6-K 1 brfitr1q20_6k.htm FORM 6-K

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 May 11, 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 Nações 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.

* * *

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

SIGNATURES

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

Date: May 11, 2020 |
| BRF S.A.
| By: | /s/ Carlos Alberto Bezerra de Moura
|  | Name: | Carlos Alberto Bezerra de Moura
|  | Title: | Chief Financial and Investor Relations Officer

EXHIBIT INDEX

Exhibit | Description of Exhibit
1 | Financial Statements

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 | 34
2. | BASIS OF PREPARATION AND PRESENTATION OF INTERIM FINANCIAL STATEMENTS | 38
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 39
4. | CASH AND CASH EQUIVALENTS | 40
5. | MARKETABLE SECURITIES | 40
6. | TRADE ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES | 41
7. | INVENTORIES | 42
8. | BIOLOGICAL ASSETS | 43
9. | RECOVERABLE TAXES | 45
10. | INCOME AND SOCIAL CONTRIBUTION TAXES | 46
11. | JUDICIAL DEPOSITS | 48
12. | INVESTMENTS | 49
13. | PROPERTY, PLANT AND EQUIPMENT, NET | 50
14. | INTANGIBLE ASSETS | 53
15. | LOANS AND FINANCING | 54
16. | TRADE ACCOUNTS PAYABLE | 57
17. | SUPPLY CHAIN FINANCE | 57
18. | LEASES | 58
19. | SHARE-BASED PAYMENT | 60
20. | EMPLOYEES BENEFITS PLANS | 61
21. | PROVISION FOR TAX, CIVIL, LABOR AND OTHER RISKS | 62
22. | SHAREHOLDERS’ EQUITY | 63
23. | EARNINGS (LOSS) PER SHARE | 63
24. | FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT | 64
25. | SEGMENT INFORMATION | 77
26. | NET SALES | 78
27. | OTHER OPERATING INCOME (EXPENSES), NET | 79
28. | FINANCIAL INCOME (EXPENSES), NET | 79

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

2

29. | STATEMENT OF INCOME BY NATURE | 80
30. | RELATED PARTIES – PARENT COMPANY | 80
31. | COMMITMENTS | 83
32. | TRANSACTIONS THAT DO NOT INVOLVE CASH | 83
33. | SUBSEQUENT EVENTS | 83
34. | APPROVAL OF THE INTERIM FINANCIAL INFORMATION | 84
COMENTARY ABOUT THE COMPANY PROJECTIONS BEHAVIOUR | 85
BREAKDOWN OF THE CAPITAL BY OWNER (NOT REVIEWED) | 85
INDEPENDENT AUDITOR’S REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION | 86
OPINION OF THE AUDIT COMMITTEE | 87
STATEMENT OF EXECUTIVE BOARD ON THE INTERIM FINANCIAL INFORMATION AND INDEPENDENT AUDITOR’S REPORT | 88

#

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

3

(in thousands of Brazilian Reais)

# STATEMENT OF FINANCIAL POSITION

|  |  | Parent company |  | Consolidated |  |  |  |  | Parent company |  | Consolidated
ASSETS | Note |  | 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19 |  | LIABILITIES | Note |  | 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19
CURRENT ASSETS |  |  |  |  |  |  |  |  |  |  | CURRENT LIABILITIES |  |  |  |  |  |  |  |  |
Cash and cash equivalents | 4 |  | 3,944,305 |  | 1,368,980 |  | 7,960,987 |  | 4,237,785 |  | Loans and borrowings | 15 |  | 3,771,137 |  | 3,033,034 |  | 3,880,548 |  | 3,132,029
Marketable securities | 5 |  | 307,184 |  | 396,994 |  | 331,313 |  | 418,182 |  | Trade accounts payable | 16 |  | 5,800,464 |  | 5,270,762 |  | 6,455,268 |  | 5,784,419
Trade and other receivables | 6 |  | 8,337,294 |  | 6,153,937 |  | 3,022,747 |  | 3,090,691 |  | Supply chain finance | 17 |  | 927,409 |  | 842,037 |  | 927,409 |  | 842,037
Inventories | 7 |  | 3,302,873 |  | 2,786,147 |  | 4,765,144 |  | 3,887,916 |  | Lease liability | 18 |  | 285,032 |  | 313,058 |  | 364,208 |  | 376,628
Biological assets | 8 |  | 1,624,830 |  | 1,545,127 |  | 1,702,523 |  | 1,603,039 |  | Payroll, related charges and employee profit sharing |  |  | 634,071 |  | 754,032 |  | 676,697 |  | 825,254
Recoverable taxes | 9 |  | 275,517 |  | 274,480 |  | 486,067 |  | 473,732 |  | Tax payable |  |  | 228,332 |  | 268,193 |  | 563,826 |  | 517,208
Recoverable income tax and social contribution | 9 |  | 47,976 |  | 40,291 |  | 192,467 |  | 152,486 |  | Derivative financial instruments | 24 |  | 1,523,671 |  | 151,722 |  | 1,533,176 |  | 153,612
Derivative financial instruments | 24 |  | 281,299 |  | 193,740 |  | 282,115 |  | 195,324 |  | Provision for tax, civil and labor risks | 21 |  | 1,106,358 |  | 1,081,103 |  | 1,110,288 |  | 1,084,308
Restricted cash |  |  | 24,361 |  | 296,294 |  | 24,361 |  | 296,294 |  | Employee benefits | 20 |  | 87,996 |  | 87,996 |  | 97,569 |  | 95,919
Assets held for sale |  |  | 11,561 |  | 16,671 |  | 102,092 |  | 99,245 |  | Advances from related parties | 30 |  | 9,921,495 |  | 5,364,164 |  | - |  | -
Other current assets |  |  | 482,228 |  | 495,743 |  | 589,852 |  | 590,733 |  | Other current liabilities |  |  | 456,401 |  | 329,166 |  | 702,880 |  | 512,591
Total current assets |  |  | 18,639,428 |  | 13,568,404 |  | 19,459,668 |  | 15,045,427 |  | Total current liabilities |  |  | 24,742,366 |  | 17,495,267 |  | 16,311,869 |  | 13,324,005
NON-CURRENT ASSETS |  |  |  |  |  |  |  |  |  |  | NON-CURRENT LIABILITIES |  |  |  |  |  |  |  |  |
LONG-TERM RECEIVALBLES |  |  |  |  |  |  |  |  |  |  | Loans and borrowings | 15 |  | 16,318,102 |  | 13,395,970 |  | 19,124,159 |  | 15,488,250
Marketable securities | 5 |  | 15,490 |  | 14,891 |  | 381,942 |  | 307,352 |  | Trade accounts payable | 16 |  | 8,505 |  | 12,347 |  | 8,505 |  | 12,347
Trade and other receivables | 6 |  | 68,202 |  | 71,029 |  | 68,201 |  | 71,029 |  | Lease liability | 18 |  | 2,023,682 |  | 1,939,494 |  | 2,194,078 |  | 2,054,552
Recoverable taxes | 9 |  | 5,222,133 |  | 5,167,016 |  | 5,222,107 |  | 5,169,547 |  | Tax payable |  |  | 185,693 |  | 190,257 |  | 185,693 |  | 190,257
Recoverable income tax and social contribution | 9 |  | 196,403 |  | 264,428 |  | 202,557 |  | 269,263 |  | Provision for tax, civil and labor risks | 21 |  | 731,732 |  | 709,760 |  | 732,093 |  | 710,061
Deferred income taxes | 10 |  | 2,375,746 |  | 1,808,494 |  | 2,395,469 |  | 1,845,862 |  | Deferred income tax | 10 |  | - |  | - |  | 107,967 |  | 85,310
Judicial deposits | 11 |  | 575,795 |  | 575,681 |  | 575,879 |  | 575,750 |  | Liabilities with related parties | 30 |  | 1,218,304 |  | 960,056 |  | - |  | -
Biological assets | 8 |  | 1,033,290 |  | 1,016,642 |  | 1,112,864 |  | 1,081,025 |  | Employee benefits | 20 |  | 521,262 |  | 506,791 |  | 630,205 |  | 593,555
Receivables from related parties | 30 |  | 305 |  | 234 |  | - |  | - |  | Derivative financial instruments | 24 |  | 38,629 |  | 3 |  | 38,629 |  | 3
Derivative financial instruments | 24 |  | 7,164 |  | 49,991 |  | 7,164 |  | 49,991 |  | Other non-current liabilities |  |  | 435,963 |  | 482,109 |  | 1,174,685 |  | 1,093,942
Other non-current assets |  |  | 72,555 |  | 78,516 |  | 80,874 |  | 85,537 |  |  |  |  |  |  |  |  |  |  |
Total long-term receivables |  |  | 9,567,083 |  | 9,046,922 |  | 10,047,057 |  | 9,455,356 |  | Total non-current liabilities |  |  | 21,481,872 |  | 18,196,787 |  | 24,196,014 |  | 20,228,277
|  |  |  |  |  |  |  |  |  |  | EQUITY | 22 |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  | Capital |  |  | 12,460,471 |  | 12,460,471 |  | 12,460,471 |  | 12,460,471
|  |  |  |  |  |  |  |  |  |  | Capital reserves |  |  | 199,434 |  | 192,845 |  | 199,434 |  | 192,845
Investments | 12 |  | 10,059,770 |  | 6,499,517 |  | 16,909 |  | 14,880 |  | Accumulated losses |  |  | (4,042,906) |  | (3,996,985) |  | (4,042,906) |  | (3,996,985)
Property, plant and equipment, net | 13 |  | 11,194,839 |  | 11,333,302 |  | 12,375,656 |  | 12,276,889 |  | Treasury shares |  |  | (38,239) |  | (38,239) |  | (38,239) |  | (38,239)
Intangible assets | 14 |  | 3,239,355 |  | 3,139,532 |  | 5,405,045 |  | 4,908,079 |  | Other comprehensive loss |  |  | (2,102,523) |  | (722,469) |  | (2,102,523) |  | (722,469)
|  |  |  |  |  |  |  |  |  |  | Attributable to controlling shareholders |  |  | 6,476,237 |  | 7,895,623 |  | 6,476,237 |  | 7,895,623
|  |  |  |  |  |  |  |  |  |  | Non-controlling interests |  |  | - |  | - |  | 320,215 |  | 252,726
Total non-current assets |  |  | 34,061,047 |  | 30,019,273 |  | 27,844,667 |  | 26,655,204 |  | Total equity |  |  | 6,476,237 |  | 7,895,623 |  | 6,796,452 |  | 8,148,349
TOTAL ASSETS |  |  | 52,700,475 |  | 43,587,677 |  | 47,304,335 |  | 41,700,631 |  | TOTAL LIABILITIES AND EQUITY |  |  | 52,700,475 |  | 43,587,677 |  | 47,304,335 |  | 41,700,631

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

#

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

4

(in thousands of Brazilian Reais)

# STATEMENT OF INCOME (LOSS)

|  |  | Parent company |  | Consolidated
| Note |  | January to March 2020 |  | January to March 2019 |  | January to March 2020 |  | January to March 2019
CONTINUING OPERATIONS |  |  |  |  |  |  |  |  |
NET SALES | 26 |  | 7,449,045 |  | 6,417,946 |  | 8,949,065 |  | 7,359,250
Cost of sales | 29 |  | (5,828,909) |  | (5,269,824) |  | (6,696,088) |  | (5,842,180)
GROSS PROFIT |  |  | 1,620,136 |  | 1,148,122 |  | 2,252,977 |  | 1,517,070
OPERATING INCOME (EXPENSES) |  |  |  |  |  |  |  |  |
Selling expenses | 29 |  | (1,032,567) |  | (900,491) |  | (1,284,334) |  | (1,135,295)
General and administrative expenses | 29 |  | (87,281) |  | (91,680) |  | (142,560) |  | (141,229)
Impairment loss on trade and other receivables | 29 |  | (31,102) |  | (6,538) |  | (32,851) |  | (5,507)
Other operating income (expenses), net | 27 |  | (231,331) |  | (87,492) |  | (238,553) |  | (76,676)
Income (loss) from associates and joint ventures | 12 |  | 3,987,252 |  | 212,368 |  | - |  | (165)
INCOME BEFORE FINANCIAL RESULTS AND INCOME TAXES |  |  | 4,225,107 |  | 274,289 |  | 554,679 |  | 158,198
Financial expenses | 28 |  | (614,740) |  | (512,101) |  | (569,350) |  | (503,260)
Financial income | 28 |  | 106,777 |  | 79,893 |  | 112,878 |  | 86,061
Foreign exchange and monetary variations | 28 |  | (3,813,529) |  | (144,281) |  | (149,997) |  | (31,066)
LOSS BEFORE TAXES FROM CONTINUING OPERATIONS |  |  | (96,385) |  | (302,200) |  | (51,790) |  | (290,067)
Income taxes | 10 |  | 50,464 |  | 190,137 |  | 13,558 |  | 176,789
LOSS FROM CONTINUING OPERATIONS |  |  | (45,921) |  | (112,063) |  | (38,232) |  | (113,278)
DISCONTINUED OPERATIONS |  |  |  |  |  |  |  |  |
LOSS FROM DISCONTINUED OPERATIONS |  |  | - |  | (888,872) |  | - |  | (899,053)
LOSS FOR THE PERIOD |  |  | (45,921) |  | (1,000,935) |  | (38,232) |  | (1,012,331)
Net Income (Loss) from Continuing Operation Attributable to |  |  |  |  |  |  |  |  |
Controlling shareholders |  |  | (45,921) |  | (112,063) |  | (45,921) |  | (112,063)
Non-controlling interest |  |  | - |  | - |  | 7,689 |  | (1,215)
|  |  | (45,921) |  | (112,063) |  | (38,232) |  | (113,278)
Net Loss From Discontinued Operation Attributable to |  |  |  |  |  |  |  |  |
Controlling shareholders |  |  | - |  | (888,872) |  | - |  | (888,872)
Non-controlling interest |  |  | - |  | - |  | - |  | (10,181)
|  |  | - |  | (888,872) |  | - |  | (899,053)
LOSSES PER SHARE FROM CONTINUING OPERATIONS |  |  |  |  |  |  |  |  |
Weighted average shares outstanding - basic |  |  |  |  |  |  | 811,759,800 |  | 811,416,158
Losses per share - basic | 23 |  |  |  |  |  | (0.06) |  | (0.14)
Weighted average shares outstanding - diluted |  |  |  |  |  |  | 811,759,800 |  | 811,416,158
Losses per share - diluted | 23 |  |  |  |  |  | (0.06) |  | (0.14)
LOSSES PER SHARE FROM DISCONTINUED OPERATIONS |  |  |  |  |  |  |  |  |
Weighted average shares outstanding - basic |  |  |  |  |  |  | 811,759,800 |  | 811,416,158
Losses per share - basic | 23 |  |  |  |  |  | - |  | (1.10)
Weighted average shares outstanding - diluted |  |  |  |  |  |  | 811,759,800 |  | 811,416,158
Losses per share - diluted | 23 |  |  |  |  |  | - |  | (1.10)

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

#

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

5

(in thousands of Brazilian Reais)

# STATEMENT OF COMPREHENSIVE INCOME (LOSS)

|  |  | Parent company |  | Consolidated
| Note |  | January to March 2020 |  | January to March 2019 |  | January to March 2020 |  | January to March 2019
Loss for the period |  |  | (45,921) |  | (1,000,935) |  | (38,232) |  | (1,012,331)
Other comprehensive income (loss) |  |  |  |  |  |  |  |  |
Gains (losses) on foreign currency translation adjustments |  |  | (101,550) |  | 708,460 |  | (41,703) |  | 698,465
Losses on hedge investments, net |  |  | (272,875) |  | - |  | (272,875) |  | -
Unrealized gains (losses) on cash flow hedge | 24 |  | (1,009,511) |  | 14,239 |  | (1,009,511) |  | 14,239
Gains (losses) on marketable securities from debt securities at FVTOCI (1) | 5 |  | (2,873) |  | 393 |  | (2,873) |  | 393
Net other comprehensive income (loss), to be reclassified to the statement of income in subsequent periods |  |  | (1,386,809) |  | 723,092 |  | (1,326,962) |  | 713,097
Gains on marketable equity securities at FVTOCI (1) | 5 |  | 367 |  | 61,016 |  | 367 |  | 61,016
Actuarial gains on pension and post-employment plans | 20 |  | 6,388 |  | 918 |  | 6,341 |  | 583
Net other comprehensive income, with no impact into subsequent statement of income |  |  | 6,755 |  | 61,934 |  | 6,708 |  | 61,599
Total comprehensive loss, net of taxes |  |  | (1,425,975) |  | (215,909) |  | (1,358,486) |  | (237,635)
Attributable to |  |  |  |  |  |  |  |  |
Controlling shareholders |  |  | (1,425,975) |  | (215,909) |  | (1,425,975) |  | (215,909)
Non-controlling interest |  |  | - |  | - |  | 67,489 |  | (21,726)
|  |  | (1,425,975) |  | (215,909) |  | (1,358,486) |  | (237,635)

(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.

#

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

6

(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) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gains (losses) on foreign currency translation adjustments |  | - |  | - |  | - |  | 559,436 |  | - |  | - |  | - |  | - |  | 559,436 |  | (30,666) |  | 528,770
Gains in marketable securities 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) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gains (losses) on foreign currency translation adjustments |  | - |  | - |  | - |  | (101,550) |  | - |  | - |  | - |  | - |  | (101,550) |  | 59,847 |  | (41,703)
Losses on hedge investments, net |  | - |  | - |  | - |  | (272,875) |  | - |  | - |  | - |  | - |  | (272,875) |  | - |  | (272,875)
Unrealized losses on marketable securities at FVTOCI (2) |  | - |  | - |  | - |  | - |  | (2,506) |  | - |  | - |  | - |  | (2,506) |  | - |  | (2,506)
Unrealized losses in cash flow hedge |  | - |  | - |  | - |  | - |  | - |  | (1,009,511) |  | - |  | - |  | (1,009,511) |  | - |  | (1,009,511)
Actuarial gains (losses) on pension and post-employment plans |  | - |  | - |  | - |  | - |  | - |  | - |  | 6,388 |  | - |  | 6,388 |  | (47) |  | 6,341
Income (loss) for the period |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (45,921) |  | (45,921) |  | 7,689 |  | (38,232)
SUB-TOTAL COMPREHENSIVE INCOME (LOSS) |  | - |  | - |  | - |  | (374,425) |  | (2,506) |  | (1,009,511) |  | 6,388 |  | (45,921) |  | (1,425,975) |  | 67,489 |  | (1,358,486)
Share-based payments |  | - |  | 6,589 |  |  |  | - |  | - |  | - |  | - |  | - |  | 6,589 |  | - |  | 6,589
BALANCES AT MARCH 31, 2020 |  | 12,460,471 |  | 199,434 |  | (38,239) |  | (567,804) |  | 1,948 |  | (1,366,232) |  | (170,435) |  | (4,042,906) |  | 6,476,237 |  | 320,215 |  | 6,796,452

(2) All changes in other comprehensive income are presented net of taxes.

