)	(21,665,812)	-	(21,665,812)
Derivatives not designated	-	(68,812)	(68,812)
Derivatives designated as hedge accounting (1)	-	(1,073,268)	(1,073,268)
	(22,072,739)	4,018,705	(18,054,034)

(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.

	Parent company
	12.31.19
	Amortized cost	Fair value through profit and loss	Total
Assets
Cash and bank	170,902	-	170,902
Cash equivalents	-	1,198,078	1,198,078
Marketable securities	-	411,885	411,885
Restricted cash	296,294	-	296,294
Trade accounts receivable	5,878,791	225,941	6,104,732
Other receivables	120,234	-	120,234
Derivatives not designated	-	51,811	51,811
Derivatives designated as hedge accounting (1)	-	191,920	191,920
Liabilities
Trade accounts payable - Restated	(5,283,109)	-	(5,283,109)
Supply chain finance	(842,037)	-	(842,037)
Loans and financing (2)	(16,429,004)	-	(16,429,004)
Derivatives not designated	-	(29,479)	(29,479)
Derivatives designated as hedge accounting (1)	-	(122,246)	(122,246)
	(16,087,929)	1,927,910	(14,160,019)

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	Consolidated
	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.

	Consolidated
	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)

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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.

	Parent company
	06.30.20			12.31.19
	Level 1	Level 2	Total	Level 1	Level 2	Total
Financial Assets
Fair value through profit and loss
Savings account and overnight	302,958	-	302,958	70,515	-	70,515
Term deposits	-	-	-	254,583	-	254,583
Bank deposit certificates	-	4,090,514	4,090,514	-	869,473	869,473
Financial treasury bills	309,460	-	309,460	396,994	-	396,994
Investment funds	18,652	-	18,652	18,398	-	18,398
Trade accounts receivable	-	196,563	196,563	-	225,941	225,941
Derivatives	-	242,638	242,638	-	243,731	243,731
Financial Liabilities
Fair value through profit and loss
Derivatives	-	(1,142,080)	(1,142,080)	-	(151,725)	(151,725)
	631,070	3,387,635	4,018,705	740,490	1,187,420	1,927,910

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	Consolidated
	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.

	Parent company and Consolidated
		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)
Parent company		(12,234,079)	(12,212,375)	(9,163,735)	(9,632,348)
BRF GmbH bonds
BRF SA BRFSBZ4	2026	(2,719,565)	(2,683,338)	(1,999,509)	(2,101,175)
Consolidated		(14,953,644)	(14,895,713)	(11,163,244)	(11,733,523)

SEGMENT INFORMATION

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:

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Net sales	Consolidated — 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:

	Consolidated — 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	Consolidated — 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 (note )	(19,263)	(59,889)	4,503	4,246
Arbitration reversal	14,520	14,520	-	-
COVID-19 - Expenses and expcted credit losses	(2,182)	(26,260)	-	-
Restructuring plan	-	-	-	(16,431)
Other	3,304	(2,632)	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:

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	Consolidated — 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.

