EX-99.1 2 ex99-1.htm EX-99.1

INDEX

STATEMENTS OF FINANCIAL POSITION | 4
STATEMENTS OF INCOME (LOSS) | 5
STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | 6
STATEMENTS OF CHANGES IN EQUITY | 7
STATEMENTS OF CASH FLOWS | 8
STATEMENTS OF VALUE ADDED | 9
MANAGEMENT REPORT | 10
1. COMPANY’S OPERATIONS | 29
2. BASIS OF PREPARATION AND PRESENTATION OF FINANCIAL STATEMENTS | 38
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 39
4. CASH AND CASH EQUIVALENTS | 48
5. MARKETABLE SECURITIES | 48
6. TRADE ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES | 49
7. INVENTORIES | 50
8. BIOLOGICAL ASSETS | 51
9. RECOVERABLE TAXES | 53
10. DEFERRED INCOME TAXES | 57
11. JUDICIAL DEPOSITS | 59
12. INVESTMENTS | 60
13. PROPERTY, PLANT AND EQUIPMENT | 61
14. INTANGIBLE ASSETS | 65
15. LOANS AND BORROWINGS | 68
16. TRADE ACCOUNTS PAYABLE | 73
17. SUPPLY CHAIN FINANCE | 73
18. LEASES | 74
19. SHARE-BASED PAYMENT | 77
20. EMPLOYEES BENEFITS PLANS | 79
21. PROVISION FOR TAX, CIVIL AND LABOR RISKS | 85
22. EQUITY | 87
23. EARNINGS (LOSS) PER SHARE | 89
24. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT | 89
25. SEGMENT INFORMATION | 104
26. NET SALES | 106
27. OTHER OPERATING INCOME (EXPENSES), NET | 107
28. FINANCIAL INCOME (EXPENSES), NET | 107
29. STATEMENT OF INCOME BY NATURE | 108

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 2

Table of Contents

30. RELATED PARTIES | 108
31. GOVERNMENT GRANTS | 111
32. COMMITMENTS | 111
33. INSURANCE COVERAGE – CONSOLIDATED | 111
34. TRANSACTIONS THAT DO NOT INVOLVE CASH | 111
35. EVENTS AFTER THE REPORTING PERIOD | 112
36. APPROVAL OF THE FINANCIAL STATEMENTS | 113
COMENTARY ABOUT THE BEHAVIOR OF THE COMPANY’S PROJECTIONS | 114
INDEPENDENT AUDITORS’ REPORT ON INDIVIDUAL AND CONSOLIDATED FINANCIAL STATEMENTS | 115
OPINION OF THE FISCAL COUNCIL | 119
SUMMARIZED ANNUAL REPORT OF THE AUDIT AND INTEGRITY COMMITTEE | 120
STATUTORY AUDIT COMMITTEE OPINION | 122
OPINION OF EXECUTIVE BOARD ON THE CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR’S REPORT | 123

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 3

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STATEMENTS OF FINANCIAL POSITION