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

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

#

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

7

(in thousands of Brazilian Reais)

# STATEMENT OF CASH FLOWS

|  | Parent company |  | Consolidated
|  | January to March 2020 |  | January to March 2019 |  | January to March 2020 |  | January to March 2019
OPERATING ACTIVITIES |  |  |  |  |  |  |  |
Loss from continuing operations |  | (45,921) |  | (112,063) |  | (38,232) |  | (113,278)
Adjustments for: |  |  |  |  |  |  |  |
Depreciation and amortization |  | 301,538 |  | 317,659 |  | 364,768 |  | 371,628
Depreciation and depletion of biological assets |  | 186,261 |  | 177,166 |  | 207,052 |  | 192,990
Result on disposals of property, plant and equipments |  | 9,770 |  | (10,245) |  | 10,876 |  | (9,120)
Provision for losses in inventories |  | 18,313 |  | 38,640 |  | 26,654 |  | 36,183
Provision for tax, civil and labor risks |  | 115,028 |  | 62,798 |  | 115,197 |  | 63,408
Impairment |  | - |  | - |  | 17,449 |  | -
Income from associates and joint ventures |  | (3,987,252) |  | (212,368) |  | - |  | 165
Financial results, net |  | 4,321,492 |  | 576,489 |  | 606,469 |  | 448,265
Gains in tax lawsuit |  | (74,185) |  | - |  | (74,185) |  | -
Deferred income tax |  | (50,464) |  | (190,137) |  | (29,907) |  | (200,889)
Employee profit sharing |  | 49,525 |  | 49,811 |  | 46,644 |  | 61,837
Others (1) |  | 293,907 |  | 39,143 |  | 298,540 |  | 44,113
|  | 1,138,012 |  | 736,893 |  | 1,551,325 |  | 895,302
Trade accounts receivable |  | (2,190,361) |  | (1,786,735) |  | 352,280 |  | 340,048
Inventories |  | (535,039) |  | (118,813) |  | (856,085) |  | (169,695)
Biological assets - current |  | (79,703) |  | (16,005) |  | (89,082) |  | (28,645)
Trade accounts payable |  | 214,150 |  | (70,695) |  | 369,158 |  | (121,231)
Supply chain finance |  | 83,201 |  | (197,691) |  | 83,201 |  | (197,663)
Cash (applied) generated by operating activities |  | (1,369,740) |  | (1,453,046) |  | 1,410,797 |  | 718,116
Investments in securities at FVTPL (2) |  | - |  | (89,046) |  | - |  | (90,161)
Redemptions of securities at FVTPL (2) |  | 98,864 |  | 10,766 |  | 98,972 |  | 11,144
Interest received |  | 8,962 |  | 31,273 |  | 13,914 |  | 36,403
Dividends and interest on shareholders' equity received |  | - |  | 8,247 |  | - |  | 12,399
Payment of tax, civil and labor provisions |  | (110,788) |  | (79,219) |  | (110,788) |  | (79,218)
Payment of interest |  | (116,762) |  | (105,364) |  | (184,809) |  | (168,351)
Payment of income tax and social contribution |  | - |  | - |  | (8) |  | (39)
Other operating assets and liabilities |  | 3,558,647 |  | (459,986) |  | 1,600,948 |  | (342,962)
Net cash (applied) provided by operating activities |  | 2,069,183 |  | (2,136,375) |  | 2,829,026 |  | 97,331
Net cash (applied) provided by operating activities from discontinued operations |  | - |  | 87,498 |  | - |  | (85,029)
Net cash (applied) provided by operating activities |  | 2,069,183 |  | (2,048,877) |  | 2,829,026 |  | 12,302
INVESTING ACTIVITIES |  |  |  |  |  |  |  |
Investments in securities at amortized cost |  | - |  | - |  | - |  | (8,769)
Redemptions of securities at amortized cost |  | - |  | 89,046 |  | - |  | 89,046
Redemptions of securities at FVTOCI (3) |  | - |  | 11,034 |  | - |  | 11,034
Redemption (Investments) in restricted cash |  | 287,621 |  | 110,846 |  | 287,621 |  | 111,291
Additions to property, plant and equipment |  | (110,702) |  | (71,240) |  | (115,030) |  | (75,371)
Additions to biological assets - non-current |  | (201,654) |  | (164,260) |  | (226,549) |  | (188,351)
Proceeds from disposals of property, plant, equipment and investments |  | 10,219 |  | 372,145 |  | 10,219 |  | 390,267
Additions to intangible assets |  | (27,870) |  | (23,043) |  | (24,766) |  | (23,072)
Sale (acquisition) of participation in joint ventures and associated entities |  | (275) |  | (129) |  | (275) |  | (129)
Capital increase (decrease) in associates and joint ventures |  | 5,000 |  | - |  | - |  | -
Net cash provided (used in) investing activities |  | (37,661) |  | 324,399 |  | (68,780) |  | 305,946
Net cash provided (used in) investing activities from discontinued operations |  | - |  | - |  | - |  | 45,235
Net cash provided (used in) investing activities |  | (37,661) |  | 324,399 |  | (68,780) |  | 351,181
FINANCING ACTIVITIES |  |  |  |  |  |  |  |
Proceeds from debt issuance |  | 1,057,526 |  | 904,600 |  | 1,374,940 |  | 1,020,014
Repayment of debt |  | (483,387) |  | (987,136) |  | (665,833) |  | (1,706,533)
Payment of lease liabilities |  | (111,198) |  | (119,426) |  | (134,792) |  | (135,276)
Net cash provided (used in) by financing activities |  | 462,941 |  | (201,962) |  | 574,315 |  | (821,795)
Net cash provided (used in) by financing activities from discontinued operations |  | - |  | - |  | - |  | 1,567
Net cash provided (used in) by financing activities |  | 462,941 |  | (201,962) |  | 574,315 |  | (820,228)
EFFECT OF EXCHANGE RATE VARIATION ON CASH AND CASH EQUIVALENTS |  | 80,862 |  | 7,221 |  | 388,641 |  | 43,869
Net increase (decrease) in cash and cash equivalents |  | 2,575,325 |  | (1,919,219) |  | 3,723,202 |  | (412,876)
At the beginning of the period |  | 1,368,980 |  | 3,826,698 |  | 4,237,785 |  | 5,036,011
At the end of the period |  | 3,944,305 |  | 1,907,479 |  | 7,960,987 |  | 4,623,135

(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.

#

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

8

(in thousands of Brazilian Reais)

# STATEMENT OF VALUE ADDED

|  | Parent company |  | Consolidated
|  | January to March 2020 |  | Restated (1) January to March 2019 |  | January to March 2020 |  | Restated (1) January to March 2019
1 - REVENUES |  | 8,162,670 |  | 7,185,354 |  | 9,632,859 |  | 8,226,844
Sales of goods and products |  | 8,360,295 |  | 7,155,673 |  | 9,861,663 |  | 8,177,232
Other income |  | (181,413) |  | (37,436) |  | (191,895) |  | (19,032)
Revenue related to construction of own assets |  | 109,134 |  | 71,134 |  | 102,272 |  | 71,715
Expected credit losses |  | (125,346) |  | (4,017) |  | (139,181) |  | (3,071)
2 - RAW MATERIAL ACQUIRED FROM THIRD PARTIES |  | (5,198,443) |  | (4,632,990) |  | (6,141,065) |  | (5,295,432)
Costs of goods sold |  | (4,465,712) |  | (3,992,809) |  | (5,267,555) |  | (4,517,989)
Materials, energy, third parties services and other |  | (739,531) |  | (675,531) |  | (877,765) |  | (820,114)
Reversal for inventories losses |  | 6,800 |  | 35,350 |  | 4,255 |  | 42,671
3 - GROSS ADDED VALUE (1-2) |  | 2,964,227 |  | 2,552,364 |  | 3,491,794 |  | 2,931,412
4 - DEPRECIATION AND AMORTIZATION |  | (487,799) |  | (494,825) |  | (571,820) |  | (564,618)
5 - NET ADDED VALUE (3-4) |  | 2,476,428 |  | 2,057,539 |  | 2,919,974 |  | 2,366,794
6 - RECEIVED FROM THIRD PARTIES |  | 4,093,636 |  | 292,015 |  | 112,865 |  | 85,863
Income from associates and joint ventures |  | 3,987,252 |  | 212,368 |  | - |  | (165)
Financial income |  | 106,777 |  | 79,893 |  | 112,878 |  | 86,061
Others |  | (393) |  | (246) |  | (13) |  | (33)
7 - ADDED VALUE TO BE DISTRIBUTED (5+6) |  | 6,570,064 |  | 2,349,554 |  | 3,032,839 |  | 2,452,657
8 - DISTRIBUTION OF ADDED VALUE |  | 6,570,064 |  | 2,349,554 |  | 3,032,839 |  | 2,452,657
Payroll |  | 1,195,257 |  | 1,124,339 |  | 1,300,340 |  | 1,230,384
Salaries |  | 899,285 |  | 834,417 |  | 983,371 |  | 921,953
Benefits |  | 236,346 |  | 233,443 |  | 253,485 |  | 248,635
Government severance indemnity fund for employees |  | 59,626 |  | 56,479 |  | 63,484 |  | 59,796
Taxes, Fees and Contributions |  | 958,187 |  | 645,227 |  | 1,002,619 |  | 744,752
Federal |  | 360,103 |  | 173,364 |  | 403,299 |  | 271,798
State |  | 587,515 |  | 461,379 |  | 587,498 |  | 461,444
Municipal |  | 10,569 |  | 10,484 |  | 11,822 |  | 11,510
Capital Remuneration from Third Parties |  | 4,462,541 |  | 692,051 |  | 768,112 |  | 590,799
Interests, including exchange variation |  | 4,432,327 |  | 661,684 |  | 723,405 |  | 542,942
Rents |  | 30,214 |  | 30,367 |  | 44,707 |  | 47,857
Interest on Own-Capital |  | (45,921) |  | (112,063) |  | (38,232) |  | (113,278)
Income (loss) of the period |  | (45,921) |  | (112,063) |  | (45,921) |  | (112,063)
Non-controlling interest |  | - |  | - |  | 7,689 |  | (1,215)

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

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

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

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1. 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.

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

34

1.1. Equity interest

|  |  |  |  |  |  | % equity interest
Entity |  |  | Main activity |  | Country |  | 03.31.20 |  | 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 |  |  | Import and commercialization of products |  | Hungary |  | 100.00 |  | 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 | (a) |  | 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 |  |  | Import and commercialization of products |  | Saudi Arabia |  | 75.00 |  | 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. |  |  | Industrialization, import and commercialization of products |  | Malaysia |  | 70.00 |  | 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.

Except for the associates PP-BIO and PR-SAD in which the Company records the investments by the equity method, all other subsidiaries shown in the table were consolidated.

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

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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 three-month period ended on March 31, 2020, the main impacts observed as result of the referred investigations were recorded in other operating expenses in the amount of R$12,301 (R$11,113 on March 31, 2019), 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.

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. 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.

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

36

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. Of the employees who were identified, only one person still remained active in his function and has preventively been removed after the filing of the charges, according to the current policy of the Company, which provides removal until the resolution of the case.

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.

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. 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).

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

37

1.4. Coronavirus (COVID-19)

On January 31, 2020 the World Health Organization (WHO) 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.

Customers from certain regions and channels in which the Company runs businesses are being affected, mainly by the measures of social distancing imposed by authorities. The Company foresees an increase in the default rates during the second quarter of 2020 and a consequent increase in the expected credit losses. The impacts of these increase in the expected credit losses are registered in the interim financial information (note 6).

Aiming to preventively strengthen its liquidity level during this period of high volatility, additionally to the strategies described in note 24 and to the active revolving credit facility not disbursed (note 15.1), during March and April of 2020 the Company contracted and disbursed credit facilities with financial institutions in Brazil in the aggregate amount of, approximately, R$1,830,000 and average term of one year, without any financial covenant clause. Considering the current liquidity level, the additional initiatives mentioned above, other credit lines under negotiation and the perspectives for the short and medium term, the management does not foresee relevant impacts that could compromise the operating and financial capacity affecting the Company’s continuity.

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 is no need for recognizing losses until this moment. 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 will be held between April 24, 2020 and May 23, 2020.

2. 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.

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

38

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.

3. 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.

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.

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

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4. CASH AND CASH EQUIVALENTS

| Average rate (p.a.) |  | Parent company |  | Consolidated
|  | 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19
Cash and bank accounts |  |  |  |  |  |  |  |  |
U.S. Dollar | - |  | - |  | 403 |  | 1,673,451 |  | 1,356,128
Brazilian Reais | - |  | 59,892 |  | 166,506 |  | 60,739 |  | 167,051
Euro | - |  | 11,091 |  | 3,813 |  | 66,976 |  | 71,626
Other currencies | - |  | 12 |  | 180 |  | 1,217,686 |  | 694,982
|  |  | 70,995 |  | 170,902 |  | 3,018,852 |  | 2,289,787
Cash equivalents |  |  |  |  |  |  |  |  |
In Brazilian Reais |  |  |  |  |  |  |  |  |
Investment funds | 1.03% |  | 3,654 |  | 3,507 |  | 3,654 |  | 3,507
Bank deposit certificates | 3.46% |  | 3,468,565 |  | 869,473 |  | 3,484,021 |  | 879,758
|  |  | 3,472,219 |  | 872,980 |  | 3,487,675 |  | 883,265
In U.S. Dollar |  |  |  |  |  |  |  |  |
Term deposit | 3.22% |  | 331,125 |  | 254,583 |  | 364,986 |  | 270,714
Overnight | 0.07% |  | 69,966 |  | 70,515 |  | 1,089,474 |  | 689,874
Other currencies |  |  |  |  |  |  |  |  |
Term deposit | - |  | - |  | - |  | - |  | 104,145
|  |  | 401,091 |  | 325,098 |  | 1,454,460 |  | 1,064,733
|  |  | 3,944,305 |  | 1,368,980 |  | 7,960,987 |  | 4,237,785

5. MARKETABLE SECURITIES

|  |  |  |  | Average interest rate (p.a.) |  | Parent company |  | Consolidated
| WAM (1) |  | Currency |  |  | 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19
Fair value through other comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |
Credit linked note | 3.15 |  | USD |  | 3.85% |  | - |  | - |  | 22,236 |  | 19,285
Stocks | - |  | R$ and HKD |  | - |  | - |  | - |  | 33,466 |  | 26,678
|  |  |  |  |  |  | - |  | - |  | 55,702 |  | 45,963
Fair value through profit and loss |  |  |  |  |  |  |  |  |  |  |  |  |
Financial treasury bills | 4.14 |  | R$ |  | 3.65% |  | 307,184 |  | 396,994 |  | 307,184 |  | 396,994
Investment funds - FIDC BRF | 3.71 |  | R$ |  | - |  | 15,490 |  | 14,891 |  | 15,490 |  | 14,891
Investment funds | 0.09 |  | ARS |  | - |  | - |  | - |  | 1,893 |  | 1,903
|  |  |  |  |  |  | 322,674 |  | 411,885 |  | 324,567 |  | 413,788
Amortized cost |  |  |  |  |  |  |  |  |  |  |  |  |
Sovereign bonds and others (2) | 3.08 |  | AOA |  | 3.82% |  | - |  | - |  | 332,986 |  | 265,783
|  |  |  |  |  |  | 322,674 |  | 411,885 |  | 713,255 |  | 725,534
Current |  |  |  |  |  |  | 307,184 |  | 396,994 |  | 331,313 |  | 418,182
Non-current (3) |  |  |  |  |  |  | 15,490 |  | 14,891 |  | 381,942 |  | 307,352

(1) Weighted average maturity in years.

(2) It’s comprised of securities of the Angola Government and are shown net of expected losses on marketable securities in the amount of R$20,414 (R$1,983 on December 31, 2019).

(3) Maturity is September 01, 2025.

Additionally, as of March 31, 2020, the amount of R$172,580 (R$100,435 on December 31, 2019) was pledged as guarantee, with no use restrictions, for USD denominated future contracts, traded on B3.

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

40

6. TRADE ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

| Parent company |  | Consolidated
| 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19
Trade accounts receivable |  |  |  |  |  |  |
Domestic customers | 1,019,976 |  | 1,333,344 |  | 1,035,709 |  | 1,336,762
Domestic related parties | 521 |  | 800 |  | - |  | -
Foreign customers | 526,667 |  | 457,413 |  | 2,585,021 |  | 2,215,050
Foreign related parties | 7,328,571 |  | 4,779,202 |  | - |  | -
| 8,875,735 |  | 6,570,759 |  | 3,620,730 |  | 3,551,812
( - ) Adjustment to present value | (5,729) |  | (8,522) |  | (7,446) |  | (10,121)
( - ) Expected credit losses | (582,851) |  | (457,505) |  | (643,029) |  | (503,848)
| 8,287,155 |  | 6,104,732 |  | 2,970,255 |  | 3,037,843
Current | 8,280,561 |  | 6,097,935 |  | 2,963,661 |  | 3,031,046
Non-current | 6,594 |  | 6,797 |  | 6,594 |  | 6,797
Other receivables | 147,488 |  | 150,156 |  | 150,235 |  | 153,799
( - ) Adjustment to present value | (1,513) |  | (1,936) |  | (1,513) |  | (1,936)
( - ) Expected credit losses | (27,634) |  | (27,986) |  | (28,029) |  | (27,986)
| 118,341 |  | 120,234 |  | 120,693 |  | 123,877
Current | 56,733 |  | 56,002 |  | 59,086 |  | 59,645
Non-current (1) | 61,608 |  | 64,232 |  | 61,607 |  | 64,232

(1) Weighted average maturity of 2.59 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 March 31, 2020, FIDC BRF had an outstanding balance of R$720,585 (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 March 31, 2020, other receivables are mainly represented by receivables from the sale of farms and various properties, with a balance of R$103,418 (R$109,419 on December 31, 2019).