NET SALES

| | Parent company — April to June 2020 | January to June 2020 | April to June 2019 | January to June 2019 | Consolidated — 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 | 9,951,874 | 5,739,830 | 11,506,128 | 5,069,822 | 9,951,942 | | International | 2,198,586 | 4,751,730 | 2,704,490 | 4,970,220 | 4,537,513 | 8,804,578 | 4,289,643 | 7,745,612 | | Other segments | 274,412 | 566,044 | 298,480 | 558,305 | 283,285 | 590,579 | 305,893 | 554,970 | | | 8,212,828 | 16,823,902 | 8,072,792 | 15,480,399 | 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) | (1,096,975) | (2,208,119) | (988,126) | (1,929,779) | | International | (24,698) | (48,646) | (30,665) | (55,620) | (330,227) | (581,589) | (304,145) | (566,243) | | Other segments | (27,746) | (54,683) | (28,153) | (51,206) | (29,500) | (58,586) | (35,078) | (59,243) | | | (1,149,419) | (2,311,448) | (1,046,944) | (2,036,605) | (1,456,702) | (2,848,294) | (1,327,349) | (2,555,265) | | Net sales | | | | | | | | | | Brazil | 4,642,855 | 9,298,009 | 4,081,696 | 8,022,095 | 4,642,855 | 9,298,009 | 4,081,696 | 8,022,163 | | International | 2,173,888 | 4,703,084 | 2,673,825 | 4,914,600 | 4,207,286 | 8,222,989 | 3,985,498 | 7,179,369 | | Other segments | 246,666 | 511,361 | 270,327 | 507,099 | 253,785 | 531,993 | 270,815 | 495,727 | | | 7,063,409 | 14,512,454 | 7,025,848 | 13,443,794 | 9,103,926 | 18,052,991 | 8,338,009 | 15,697,259 |

OTHER OPERATING INCOME (EXPENSES), NET

| | Parent company — April to June 2020 | January to June 2020 | April to June 2019 | January to June 2019 | Consolidated — April to June 2020 | January to June 2020 | April to June 2019 | January to June 2019 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Recovery of expenses (1) | 156,174 | 234,651 | 695,513 | 703,323 | 156,370 | 235,057 | 695,814 | 704,811 | | Provision reversal | 70,625 | 70,625 | 357 | 14,080 | 70,625 | 70,625 | 357 | 14,085 | | Scrap sales | 2,742 | 5,434 | 2,868 | 5,865 | 2,787 | 5,562 | 3,221 | 6,837 | | Provision for civil and tax risks (2) | (22,796) | (65,272) | (356,726) | (363,884) | (23,045) | (65,520) | (356,210) | (363,918) | | Other employees benefits | (8,214) | (15,649) | (7,458) | (14,916) | (8,214) | (15,649) | (9,918) | (17,374) | | Insurance claims costs | (1,791) | (5,476) | (2,345) | (13,845) | (828) | (2,517) | (2,193) | (14,977) | | Net gains (losses) from the disposals of investments | - | - | (482) | (482) | 223 | 256 | (2,354) | (2,354) | | Net gains (losses) from the disposals of property, plant and equipment | 7,390 | (2,380) | 13,978 | 24,223 | 3,467 | (7,409) | 9,128 | 18,248 | | Employee participation and bonuses | (71,874) | (121,399) | (51,873) | (101,684) | (71,347) | (117,992) | (52,843) | (110,455) | | Demobilization expenses | (2,108) | (5,863) | (8,404) | (17,187) | (1,998) | (6,255) | (10,949) | (21,932) | | Expenses with investigations and class action (3) | (9,773) | (204,757) | (23,921) | (35,034) | (11,771) | (209,151) | (31,207) | (42,320) | | Expected credit losses in other receivables | (92) | (3,185) | - | - | 308 | (3,157) | - | - | | Other | 26,938 | 29,161 | 1,501 | (24,943) | 21,976 | 16,150 | (12,369) | (16,850) | | | 147,221 | (84,110) | 263,008 | 175,516 | 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.

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FINANCIAL INCOME (EXPENSES), NET