|  |  | Parent company |  | Consolidated |  |  |  |  | Parent company |  | Consolidated
ASSETS | Note |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | LIABILITIES | Note |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
CURRENT ASSETS |  |  |  |  |  |  |  |  |  |  | CURRENT LIABILITIES |  |  |  |  |  |  |  |  |
Cash and cash equivalents | 4 |  | 4,633,816 |  | 3,876,139 |  | 7,528,820 |  | 7,576,625 |  | Loans and borrowings | 15 |  | 2,790,926 |  | 811,919 |  | 3,203,068 |  | 1,059,984
Marketable securities | 5 |  | 324,771 |  | 312,515 |  | 346,855 |  | 314,158 |  | Trade accounts payable | 16 |  | 10,440,754 |  | 8,156,231 |  | 11,701,996 |  | 8,996,206
Trade and other receivables | 6 |  | 7,270,531 |  | 5,254,064 |  | 4,107,156 |  | 4,136,421 |  | Supply chain finance | 17 |  | 2,237,975 |  | 1,452,637 |  | 2,237,975 |  | 1,452,637
Inventories | 7 |  | 7,403,503 |  | 5,161,261 |  | 9,654,870 |  | 6,802,759 |  | Lease liability | 18 |  | 364,470 |  | 302,946 |  | 471,956 |  | 383,162
Biological assets | 8 |  | 2,786,692 |  | 2,044,288 |  | 2,899,921 |  | 2,129,010 |  | Payroll, related charges and employee profit sharing |  |  | 810,960 |  | 860,836 |  | 900,394 |  | 940,816
Recoverable taxes | 9 |  | 881,927 |  | 812,338 |  | 976,133 |  | 899,120 |  | Taxes payable |  |  | 246,744 |  | 268,347 |  | 454,038 |  | 395,630
Recoverable income taxes | 9 |  | 29,784 |  | 28,888 |  | 71,762 |  | 43,840 |  | Derivative financial instruments | 24 |  | 325,430 |  | 378,543 |  | 327,443 |  | 384,969
Derivative financial instruments | 24 |  | 132,498 |  | 361,315 |  | 134,551 |  | 377,756 |  | Provision for tax, civil and labor risks | 21 |  | 956,193 |  | 860,889 |  | 959,132 |  | 865,338
Restricted cash |  |  | 24,963 |  | 1 |  | 24,963 |  | 1 |  | Employee benefits | 20 |  | 42,097 |  | 114,938 |  | 54,354 |  | 125,230
Assets held for sale |  |  | 5,000 |  | 15,637 |  | 16,628 |  | 186,025 |  | Advances from related parties | 30 |  | 12,393,604 |  | 8,960,394 |  | - |  | -
Other current assets |  |  | 324,680 |  | 348,722 |  | 481,464 |  | 446,269 |  | Liabilities directly associated with assets held for sale |  |  | - |  | - |  | - |  | 21,718
|  |  |  |  |  |  |  |  |  |  | Other current liabilities |  |  | 357,887 |  | 335,137 |  | 914,933 |  | 814,638
Total current assets |  |  | 23,818,165 |  | 18,215,168 |  | 26,243,123 |  | 22,911,984 |  | Total current liabilities |  |  | 30,967,040 |  | 22,502,817 |  | 21,225,289 |  | 15,440,328
NON-CURRENT ASSETS |  |  |  |  |  |  |  |  |  |  | NON-CURRENT LIABILITIES |  |  |  |  |  |  |  |  |
LONG-TERM RECEIVALBLES |  |  |  |  |  |  |  |  |  |  | Loans and borrowings | 15 |  | 19,320,254 |  | 18,498,335 |  | 22,252,962 |  | 21,344,442
Marketable securities | 5 |  | 15,438 |  | 15,044 |  | 447,413 |  | 344,577 |  | Trade accounts payable | 16 |  | 8,718 |  | 13,781 |  | 12,628 |  | 13,781
Trade and other receivables | 6 |  | 34,540 |  | 49,569 |  | 34,978 |  | 49,864 |  | Lease liability | 18 |  | 1,803,853 |  | 1,965,748 |  | 2,007,290 |  | 2,153,519