The movements of the expected credit losses are shown below:

| Parent company |  | Consolidated
| 03.31.20 |  | 03.31.20
Beginning balance | (457,505) |  | (503,848)
Provision | (31,101) |  | (32,937)
Write-offs | 2,751 |  | 2,778
Exchange rate variation | (96,996) |  | (109,022)
Ending balance | (582,851) |  | (643,029)

The aging of trade accounts receivable is as follows:

| Parent company |  | Consolidated
| 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19
Not overdue | 8,288,974 |  | 6,028,415 |  | 2,713,588 |  | 2,820,308
Overdue |  |  |  |  |  |  |
01 to 60 days | 26,897 |  | 29,232 |  | 262,187 |  | 143,303
61 to 90 days | 2,443 |  | 5,549 |  | 13,601 |  | 19,409
91 to 120 days | 4,893 |  | 1,568 |  | 10,602 |  | 3,723
121 to 180 days | 6,938 |  | 876 |  | 14,290 |  | 3,934
181 to 360 days | 2,307 |  | 5,166 |  | 9,566 |  | 20,748
More than 360 days | 543,283 |  | 499,953 |  | 596,896 |  | 540,387
( - ) Adjustment to present value | (5,729) |  | (8,522) |  | (7,446) |  | (10,121)
( - ) Expected credit losses | (582,851) |  | (457,505) |  | (643,029) |  | (503,848)
| 8,287,155 |  | 6,104,732 |  | 2,970,255 |  | 3,037,843

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

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7. INVENTORIES

| Parent company |  | Consolidated
| 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19
Finished goods | 1,600,401 |  | 1,302,419 |  | 2,901,553 |  | 2,257,119
Work in progress | 165,214 |  | 147,022 |  | 168,221 |  | 149,470
Raw materials | 912,776 |  | 721,278 |  | 1,012,195 |  | 803,520
Packaging materials | 61,370 |  | 57,915 |  | 67,920 |  | 60,715
Secondary materials | 383,295 |  | 367,311 |  | 390,240 |  | 375,744
Supplies | 169,894 |  | 168,248 |  | 198,674 |  | 205,399
Imports in transit | 43,714 |  | 61,021 |  | 43,714 |  | 61,021
Other | 17,873 |  | 5,252 |  | 34,296 |  | 19,266
(-) Adjustment to present value | (51,664) |  | (44,319) |  | (51,669) |  | (44,338)
| 3,302,873 |  | 2,786,147 |  | 4,765,144 |  | 3,887,916

The additions and reversals of provisions for losses on inventories, which were recorded under the item Cost of Goods Sold, are shown in the table below:

| Parent company
|  |  |  |  |  |  | 03.31.20
| Provision for adjustment to realizable value | Provision for deterioration | Provision for obsolescence | Total
Beginning balance | (9,075) |  | (37,729) |  | (8,416) |  | (55,220)
Additions | (8,915) |  | (18,397) |  | (1,197) |  | (28,509)
Reversals | 10,196 |  | - |  | - |  | 10,196
Write-offs | - |  | 24,411 |  | 702 |  | 25,113
Ending balance | (7,794) |  | (31,715) |  | (8,911) |  | (48,420)

| Consolidated
|  |  |  |  |  |  | 03.31.20
| Provision for adjustment to realizable value | Provision for deterioration | Provision for obsolescence | Total
Beginning balance | (10,712) |  | (42,526) |  | (14,919) |  | (68,157)
Additions | (13,200) |  | (22,030) |  | (3,505) |  | (38,735)
Reversals | 12,081 |  | - |  | - |  | 12,081
Write-offs | - |  | 29,007 |  | 2,329 |  | 31,336
Exchange rate variation | 499 |  | (741) |  | (185) |  | (427)
Ending balance | (11,332) |  | (36,290) |  | (16,280) |  | (63,902)

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

42

8. 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 shown below:

| Parent company
|  |  |  |  |  |  |  |  |  |  |  |  | 03.31.20
| 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 | 2,204,547 |  | 1,583,035 |  | 3,787,582 |  | 14,477 |  | 76,211 |  | 10,897 |  | 101,585
Changes in fair value (1) | 452,669 |  | 107,617 |  | 560,286 |  | 7,021 |  | (40,032) |  | - |  | (33,011)
Harvest | - |  | - |  | - |  | - |  | - |  | (15,069) |  | (15,069)
Write-off | - |  | - |  | - |  | - |  | - |  | (85) |  | (85)
Transfer between current and non-current | 15,889 |  | 21,107 |  | 36,996 |  | (15,889) |  | (21,107) |  | - |  | (36,996)
Transfer to assets held for sale | - |  | - |  | - |  | - |  | - |  | 224 |  | 224
Transfer to inventories | (2,657,081) |  | (1,648,080) |  | (4,305,161) |  | - |  | - |  | - |  | -
Ending balance | 573,797 |  | 1,051,033 |  | 1,624,830 |  | 355,894 |  | 352,876 |  | 324,520 |  | 1,033,290
| Consolidated
|  |  |  |  |  |  |  |  |  |  |  |  | 03.31.20
| 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 | 2,207,218 |  | 1,583,035 |  | 3,790,253 |  | 23,199 |  | 76,211 |  | 10,897 |  | 110,307
Changes in fair value (1) | 459,377 |  | 107,617 |  | 566,994 |  | 2,402 |  | (40,032) |  | - |  | (37,630)
Harvest | - |  | - |  | - |  | - |  | - |  | (15,069) |  | (15,069)
Write-off | - |  | - |  | - |  | - |  | - |  | (85) |  | (85)
Transfer between current and non-current | 15,889 |  | 21,107 |  | 36,996 |  | (15,889) |  | (21,107) |  | - |  | (36,996)
Transfer between held for sale | - |  | - |  | - |  | - |  | - |  | 224 |  | 224
Transfer to inventories | (2,657,081) |  | (1,648,080) |  | (4,305,161) |  | - |  | - |  | - |  | -
Exchange variation | 10,402 |  | - |  | 10,402 |  | 11,088 |  | - |  | - |  | 11,088
Ending balance | 651,490 |  | 1,051,033 |  | 1,702,523 |  | 435,468 |  | 352,876 |  | 324,520 |  | 1,112,864

(1) The change in the fair value of biological assets includes depreciation of breeders and depletion of forests in the amount of R$186,261 (R$728,904 on December 31, 2019) at the parent company and R$207,052 (R$798,239 on December 31, 2019) in the consolidated.

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

43

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

| Parent company
| 03.31.20 |  | 12.31.19
| Quantity (thousand of heads) |  | Value |  | Quantity (thousand of heads) |  | Value
Consumable biological assets |  |  |  |  |  |  |
Immature poultry | 161,273 |  | 573,797 |  | 170,071 |  | 557,773
Immature pork | 4,178 |  | 1,051,033 |  | 4,098 |  | 987,354
Total current | 165,451 |  | 1,624,830 |  | 174,169 |  | 1,545,127
Production biological assets |  |  |  |  |  |  |
Immature poultry | 5,931 |  | 129,006 |  | 6,093 |  | 129,837
Mature poultry | 10,340 |  | 226,888 |  | 10,329 |  | 220,448
Immature pork | 201 |  | 81,965 |  | 211 |  | 77,027
Mature pork | 452 |  | 270,911 |  | 455 |  | 260,777
Total non-current | 16,924 |  | 708,770 |  | 17,088 |  | 688,089
| 182,375 |  | 2,333,600 |  | 191,257 |  | 2,233,216
| Consolidated
| 03.31.20 |  | 12.31.19
| Quantity (thousand of heads) |  | Value |  | Quantity (thousand of heads) |  | Value
Consumable biological assets |  |  |  |  |  |  |
Immature poultry | 180,805 |  | 651,490 |  | 189,602 |  | 615,685
Immature pork | 4,178 |  | 1,051,033 |  | 4,098 |  | 987,354
Total current | 184,983 |  | 1,702,523 |  | 193,700 |  | 1,603,039
Production biological assets |  |  |  |  |  |  |
Immature poultry | 6,840 |  | 164,113 |  | 7,042 |  | 160,415
Mature poultry | 11,720 |  | 271,355 |  | 11,554 |  | 254,253
Immature pork | 201 |  | 81,965 |  | 211 |  | 77,027
Mature pork | 452 |  | 270,911 |  | 455 |  | 260,777
Total non-current | 19,213 |  | 788,344 |  | 19,262 |  | 752,472
| 204,196 |  | 2,490,867 |  | 212,962 |  | 2,355,511

The Company has forests pledged as collateral for financing and tax/civil contingencies in the amount of R$81,722 in the parent company and in the consolidated (R$62,408 in the parent company and in the consolidated at December 31, 2019).

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

44

9. RECOVERABLE TAXES

| Parent company |  | Consolidated
| 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19
Recoverable taxes |  |  |  |  |  |  |
ICMS ("State VAT") | 1,479,215 |  | 1,476,595 |  | 1,687,883 |  | 1,635,664
PIS and COFINS ("Federal Taxes to Social Fund Programs") | 3,038,764 |  | 2,986,235 |  | 3,040,187 |  | 2,990,313
IPI ("Federal VAT") | 868,299 |  | 848,862 |  | 868,301 |  | 848,865
INSS ("Brazilian Social Security") | 252,937 |  | 255,950 |  | 252,960 |  | 255,967
Other | 40,638 |  | 41,048 |  | 41,531 |  | 80,144
(-) Provision for losses | (182,203) |  | (167,194) |  | (182,688) |  | (167,674)
| 5,497,650 |  | 5,441,496 |  | 5,708,174 |  | 5,643,279
Current | 275,517 |  | 274,480 |  | 486,067 |  | 473,732
Non-current | 5,222,133 |  | 5,167,016 |  | 5,222,107 |  | 5,169,547
Recoverable income tax and social contribution |  |  |  |  |  |  |
Income and social contribution tax ("IR/CS") | 253,364 |  | 313,704 |  | 404,053 |  | 430,778
(-) Provision for losses | (8,985) |  | (8,985) |  | (9,029) |  | (9,029)
| 244,379 |  | 304,719 |  | 395,024 |  | 421,749
Current | 47,976 |  | 40,291 |  | 192,467 |  | 152,486
Non-current | 196,403 |  | 264,428 |  | 202,557 |  | 269,263

The rollforward of the provision for realization of recoverable taxes are set forth below:

| Parent company
|  |  |  |  |  |  |  |  |  |  | 03.31.20
| ICMS | PIS and COFINS | IR/CS | IPI | Other | Total
Beginning balance | (141,193) |  | (16,922) |  | (8,985) |  | (3,818) |  | (5,261) |  | (176,179)
Additions | (22,529) |  | - |  | - |  | - |  | - |  | (22,529)
Write-offs | 2,729 |  | 2,694 |  | - |  | 2,097 |  | - |  | 7,520
Ending balance | (160,993) |  | (14,228) |  | (8,985) |  | (1,721) |  | (5,261) |  | (191,188)

| Consolidated
|  |  |  |  |  |  |  |  |  |  | 03.31.20
| ICMS | PIS and COFINS | IR/CS | IPI | Other | Total
Beginning balance | (141,193) |  | (16,922) |  | (9,029) |  | (3,818) |  | (5,741) |  | (176,703)
Additions | (22,529) |  | - |  | - |  | - |  | - |  | (22,529)
Write-offs | 2,729 |  | 2,694 |  | - |  | 2,097 |  | - |  | 7,520
Exchange rate variation | - |  | - |  | - |  | - |  | (5) |  | (5)
Ending balance | (160,993) |  | (14,228) |  | (9,029) |  | (1,721) |  | (5,746) |  | (191,717)

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

45

10. INCOME AND SOCIAL CONTRIBUTION TAXES

10.1. Deferred income and social contribution taxes

| Parent company |  | Consolidated
| 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19
Assets |  |  |  |  |  |  |
Tax loss carryforwards (corporate income tax) | 1,779,025 |  | 1,780,424 |  | 1,784,253 |  | 1,785,027
Negative calculation basis (social contribution tax) | 682,215 |  | 680,518 |  | 684,097 |  | 682,175
Temporary differences - Assets |  |  |  |  |  |  |
Provisions for tax, civil and labor risks | 493,335 |  | 477,538 |  | 493,335 |  | 477,538
Suspended collection taxes | 33,573 |  | 31,069 |  | 33,573 |  | 31,069
Expected credit losses | 179,433 |  | 135,219 |  | 179,490 |  | 135,374
Provision for losses on tax credits | 69,812 |  | 60,771 |  | 69,812 |  | 60,771
Provision for other obligations | 153,780 |  | 93,619 |  | 153,780 |  | 93,619
Employees' profit sharing | 26,945 |  | 66,166 |  | 26,945 |  | 66,166
Provision for inventory losses | 16,326 |  | 18,657 |  | 16,389 |  | 18,718
Employees' benefits plan | 207,148 |  | 202,228 |  | 207,148 |  | 202,228
Difference on tax x accounting basis for leases | 44,908 |  | 37,492 |  | 44,908 |  | 37,492
Unrealized losses on derivatives | 466,307 |  | - |  | 466,307 |  | -
Other temporary differences | 36,084 |  | 35,568 |  | 48,579 |  | 66,458
| 4,188,891 |  | 3,619,269 |  | 4,208,616 |  | 3,656,635
Temporary differences - Liabilities |  |  |  |  |  |  |
Unrealized fair value gains | (14,912) |  | (11,998) |  | (14,912) |  | (11,998)
Difference on tax x accounting basis for goodwill amortization | (319,876) |  | (319,592) |  | (319,876) |  | (319,592)
Difference on tax x accounting basis for depreciation (useful life) | (816,212) |  | (802,844) |  | (816,212) |  | (802,844)
Estimated annual effective tax rate - CPC 21 | (4,640) |  | - |  | (4,640) |  | -
Business combination - Sadia (1) | (645,273) |  | (622,203) |  | (668,070) |  | (640,318)
Unrealized gains on derivatives | - |  | (43,428) |  | - |  | (43,428)
Other - exchange rate variation | - |  | - |  | (87,330) |  | (69,142)
Other temporary differences | (12,232) |  | (10,710) |  | (10,074) |  | (8,761)
| (1,813,145) |  | (1,810,775) |  | (1,921,114) |  | (1,896,083)
Total deferred tax | 2,375,746 |  | 1,808,494 |  | 2,287,502 |  | 1,760,552
Total Assets | 2,375,746 |  | 1,808,494 |  | 2,395,469 |  | 1,845,862
Total Liabilities | - |  | - |  | (107,967) |  | (85,310)
| 2,375,746 |  | 1,808,494 |  | 2,287,502 |  | 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 on 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 March 2020 |  | January to March 2020
Beginning balance | 1,808,494 |  | 1,760,552
Deferred income and social contribution recognized in the statement of income | 50,464 |  | 29,907
Deferred income and social contribution recognized in other comprehensive income | 516,489 |  | 516,489
Other | 299 |  | (19,446)
Ending balance | 2,375,746 |  | 2,287,502

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

46

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
April to december 2020 | 53,685 |  | 53,685
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 | 644,136 |  | 651,246
| 2,461,240 |  | 2,468,350

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 |  | Consolidated
| 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19
Income (loss) before income and social contribution - continued operations | (96,385) |  | (302,200) |  | (51,790) |  | (290,067)
Nominal tax rate | 34% |  | 34% |  | 34% |  | 34%
Credit (expense) at nominal rate | 32,771 |  | 102,748 |  | 17,609 |  | 98,623
Reconciling items |  |  |  |  |  |  |
Income from associates and joint ventures | 1,355,666 |  | 72,205 |  | - |  | (4,056)
Difference of tax rates on results of foreign subsidiaries | - |  | - |  | 563,394 |  | 70,990
Difference of funcional currency of foreign subsidiaries | - |  | - |  | 770,679 |  | (3,894)
Deferred tax assets not recognized (1) | (1,332,416) |  | (54,336) |  | (1,332,416) |  | (54,336)
Penalties | (4,064) |  | - |  | (4,064) |  | -
Investment grant | 10,534 |  | - |  | 10,534 |  | -
Estimated annual effective tax rate - CPC 21 | (4,640) |  | 196,959 |  | (4,640) |  | 196,959
Reversal (recognition) of provision with no deferred tax constituted | - |  | (130,390) |  | - |  | (130,390)
Other permanent differences | (7,387) |  | 2,951 |  | (7,538) |  | 2,893
| 50,464 |  | 190,137 |  | 13,558 |  | 176,789
Current income tax | - |  | - |  | (16,349) |  | (24,100)
Deferred income tax | 50,464 |  | 190,137 |  | 29,907 |  | 200,889

(1) Amount related to the non-recognition of deferred tax on tax losses and negative basis in the amount of R$3,918,871 in the parent company and in the consolidated, due to limiting the ability 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 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.

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

47

11. JUDICIAL DEPOSITS

The rollforward of the judicial deposits is set forth below:

| Parent company
|  |  |  |  |  |  | 03.31.20
| Tax | Labor | Civil, commercial and other | Total
Beginning balance | 244,977 |  | 301,739 |  | 28,965 |  | 575,681
Additions | - |  | 31,802 |  | 4,051 |  | 35,853
Reversals | (33) |  | (13,661) |  | (3) |  | (13,697)
Write-offs | (902) |  | (28,928) |  | (205) |  | (30,035)
Interest | 1,567 |  | 5,827 |  | 599 |  | 7,993
Ending balance | 245,609 |  | 296,779 |  | 33,407 |  | 575,795

| Consolidated
|  |  |  |  |  |  | 03.31.20
| Tax | Labor | Civil, commercial and other | Total
Beginning balance | 244,977 |  | 301,808 |  | 28,965 |  | 575,750
Additions | - |  | 31,802 |  | 4,051 |  | 35,853
Reversals | (33) |  | (13,661) |  | (3) |  | (13,697)
Write-offs | (902) |  | (28,928) |  | (205) |  | (30,035)
Interest | 1,567 |  | 5,829 |  | 599 |  | 7,995
Exchange rate variation | - |  | 13 |  | - |  | 13
Ending balance | 245,609 |  | 296,863 |  | 33,407 |  | 575,879

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

48

12. INVESTMENTS

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

| Subsidiaries |  | Affiliates |  |  |
| 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 |  | PP-BIO Adm. Bem próprio S.A. |  | PR-SAD Adm. Bem próprio S.A. |  | Total
|  |  |  |  |  |  |  |  |  |  |  |  |  |  | 03.31.20 |  | 12.31.19
a) Participation as of december 31, 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 number of shares and membership interests | 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 |  | - |  | - |  |  |  |
Number of shares and membership interest 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 december 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Share capital | 68,067 |  | 6,523 |  | 1,186 |  | 32,664 |  | 313 |  | 5,564 |  | 25,315 |  | 20,740 |  | - |  | 8 |  | 2,933 |  | - |  | - |  | - |  |  |  |
Shareholders' equity | 867 |  | 9,664,780 |  | (216) |  | 22,419 |  | (73,715) |  | 5,591 |  | 9,923 |  | (192) |  | 277,798 |  | 77,593 |  | (28,263) |  | 2,369 |  | - |  | - |  |  |  |
Income (loss) for the year | (164) |  | 1,644,582 |  | (75) |  | (1,752) |  | 205,004 |  | 27 |  | (3,123) |  | (66) |  | (24,254) |  | (20,254) |  | (2,958) |  | 14 |  | - |  | - |  |  |  |
c) Movements of investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | 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) | (164) |  | 3,784,584 |  | (188) |  | (1,664) |  | 205,004 |  | 27 |  | (10,697) |  | (7) |  | 29,745 |  | (19,402) |  | - |  | 14 |  | - |  | - |  | 3,987,252 |  | 1,186,569
Dividends and interests on shareholders' equity | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (8,665)
Capital movements |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital increase | - |  | - |  | - |  | 5,000 |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 61 |  | 214 |  | 5,275 |  | 2,385
Capital transaction between subsidiaries | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 1,314,596
Acquisition (sale) of equity interest | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (67,444)
Closure of equity interest | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 90,834
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other comprehensive income | - |  | (268,581) |  | 85 |  | - |  | (150,073) |  | - |  | 10,183 |  | (2) |  | 12,746 |  | 18,187 |  | - |  | - |  | - |  | - |  | (377,455) |  | (81,086)
Provision for losses on investments | - |  | - |  | 103 |  | - |  | (54,931) |  | - |  | - |  | 9 |  | - |  | - |  | - |  | - |  | - |  | - |  | (54,819) |  | 128,757
Reversal of provision for losses on investments | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (109,463)
Ending balance | 867 |  | 9,664,780 |  | - |  | 22,419 |  | - |  | 5,591 |  | 4,277 |  | - |  | 277,798 |  | 73,606 |  | - |  | 2,369 |  | 2,415 |  | 5,065 |  | 10,059,187 |  | 6,498,934

The Company owns other investments in the amount of R$583 in the parent company and R$9,249 in the consolidated (R$583 at parent company and R$7,676 in the consolidated on December 31, 2019).