| | Note | Parent company — April to June 2020 | January to June 2020 | Restated (1) April to June 2019 | Restated (1) January to June 2019 | Consolidated — April to June 2020 | January to June 2020 | Restated (1) April to June 2019 | Restated (1) January to June 2019 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Financial income | | 66,332 | 173,109 | 460,656 | 540,550 | 81,833 | 194,711 | 474,668 | 560,729 | | Interest on cash and cash equivalents | 4 | 32,813 | 53,847 | 22,828 | 59,692 | 21,474 | 51,029 | 34,901 | 69,451 | | Revenues from marketable securities | 5 | 2,478 | 21,921 | 26,152 | 44,642 | 28,800 | 45,387 | 27,868 | 54,404 | | Fair value throught other comprehensive income | | - | - | - | - | 243 | 454 | 152 | 323 | | Fair value throught profit and loss | | 2,306 | 6,060 | 5,740 | 10,244 | 2,305 | 5,716 | 5,352 | 9,856 | | Amortized cost | | 172 | 15,861 | 20,412 | 34,398 | 26,252 | 39,217 | 22,364 | 44,225 | | Interest on recoverable taxes | 9 | 23,659 | 80,256 | 401,731 | 419,335 | 23,704 | 80,340 | 401,797 | 419,467 | | Interest on other assets | | 7,382 | 17,085 | 9,945 | 16,881 | 7,855 | 17,955 | 10,102 | 17,407 | | Financial expenses | | (577,883) | (1,192,623) | (982,549) | (1,494,651) | (166,563) | (735,913) | (1,048,018) | (1,551,277) | | Interest on loans and financing | 15 | (272,631) | (550,464) | (299,517) | (588,543) | (317,077) | (631,570) | (340,960) | (674,531) | | Interest with related parties | 30 | (100,565) | (181,326) | (37,672) | (76,070) | - | - | - | - | | Interest on contingencies | 21 | (38,121) | (104,164) | (437,637) | (456,591) | (39,042) | (105,940) | (437,637) | (457,436) | | Interest on leases | 18 | (47,015) | (95,261) | (45,284) | (90,830) | (51,494) | (103,863) | (49,651) | (99,707) | | Interest on other liabilities | | 3,956 | 5,360 | (20,961) | (26,316) | 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 | (90,680) | (181,468) | (76,011) | (143,501) | (90,557) | (181,498) | (76,634) | (145,092) | | Other | | (32,827) | (85,300) | (65,467) | (112,800) | (10,047) | (108,779) | (101,760) | (149,560) | | Monetary, exchange and derivative results, net | | (1,037,987) | (4,851,516) | 68,931 | (75,350) | (105,573) | (255,570) | (45,972) | (77,039) | | Exchange rate variation on monetary assets and liabilities | | (1,265,586) | (6,120,056) | 162,148 | 70,690 | (334,800) | (1,533,734) | 46,854 | 82,544 | | Derivative results | | 227,599 | 1,268,540 | (93,217) | (146,040) | 229,227 | 1,278,164 | (92,826) | (159,583) | | | | (1,549,538) | (5,871,030) | (452,962) | (1,029,451) | (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).

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:

| | Parent company — April to June 2020 | January to June 2020 | April to June 2019 | January to June 2019 | Consolidated — April to June 2020 | January to June 2020 | April to June 2019 | January to June 2019 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Costs of sales | | | | | | | | | | Raw materials and consumables (1) | 4,231,356 | 8,139,255 | 3,770,516 | 7,206,588 | 5,047,664 | 9,722,981 | 4,298,158 | 8,224,665 | | Salaries and employees benefits | 983,001 | 1,914,252 | 896,650 | 1,759,779 | 1,002,007 | 1,947,175 | 910,021 | 1,785,418 | | Depreciation | 419,500 | 835,104 | 417,998 | 833,222 | 460,821 | 913,052 | 448,822 | 893,489 | | Amortization | 12,704 | 26,389 | 19,884 | 36,229 | 29,238 | 57,583 | 33,630 | 62,820 | | Others | 536,325 | 1,096,795 | 544,798 | 1,083,852 | 585,304 | 1,180,331 | 555,729 | 1,122,148 | | | 6,182,886 | 12,011,795 | 5,649,846 | 10,919,670 | 7,125,034 | 13,821,122 | 6,246,360 | 12,088,540 | | Sales expenses | | | | | | | | | | Indirect and direct logistics expenses | 547,545 | 1,063,078 | 454,180 | 867,678 | 624,692 | 1,208,409 | 503,961 | 1,002,381 | | Marketing | 86,606 | 203,672 | 133,615 | 221,640 | 136,138 | 290,233 | 198,023 | 337,448 | | Salaries and employees benefits | 267,851 | 517,086 | 258,731 | 508,602 | 353,584 | 671,734 | 319,209 | 631,950 | | Depreciation | 37,740 | 68,621 | 23,923 | 49,861 | 57,533 | 111,113 | 45,376 | 89,795 | | Amortization | 15,319 | 29,038 | 17,492 | 32,480 | 22,753 | 42,712 | 22,990 | 43,325 | | Others | 102,720 | 208,853 | 99,504 | 207,675 | 166,189 | 321,022 | 167,218 | 287,173 | | | 1,057,781 | 2,090,348 | 987,445 | 1,887,936 | 1,360,889 | 2,645,223 | 1,256,777 | 2,392,072 | | Administrative expenses | | | | | | | | | | Salaries and employees benefits | 50,540 | 90,720 | 42,902 | 85,282 | 85,617 | 155,839 | 72,505 | 142,882 | | Fees | 17,350 | 29,213 | 7,954 | 14,215 | 17,350 | 29,213 | 7,954 | 14,215 | | Depreciation | 8,172 | 14,483 | 4,123 | 8,698 | 12,130 | 21,627 | 6,203 | 12,305 | | Amortization | 6,646 | 14,245 | 4,889 | 11,281 | 7,505 | 15,713 | 7,011 | 15,438 | | Others | 39,901 | 61,229 | 25,885 | 57,957 | 67,863 | 110,633 | 42,484 | 92,546 | | | 122,609 | 209,890 | 85,753 | 177,433 | 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 in the parent company and in the consolidated (R$31,516 in the parent company and in the consolidated in the same period of the previous year) and R$14,872 in the parent company and in the consolidated for the three-month period ended on June 30, 2020 (R$16,851 in the parent company and in the consolidated in the same period of the previous year).

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RELATED PARTIES – PARENT COMPANY

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 conducted.

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30.1. Transactions and balances

The balances of the transactions with related parties registered in the statement of financial position of the Parent Company are as follows:

| | Accounts receivable — 06.30.20 | 12.31.19 | Dividends and interest on the shareholders' equity receivable — 06.30.20 | 12.31.19 | Loans — 06.30.20 | 12.31.19 | Trade accounts payable — 06.30.20 | 12.31.19 | Other rights — 06.30.20 | 12.31.19 | Advances and other liabilities — 06.30.20 | | 12.31.19 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Al-Wafi Food Products Factory LLC | - | - | - | - | - | - | - | - | - | 30 | - | | (927) | | Banvit | - | - | - | - | - | - | - | - | 236 | 1,094 | - | | - | | BRF Energia S.A. | - | - | - | - | - | - | (9,813) | (6,376) | - | - | - | | - | | BRF Foods GmbH | 849,134 | 833,062 | - | - | - | - | - | - | - | - | - | | - | | BRF Foods GmbH - Branch | - | - | - | - | - | - | - | - | - | 1,296 | (2,354) | | (1,733) | | BRF Foods LLC | - | - | - | - | - | - | - | - | 552 | 466 | (2) | | (2) | | BRF Global GmbH | 4,859,603 | 3,843,949 | - | - | - | - | - | - | - | - | (7,142,683) | (1) | (4,049,636) | | BRF GmbH | - | - | - | - | - | - | - | - | 1,830 | 1,520 | (1,780,933) | (2) | (1,311,123) | | BRF Pet S.A. | 2,091 | 800 | - | - | - | - | (37) | (16) | 299 | 167 | - | | - | | Establecimiento Levino Zaccardi y Cia. S.A. | - | - | - | - | 325 | 234 | - | - | | | - | | - | | Federal Foods Qatar | - | - | - | - | - | - | - | - | - | - | - | | (141) | | FFM Further | - | - | - | - | - | - | - | - | - | 70 | - | | - | | Highline International Ltd. | - | - | - | - | - | - | - | - | - | - | - | | (7,351) | | One Foods Holdings | - | - | - | - | - | - | - | - | 7,693 | 5,662 | - | | - | | Perdigão International Ltd. | - | - | - | - | - | - | - | - | - | - | (1,117,287) | (1) | (905,550) | | PSA Laboratório Veterinário Ltda. | - | - | 200 | 396 | - | - | - | - | - | - | - | | - | | Sadia Alimentos S.A. | - | - | - | - | - | - | - | - | - | - | (10,266) | | (11,159) | | Sadia Chile S.A. | 160,128 | 99,095 | - | - | - | - | - | - | - | - | - | | - | | Sadia Uruguay S.A. | 27,395 | 3,096 | - | - | - | - | - | - | - | - | (37,871) | | (36,598) | | VIP S.A. Empreendimentos e Partic. Imob. | - | - | 22 | 22 | - | - | - | - | - | - | - | | - | | Total | 5,898,351 | 4,780,002 | 222 | 418 | 325 | 234 | (9,850) | (6,392) | 10,610 | 10,305 | (10,091,396) | | (6,324,220) |