Recoverable taxes | 9 |  | 4,765,453 |  | 4,868,219 |  | 4,780,096 |  | 4,868,198 |  | Taxes payable |  |  | 130,565 |  | 141,252 |  | 132,195 |  | 141,252
Recoverable income taxes | 9 |  | 194,979 |  | 54,123 |  | 206,355 |  | 54,859 |  | Provision for tax, civil and labor risks | 21 |  | 517,522 |  | 837,106 |  | 558,500 |  | 837,382
Deferred income taxes | 10 |  | 2,885,387 |  | 2,068,769 |  | 2,941,270 |  | 2,109,064 |  | Deferred income taxes | 10 |  | - |  | - |  | 23,710 |  | 26,527
Judicial deposits | 11 |  | 545,631 |  | 553,276 |  | 550,319 |  | 553,341 |  | Liabilities with related parties | 30 |  | 45,921 |  | 41,892 |  | - |  | -
Biological assets | 8 |  | 1,367,013 |  | 1,154,726 |  | 1,414,482 |  | 1,221,749 |  | Employee benefits | 20 |  | 361,356 |  | 521,855 |  | 498,231 |  | 651,325
Receivables from related parties | 30 |  | - |  | 315 |  | - |  | - |  | Derivative financial instruments | 24 |  | 41,861 |  | 727 |  | 41,861 |  | 727
Derivative financial instruments | 24 |  | 10,804 |  | 234 |  | 10,804 |  | 234 |  | Other non-current liabilities |  |  | 251,512 |  | 249,691 |  | 325,098 |  | 242,089
Restricted cash |  |  | 1 |  | 24,357 |  | 1 |  | 24,357 |  |  |  |  |  |  |  |  |  |  |
Other non-current assets |  |  | 70,228 |  | 77,829 |  | 76,757 |  | 82,123 |  |  |  |  |  |  |  |  |  |  |
Total long-term receivables |  |  | 9,889,474 |  | 8,866,461 |  | 10,462,475 |  | 9,308,366 |  | Total non-current liabilities |  |  | 22,481,562 |  | 22,270,387 |  | 25,852,475 |  | 25,411,044
|  |  |  |  |  |  |  |  |  |  | EQUITY | 22 |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  | Capital |  |  | 12,460,471 |  | 12,460,471 |  | 12,460,471 |  | 12,460,471
|  |  |  |  |  |  |  |  |  |  | Capital reserves |  |  | 141,834 |  | 141,834 |  | 141,834 |  | 141,834
|  |  |  |  |  |  |  |  |  |  | Other equity transactions |  |  | (67,531) |  | 246 |  | (67,531) |  | 246
Investments | 12 |  | 13,269,948 |  | 11,922,325 |  | 7,113 |  | 8,874 |  | Accumulated losses |  |  | (2,132,230) |  | (2,594,028) |  | (2,132,230) |  | (2,594,028)
Property, plant and equipment | 13 |  | 11,723,211 |  | 11,168,558 |  | 13,040,862 |  | 12,215,580 |  | Treasury shares |  |  | (127,286) |  | (123,938) |  | (127,286) |  | (123,938)
Intangible assets | 14 |  | 3,210,336 |  | 3,186,476 |  | 6,149,814 |  | 5,220,102 |  | Other comprehensive loss |  |  | (1,812,726) |  | (1,298,801) |  | (1,812,726) |  | (1,298,801)
|  |  |  |  |  |  |  |  |  |  | Attributable to controlling shareholders |  |  | 8,462,532 |  | 8,585,784 |  | 8,462,532 |  | 8,585,784
|  |  |  |  |  |  |  |  |  |  | Non-controlling interests |  |  | - |  | - |  | 363,091 |  | 227,750
Total non-current assets |  |  | 38,092,969 |  | 35,143,820 |  | 29,660,264 |  | 26,752,922 |  | Total equity |  |  | 8,462,532 |  | 8,585,784 |  | 8,825,623 |  | 8,813,534
TOTAL ASSETS |  |  | 61,911,134 |  | 53,358,988 |  | 55,903,387 |  | 49,664,906 |  | TOTAL LIABILITIES AND EQUITY |  |  | 61,911,134 |  | 53,358,988 |  | 55,903,387 |  | 49,664,906