On March 31, 2020, these associates, affiliates and joint ventures do not have any restriction to amortize their loans or advances to the Company.

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

49

13. 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) |  | 03.31.20
Cost |  |  |  |  |  |  |  |  |  |  |
Land |  |  | 546,976 |  | - |  | (2,963) |  | 22,144 |  | 566,157
Buildings, facilities and improvements |  |  | 9,558,475 |  | 59,938 |  | (9,209) |  | 52,070 |  | 9,661,274
Machinery and equipment |  |  | 7,669,528 |  | 2,463 |  | (32,447) |  | 76,553 |  | 7,716,097
Furniture and fixtures |  |  | 101,855 |  | 124 |  | (227) |  | 2,848 |  | 104,600
Vehicles |  |  | 121,079 |  | 16,625 |  | (341) |  | (3) |  | 137,360
Construction in progress |  |  | 335,872 |  | 109,134 |  | - |  | (183,131) |  | 261,875
Advances to suppliers |  |  | - |  | 61 |  | - |  | - |  | 61
|  |  | 18,333,785 |  | 188,345 |  | (45,187) |  | (29,519) |  | 18,447,424
Depreciation |  |  |  |  |  |  |  |  |  |  |
Land (2) | 20.77% |  | (4,258) |  | (1,451) |  | 37 |  | (1,799) |  | (7,471)
Buildings, facilities and improvements | 9.53% |  | (3,126,532) |  | (142,665) |  | 8,468 |  | 53,570 |  | (3,207,159)
Machinery and equipment | 6.64% |  | (3,790,298) |  | (112,947) |  | 15,283 |  | (60,340) |  | (3,948,302)
Furniture and fixtures | 6.67% |  | (54,854) |  | (1,266) |  | 193 |  | 6 |  | (55,921)
Vehicles | 27.88% |  | (24,541) |  | (9,255) |  | 65 |  | (1) |  | (33,732)
|  |  | (7,000,483) |  | (267,584) |  | 24,046 |  | (8,564) |  | (7,252,585)
|  |  | 11,333,302 |  | (79,239) |  | (21,141) |  | (38,083) |  | 11,194,839

(1) Refers to the transfer of R$38,554 for intangible assets, R$7 for biological assets and R$(478) for assets held for sale.

(2) Land depreciation refers to right-of-use assets. The amount of R$1,051 of depreciation was recognized in the cost of formation of forests and will be realized in the result when it is exhausted (note 18.1).

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

50

| Consolidated
| Weighted average depreciation rate (p.a.) |  | 12.31.19 |  | Additions |  | Disposals |  | Transfers (1) |  | Exchange rate variation |  | 03.31.20
Cost |  |  |  |  |  |  |  |  |  |  |  |  |
Land |  |  | 603,479 |  | 965 |  | (2,963) |  | 20,793 |  | 10,725 |  | 632,999
Buildings, facilities and improvements |  |  | 10,148,798 |  | 111,994 |  | (12,201) |  | 51,254 |  | 161,209 |  | 10,461,054
Machinery and equipment |  |  | 8,177,047 |  | 13,267 |  | (33,198) |  | 80,858 |  | 109,752 |  | 8,347,726
Furniture and fixtures |  |  | 140,439 |  | 124 |  | (284) |  | 3,270 |  | 10,993 |  | 154,542
Vehicles |  |  | 213,199 |  | 19,501 |  | (11,349) |  | (1,199) |  | 26,635 |  | 246,787
Construction in progress |  |  | 348,907 |  | 102,272 |  | - |  | (184,509) |  | 2,375 |  | 269,045
Advances to suppliers |  |  | 528 |  | 434 |  | - |  | 12 |  | 92 |  | 1,066
|  |  | 19,632,397 |  | 248,557 |  | (59,995) |  | (29,521) |  | 321,781 |  | 20,113,219
Depreciation |  |  |  |  |  |  |  |  |  |  |  |  |
Land (2) | 22.31% |  | (5,086) |  | (1,449) |  | 37 |  | (1,850) |  | (151) |  | (8,499)
Buildings, facilities and improvements | 9.20% |  | (3,263,801) |  | (162,484) |  | 11,450 |  | 53,142 |  | (38,901) |  | (3,400,594)
Machinery and equipment | 6.60% |  | (3,950,250) |  | (123,182) |  | 15,514 |  | (61,214) |  | (39,497) |  | (4,158,629)
Furniture and fixtures | 6.67% |  | (71,779) |  | (2,679) |  | 235 |  | 6 |  | (3,871) |  | (78,088)
Vehicles | 33.97% |  | (64,592) |  | (20,016) |  | 4,958 |  | 1,353 |  | (13,456) |  | (91,753)
|  |  | (7,355,508) |  | (309,810) |  | 32,194 |  | (8,563) |  | (95,876) |  | (7,737,563)
|  |  | 12,276,889 |  | (61,253) |  | (27,801) |  | (38,084) |  | 225,905 |  | 12,375,656

(1) Refers to the transfer of R$38,555 for intangible assets, R$7 for biological assets and R$(478) to held for sale.

(2) Land depreciation refers to right-of-use assets. The amount of R$1,051 of depreciation was recognized in the cost of formation of forests and will be realized in the result when it is exhausted (note 18.1)

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

51

The amount of capitalized borrowing costs during the three-month period ended on March 31, 2020 was of R$4,058 in the parent company and in the consolidated (R$5,302 in the parent company and R$5,324 in the consolidated on the three-month period ended on March 31, 2019). The weighted average rate used to determine the amount of borrowing costs subject to capitalization was 6.60% p.a. in the parent company and in the consolidated (6.13% p.a. in the parent company and 2.23% in the consolidated on March 31, 2019).

The property, plant and equipment items that are pledged as collateral for transactions of different natures are set forth below:

|  |  |  | Parent company and Consolidated
|  | Type of collateral |  | 03.31.20 |  | 12.31.19
Land |  | Financial/Tax |  | 213,572 |  | 221,727
Buildings, facilities and improvements |  | Financial/Tax |  | 1,494,019 |  | 1,499,808
Machinery and equipment |  | Financial/Labor/Tax/Civil |  | 1,486,069 |  | 1,488,889
Furniture and fixtures |  | Financial/Tax |  | 15,146 |  | 14,090
Vehicles |  | Financial/Tax |  | 342 |  | 369
|  |  |  | 3,209,148 |  | 3,224,883

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

52

14. INTANGIBLE ASSETS

The intangible assets rollforward is set forth below:

|  |  | Parent company
| Weighted average amortization rate (p.a.) |  | 12.31.19 |  | Additions |  | Disposals |  | Transfers |  | 03.31.20
Cost |  |  |  |  |  |  |  |  |  |  |
Non-compete agreement |  |  | 71,729 |  | - |  | (379) |  | - |  | 71,350
Goodwill for future profitability |  |  | 1,783,655 |  | - |  | - |  | - |  | 1,783,655
Outgrowers relationship |  |  | 14,604 |  | - |  | - |  | - |  | 14,604
Trademarks |  |  | 1,152,885 |  | - |  | - |  | - |  | 1,152,885
Patents |  |  | 6,205 |  | - |  | - |  | - |  | 6,205
Software |  |  | 491,682 |  | 72,766 |  | (35,625) |  | 36,356 |  | 565,179
Intangible in progress |  |  | 11,450 |  | 23,506 |  | - |  | (6,366) |  | 28,590
|  |  | 3,532,210 |  | 96,272 |  | (36,004) |  | 29,990 |  | 3,622,468
Amortization |  |  |  |  |  |  |  |  |  |  |
Non-compete agreement | 38.67% |  | (57,690) |  | (3,997) |  | 379 |  | - |  | (61,308)
Outgrowers relationship | 13.03% |  | (12,744) |  | (301) |  | - |  | - |  | (13,045)
Patents | 19.05% |  | (5,524) |  | (118) |  | - |  | - |  | (5,642)
Software | 24.97% |  | (316,720) |  | (30,587) |  | 35,625 |  | 8,564 |  | (303,118)
|  |  | (392,678) |  | (35,003) |  | 36,004 |  | 8,564 |  | (383,113)
|  |  | 3,139,532 |  | 61,269 |  | - |  | 38,554 |  | 3,239,355

|  |  | Consolidated
| Weighted average amortization rate (p.a.) |  | 12.31.19 |  | Additions |  | Disposals |  | Transfers |  | Exchange rate variation |  | 03.31.20
Cost |  |  |  |  |  |  |  |  |  |  |  |  |
Non-compete agreement |  |  | 99,229 |  | - |  | (379) |  | - |  | 7,542 |  | 106,392
Goodwill for future profitability |  |  | 2,713,602 |  | - |  | - |  | - |  | 238,444 |  | 2,952,046
Outgrowers relationship |  |  | 14,604 |  | - |  | - |  | - |  | - |  | 14,604
Trademarks |  |  | 1,322,262 |  | - |  | - |  | - |  | 28,482 |  | 1,350,744
Patents |  |  | 6,305 |  | - |  | (106) |  | - |  | 6 |  | 6,205
Customer relationship |  |  | 892,758 |  | - |  | - |  | - |  | 205,896 |  | 1,098,654
Software |  |  | 523,615 |  | 73,966 |  | (35,625) |  | 37,325 |  | 8,090 |  | 607,371
Intangible in progress |  |  | 12,151 |  | 23,565 |  | - |  | (7,334) |  | 208 |  | 28,590
|  |  | 5,584,526 |  | 97,531 |  | (36,110) |  | 29,991 |  | 488,668 |  | 6,164,606
Amortization |  |  |  |  |  |  |  |  |  |  |  |  |
Non-compete agreement | 28.94% |  | (74,190) |  | (5,514) |  | 379 |  | - |  | (4,760) |  | (84,085)
Outgrowers relationship | 13.03% |  | (12,744) |  | (301) |  | - |  | - |  | - |  | (13,045)
Patents | 19.05% |  | (5,626) |  | (118) |  | 106 |  | - |  | (13) |  | (5,651)
Customer relationship | 7.33% |  | (242,263) |  | (18,135) |  | - |  | - |  | (60,364) |  | (320,762)
Software | 24.66% |  | (341,624) |  | (31,941) |  | 35,625 |  | 8,564 |  | (6,642) |  | (336,018)
|  |  | (676,447) |  | (56,009) |  | 36,110 |  | 8,564 |  | (71,779) |  | (759,561)
|  |  | 4,908,079 |  | 41,522 |  | - |  | 38,555 |  | 416,889 |  | 5,405,045

During the three-month period ended on March 31, 2020, Management did not identify any event that could indicate an impairment of such assets.

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

53

15. LOANS AND FINANCING

| 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 |  | 03.31.20
Local currency |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Working capital | Pre- fixed / CDI |  | 5.95% (6.07% on 12.31.19) |  | 1.0 |  | 3,312,639 |  | 1,040,000 |  | (161,690) |  | (9,422) |  | 48,642 |  | - |  | 4,230,169
Certificate of agribusiness receivables (2) | CDI / IPCA |  | 6.40% (6.73% on 12.31.19) |  | 2.5 |  | 1,597,447 |  | - |  | - |  | - |  | 29,691 |  | - |  | 1,627,138
Development bank credit lines | Pre- fixed / Selic / TJLP |  | 5.17% (5.09% on 12.31.19) |  | 0.1 |  | 45,516 |  | - |  | (34,076) |  | (377) |  | 477 |  | - |  | 11,540
Special program asset restructuring | IGPM |  | (12.22% on 12.31.19) |  | 0.2 |  | 284,308 |  | - |  | (287,621) |  | (5,142) |  | 8,455 |  | - |  | -
Debentures | CDI / IPCA |  | 7.07% (7.40% on 12.31.19) |  | 6.0 |  | 755,760 |  | - |  | - |  | - |  | 15,305 |  | - |  | 771,065
Fiscal incentives | Pre- fixed |  | 2.40% (2.40% on 12.31.19) |  | - |  | 5,720 |  | 17,801 |  | - |  | (156) |  | 167 |  | - |  | 23,532
|  |  |  |  |  |  | 6,001,390 |  | 1,057,801 |  | (483,387) |  | (15,097) |  | 102,737 |  | - |  | 6,663,444
Foreign currency |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Bonds | Pre- fixed + e.r. USD and EUR |  | 4.37% (4.36% on 12.31.19) |  | 5.8 |  | 8,407,975 |  | (275) |  | - |  | (60,058) |  | 131,824 |  | 2,423,784 |  | 10,903,250
Export credit facility | Pre- fixed/LIBOR + e.r. USD |  | 4.37% (5.77% on 12.31.19) |  | 3.2 |  | 2,019,639 |  | - |  | - |  | (41,607) |  | 42,695 |  | 501,818 |  | 2,522,545
|  |  |  |  |  |  | 10,427,614 |  | (275) |  | - |  | (101,665) |  | 174,519 |  | 2,925,602 |  | 13,425,795
|  |  |  |  |  |  | 16,429,004 |  | 1,057,526 |  | (483,387) |  | (116,762) |  | 277,256 |  | 2,925,602 |  | 20,089,239
Current |  |  |  |  |  |  | 3,033,034 |  |  |  |  |  |  |  |  |  |  |  | 3,771,137
Non-current |  |  |  |  |  |  | 13,395,970 |  |  |  |  |  |  |  |  |  |  |  | 16,318,102

(1) Weighted average maturity is demonstrated 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.

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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 |  | 03.31.20
Local currency |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Working capital | Pre-fixed / CDI |  | 5.95% (6.07% on 12.31.19) |  | 1.2 |  | 3,312,639 |  | 1,040,000 |  | (161,690) |  | (9,422) |  | 48,642 |  | - |  | 4,230,169
Certificate of agribusiness receivables (2) | CDI / IPCA |  | 6.40% (6.73% on 12.31.19) |  | 2.5 |  | 1,597,447 |  | - |  | - |  | - |  | 29,691 |  | - |  | 1,627,138
Development bank credit lines | Pre-fixed / Selic / TJLP |  | 5.17% (5.09% on 12.31.19) |  | 0.3 |  | 45,516 |  | - |  | (34,076) |  | (377) |  | 477 |  | - |  | 11,540
Debentures | CDI / IPCA |  | 7.07% (7.40% on 12.31.19) |  | 6.2 |  | 755,760 |  | - |  | - |  | - |  | 15,305 |  | - |  | 771,065
Special program asset restructuring | IGPM |  | (12.22% on 12.31.19) |  | 0.2 |  | 284,308 |  | - |  | (287,621) |  | (5,142) |  | 8,455 |  | - |  | -
Fiscal incentives | Pre-fixed |  | 2.40% (2.40% on 12.31.19) |  | - |  | 5,720 |  | 17,801 |  | - |  | (156) |  | 167 |  | - |  | 23,532
|  |  |  |  |  |  | 6,001,390 |  | 1,057,801 |  | (483,387) |  | (15,097) |  | 102,737 |  | - |  | 6,663,444
Foreign currency |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Bonds | Pre-Fixed + e.r. USD and EUR |  | 4.37% (4.36% on 12.31.19) |  | 6.0 |  | 10,407,484 |  | (275) |  | - |  | (116,548) |  | 157,430 |  | 3,008,282 |  | 13,456,373
|  |  |  |  |  |  | - |  |  |  |  |  |  |  |  |  |  |  |
Export credit facility | Pre-Fixed / LIBOR + e.r. USD |  | 4.37% (5.77% on 12.31.19) |  | 3.2 |  | 2,019,640 |  | - |  | - |  | (41,607) |  | 42,694 |  | 501,818 |  | 2,522,545
|  |  |  |  |  |  | - |  |  |  |  |  |  |  |  |  |  |  |
Working capital | Pre-Fixed + e.r. TRY |  | 10.57% (16.56% on 12.31.19) |  | 1.1 |  | 191,765 |  | 317,414 |  | (182,446) |  | (11,557) |  | 11,356 |  | 35,813 |  | 362,345
|  |  |  |  |  |  | 12,618,889 |  | 317,139 |  | (182,446) |  | (169,712) |  | 211,480 |  | 3,545,913 |  | 16,341,263
|  |  |  |  |  |  | 18,620,279 |  | 1,374,940 |  | (665,833) |  | (184,809) |  | 314,217 |  | 3,545,913 |  | 23,004,707
Current |  |  |  |  |  |  | 3,132,029 |  |  |  |  |  |  |  |  |  |  |  | 3,880,548
Non-current |  |  |  |  |  |  | 15,488,250 |  |  |  |  |  |  |  |  |  |  |  | 19,124,159

(1) Weighted average maturity is demonstrated 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.

On March 31, 2020, the Company did not have any financial covenant clauses related to its loans and financing agreements.

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

55

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 March 31, 2020, the facility was available, but unused.

15.2. Loans and financing maturity schedule

The maturity schedule of the loans and financing is as follows:

| Parent company |  | Consolidated
| 03.31.20 |  | 03.31.20
Current | 3,771,137 |  | 3,880,548
Non-current | 16,318,102 |  | 19,124,159
April to december 2021 | 1,843,294 |  | 1,930,348
2022 | 2,670,656 |  | 2,828,936
2023 | 2,873,772 |  | 2,881,686
2024 | 2,946,361 |  | 2,946,361
2025 onwards | 5,984,019 |  | 8,536,828
| 20,089,239 |  | 23,004,707

15.3. Guarantees

| Parent company |  | Consolidated
| 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19
Total of loans and financing | 20,089,239 |  | 16,429,004 |  | 23,004,707 |  | 18,620,279
Mortgage guarantees | 35,072 |  | 51,237 |  | 35,072 |  | 51,237
Related to FINEM-BNDES | 11,540 |  | 45,516 |  | 11,540 |  | 45,516
Related to tax incentives and other | 23,532 |  | 5,721 |  | 23,532 |  | 5,721

On March 31, 2020, the amount of bank guarantees contracted by the Company was of R$660,988 (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).

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

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16. TRADE ACCOUNTS PAYABLE

| Parent company |  | Consolidated
| 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19
Domestic suppliers |  |  |  |  |  |  |
Third parties | 5,393,775 |  | 4,921,902 |  | 5,403,810 |  | 4,930,424
Related parties | 8,629 |  | 6,392 |  | - |  | -
| 5,402,404 |  | 4,928,294 |  | 5,403,810 |  | 4,930,424
Foreign suppliers |  |  |  |  |  |  |
Third parties | 460,596 |  | 404,068 |  | 1,114,008 |  | 915,611
| 460,596 |  | 404,068 |  | 1,114,008 |  | 915,611
(-) Adjustment to present value | (54,031) |  | (49,253) |  | (54,045) |  | (49,269)
| 5,808,969 |  | 5,283,109 |  | 6,463,773 |  | 5,796,766
Current | 5,800,464 |  | 5,270,762 |  | 6,455,268 |  | 5,784,419
Non-current | 8,505 |  | 12,347 |  | 8,505 |  | 12,347

On the trade accounts payable balance as of March 31, 2020, R$1,853,541 in the parent company and R$1,854,703 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.