(1) The amount corresponds to export pre-payments, usual operation between the productive units in Brazil with the wholly-owned subsidiaries that operate as trading companies in the international market.

(2) Exercising its power as parent Company, BRF S.A. performs reimbursement to certain subsidiaries for losses incurred in the normal course of their operations, generating liabilities recorded as Other Obligations with Related Parties.

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| | Revenue — April to June 2020 | January to June 2020 | April to June 2019 | January to June 2019 | Financial results, net — April to June 2020 | January to June 2020 | April to June 2019 | January to June 2019 | Purchases — April to June 2020 | January to June 2020 | April to June 2019 | January to June 2019 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Avex S.A. | - | - | - | 1,439 | - | - | - | - | - | - | - | - | | BRF Energia S.A. | - | - | - | - | - | - | - | - | (58,002) | (131,460) | (58,002) | (117,191) | | BRF Foods GmbH | 47,582 | 93,362 | 56,769 | 118,497 | - | - | - | - | - | - | - | - | | BRF Global GmbH | 2,693,708 | 5,307,306 | 2,520,702 | 4,603,783 | (82,774) | (147,907) | (23,152) | (48,050) | - | - | - | - | | BRF Pet S.A. | 1,317 | 2,487 | 366 | 749 | - | - | - | - | (21) | (58) | (21) | (26) | | Campo Austral | - | - | - | 1,448 | - | - | - | - | - | - | - | - | | Establecimiento Levino Zaccardi y Cia. S.A. | - | - | - | - | 4 | 7 | - | - | - | - | - | - | | Perdigão International Ltd. | - | - | - | - | (17,084) | (31,879) | (11,821) | (25,320) | - | - | - | - | | Sadia Alimentos S.A. | - | - | - | - | (166) | (361) | (731) | (731) | - | - | - | - | | Sadia Chile S.A. | 46,936 | 79,518 | 18,139 | 30,170 | - | - | - | - | - | - | - | (46) | | Sadia Uruguay S.A. | 11,270 | 20,713 | 9,793 | 19,991 | (544) | (1,186) | (1,969) | (1,969) | - | - | - | - | | Total | 2,800,813 | 5,503,386 | 2,605,769 | 4,776,077 | (100,564) | (181,326) | (37,673) | (76,070) | (58,023) | (131,518) | (58,023) | (117,263) |

The subsidiaries of the Company enter into loan agreements pursuant its cash management strategy. As of June 30, 2020, the balance of these transactions was R$2,497,871 (R$1,808,320 as of December 31, 2019) with a weighted average rate of 4.44% p.a. (4.43% p.a. as of December 31, 2019).

30.2. Other Related Parties

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.

30.3. Granted guarantees

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).