The accompanying notes are an integral part of the financial statements.

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 4

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STATEMENTS OF INCOME (LOSS)

|  |  | Parent company |  | Consolidated
| Note |  | 12.31.21 |  | 12.31.20 (1) |  | 12.31.21 |  | 12.31.20 (1)
CONTINUING OPERATIONS |  |  |  |  |  |  |  |  |
NET SALES | 26 |  | 42,118,478 |  | 32,583,136 |  | 48,343,305 |  | 39,469,700
Cost of sales | 29 |  | (33,810,019) |  | (26,347,624) |  | (38,177,609) |  | (30,133,769)
GROSS PROFIT |  |  | 8,308,459 |  | 6,235,512 |  | 10,165,696 |  | 9,335,931
OPERATING INCOME (EXPENSES) |  |  |  |  |  |  |  |  |
Selling expenses | 29 |  | (5,162,751) |  | (4,471,964) |  | (6,531,413) |  | (5,673,030)
General and administrative expenses | 29 |  | (542,602) |  | (555,988) |  | (822,960) |  | (832,858)
Impairment loss on trade receivables | 6 |  | (9,347) |  | (4,822) |  | (12,799) |  | (12,137)
Other operating income (expenses), net | 27 |  | 129,211 |  | 50,009 |  | 211,263 |  | 28,887
Income from associates and joint ventures | 12 |  | 867,505 |  | 6,320,756 |  | - |  | -
INCOME BEFORE FINANCIAL RESULTS AND INCOME TAXES |  |  | 3,590,475 |  | 7,573,503 |  | 3,009,787 |  | 2,846,793
Financial income |  |  | 462,847 |  | 371,496 |  | 537,736 |  | 420,757
Financial expenses |  |  | (3,069,588) |  | (2,568,149) |  | (3,331,615) |  | (1,889,454)
Foreign exchange and monetary variations |  |  | (1,108,816) |  | (4,221,192) |  | (250,696) |  | (230,298)
FINANCIAL INCOME (EXPENSES), NET | 28 |  | (3,715,557) |  | (6,417,845) |  | (3,044,575) |  | (1,698,995)
INCOME (LOSS) BEFORE TAXES |  |  | (125,082) |  | 1,155,658 |  | (34,788) |  | 1,147,798
Income taxes | 10 |  | 624,467 |  | 227,906 |  | 552,102 |  | 242,271
INCOME FROM CONTINUING OPERATIONS |  |  | 499,385 |  | 1,383,564 |  | 517,314 |  | 1,390,069
LOSS FROM DISCONTINUED OPERATIONS | 1.3 |  | (79,930) |  | - |  | (79,930) |  | -
INCOME FOR THE YEAR |  |  | 419,455 |  | 1,383,564 |  | 437,384 |  | 1,390,069
Net Income from Continuing Operation Attributable to |  |  |  |  |  |  |  |  |
Controlling shareholders |  |  | 499,385 |  | 1,383,564 |  | 499,385 |  | 1,383,564
Non-controlling interest |  |  | - |  | - |  | 17,929 |  | 6,505
|  |  | 499,385 |  | 1,383,564 |  | 517,314 |  | 1,390,069
Net Loss From Discontinued Operations Attributable to |  |  |  |  |  |  |  |  |
Controlling shareholders |  |  | (79,930) |  | - |  | (79,930) |  | -
Non-controlling interest |  |  | - |  | - |  | - |  | -
|  |  | (79,930) |  | - |  | (79,930) |  | -
INCOME PER SHARE FROM CONTINUED OPERATIONS |  |  |  |  |  |  |  |  |
Weighted average shares outstanding - basic |  |  |  |  |  |  | 807,929,481 |  | 809,110,872
Income per share - basic | 23 |  |  |  |  |  | 0.62 |  | 1.71
Weighted average shares outstanding - diluted |  |  |  |  |  |  | 808,678,648 |  | 811,348,808
Income per share - diluted | 23 |  |  |  |  |  | 0.62 |  | 1.71
LOSSES PER SHARE FROM DISCONTINUED OPERATIONS |  |  |  |  |  |  |  |  |
Weighted average shares outstanding - basic |  |  |  |  |  |  | 807,929,481 |  | -
Losses per share - basic | 23 |  |  |  |  |  | (0.10) |  | -
Weighted average shares outstanding - diluted |  |  |  |  |  |  | 807,929,481 |  | -
Losses per share - diluted | 23 |  |  |  |  |  | (0.10) |  | -

| (1) | The amounts of employee participation and bonuses were subject to an immaterial classification error correction (note 3.1.).