17. SUPPLY CHAIN FINANCE

|  | Parent company and Consolidated
|  | 03.31.20 |  | 12.31.19
Supply chain finance - Domestic suppliers |  | 679,147 |  | 671,869
Supply chain finance - Foreign suppliers |  | 258,049 |  | 182,126
|  | 937,196 |  | 853,995
(-) Adjustment to present value |  | (9,787) |  | (11,958)
|  | 927,409 |  | 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, has not identified any material change in the existing commercial conditions with its suppliers. These operations are presented in the cash flow of operating activities.

On March 31, 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 0.36% to 0.59% p.m. (0.38% to 0.67% p.m. on December 31, 2019).

On March 31, 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 0.23% to 0.46% p.m. (0.32% to 0.46% p.m. on December 31, 2019).

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

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18. 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 contract, 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 |  | 03.31.20
Cost |  |  |  |  |  |  |  |  |  |  |
Land |  |  | 20,499 |  | - |  | (182) |  | 20,751 |  | 41,068
Buildings |  |  | 2,446,641 |  | 59,933 |  | (1,387) |  | (2,487) |  | 2,502,700
Machinery and equipment |  |  | 114,571 |  | 1,085 |  | (7,108) |  | - |  | 108,548
Vehicles |  |  | 112,917 |  | 16,625 |  | (341) |  | - |  | 129,201
Software |  |  | 55,705 |  | 72,766 |  | (35,624) |  | (18,264) |  | 74,583
|  |  | 2,750,333 |  | 150,409 |  | (44,642) |  | - |  | 2,856,100
Depreciation |  |  |  |  |  |  |  |  |  |  |
Land | 16.11% |  | (4,258) |  | (1,451) |  | 37 |  | (1,799) |  | (7,471)
Buildings | 28.94% |  | (459,122) |  | (91,084) |  | 869 |  | (6,765) |  | (556,102)
Machinery and equipment | 40.97% |  | (96,684) |  | (7,453) |  | 6,476 |  | - |  | (97,661)
Vehicles | 28.74% |  | (18,550) |  | (9,133) |  | 65 |  | - |  | (27,618)
Software | 45.21% |  | (44,815) |  | (8,313) |  | 35,624 |  | 8,564 |  | (8,940)
|  |  | (623,429) |  | (117,434) |  | 43,071 |  | - |  | (697,792)
|  |  | 2,126,904 |  | 32,975 |  | (1,571) |  | - |  | 2,158,308

| Consolidated
| Weighted average depreciation rate (p.a.) |  | 12.31.19 |  | Additions |  | Disposals |  | Exchange rate variation |  | Transfers |  | 03.31.20
Cost |  |  |  |  |  |  |  |  |  |  |  |  |
Land |  |  | 22,790 |  | 965 |  | (182) |  | 385 |  | 20,751 |  | 44,709
Buildings |  |  | 2,615,883 |  | 111,820 |  | (4,353) |  | 47,152 |  | (2,487) |  | 2,768,015
Machinery and equipment |  |  | 115,173 |  | 1,085 |  | (7,155) |  | 173 |  | - |  | 109,276
Vehicles |  |  | 207,443 |  | 19,501 |  | (11,349) |  | 25,498 |  | - |  | 241,093
Software |  |  | 55,705 |  | 72,766 |  | (35,625) |  | - |  | (18,264) |  | 74,582
|  |  | 3,016,994 |  | 206,137 |  | (58,664) |  | 73,208 |  | - |  | 3,237,675
Depreciation |  |  |  |  |  |  |  |  |  |  |  |  |
Land | 16.51% |  | (5,086) |  | (1,450) |  | 37 |  | (151) |  | (1,799) |  | (8,449)
Buildings | 29.15% |  | (512,836) |  | (106,776) |  | 3,835 |  | (17,227) |  | (6,765) |  | (639,769)
Machinery and equipment | 40.99% |  | (96,958) |  | (7,524) |  | 6,508 |  | (90) |  | - |  | (98,064)
Vehicles | 35.85% |  | (57,357) |  | (19,809) |  | 4,958 |  | (12,420) |  | - |  | (84,628)
Software | 45.21% |  | (44,815) |  | (8,313) |  | 35,625 |  | - |  | 8,564 |  | (8,939)
|  |  | (717,052) |  | (143,872) |  | 50,963 |  | (29,888) |  | - |  | (839,849)
|  |  | 2,299,942 |  | 62,265 |  | (7,701) |  | 43,320 |  | - |  | 2,397,826

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

58

18.2. Lease liabilities

| Parent company
| WAM (1) |  | 12.31.19 |  | Additions |  | Payments |  | Interest paid |  | Interest accrued |  | Disposals |  | Transfers |  | 03.31.20
Land | 6.8 |  | 18,707 |  | 83 |  | (2,524) |  | (1,100) |  | 1,101 |  | (210) |  | 17,501 |  | 33,558
Buildings | 7.5 |  | 2,106,997 |  | 59,850 |  | (84,784) |  | (21,246) |  | 40,056 |  | (693) |  | (17,501) |  | 2,082,679
Machinery and equipment | 1.1 |  | 25,349 |  | 1,085 |  | (8,438) |  | (3,213) |  | 3,214 |  | (662) |  | - |  | 17,335
Vehicles | 2.8 |  | 100,362 |  | 16,625 |  | (7,747) |  | (2,589) |  | 2,589 |  | (296) |  | - |  | 108,944
Software | 2.2 |  | 1,137 |  | 72,766 |  | (7,705) |  | (1,181) |  | 1,181 |  | - |  | - |  | 66,198
|  |  | 2,252,552 |  | 150,409 |  | (111,198) |  | (29,329) |  | 48,141 |  | (1,861) |  | - |  | 2,308,714
Current |  |  | 313,058 |  |  |  |  |  |  |  |  |  |  |  |  |  | 285,032
Non-current |  |  | 1,939,494 |  |  |  |  |  |  |  |  |  |  |  |  |  | 2,023,682

(1) Weighted average maturity, demonstrated in years.

| Consolidated
| WAM (1) |  | 12.31.19 |  | Additions |  | Payments |  | Interest paid |  | Interest accrued |  | Disposals |  | Transfers |  | Exchange rate variation |  | 03.31.20
Land | 5.2 |  | 20,355 |  | 1,048 |  | (2,708) |  | (1,235) |  | 1,235 |  | (210) |  | 17,501 |  | 260 |  | 36,246
Buildings | 4.6 |  | 2,227,026 |  | 111,737 |  | (99,771) |  | (24,076) |  | 42,888 |  | (693) |  | (17,501) |  | 31,266 |  | 2,270,876
Machinery and equipment | 1.2 |  | 25,687 |  | 1,085 |  | (8,509) |  | (3,219) |  | 3,219 |  | (676) |  | - |  | 86 |  | 17,673
Vehicles | 1.6 |  | 156,975 |  | 19,501 |  | (16,099) |  | (3,744) |  | 3,744 |  | (6,770) |  | - |  | 13,686 |  | 167,293
Software | 2.2 |  | 1,137 |  | 72,766 |  | (7,705) |  | (1,181) |  | 1,181 |  | - |  | - |  | - |  | 66,198
|  |  | 2,431,180 |  | 206,137 |  | (134,792) |  | (33,455) |  | 52,267 |  | (8,349) |  | - |  | 45,298 |  | 2,558,286
Current |  |  | 376,628 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 364,208
Non-current |  |  | 2,054,552 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2,194,078

(1) Weighted average maturity, demonstrated 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
| 03.31.20 |  | 03.31.20
Current | 497,944 |  | 572,234
Non-current | 1,810,770 |  | 1,986,052
April to december 2021 | 429,409 |  | 478,920
2022 | 344,186 |  | 385,848
2023 | 270,639 |  | 296,382
2024 | 224,001 |  | 229,699
2025 onwards | 542,535 |  | 595,203
| 2,308,714 |  | 2,558,286

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

59

18.4. Incremental rates

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

|  | 03.31.20 |  | 12.31.19
Contract Terms |  | Nominal rate% p.a. |  | Actual rate% p.a. |  | Nominal rate% p.a. |  | Actual rate% p.a.
1 year |  | 5.69% |  | 1.05% |  | 8.46% |  | 4.97%
2 years |  | 6.64% |  | 2.38% |  | 9.49% |  | 5.37%
3 years |  | 6.81% |  | 2.60% |  | 10.60% |  | 6.28%
4 years |  | - |  | - |  | 11.43% |  | 7.01%
5 years |  | - |  | - |  | 11.84% |  | 7.28%
6 years |  | - |  | - |  | 12.13% |  | 7.48%
8 years |  | - |  | - |  | 12.43% |  | 7.67%
9 years |  | - |  | - |  | 12.51% |  | 7.78%
10 years |  | - |  | - |  | 12.61% |  | 7.84%
11 years |  | - |  | - |  | 12.68% |  | 7.86%
13 years |  | - |  | - |  | 12.81% |  | 7.93%
14 years |  | - |  | - |  | 12.86% |  | 7.96%
15 years |  | - |  | - |  | 12.90% |  | 7.97%
18 years |  | - |  | - |  | 13.01% |  | 8.03%
20 years |  | - |  | - |  | 13.12% |  | 8.12%

The rates shown above on March 31, 2020 refer to the incremental rates used in contracts recognized in the first quarter of 2020 and the rates on 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 |  | Consolidated
|  | January to March 2020 |  | January to March 2020
Variable payments not included in the lease liabilities |  | 10,748 |  | 82,528
Expenses related to short-term assets |  | 15,734 |  | 42,204
Expenses related to low-value assets |  | 76 |  | 301
|  | 26,558 |  | 125,033

19. SHARE-BASED PAYMENT

The rules of stock options and restricted shares plans granted to executives were disclosed in the financial statements for the year ended December 31, 2019 (note 20) and are unchanged for this period.

The breakdown of the outstanding granted stock options is set forth as follows:

Date |  | Quantity |  | Grant (1) |  | Strike price (1)
Grant date |  | Beggining of exercise |  | End of the exercise |  | Options granted |  | Outstanding options |  | Fair value of the option |  | Granting date |  | Updated IPCA
04.26.16 |  | 04.30.17 |  | 04.30.21 |  | 8,724,733 |  | 1,325,000 |  | 9.21 |  | 56.00 |  | 66.73
05.31.16 |  | 05.31.17 |  | 05.31.21 |  | 3,351,220 |  | 1,156,990 |  | 10.97 |  | 46.68 |  | 55.20
|  |  |  |  |  | 12,075,953 |  | 2,481,990 |  |  |  |  |  |

(1) Amounts expressed in Brazilian Reais.

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

60

The breakdown of the restricted shares is set forth as follows:

Date |  | Quantity |  | Grant (1)
Grant |  | Vesting period |  | Shares granted |  | Outstanding shares |  | Fair value of the shares
06.14.18 |  | 06.14.20 |  | 270,000 |  | 172,125 |  | 20.00
10.01.18 |  | 10.01.20 |  | 2,311,394 |  | 1,301,616 |  | 21.44
09.01.19 |  | 09.01.21 |  | 742,901 |  | 742,901 |  | 30.61
|  |  |  | 3,324,295 |  | 2,216,642 |  |

(1) Amounts expressed in Brazilian Reais.

The rollforward of the granted options and shares in the three-month period ended on March 31, 2020, is presented as follows:

|  | Consolidated
Outstanding options/shares as of december 31, 2019 |  | 4,722,734
Issued - grant of 2019 |  |
Forfeiture: |  |
Restricted shares - Grant of 2018 |  | (12,592)
Stock options - Grant of 2016 |  | (11,510)
Outstanding options/shares as of march 31, 2020 |  | 4,698,632

The weighted average exercise price of the outstanding options conditioned to services is R$61.36 (sixty Brazilian Reais and thirty-six cents) (R$60.96 as of December 31, 2019), and the weighted average remaining vesting term is 14 months (17 months as of December 31, 2019).

The Company has registered as capital reserve, under shareholders’ equity, the fair value of the options in the amount of R$262,034 (R$255,445 as of December 31, 2019). In the statement of income for the period ended March 31, 2020 the amount recognized as expense was R$6,589 (R$6,861 as of December 31, 2019).

20. EMPLOYEES BENEFITS PLANS

The Company offers pension and other post-employment plans to the employees. The characteristics of such benefits were disclosed in the annual financial statements for the year ended December 31, 2019 (note 21) and have not been changed during this period. The actuarial liabilities are presented below:

| Parent company |  | Consolidated
| Liabilities |  | Liabilities
| 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19
Medical assistance | 190,671 |  | 187,274 |  | 190,671 |  | 187,274
F.G.T.S. Penalty (1) | 254,163 |  | 247,485 |  | 254,163 |  | 247,485
Award for length of service | 106,288 |  | 103,284 |  | 106,288 |  | 103,284
Other | 58,136 |  | 56,744 |  | 176,652 |  | 151,431
| 609,258 |  | 594,787 |  | 727,774 |  | 689,474
Current | 87,996 |  | 87,996 |  | 97,569 |  | 95,919
Non-current | 521,262 |  | 506,791 |  | 630,205 |  | 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 three-month period ended March 31, 2020 against comprehensive income a gain of R$6,388 in the parent company and R$6,341 in consolidated (R$918 in the parent company and R$583 in consolidated as of March 31, 2019).

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21. PROVISION FOR TAX, CIVIL, LABOR AND OTHER RISKS

The Company and its subsidiaries are involved in certain legal matters arising in the normal course of business, which include civil, tax, social security, labor, commercial and other processes.

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 probable loss, and contingent liabilities is presented below:

| Parent company
|  |  |  |  |  |  |  |  | 03.31.20
| 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 | 38,637 |  | 92,741 |  | 11,778 |  | - |  | 143,156
Reversals | (5,988) |  | (31,231) |  | (10,332) |  | (506) |  | (48,057)
Payments | (33,113) |  | (69,278) |  | (8,397) |  | - |  | (110,788)
Interest | 18,847 |  | 29,240 |  | 14,829 |  | - |  | 62,916
Ending balance | 601,699 |  | 621,982 |  | 314,354 |  | 300,055 |  | 1,838,090
Current |  |  |  |  |  |  |  |  | 1,106,358
Non-current |  |  |  |  |  |  |  |  | 731,732

| Consolidated
|  |  |  |  |  |  |  |  | 03.31.20
| 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 | 38,636 |  | 92,911 |  | 11,778 |  | - |  | 143,325
Reversals | (5,987) |  | (31,232) |  | (10,332) |  | (506) |  | (48,057)
Payments | (33,113) |  | (69,278) |  | (8,397) |  | - |  | (110,788)
Interest | 18,848 |  | 29,240 |  | 14,829 |  | - |  | 62,917
Exchange rate variation | 30 |  | 449 |  | 118 |  | 18 |  | 615
Ending balance | 601,878 |  | 625,164 |  | 315,173 |  | 300,166 |  | 1,842,381
Current |  |  |  |  |  |  |  |  | 1,110,288
Non-current |  |  |  |  |  |  |  |  | 732,093

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 March 31, 2020, the total amount of contingencies classified as possible was R$13,808,539 (R$13,299,190 as of December 31, 2019), of which R$300,166 (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.

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22. SHAREHOLDERS’ EQUITY

22.1. Capital Stock

On March 31, 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
| 03.31.20 |  | 12.31.19
Common shares | 812,473,246 |  | 812,473,246
Treasury shares | (713,446) |  | (713,446)
Outstanding shares | 811,759,800 |  | 811,759,800

22.1.2. Rollforward of outstanding shares

| Parent company
| Quantity of outstanding of shares
| 03.31.20 |  | 12.31.19
Shares at the beginning of the year | 811,759,800 |  | 811,416,022
Transfer of restricted shares | - |  | 343,778
Shares at the end of the year | 811,759,800 |  | 811,759,800

22.2. Treasury shares

The Company has 713,446 shares in treasury, with an average cost of R$53.60 (fifty-three Brazilian Reais and sixty cents) per share, and market value corresponding to R$10,766.

On March 26, 2020, the Company’s Board of Directors approved the Company’s share buyback program up to the limit of 7,500,000 (seven million and five hundred thousand) common shares, in a 12-month term.

23. EARNINGS (LOSS) PER SHARE

The basic earnings (losses) per share are calculated by dividing the earnings (losses) attributable to the owners of ordinary shares, by the weighted average quantity of available ordinary shares during the period.

The diluted earnings (losses) per share are calculated by dividing the earnings (losses) attributable to the owners of ordinary shares by the weighted average quantity of available ordinary shares during the period summed to the weighted average quantity of ordinary shares that would be available on the conversion of all potential dilutive ordinary shares (stock options and restricted shares). Since the share price on March 31, 2020 is lower than the strike price, the options do not have a dilutive effect.

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63

| Continued operations |  | Discontinued operations |  | Continued and discontinued operations
| January to March 2020 |  | January to March 2019 |  | January to March 2019 |  | January to March 2019
Basic numerator |  |  |  |  |  |  |
Net earnings (loss) for the exercise attributable to controlling shareholders | (45,921) |  | (112,063) |  | (888,872) |  | (1,000,935)
Basic denominator |  |  |  |  |  |  |
Common shares | 812,473,246 |  | 812,473,246 |  | 812,473,246 |  | 812,473,246
Weighted average number of outstanding shares - basic (except treasury shares) | 811,759,800 |  | 811,416,158 |  | 811,416,158 |  | 811,416,158
Net earnings (loss) per share basic - R$ | (0.06) |  | (0.14) |  | (1.10) |  | (1.23)
Diluted numerator |  |  |  |  |  |  |
Net earnings (loss) for the exercise attributable to controlling shareholders | (45,921) |  | (112,063) |  | (888,872) |  | (1,000,935)
Diluted denominator |  |  |  |  |  |  |
Weighted average number of outstanding shares - basic (except treasury shares) | 811,759,800 |  | 811,416,158 |  | 811,416,158 |  | 811,416,158
Weighted average number of outstanding shares - diluted | 811,759,800 |  | 811,416,158 |  | 811,416,158 |  | 811,416,158
Net earnings (loss) per share diluted - R$ | (0.06) |  | (0.14) |  | (1.10) |  | (1.23)

24. 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, 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 March 31, 2020, the Company held financial investments over R$100,000 at the following financial institutions: Al Rajhi Bank, Banco Bradesco, Banco BIC, Banco BNP Paribas, Banco do Brasil, Banco BTG Pactual, Banco Itaú, Banco Safra, Banco Santander, BBVA Banco Frances, Citibank, HSBC, J.P. Morgan Chase Bank, National Commercial Bank e Rabobank.

The Company also held derivative contracts with the following financial institutions: Banco Bradesco, Banco Itaú, Banco Santander, Banco Votorantim, Bank of America Merrill Lynch, Banco BNP Paribas, Citibank, Deutsche Bank, ING Bank, J.P. Morgan Chase Bank, Morgan Stanley e Rabobank.