30.4. Management remuneration

The total remuneration and benefits expense with board members, statutory directors and the head of internal audit are set forth below:

	Consolidated — 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 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).

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COMMITMENTS

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:

	Parent company	Consolidated
	06.30.20	06.30.20
Current	4,809,544	5,123,497
Non-current	1,849,078	1,890,505
July to december 2021	617,655	634,736
2022	285,482	309,828
2023	200,098	200,098
2024	192,744	192,744
2025 onwards	553,099	553,099
	6,658,622	7,014,002

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$171,669 in the parent company and R$227,600 in the consolidated (R$2,174,821 in the parent company and R$2,422,669 in the consolidated in the same period of the previous year) and in the three-month period ended on June 30, 2020, amounted to R$21,260 in the parent company and R$21,463 in the consolidated (R$10,091 in the parent company and R$17,541 in the consolidated in the same period of the previous year).

SUBSEQUENT EVENTS

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.

Parent company and Consolidated
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

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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.

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 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 (3)	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 (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.

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APPROVAL OF THE INTERIM FINANCIAL INFORMATION

The 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

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COMENTARY ABOUT THE COMPANY PROJECTIONS BEHAVIOUR

In the twelve-month period ended December 31, 2019, Company's net leverage, as measured by the Net Debt / Adjusted EBITDA ratio, reached 2.50x.

The projections initially disclosed on June 29, 2018 for the fiscal year ending December 31, 2019 were replaced on February 7, 2019, on June 3, 2019, on August 9, 2019 and finally on November 8, 2019. Following the completion of the Monetization Plan, the Company revised the net leverage guidance indicator to approximately 2.75X at the end of 2019 and maintained its guidance of approximately 2.65x for 2020. On March 3, 2020 the Company revised the net leverage guidance to a range between 2.35 - 2.75x for the year 2020.

BREAKDOWN OF THE CAPITAL BY OWNER (NOT REVIEWED)

The shareholding position of the shareholders holders of more than 5% of the voting stock, management, members of the Board of Directors is presented below:

Shareholders	06.30.20 — Quantity	%	12.31.19 — Quantity	%
Major shareholders
Fundação Petrobras de Seguridade Social - Petros (1)	92,716,266	11.41	92,716,266	11.41
Caixa de Previd. dos Func. do Banco do Brasil (1)	76,290,652	9.39	76,974,752	9.47
Management
Board of Directors	6,596,580	0.81	6,474,420	0.80
Executives	355,643	0.04	236,338	0.03
Treasury shares	5,310,626	0.65	713,446	0.09
Other	631,203,479	77.70	635,358,024	78.20
	812,473,246	100.00	812,473,246	100.00

(1) The pension funds are controlled by employees that participate in the respective companies.

The Company is bound to arbitration in the Market Arbitration Chamber, as established by the arbitration clause in the by-laws.

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INDEPENDENT AUDITOR’S REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION

To the Board of Directors and Shareholders of

BRF S.A.

Itajaí - SC

Introduction

We have reviewed the accompanying individual and consolidated interim financial information of BRF S.A. (“Company”) contained in the Quarterly Information Form - ITR for the quarter ended June 30, 2020, which comprises the statement of financial position as of June 30, 2020 and the respective statements of income (loss) and comprehensive income (loss) for the three and six-month period then ended and changes in equity and cash flows for the six-month period then ended, including the explanatory notes.

The Company's management is responsible for the preparation of this individual and consolidated interim financial information in accordance with Technical Pronouncement CPC 21 (R1) and IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board - IASB, as well as for the presentation of this information in accordance with standards issued by Comissão de Valores Mobiliários , applicable to the preparation of Quarterly Information - ITR. Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of review

We conducted our review in accordance with the Brazilian and International standards on review engagements of interim financial information (NBC TR 2410 – Revisão de Informações Intermediárias Executada pelo Auditor da Entidade and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for the financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the auditing standards and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion on the individual and consolidated interim financial information

Based on our review, nothing has come to our attention that causes us to believe that the accompanying individual and consolidated interim financial information included in the Quarterly Information referred to above has not been prepared, in all material respects, in accordance with CPC 21 (R1) and IAS 34, issued by IASB, applicable to the preparation of Quarterly Information - ITR, and presented in accordance with the standards issued by Comissão de Valores Mobiliários .