24.3. Capital management and liquidity risk

On March 31, 2020, the long term consolidated gross debt represented 77.9% (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:

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

64

| Consolidated
| 03.31.20 |  | 12.31.19
| Current |  | Non-current |  | Total |  | Total
Foreign currency debt | (434,069) |  | (15,907,194) |  | (16,341,263) |  | (11,006,524)
Local currency debt | (3,446,479) |  | (3,216,965) |  | (6,663,444) |  | (7,613,755)
Derivative financial liabilities | (1,533,176) |  | (38,629) |  | (1,571,805) |  | (153,612)
Gross debt | (5,413,724) |  | (19,162,788) |  | (24,576,512) |  | (18,773,891)
Marketable securities and cash and cash equivalents | 8,292,300 |  | 381,942 |  | 8,674,242 |  | 4,963,319
Derivative financial assets | 282,115 |  | 7,164 |  | 289,279 |  | 245,315
Restricted cash | 24,361 |  | - |  | 24,361 |  | 296,294
Net debt | 3,185,052 |  | (18,773,682) |  | (15,588,630) |  | (13,268,963)

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

| Parent company
| 03.31.20
| Book value |  | Contractual cash flow |  | 2020 |  | 2021 |  | 2022 |  | 2023 |  | 2024 |  | 2025 onwards
Non derivative financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans and financing | 20,089,239 |  | 24,074,471 |  | 4,320,598 |  | 2,470,823 |  | 3,443,883 |  | 3,556,669 |  | 3,344,184 |  | 6,938,314
Trade accounts payable | 5,808,969 |  | 5,863,000 |  | 5,854,495 |  | 2,777 |  | 2,921 |  | 2,700 |  | 107 |  | -
Supply chain finance | 927,409 |  | 937,196 |  | 937,196 |  | - |  | - |  | - |  | - |  | -
Lease payables | 2,308,714 |  | 2,875,161 |  | 532,053 |  | 482,199 |  | 412,974 |  | 346,972 |  | 306,852 |  | 794,111
Derivative financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial instruments designated as cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate derivatives | 18,272 |  | 1,442 |  | - |  | 1,442 |  | - |  | - |  | - |  | -
Currency derivatives | 1,460,164 |  | 1,244,684 |  | 1,230,154 |  | 14,530 |  | - |  | - |  | - |  | -
Commodities derivatives | 40,694 |  | 49,305 |  | 49,305 |  | - |  | - |  | - |  | - |  | -
Financial instruments not designated as cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Currency derivatives | 43,170 |  | 37,029 |  | 37,029 |  | - |  | - |  | - |  | - |  | -

| Consolidated
| 03.31.20
| Book value |  | Contractual cash flow |  | 2020 |  | 2021 |  | 2022 |  | 2023 |  | 2024 |  | 2025 onwards
Non derivative financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans and financing | 23,004,707 |  | 27,829,517 |  | 4,577,538 |  | 2,632,950 |  | 3,720,104 |  | 3,677,862 |  | 3,457,256 |  | 9,763,807
Trade accounts payable | 6,463,773 |  | 6,517,818 |  | 6,509,313 |  | 2,777 |  | 2,921 |  | 2,700 |  | 107 |  | -
Supply chain finance | 927,409 |  | 937,196 |  | 937,196 |  | - |  | - |  | - |  | - |  | -
Lease payables | 2,558,286 |  | 3,178,028 |  | 611,432 |  | 537,797 |  | 462,963 |  | 379,976 |  | 314,658 |  | 871,202
Derivative financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial instruments designated as cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate derivatives | 18,272 |  | 1442 |  | 0 |  | 1442 |  | 0 |  | 0 |  | 0 |  | 0
Currency derivatives | 1,460,164 |  | 1244684 |  | 1230154 |  | 14530 |  | 0 |  | 0 |  | 0 |  | 0
Commodities derivatives | 40,694 |  | 49306 |  | 49306 |  | 0 |  | 0 |  | 0 |  | 0 |  | 0
Financial instruments not designated as cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Currency derivatives | 52,675 |  | 42,493 |  | 42,493 |  | - |  | - |  | - |  | - |  | -

For the three-month period ended March 31, 2020, the Company does not expect that the cash outflows to fulfill the obligations shown above will be significantly anticipated or substantially modified outside the normal course of business.

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

65

24.4. Market risk management

24.4.1. Interest rate risk

The indebtedness is essentially linked to the fixed coupon (R$, USD and EUR), 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 on March 31, 2020 were designated as hedge accounting and are shown in the table below:

03.31.20
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 |  | (14,866)
Interest rate swap |  | 4th Qtr. 2021 |  | Debt |  | 118,00% CDI |  | 5.72% p.a. |  | 180,000 | BRL |  | (3,406)
|  |  |  |  |  |  |  |  |  |  |  |  | (18,272)

24.4.2. Foreign exchange risk

Foreign exchange 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 statement of income are as follows, summarized in Brazilian Reais:

|  | Consolidated
|  | 03.31.20 |  | 12.31.19 (1)
Cash and cash equivalents |  | 3,427,107 |  | 2,591,746
Trade accounts receivable |  | 6,148,216 |  | 4,892,708
Trade accounts payable |  | (744,256) |  | (601,007)
Loans and financing |  | (11,417,402) |  | (8,854,826)
Derivative financial instruments (hedge) |  | 2,434,673 |  | 1,734,517
Other assets and liabilities, net |  | (436,691) |  | (162,341)
Exposure in result |  | (588,353) |  | (399,203)

(1) Restated for better demonstration of the amount previously classified in Net Investments, which was relocated to corresponding assets and liabilities.

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

66

The net P&L exposure is mainly composed of the following currencies:

Net P&L Exposure |  | 03.31.20 |  | 12.31.19
Argentinian Peso (ARS) |  | (12,584) |  | (13,236)
Euros (EUR) |  | 30,526 |  | 23,624
Pound Sterling (GBP) |  | 8,187 |  | 6,949
Yen (JPY) |  | 8,802 |  | (17,285)
Rubles (RUB) |  | 27,214 |  | 2,780
Turkish Liras (TRY) |  | (389,813) |  | (418,576)
U.S. Dollars (USD) |  | (260,685) |  | 16,541
Total |  | (588,353) |  | (399,203)

The derivative financial instruments hired to hedge the foreign currency statement of financial position exposure on March 31, 2020 are not designated as hedge accounting and are set forth below:

03.31.20
Derivative instruments not designated |  | Asset |  | Liability |  | Maturity |  | Notional |  | Average Rate |  | Fair value (R$)
Parent company |  |  |  |  |  |  |  |  |  |  |  |  |
Non-deliverable forward |  | EUR |  | BRL |  | 2nd Qtr. 2020 |  | EUR | 225,000 |  | 5.5740 |  | 44,592
Non-deliverable forward |  | USD |  | BRL |  | 2nd Qtr. 2020 |  | USD | 385,000 |  | 5.1183 |  | 37,304
Non-deliverable forward |  | BRL |  | USD |  | 3rd Qtr. 2020 |  | USD | 9,000 |  | 4.3210 |  | (8,076)
Non-deliverable forward |  | BRL |  | USD |  | 4th Qtr. 2020 |  | USD | 6,000 |  | 4.3314 |  | (5,383)
Collar |  | BRL |  | USD |  | 4th Qtr. 2020 |  | USD | 31,000 |  | 4.1847 |  | (29,652)
Futures - B3 |  | USD |  | BRL |  | 2nd Qtr. 2020 |  | USD | 264,500 |  | 5.2022 |  | 3,695
|  |  |  |  |  |  |  |  |  |  |  |  | 42,480
Subsidiaries |  |  |  |  |  |  |  |  |  |  |  |  |
Non-deliverable forward |  | EUR |  | JPY |  | 2nd Qtr. 2020 |  | EUR | 20,722 |  | 120.6453 |  | (1,932)
Non-deliverable forward |  | EUR |  | USD |  | 2nd Qtr. 2020 |  | EUR | 35,000 |  | 1.1071 |  | (340)
Non-deliverable forward |  | EUR |  | RUB |  | 2nd Qtr. 2020 |  | EUR | 16,966 |  | 88.4124 |  | (702)
Collar |  | TRY |  | USD |  | 2nd Qtr. 2020 |  | USD | 50,000 |  | 6.6750 |  | (5,715)
Total Consolidated |  |  |  |  |  |  |  |  |  |  |  |  | 33,791

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

67

ii. Operating income exposure

The derivative and non-derivative financial instruments designated as cash flow hedges for foreing exchange operating exposure on March 31, 2020 are set forth below:

03.31.20
Cash flow hedge - Derivative instruments |  | Hedged object |  | Asset |  | Liability |  | Maturity |  | Notional |  | Average Rate |  | Fair value
Parent company and consolidated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-deliverable forward |  | USD Exports |  | BRL |  | USD |  | 2nd Qtr. 2020 |  | USD | 116,000 |  | 4.5399 |  | (76,928)
Non-deliverable forward |  | USD Exports |  | BRL |  | USD |  | 3rd Qtr. 2020 |  | USD | 26,000 |  | 4.1759 |  | (27,048)
Non-deliverable forward |  | USD Exports |  | BRL |  | USD |  | 4th Qtr. 2020 |  | USD | 9,000 |  | 4.1090 |  | (10,053)
Non-deliverable forward |  | EUR Exports |  | BRL |  | EUR |  | 2nd Qtr. 2020 |  | EUR | 3,000 |  | 4.6502 |  | (3,246)
Collar |  | USD Exports |  | BRL |  | USD |  | 2nd Qtr. 2020 |  | USD | 546,000 |  | 4.2257 |  | (494,211)
Collar |  | USD Exports |  | BRL |  | USD |  | 3rd Qtr. 2020 |  | USD | 290,000 |  | 4.3123 |  | (239,694)
Collar |  | USD Exports |  | BRL |  | USD |  | 4th Qtr. 2020 |  | USD | 217,000 |  | 4.2467 |  | (198,708)
Collar |  | USD Exports |  | BRL |  | USD |  | 1st Qtr. 2021 |  | USD | 100,000 |  | 4.4835 |  | (71,041)
|  |  |  |  |  |  |  |  |  |  |  |  |  |  | (1,120,929)
03.31.20
Cash flow hedge - Non-derivative instruments |  | Hedged object |  | Asset |  | Liability |  | Maturity |  | Notional |  | Average Rate |  | Fair value (1)
Parent company and consolidated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Bond BRF SA BRFSBZ5 |  | USD Exports |  | - |  | USD |  | 2nd Qtr. 2022 |  | USD | 109,312 |  | 2.0213 |  | (405,754)
Bond BRF SA BRFSBZ3 |  | USD Exports |  | - |  | USD |  | 2nd Qtr. 2023 |  | USD | 150,000 |  | 2.0387 |  | (474,000)
|  |  |  |  |  |  |  |  |  |  |  |  |  |  | (879,754)

(1) Corresponds to the effective portion of the hedge result accumulated in Other Comprehensive Income.

iii. Investments exposure

The non-derivative financial instruments designated as instruments for net investment hedge on March 31, 2020 are set forth below:

03.31.20
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 |  | (88,370)
Bond - BRF SA BRFSBZ4 |  | BRF Al Yasra Food |  | - |  | USD |  | 3rd Qtr. 2026 |  | USD | 108,757 |  | 3.7649 |  | (107,913)
Bond - BRF SA BRFSBZ4 |  | Al Khan Foodstuff LLC |  | - |  | USD |  | 3rd Qtr. 2026 |  | USD | 65,570 |  | 3.7649 |  | (76,585)
|  |  |  |  |  |  |  |  |  |  |  |  |  |  | (272,868)

(1) Corresponds to the effective portion of the hedge result accumulated in Other Comprehensive Income.

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

68

24.4.3. Commodities price risk

The financial instruments designated as cash flow hedges and fair value hedges for the commodities price exposure on March 31, 2020 are set forth below:

03.31.20
Cash flow hedge - Derivative instruments |  | Hedged object |  | Index |  | Maturity |  | Quantity |  | Average rate (USD/Ton) |  | Fair value
Parent company and consolidated |  |  |  |  |  |  |  |  |  |  |  |  |
Non-deliverable forward - buy |  | Soybean meal purchase - floating price |  | Soybean meal - CBOT |  | 2nd Qtr. 2020 |  | 19,985 | ton |  | 122.09 |  | 1,004
Non-deliverable forward - buy |  | Soybean meal purchase - floating price |  | Soybean meal - CBOT |  | 3rd Qtr. 2020 |  | 54,985 | ton |  | 123.25 |  | 65
Non-deliverable forward - buy |  | Soybean meal purchase - floating price |  | Soybean meal - CBOT |  | 4th Qtr. 2020 |  | 9,997 | ton |  | 121.84 |  | (63)
Non-deliverable forward - buy |  | Soybean meal purchase - floating price |  | Soybean meal - CBOT |  | 1st Qtr. 2021 |  | 9,997 | ton |  | 121.18 |  | (687)
Collar - buy |  | Soybean meal purchase - floating price |  | Soybean meal - CBOT |  | 2nd Qtr. 2020 |  | 29,937 | ton |  | 125.42 |  | 257
Non-deliverable forward - buy |  | Soybean purchase - floating price |  | Soybean - CBOT |  | 2nd Qtr. 2020 |  | 14,000 | ton |  | 330.08 |  | (283)
Non-deliverable forward - buy |  | Soybean purchase - floating price |  | Soybean - CBOT |  | 3rd Qtr. 2020 |  | 5,001 | ton |  | 334.67 |  | (211)
Collar - buy |  | Soybean purchase - floating price |  | Soybean - CBOT |  | 2nd Qtr. 2020 |  | 11,009 | ton |  | 334.58 |  | (253)
Collar - buy |  | Soybean purchase - floating price |  | Soybean - CBOT |  | 3rd Qtr. 2020 |  | 4,001 | ton |  | 338.23 |  | (182)
Non-deliverable forward - buy |  | Corn purchase - floating price |  | Corn - CBOT |  | 2nd Qtr. 2020 |  | 99,954 | ton |  | 183.43 |  | (25,392)
Collar - buy |  | Corn purchase - floating price |  | Corn - CBOT |  | 2nd Qtr. 2020 |  | 40,070 | ton |  | 151.07 |  | (1,978)
Non-deliverable forward - buy |  | Soybean oil purchase - floating price |  | Soybean oil - CBOT |  | 2nd Qtr. 2020 |  | 14,399 | ton |  | 665.01 |  | (4,921)
Non-deliverable forward - buy |  | Soybean oil purchase - floating price |  | Soybean oil - CBOT |  | 3rd Qtr. 2020 |  | 13,899 | ton |  | 652.45 |  | (3,075)
Non-deliverable forward - buy |  | Soybean oil purchase - floating price |  | Soybean oil - CBOT |  | 4th Qtr. 2020 |  | 9,698 | ton |  | 629.06 |  | (344)
Non-deliverable forward - buy |  | Soybean oil purchase - floating price |  | Soybean oil - CBOT |  | 1st Qtr. 2021 |  | 2,499 | ton |  | 602.65 |  | 336
Collar - buy |  | Soybean oil purchase - floating price |  | Soybean oil - CBOT |  | 2nd Qtr. 2020 |  | 1,995 | ton |  | 652.86 |  | (355)
|  |  |  |  |  |  |  |  |  |  |  |  | (36,082)
03.31.20
Fair value hedge - Derivative instruments |  | Hedged object |  | Index |  | Maturity |  | Quantity |  | Average rate (USD/Ton) |  | Fair value
Parent company and consolidated |  |  |  |  |  |  |  |  |  |  |  |  |
Non-deliverable forward - sell |  | Soybean purchase - fixed price |  | Soybean - CBOT |  | 2nd Qtr. 2020 |  | 7,992 | ton |  | 336.87 |  | 417
Non-deliverable forward - sell |  | Soybean purchase - fixed price |  | Soybean - CBOT |  | 3rd Qtr. 2020 |  | 33,485 | ton |  | 339.56 |  | 2,730
Non-deliverable forward - sell |  | Soybean purchase - fixed price |  | Soybean - CBOT |  | 4th Qtr. 2020 |  | 45,488 | ton |  | 340.34 |  | 4,236
Non-deliverable forward - sell |  | Soybean purchase - fixed price |  | Soybean - CBOT |  | 1st Qtr. 2021 |  | 5,998 | ton |  | 317.10 |  | 89
Non-deliverable forward - sell |  | Corn purchase - fixed price |  | Corn - CBOT |  | 2nd Qtr. 2020 |  | 669,857 | ton |  | 157.55 |  | 74,314
Non-deliverable forward - sell |  | Corn purchase - fixed price |  | Corn - CBOT |  | 3rd Qtr. 2020 |  | 403,349 | ton |  | 154.68 |  | 35,621
Non-deliverable forward - sell |  | Corn purchase - fixed price |  | Corn - CBOT |  | 4th Qtr. 2020 |  | 453,001 | ton |  | 156.39 |  | 36,860
Non-deliverable forward - sell |  | Corn purchase - fixed price |  | Corn - CBOT |  | 1st Qtr. 2021 |  | 255,547 | ton |  | 156.73 |  | 15,486
Non-deliverable forward - sell |  | Corn purchase - fixed price |  | Corn - CBOT |  | 2nd Qtr. 2021 |  | 292,340 | ton |  | 152.75 |  | 6,905
Non-deliverable forward - sell |  | Corn purchase - fixed price |  | Corn - CBOT |  | 3rd Qtr. 2021 |  | 31,892 | ton |  | 145.75 |  | (84)
Non-deliverable forward - sell |  | Corn purchase - fixed price |  | Corn - CBOT |  | 2nd Qtr. 2020 |  | 126,345 | ton |  | 149.60 |  | 10,371
Corn future - sell |  | Corn purchase - fixed price |  | Corn - B3 |  | 3rd Qtr. 2020 |  | 33,507 | ton |  | 709.30 |  | (184)
|  |  |  |  |  |  |  |  |  |  |  |  | 186,761

03.31.20
Fair value hedge - Derivative instruments |  | Protection object |  | Assets |  | Liabilities |  | Maturity |  | Notional |  | Average rate |  | Fair value
Parent company and consolidated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-deliverable forward |  | Cost in USD |  | BRL |  | USD | USD | 2nd Qtr. 2020 |  | USD | 127,114 |  | 4.2184 |  | (125,655)
Non-deliverable forward |  | Cost in USD |  | BRL |  | USD | USD | 3rd Qtr. 2020 |  | USD | 73,765 |  | 4.2976 |  | (68,057)
Non-deliverable forward |  | Cost in USD |  | BRL |  | USD | USD | 4th Qtr. 2020 |  | USD | 86,328 |  | 4.2973 |  | (81,103)
Non-deliverable forward |  | Cost in USD |  | BRL |  | USD | USD | 1st Qtr. 2021 |  | USD | 41,947 |  | 4.4752 |  | (32,966)
Non-deliverable forward |  | Cost in USD |  | BRL |  | USD | USD | 2nd Qtr. 2021 |  | USD | 44,654 |  | 4.8680 |  | (19,500)
Non-deliverable forward |  | Cost in USD |  | BRL |  | USD | USD | 3rd Qtr. 2021 |  | USD | 4,648 |  | 5.2500 |  | (514)
|  |  |  |  |  |  |  |  |  |  |  |  |  |  | (327,795)

24.5. Hedge accounting

24.5.1. Designated relations

The Company formally designates its hedge accounting relations in compliance with CPC 48 / IFRS 09 and the Risk Policy, as disclosed in the annual financial statements for the year ended on December 31, 2019.

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

69

24.5.2. Gains and losses with hedge accounting instruments

The rollforward of the fair value of the instruments designated as hedge accounting is set forth below:

Parent company
03.31.20
|  |  |  | Cash flow hedge |  | Fair value hedge |  | Net investment hedge |  |
|  | Interest |  | Foreign exchange |  | Commodities |  | Commodities |  | Foreign exchange |  |
|  | Derivatives |  | Derivatives |  | Non-derivatives |  | Derivatives |  | Derivatives |  | Non-derivatives |  | Total
Fair value on 12.31.19 |  | - |  | 76,164 |  | (576,877) |  | (33,711) |  | 27,221 |  | (66,818) |  | (574,021)
Settlement |  | (5,207) |  | 222,852 |  | - |  | 32,242 |  | 11,575 |  | - |  | 261,462
Inventories |  | - |  | - |  | - |  | (9,331) |  | (170,285) |  | - |  | (179,616)
Other comprehensive income |  | (16,830) |  | (1,202,466) |  | (302,877) |  | (7,383) |  | - |  | (206,050) |  | (1,735,606)
Operating result - income |  | - |  | (216,048) |  | - |  | - |  | - |  | - |  | (216,048)
Operating result - cost |  | - |  | - |  | - |  | (17,899) |  | (9,545) |  | - |  | (27,444)
Financial result |  | 3,765 |  | (1,431) |  | - |  | - |  | - |  | - |  | 2,334
Fair value on 03.31.20 |  | (18,272) |  | (1,120,929) |  | (879,754) |  | (36,082) |  | (141,034) |  | (272,868) |  | (2,468,939)

Consolidated
03.31.20
|  | Cash flow hedge |  | Fair value hedge |  | Net investment hedge |  |
|  | Interest |  | Foreign exchange |  | Commodities |  | Commodities |  | Foreign exchange |  |
|  | Derivatives |  | Derivatives |  | Non-derivatives |  | Derivatives |  | Derivatives |  | Non-derivatives |  | Total
Fair value on 12.31.19 |  | - |  | 76,164 |  | (576,877) |  | (33,711) |  | 27,221 |  | (66,818) |  | (574,021)
Settlement |  | (5,207) |  | 222,852 |  | - |  | 32,040 |  | 11,575 |  | - |  | 261,260
Inventories |  | - |  | - |  | - |  | (8,702) |  | (170,285) |  | - |  | (178,987)
Other comprehensive income |  | (16,830) |  | (1,202,466) |  | (302,877) |  | (7,383) |  | - |  | (206,050) |  | (1,735,606)
Operating result - income |  | - |  | (216,048) |  | - |  | - |  | - |  | - |  | (216,048)
Operating result - cost |  | - |  | - |  | - |  | (18,326) |  | (9,545) |  | - |  | (27,871)
Financial result |  | 3,765 |  | (1,431) |  | - |  | - |  | - |  | - |  | 2,334
Fair value on 03.31.20 |  | (18,272) |  | (1,120,929) |  | (879,754) |  | (36,082) |  | (141,034) |  | (272,868) |  | (2,468,939)

24.6. Derivative Financial Instruments

Summarized financial position of derivative financial instruments:

| Parent company |  | Consolidated
| 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19
Asset |  |  |  |  |  |  |
Designated as hedge accounting |  |  |  |  |  |  |
Currency derivatives | 11,440 |  | 166,729 |  | 11,440 |  | 166,729
Commodities derivatives | 191,373 |  | 25,191 |  | 191,373 |  | 25,191
Not designated as hedge accounting |  |  |  |  |  |  |
Currency derivatives | 85,650 |  | 51,811 |  | 86,466 |  | 53,395
| 288,463 |  | 243,731 |  | 289,279 |  | 245,315
Current assets | 281,299 |  | 193,740 |  | 282,115 |  | 195,324
Non-current assets | 7,164 |  | 49,991 |  | 7,164 |  | 49,991
Liabilities |  |  |  |  |  |  |
Designated as hedge accounting |  |  |  |  |  |  |
Currency derivatives | (1,460,164) |  | (73,417) |  | (1,460,164) |  | (73,417)
Commodities derivatives | (40,694) |  | (48,829) |  | (40,694) |  | (48,829)
Interest rate derivatives | (18,272) |  | - |  | (18,272) |  | -
Not designated as hedge accounting |  |  |  |  |  |  |
Currency derivatives | (43,170) |  | (29,479) |  | (52,675) |  | (31,369)
| (1,562,300) |  | (151,725) |  | (1,571,805) |  | (153,615)
Current liabilities | (1,523,671) |  | (151,722) |  | (1,533,176) |  | (153,612)
Non-current liabilities | (38,629) |  | (3) |  | (38,629) |  | (3)

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

70

24.7. 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 March 31, 2020, which has been described in the items above. The future results may diverge significantly of the estimated values if the reality presents different than the considered premises. Positive values indicate gains and negative values indicate losses.

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

71

Parity - R$ x USD |  | 5.1987 |  | 4.6788 |  | 3.8990 |  | 6.4984 |  | 7.7981
|  |  |  | 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$ |  | (426,586) |  | (151,338) |  | 261,535 |  | (1,114,707) |  | (1,802,827)
Options - currencies |  | Devaluation of R$ |  | (961,506) |  | (380,475) |  | 330,512 |  | (2,454,855) |  | (3,953,380)
Bonds |  | Devaluation of R$ |  | (821,328) |  | (686,519) |  | (484,307) |  | (1,158,349) |  | (1,495,371)
Exports (object) |  | Appreciation of R$ |  | 1,895,654 |  | 1,101,314 |  | 70,364 |  | 3,922,276 |  | 5,954,073
Cost (object) |  | Appreciation of R$ |  | 313,766 |  | 117,018 |  | (178,104) |  | 805,635 |  | 1,297,505
Not designated as hedge accouting |  |  |  |  |  |  |  |  |  |  |  |
NDF - Purchase |  | Appreciation of R$ |  | 30,949 |  | (169,201) |  | (469,426) |  | 531,324 |  | 1,031,699
NDF - Sale |  | Devaluation of R$ |  | 13,103 |  | 5,305 |  | (6,392) |  | 32,598 |  | 52,093
Options - currencies |  | Devaluation of R$ |  | (27,871) |  | (11,755) |  | 5,290 |  | (68,161) |  | (108,451)
Future purchase - B3 |  | Appreciation of R$ |  | (935) |  | (138,440) |  | (344,699) |  | 342,829 |  | 686,593
Net effect |  |  |  | 15,246 |  | (314,091) |  | (815,227) |  | 838,590 |  | 1,661,934
Parity - R$ x EUR |  |  |  | 5.7264 |  | 5.1538 |  | 4.2948 |  | 7.1580 |  | 8.5896
|  |  |  | 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$ |  | (3,229) |  | (1,511) |  | 1,066 |  | (7,523) |  | (11,818)
Exports (object) |  | Appreciation of R$ |  | 3,229 |  | 1,511 |  | (1,066) |  | 7,523 |  | 11,818
Not designated as hedge accouting |  |  |  |  |  |  |  |  |  |  |  |
NDF - Purchase EUR x USD |  | Appreciation of EUR |  | (1,019) |  | (21,061) |  | (51,125) |  | 49,087 |  | 99,192
NDF - Purchase EUR x RUB |  | Appreciation of EUR |  | (2,964) |  | (11,419) |  | (20,455) |  | 26,681 |  | 68,480
NDF - Purchase |  | Appreciation of R$ |  | 34,288 |  | (94,556) |  | (287,822) |  | 356,398 |  | 678,508
Net effect |  |  |  | 30,305 |  | (127,036) |  | (359,402) |  | 432,166 |  | 846,180
Price parity CBOT - Corn - USD/Ton |  |  |  | 140.10 |  | 126.09 |  | 105.07 |  | 175.12 |  | 210.15
|  |  |  | 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 |  |  |  |  |  |  |  |  |  |  |  |
Non-deliverable forward - Corn sale |  | Increase in the price of corn |  | 171,981 |  | 325,367 |  | 555,446 |  | (211,485) |  | (594,950)
Non-deliverable forward - Corn purchase |  | Decrease in the price of corn |  | (22,514) |  | (29,794) |  | (40,714) |  | (4,314) |  | 13,886
Put |  | Increase in the price of corn |  | (10,149) |  | (18,961) |  | (32,177) |  | - |  | -
Corn options |  | Decrease in the price of corn |  | (1,782) |  | (4,577) |  | (8,768) |  | 1,718 |  | 8,704
Cost (object) |  | Increase in the price of corn |  | (137,536) |  | (272,035) |  | (473,787) |  | 214,081 |  | 572,360
Net effect |  |  |  | - |  | - |  | - |  | - |  | -
Price parity CBOT - Soybean meal - USD/Ton |  |  |  | 122.87 |  | 110.58 |  | 92.15 |  | 153.59 |  | 184.31
|  |  |  | 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 |  | 114 |  | (5,952) |  | (15,051) |  | 15,279 |  | 30,444
Soybean meal options |  | Decrease in the price of soybean meal |  | - |  | (2,400) |  | (10,639) |  | 11,194 |  | 24,927
Cost (object) |  | Increase in the price of soybean meal |  | (114) |  | 8,352 |  | 25,690 |  | (26,473) |  | (55,371)
Net effect |  |  |  | - |  | - |  | - |  | - |  | -
Price parity CBOT - Soybean - USD/Ton |  |  |  | 323.39 |  | 291.05 |  | 242.55 |  | 404.24 |  | 485.09
|  |  |  | 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 |  | 7,186 |  | 22,815 |  | 46,259 |  | (31,887) |  | (70,960)
NDF - Soybean purchase |  | Decrease in the price of soybean |  | (780) |  | (3,974) |  | (8,766) |  | 7,206 |  | 15,192
Soybean options |  | Decrease in the price of soybean |  | (134) |  | (2,498) |  | (6,318) |  | 4,879 |  | 11,245
Cost (object) |  | Increase in the price of soybean |  | (6,272) |  | (16,343) |  | (31,175) |  | 19,802 |  | 44,523
Net effect |  |  |  | - |  | - |  | - |  | - |  | -
Price parity CBOT - Soybean oil - USD/Ton |  |  |  | 610.22 |  | 549.20 |  | 457.67 |  | 762.78 |  | 915.33
|  |  |  | 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 |  | (8,004) |  | (20,851) |  | (40,121) |  | 24,113 |  | 56,229
Soybean oil options |  | Decrease in the price of soybean oil |  | (312) |  | (930) |  | (1,856) |  | 666 |  | 2,210
Cost (object) |  | Increase in the price of soybean oil |  | 8,316 |  | 21,781 |  | 41,977 |  | (24,779) |  | (58,439)
Net effect |  |  |  | - |  | - |  | - |  | - |  | -

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24.8. Financial instruments by category

| Parent company
| 03.31.20
| Amortized cost |  | Fair value through other comprehensive income |  | Fair value through profit and loss |  | Total
Assets |  |  |  |  |  |  |
Cash and bank | 70,995 |  | - |  | - |  | 70,995
Cash equivalents | - |  | - |  | 3,873,310 |  | 3,873,310
Marketable securities | - |  | - |  | 322,674 |  | 322,674
Restricted cash | 24,361 |  | - |  | - |  | 24,361
Trade accounts receivable | 8,099,141 |  | - |  | 188,014 |  | 8,287,155
Other receivables | 118,341 |  | - |  | - |  | 118,341
Derivatives not designated | - |  | - |  | 85,650 |  | 85,650
Derivatives designated as hedge accounting (1) | - |  | - |  | 202,813 |  | 202,813
Liabilities |  |  |  |  |  |  |
Trade accounts payable | (5,808,969) |  | - |  | - |  | (5,808,969)
Supply chain finance | (927,409) |  | - |  | - |  | (927,409)
Loans and financing (2) | (20,089,239) |  | - |  | - |  | (20,089,239)
Derivatives not designated | - |  | - |  | (43,170) |  | (43,170)
Derivatives designated as hedge accounting (1) | - |  | - |  | (1,519,130) |  | (1,519,130)
| (18,512,779) |  | - |  | 3,110,161 |  | (15,402,618)

(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 financing 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 other comprehensive income | Fair value through profit and loss |  | Total
|  | Fair value through other comprehensive income |  |
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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73

| Consolidated
| 03.31.20
| Amortized cost |  | Fair value through other comprehensive income |  | Fair value through profit and loss |  | Total
|  | Equity instruments |  | Debt instruments |  |
Assets |  |  |  |  |  |  |  |  |
Cash and bank | 3,018,852 |  | - |  | - |  | - |  | 3,018,852
Cash equivalents | - |  | - |  | - |  | 4,942,135 |  | 4,942,135
Marketable securities | 332,986 |  | 33,466 |  | 22,236 |  | 324,567 |  | 713,255
Restricted cash | 24,361 |  | - |  | - |  | - |  | 24,361
Trade accounts receivable | 2,782,241 |  | - |  | - |  | 188,014 |  | 2,970,255
Other receivables | 120,693 |  | - |  | - |  | - |  | 120,693
Derivatives not designated | - |  | - |  | - |  | 86,466 |  | 86,466
Derivatives designated as hedge accounting (1) | - |  | - |  | - |  | 202,813 |  | 202,813
Liabilities |  |  |  |  |  |  |  |  |
Trade accounts payable | (6,463,773) |  | - |  | - |  | - |  | (6,463,773)
Supply chain finance | (927,409) |  | - |  | - |  | - |  | (927,409)
Loans and financing (2) | (23,004,707) |  | - |  | - |  | - |  | (23,004,707)
Derivatives not designated | - |  | - |  | - |  | (52,675) |  | (52,675)
Derivatives designated as hedge accounting (1) | - |  | - |  | - |  | (1,519,130) |  | (1,519,130)
| (24,116,756) |  | 33,466 |  | 22,236 |  | 4,172,190 |  | (19,888,864)

(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 financing 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)
| (19,471,439) |  | 26,678 |  | 19,285 |  | 2,679,427 |  | (16,746,049)

24.9. 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 prices quoted (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; and

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» Level 3 – Instruments whose significant inputs are non-observable. The Company does not have financial instruments in this classification.

The table below presents the overall classification of financial instruments measured at fair value by measurement hierarchy. For the period ended on March 31, 2020, there were no changes between the 3 levels of hierarchy.

| Parent company
| 03.31.20 |  | 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 | 69,966 |  | - |  | 69,966 |  | 70,515 |  | - |  | 70,515
Term deposits | 331,125 |  | - |  | 331,125 |  | 254,583 |  | - |  | 254,583
Bank deposit certificates | - |  | 3,468,565 |  | 3,468,565 |  | - |  | 869,473 |  | 869,473
Financial treasury bills | 307,184 |  | - |  | 307,184 |  | 396,994 |  | - |  | 396,994
Investment funds | 19,144 |  | - |  | 19,144 |  | 18,398 |  | - |  | 18,398
Trade accounts receivable | - |  | 188,014 |  | 188,014 |  | - |  | 225,941 |  | 225,941
Derivatives | - |  | 288,463 |  | 288,463 |  | - |  | 243,731 |  | 243,731
Financial Liabilities |  |  |  |  |  |  |  |  |  |  |
Fair value through profit and loss |  |  |  |  |  |  |  |  |  |  |
Derivatives | - |  | (1,562,300) |  | (1,562,300) |  | - |  | (151,725) |  | (151,725)
| 727,419 |  | 2,382,742 |  | 3,110,161 |  | 740,490 |  | 1,187,420 |  | 1,927,910

| Consolidated
| 03.31.20 |  | 12.31.19
| Level 1 |  | Level 2 |  | Total |  | Level 1 |  | Level 2 |  | Total
Financial Assets |  |  |  |  |  |  |  |  |  |  |
Fair value through other comprehensive income |  |  |  |  |  |  |  |  |  |  |
Credit linked notes | 22,236 |  | - |  | 22,236 |  | 19,285 |  | - |  | 19,285
Stocks | 33,466 |  | - |  | 33,466 |  | 26,678 |  | - |  | 26,678
Fair value through profit and loss |  |  |  |  |  |  |  |  |  |  |
Savings account and overnight | 1,089,474 |  | - |  | 1,089,474 |  | 689,874 |  | - |  | 689,874
Term deposits | 364,986 |  | - |  | 364,986 |  | 374,859 |  | - |  | 374,859
Bank deposit certificates | - |  | 3,484,021 |  | 3,484,021 |  | - |  | 879,758 |  | 879,758
Financial treasury bills | 307,184 |  | - |  | 307,184 |  | 396,994 |  | - |  | 396,994
Investment funds | 21,037 |  | - |  | 21,037 |  | 20,301 |  | - |  | 20,301
Trade accounts receivable | - |  | 188,014 |  | 188,014 |  | - |  | 225,941 |  | 225,941
Derivatives | - |  | 289,279 |  | 289,279 |  | - |  | 245,315 |  | 245,315
Financial Liabilities |  |  |  |  |  |  |  |  |  |  |
Fair value through profit and loss |  |  |  |  |  |  |  |  |  |  |
Derivatives | - |  | (1,571,805) |  | (1,571,805) |  | - |  | (153,615) |  | (153,615)
| 1,838,383 |  | 2,389,509 |  | 4,227,892 |  | 1,527,991 |  | 1,197,399 |  | 2,725,390

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, the debentures are based in level 2 and are measured by discounted cash flows.