Emphasis of matter

We draw attention to explanatory note 1.2 to the individual and consolidated interim financial information, which describe the investigations involving the Company, as well as their current and potential developments. In the current stage of the investigations, it is not possible to determine the potential financial and non-financial impacts on the Company resulting from them and of their potential developments and, consequently, to record potential losses which could have a material adverse effect on the Company´s financial position, results of operations and cash flows in the future. Our conclusion is not modified in respect to this matter.

Other matters - Statements of Value Added

The individual and consolidated interim financial information related to statements of value added (DVA) for the six-month period ended June 30, 2020, prepared under the responsibility of the Company's management, presented herein as supplementary information for IAS 34 purposes, have been subject to review procedures jointly performed with the review of the Quarterly Information - ITR of the Company. In order to form our conclusion, we assessed whether those statements are reconciled with the interim financial information and accounting records, as applicable, and whether their format and contents are in accordance with the criteria determined in the Technical Pronouncement CPC 09 - Demonstração do Valor Adicionado . Based on our review, nothing has come to our attention that causes us to believe that the statements of value added above referred were not prepared, in all material respects, consistently with the overall individual and consolidated interim financial information.

São Paulo, August 12, 2020

KPMG Auditores Independentes

CRC 2SP014428/O-6

Original report in Portuguese signed by

Fabian Junqueira Sousa

Accountant CRC 1SP235639/O-0

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OPINION OF THE AUDIT AND INTEGRITY COMMITTEE

The Audit and Integrity Committee of BRF S.A., in fulfilling its statutory and legal duties, reviewed:

(i) the interim financial information (parent company and consolidated) for the six-month period ended on June 30, 2020;

(ii) the Management Report; and

(iii) the review report issued without modification by KPMG Auditores Independentes.

Based on the documents reviewed and on the explanations provided, the members of the Audit and Integrity Committee, undersigned, issued an opinion for the approval of the interim financial information for the six-month period ended on June 30,2020.

São Paulo, August 12, 2020.

Augusto Marques da Cruz Filho

Coordinator (Independent)

Ivandré Motiel da Silva

Non-Independent member

Marcelo Feriozzi Bacci

Independent member

Valmir Pedro Rossi

External member

Jerônimo Antunes

External member

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STATEMENT OF EXECUTIVE BOARD ON THE INTERIM FINANCIAL INFORMATION AND INDEPENDENT AUDITOR’S REPORT

In compliance with the dispositions of sections V and VI of article 25 of CVM Instruction No. 480/09, the executive board of BRF S.A., states:

(i) reviewed, discussed and agreed with the Company's interim financial information for the six-month period ended on June 30, 2020, and

(ii) reviewed, discussed and agreed with conclusions expressed in the review report issued by KPMG Auditores Independentes for the Company's interim financial information for the six-month period ended on June 30, 2020.

São Paulo, August 12, 2020.

Lorival Nogueira Luz Júnior

Global Chief Executive Officer

Carlos Alberto Bezerra de Moura

Vice President of Finance and Investor Relations

Vinícius Guimarães Barbosa

Vice-President of Operations and Procurement Officer

Sidney Rogério Manzaro

Vice-President of Commercial Brazil Market

Alessandro Rosa Bonorino

Vice-President of Human Resources and Shared Services

Rubens Fernandes Pereira

Vice-President of Strategy, Managing and Innovation

Neil Hamilton dos Guimarães Peixoto Jr.

Vice-President of Quality and Sustainability

Leonardo Campo Dallorto

Vice-President of Sales & Operations Planning and Supply Chain

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