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| Parent company and Consolidated
|  |  | 03.31.20 |  | 12.31.19
| Maturity |  | Book value |  | Fair value |  | Book value |  | Fair value
BRF bonds |  |  |  |  |  |  |  |  |
BRF SA BRFSBZ5 | 2022 |  | (574,259) |  | (575,335) |  | (435,934) |  | (460,606)
BRF SA BRFSBZ4 | 2024 |  | (2,731,800) |  | (2,531,408) |  | (2,086,169) |  | (2,191,726)
BRF SA BRFSBZ3 | 2023 |  | (1,798,876) |  | (1,664,554) |  | (1,370,446) |  | (1,427,754)
BRF SA BRFSBZ2 | 2022 |  | (1,903,901) |  | (1,844,912) |  | (1,492,653) |  | (1,559,476)
BRF SA BRFSBZ4 7/8 | 2030 |  | (3,894,414) |  | (3,324,923) |  | (3,022,773) |  | (3,160,573)
Debentures | 2030 |  | (771,065) |  | (809,157) |  | (755,760) |  | (832,213)
Parent company |  |  | (11,674,315) |  | (10,750,289) |  | (9,163,735) |  | (9,632,348)
BRF GmbH bonds |  |  |  |  |  |  |  |  |
BRF SA BRFSBZ4 | 2026 |  | (2,553,123) |  | (2,248,856) |  | (1,999,509) |  | (2,101,175)
Consolidated |  |  | (14,227,438) |  | (12,999,145) |  | (11,163,244) |  | (11,733,523)

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25. 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 divided into 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:

|  | Consolidated
Net sales |  | January to March 2020 |  | January to March 2019
Brazil |  |  |  |
In-natura |  | 1,257,087 |  | 1,099,148
Poultry |  | 970,036 |  | 885,405
Pork and other |  | 287,051 |  | 213,743
Processed |  | 3,392,804 |  | 2,837,246
Other sales |  | 5,263 |  | 4,073
|  | 4,655,154 |  | 3,940,467
International |  |  |  |
In-natura |  | 3,453,261 |  | 2,636,198
Poultry |  | 2,970,686 |  | 2,409,017
Pork and other |  | 482,575 |  | 227,181
Processed |  | 511,121 |  | 501,913
Other sales |  | 51,321 |  | 55,760
|  | 4,015,703 |  | 3,193,871
Other segments |  | 278,208 |  | 224,912
|  | 8,949,065 |  | 7,359,250

The operating income (loss) for each segment is set forth below:

|  | Consolidated
|  | January to March 2020 |  | January to March 2019
Brazil |  | 363,879 |  | 66,608
International |  | 440,648 |  | 125,466
Other segments |  | 37,529 |  | (26)
Sub total |  | 842,056 |  | 192,048
Corporate |  | (287,377) |  | (33,850)
|  | 554,679 |  | 158,198

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The items presented above as Corporate refers to relevant events not attributable to the normal course of business neither to the operating segments. For the three-month period ended on March 31, 2020, the main events were: R$12,301 (R$11,113 in the same period of the previous year) of expenses related to investigations involving the Company (note 1.2), R$204,436 referring to the agreement related to the class action in the United States (note 1.3) and, R$42,475 (R$7,708 in the same period of the previous year) related to civil and tax contingencies.

No customer individually or in aggregate (economic group) accounted for more than 5% of net sales for the three-month period ended on March 31, 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:

| Consolidated
| Goodwill |  | Trademarks |  | Total
| 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19
Brazil | 1,151,498 |  | 1,151,498 |  | 982,478 |  | 982,478 |  | 2,133,976 |  | 2,133,976
International | 1,800,548 |  | 1,562,104 |  | 368,266 |  | 339,784 |  | 2,168,814 |  | 1,901,888
| 2,952,046 |  | 2,713,602 |  | 1,350,744 |  | 1,322,262 |  | 4,302,790 |  | 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 consolidated.

26. NET SALES

| Parent company |  | Consolidated
| January to March 2020 |  | January to March 2019 |  | January to March 2020 |  | January to March 2019
Gross sales |  |  |  |  |  |  |
Brazil | 5,766,298 |  | 4,882,052 |  | 5,766,298 |  | 4,882,120
International | 2,553,143 |  | 2,265,731 |  | 4,267,065 |  | 3,455,969
Other segments | 291,633 |  | 259,823 |  | 307,294 |  | 249,077
| 8,611,074 |  | 7,407,606 |  | 10,340,657 |  | 8,587,166
Sales deductions |  |  |  |  |  |  |
Brazil | (1,111,144) |  | (941,653) |  | (1,111,144) |  | (941,653)
International | (23,948) |  | (24,955) |  | (251,362) |  | (262,098)
Other segments | (26,937) |  | (23,052) |  | (29,086) |  | (24,165)
| (1,162,029) |  | (989,660) |  | (1,391,592) |  | (1,227,916)
Net sales |  |  |  |  |  |  |
Brazil | 4,655,154 |  | 3,940,399 |  | 4,655,154 |  | 3,940,467
International | 2,529,195 |  | 2,240,776 |  | 4,015,703 |  | 3,193,871
Other segments | 264,696 |  | 236,771 |  | 278,208 |  | 224,912
| 7,449,045 |  | 6,417,946 |  | 8,949,065 |  | 7,359,250

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27. OTHER OPERATING INCOME (EXPENSES), NET

| Parent company |  | Consolidated
| January to March 2020 |  | January to March 2019 |  | January to March 2020 |  | January to March 2019
Recovery of expenses (1) | 78,478 |  | 7,810 |  | 78,688 |  | 8,997
Provision reversal | - |  | 13,723 |  | - |  | 13,728
Scrap sales | 2,693 |  | 2,997 |  | 2,774 |  | 3,616
Provision for civil and tax risks | (42,475) |  | (7,158) |  | (42,475) |  | (7,708)
Other employees benefits | (7,436) |  | (7,458) |  | (7,436) |  | (7,456)
Insurance claims costs | (3,685) |  | (11,500) |  | (1,689) |  | (12,784)
Net gains (losses) from the disposals of property, plant, equipment and investments | (9,770) |  | 10,245 |  | (10,876) |  | 9,120
Employee participation and bonuses | (49,525) |  | (49,811) |  | (46,644) |  | (57,612)
Demobilization expenses | (3,755) |  | (8,783) |  | (4,258) |  | (10,983)
Expenses with investigations and class action (2) | (194,983) |  | (11,113) |  | (197,380) |  | (11,113)
Expected credit losses in other receivables | (3,093) |  | - |  | (3,465) |  | -
Other | 2,220 |  | (26,444) |  | (5,792) |  | (4,481)
| (231,331) |  | (87,492) |  | (238,553) |  | (76,676)

(1) Includes recovery of PIS and COFINS taxes on marketing, rebates e benefit expenses in the amount of R$73,957.

(2) Includes provision for class action agreement (note 1.3).

28. FINANCIAL INCOME (EXPENSES), NET

|  |  | Parent company |  | Consolidated
| Note |  | January to March 2020 |  | Restated (1) January to March 2019 |  | January to March 2020 |  | Restated (1) January to March 2019
Financial income |  |  | 106,777 |  | 79,894 |  | 112,878 |  | 86,061
Interest on cash and cash equivalents | 4 |  | 21,034 |  | 36,864 |  | 29,555 |  | 34,550
Revenues from marketable securities | 5 |  | 19,443 |  | 18,490 |  | 16,587 |  | 26,536
Fair value throught other comprehensive income |  |  | - |  | - |  | 211 |  | 171
Fair value throught profit and loss |  |  | 3,754 |  | 4,504 |  | 3,411 |  | 4,504
Amortized cost |  |  | 15,689 |  | 13,986 |  | 12,965 |  | 21,861
Interest on recoverable taxes | 9 |  | 56,597 |  | 17,604 |  | 56,636 |  | 17,670
Interest on other assets |  |  | 9,703 |  | 6,936 |  | 10,100 |  | 7,305
Financial expenses |  |  | (614,740) |  | (512,102) |  | (569,350) |  | (503,260)
Interest on loans and financing | 15 |  | (277,833) |  | (289,026) |  | (314,493) |  | (333,571)
Interest with related parties | 30 |  | (80,761) |  | (38,398) |  | - |  | -
Interest on contingencies | 21 |  | (66,043) |  | (18,954) |  | (66,898) |  | (19,799)
Interest on leases | 18 |  | (48,246) |  | (45,546) |  | (52,369) |  | (50,056)
Interest on other liabilities |  |  | 1,404 |  | (5,355) |  | 1,407 |  | 16,335
Adjustment to present value | 6 e 16 |  | (90,788) |  | (67,490) |  | (90,941) |  | (68,458)
Other |  |  | (52,473) |  | (47,333) |  | (46,056) |  | (47,711)
Monetary, exchange and derivative results, net |  |  | (3,813,529) |  | (144,281) |  | (149,997) |  | (31,066)
Exchange rate variation on monetary assets and liabilities |  |  | (4,854,470) |  | (91,458) |  | (1,198,934) |  | 35,691
Derivative results |  |  | 1,040,941 |  | (52,823) |  | 1,048,937 |  | (66,757)
|  |  | (4,321,492) |  | (576,489) |  | (606,469) |  | (448,265)

(1) The comparative period was restated for better disclosure of exchange variations effects and derivative results.

BRF S.A. | INTERIM FINANCIAL INFORMATION - March 31, 2020

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29. STATEMENT OF INCOME BY NATURE

The Company has chosen to disclose its statement of income by function and thus presents below the details by nature:

| Parent company |  | Consolidated
| January to March 2020 |  | January to March 2019 |  | January to March 2020 |  | January to March 2019
Costs of sales |  |  |  |  |  |  |
Raw materials and consumables (1) | 3,907,899 |  | 3,436,072 |  | 4,675,317 |  | 3,926,507
Salaries and employees benefits | 931,251 |  | 863,129 |  | 945,168 |  | 875,397
Depreciation | 415,604 |  | 415,224 |  | 452,231 |  | 444,673
Amortization | 13,685 |  | 16,345 |  | 28,345 |  | 29,190
Others | 560,470 |  | 539,054 |  | 595,027 |  | 566,413
| 5,828,909 |  | 5,269,824 |  | 6,696,088 |  | 5,842,180
Sales expenses |  |  |  |  |  |  |
Indirect and direct logistics expenses | 515,533 |  | 413,498 |  | 583,717 |  | 498,420
Marketing | 117,066 |  | 88,025 |  | 154,095 |  | 139,425
Salaries and employees benefits | 249,235 |  | 249,871 |  | 318,150 |  | 312,741
Depreciation | 30,881 |  | 25,938 |  | 53,580 |  | 44,419
Amortization | 13,719 |  | 14,988 |  | 19,959 |  | 20,335
Others | 106,133 |  | 108,171 |  | 154,833 |  | 119,955
| 1,032,567 |  | 900,491 |  | 1,284,334 |  | 1,135,295
Administrative expenses |  |  |  |  |  |  |
Salaries and employees benefits | 40,180 |  | 42,380 |  | 70,222 |  | 70,377
Fees | 11,863 |  | 6,261 |  | 11,863 |  | 6,261
Depreciation | 6,311 |  | 4,575 |  | 9,497 |  | 6,102
Amortization | 7,599 |  | 6,392 |  | 8,208 |  | 8,427
Others | 21,328 |  | 32,072 |  | 42,770 |  | 50,062
| 87,281 |  | 91,680 |  | 142,560 |  | 141,229

(1) Includes abnormal losses to production chain.

The Company incurred in expenses of R$16,314 in the parent company and in the consolidated for the three-month ended on March 31, 2020 (R$14,665 for the same period of the previous year) with internal research and development of new products.

30. 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, which 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 |  | Dividends and interest on the shareholders' equity receivable |  | Loans |  | Trade accounts payable |  | Other rights |  | Other obligations
| 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19 |  | 03.31.20 |  | 12.31.19
Al-Wafi Food Products Factory LLC | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 30 |  | 30 |  | - |  | (927)
Banvit | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 338 |  | 1,094 |  | - |  | -
BRF Energia S.A. | - |  | - |  | - |  | - |  | - |  | - |  | (8,629) |  | (6,376) |  | - |  | - |  | - |  | -
BRF Foods GmbH | 800,723 |  | 833,062 |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | -
BRF Foods GmbH - Branch | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 1,305 |  | 1,296 |  | (2,235) |  | (1,733)
BRF Foods LLC | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 479 |  | 466 |  | (2) |  | (2)
BRF Global GmbH | 6,362,487 |  | 3,843,949 |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (8,261,853) | (1) | (4,049,636)
BRF GmbH | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 1,913 |  | 1,520 |  | (1,657,216) | (2) | (1,311,123)
BRF Pet S.A. | 521 |  | 800 |  | - |  | - |  | - |  | - |  | - |  | (16) |  | 196 |  | 167 |  | - |  | -
Establecimiento Levino Zaccardi y Cia. S.A. | - |  | - |  | - |  | - |  | 305 |  | 234 |  | - |  | - |  |  |  |  |  | - |  | -
Federal Foods Qatar | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (141)
FFM Further | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 70 |  | 70 |  | - |  | -
Highline International Ltd. | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (9,481) |  | (7,351)
One Foods Holdings | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 7,304 |  | 5,662 |  | - |  | -
Perdigão International Ltd. | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (1,167,370) | (1) | (905,550)
PSA Laboratório Veterinário Ltda. | - |  | - |  | 396 |  | 396 |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | -
Sadia Alimentos S.A. | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (10,316) |  | (11,159)
Sadia Chile S.A. | 150,283 |  | 99,095 |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | -
Sadia Uruguay S.A. | 15,078 |  | 3,096 |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (31,326) |  | (36,598)
VIP S.A. Empreendimentos e Partic. Imob. | - |  | - |  | 22 |  | 22 |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | -
Total | 7,329,092 |  | 4,780,002 |  | 418 |  | 418 |  | 305 |  | 234 |  | (8,629) |  | (6,392) |  | 11,635 |  | 10,305 |  | (11,139,799) |  | (6,324,220)

(1) The amount corresponds to export pre-payment, 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 |  | Financial results, net |  | Purchases
| January to March 2020 |  | January to March 2019 |  | January to March 2020 |  | January to March 2019 |  | January to March 2020 |  | January to March 2019
Avex S.A. | - |  | 1,439 |  | - |  | - |  | - |  | -
BRF Energia S.A. | - |  | - |  | - |  | - |  | (71,216) |  | (59,189)
BRF Foods GmbH | 45,780 |  | 61,728 |  | - |  | - |  | - |  | -
BRF Global GmbH | 2,613,598 |  | 2,083,080 |  | (65,132) |  | (24,898) |  | - |  | -
BRF Pet S.A. | 1,170 |  | 384 |  | - |  | - |  | (29) |  | (5)
Campo Austral | - |  | 1,448 |  | - |  | - |  | - |  | -
Establecimiento Levino Zaccardi y Cia. S.A. | - |  | - |  | 3 |  | - |  | - |  | -
Perdigão International Ltd. | - |  | - |  | (14,795) |  | (13,500) |  | - |  | -
Sadia Alimentos S.A. | - |  | - |  | (195) |  | - |  | - |  | -
Sadia Chile S.A. | 32,581 |  | 12,031 |  | - |  | - |  | - |  | (46)
Sadia Uruguay S.A. | 9,443 |  | 10,198 |  | (642) |  | - |  | - |  | -
Total | 2,702,572 |  | 2,170,308 |  | (80,761) |  | (38,398) |  | (71,245) |  | (59,240)

The Company enters into loan agreements with its subsidiaries pursuant its cash management strategy. As of March 31, 2020, the balances of these transactions were R$2,318,933 (R$1,808,320 as of December 31, 2019) with a weighted average rate of 4.43% 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 three-month ended March 31, 2020, the total amount paid as rent was of R$4,882 (R$4,231 as of March 31, 2019).

Due to the acquisition of biodigesters from Instituto Sadia de Sustentabilidade, the Company recorded a payable to this entity of R$2,415 on March 31, 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$668 (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 March 31, 2020 totaled R$7,683 (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
| January to March 2020 |  | January to March 2019
Salary and profit sharing | 11,967 |  | 9,970
Short term benefits (1) | 119 |  | 17
Private pension | 307 |  | 122
Post-employment benefits | - |  | 47
Termination benefits | 2,964 |  | 4,685
Share-based payment | 4,034 |  | 1,828
| 19,391 |  | 16,669

(1) Comprises: medical assistance, educational expenses and others.

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In addition, the executive officers received among remuneration and benefits the total amount of R$4,600 for the three-month period ended on March 31, 2020 (R$13,821 for the three-month period ended on March 31, 2019).

31. 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
|  | 03.31.20 |  | 03.31.20
Current |  | 4,879,242 |  | 5,178,816
Non-current |  | 2,419,115 |  | 2,458,194
April to december 2021 | 987,525 |  | 1,008,232
2022 |  | 488,114 |  | 506,486
2023 |  | 208,247 |  | 208,247
2024 |  | 190,505 |  | 190,505
2025 onwards |  | 544,724 |  | 544,724
|  | 7,298,357 |  | 7,637,010

32. TRANSACTIONS THAT DO NOT INVOLVE CASH

The following transactions did not involve cash or cash equivalents during the period ended March 31, 2020:

(i) Capitalized loan interest: to the period ended March 31, 2020 amounted to R$4,058 in the parent company and consolidated (R$5,302 in the parent company and R$5,324 in the consolidated as of March 31, 2019).

(ii) Addition of lease by right-of-use assets and respective lease liability: for the period ended March 31, 2020, amounted to R$150,409 in the parent company and R$206,137 in consolidated (R$2,164,730 in the parent company and R$2,405,128 in consolidated as of March 31, 2019).

33. SUBSEQUENT EVENTS

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 that it did not own 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.

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$46,100 (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.

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34. APPROVAL OF THE INTERIM FINANCIAL INFORMATION

The interim financial information was approved and the issuance authorized by the Board of Directors on May 08, 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 COMITTEE |
Comittee Coordinator (Independent) | Augusto Marques da Cruz Filho
Non-Independent Member | Ivandré Motiel da Silva
Independent Member | Marcelo Feriozzi Bacci
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:

|  | 03.31.20 |  | 12.31.19
Shareholders |  | Quantity |  | % |  | 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) |  | 76,974,752 |  | 9.47 |  | 76,974,752 |  | 9.47
Management |  |  |  |  |  |  |  |
Board of Directors |  | 6,474,420 |  | 0.80 |  | 6,474,420 |  | 0.80
Executives |  | 236,338 |  | 0.03 |  | 236,338 |  | 0.03
Treasury shares |  | 713,446 |  | 0.09 |  | 713,446 |  | 0.09
Other |  | 635,358,024 |  | 78.20 |  | 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 March 31, 2020, which comprises the statement of financial position as of March 31, 2020 and the respective statements of income (loss), comprehensive income (loss), changes in equity and cash flows for the three-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) - Interim Financial Reporting and international standard 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 the Brazilian Securities and Exchange Commission, 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 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity 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 applicable to the preparation of Quarterly Information - ITR, and presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission.

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 unmodified in respect of this matter.

Other matters

Statements of Value Added

The individual and consolidated interim financial information referred above includes the statements of value added, individual and consolidated, for the three-month period ended March 31, 2020, prepared under the responsibility of the Company's management and presented as supplementary information for the purposes of IAS 34. These statements were submitted to the review procedures followed together with the review of the Quarterly Information, with the objective to conclude whether these statements were conciliated to the individual and consolidated interim financial information and to the accounting records, as applicable, and whether their form and content are in accordance with the criteria set on Technical Pronouncement CPC 09 - Statement of Value Added. Based on our review, nothing has come to our attention that causes us to believe that the individual and consolidated statements of Value Added has not been prepared, in all material respects, according to the criteria defined in this pronouncement and consistent with the individual and consolidated interim financial information taken as a whole.

São Paulo, May 8, 2020

KPMG Auditores Independentes

CRC 2SP014428/O-6

Original report in Portuguese signed by

Guilherme Nunes

Accountant CRC 1SP195631/O-1

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OPINION OF THE AUDIT COMMITTEE

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

(i) the interim financial information (parent company and consolidated) for the three-month period ended on March 31, 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 Committee, undersigned, issued an opinion for the approval of the interim financial information for the three-month period ended on March 31,2020.

São Paulo, May 8, 2020.

Augusto Marques da Cruz Filho

Coordinator (Independent)

Ivandré Motiel da Silva

Non-Independent member

Marcelo Feriozzi Bacci

Independent 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 three-month period ended on March 31, 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 three-month period ended on March 31, 2020.

São Paulo, May 8, 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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