The accompanying notes are an integral part of the financial statements.

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 5

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STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

|  |  | Parent company |  | Consolidated
| Note |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Income for the year |  |  | 419,455 |  | 1,383,564 |  | 437,384 |  | 1,390,069
Other comprehensive income (loss), net of taxes |  |  |  |  |  |  |  |  |
Loss on foreign currency translation of foreign operations |  |  | (386,542) |  | (207,734) |  | (403,475) |  | (179,426)
Loss on net investment hedge |  |  | (96,555) |  | (277,856) |  | (96,555) |  | (277,856)
Cash flow hedges – effective portion of changes in fair value | 24 |  | (119,482) |  | 1,294,639 |  | (121,303) |  | 1,294,639
Cash flow hedges – reclassified to profit or loss | 24 |  | (26,201) |  | (1,376,139) |  | (26,201) |  | (1,376,139)
Debt investments measured at FVTOCI (1) - changes in fair value | 5 |  | - |  | 178 |  | - |  | 178
Items that are or may be reclassified subsequently to profit or loss |  |  | (628,780) |  | (566,912) |  | (647,534) |  | (538,604)
Equity investments measured at FVTOCI (1) - changes in fair value | 5 |  | 26,030 |  | 2,384 |  | 26,030 |  | 2,384
Actuarial gains on pension and post-employment plans | 20 |  | 131,168 |  | 7,589 |  | 130,671 |  | 7,121
Items that will not be reclassified to profit or loss |  |  | 157,198 |  | 9,973 |  | 156,701 |  | 9,505
Comprehensive income (loss) for the year |  |  | (52,127) |  | 826,625 |  | (53,449) |  | 860,970
Attributable to |  |  |  |  |  |  |  |  |
Controlling shareholders |  |  | (52,127) |  | 826,625 |  | (52,127) |  | 826,625
Non-controlling interest |  |  | - |  | - |  | (1,322) |  | 34,345
|  |  | (52,127) |  | 826,625 |  | (53,449) |  | 860,970

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

Items above are stated net of income taxes and the related taxes are disclosed in note 10.

The accompanying notes are an integral part of the financial statements.

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 6

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STATEMENTS OF CHANGES IN EQUITY

|  |  | Attributed to controlling shareholders
|  |  |  |  |  |  |  |  |  |  | Other comprehensive income (loss) |  |  |  |  |  |  |  |
|  |  | Capital |  | Capital reserves | Other equity transactions (5) |  | Treasury shares |  | Accumulated foreign currency translation adjustments |  | Gains (losses) on marketable securities at FVTOCI (2) |  | Gains (losses) on cash flow hedge |  | Actuarial gains (losses) |  | Retained losses |  | Total equity |  | Non-controlling interest |  | Total shareholders' equity (consolidated)
BALANCES AT DECEMBER 31, 2019 |  |  | 12,460,471 |  | 141,834 |  | 51,011 |  | (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 of foreign operations |  |  | - |  | - |  | - |  | - |  | (207,734) |  | - |  | - |  | - |  | - |  | (207,734) |  | 28,308 |  | (179,426)
Loss on net investment hedge |  |  | - |  | - |  | - |  | - |  | (277,856) |  | - |  | - |  | - |  | - |  | (277,856) |  | - |  | (277,856)
Marketable securities at FVTOCI (2) - changes in fair value |  |  | - |  | - |  | - |  | - |  | - |  | 2,562 |  | - |  | - |  | - |  | 2,562 |  | - |  | 2,562
Unrealized losses in cash flow hedge |  |  | - |  | - |  | - |  | - |  | - |  | - |  | (81,500) |  | - |  | - |  | (81,500) |  | - |  | (81,500)
Actuarial losses on pension and post-employment plans |  |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 7,589 |  | - |  | 7,589 |  | (468) |  | 7,121
Income for the year |  |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 1,383,564 |  | 1,383,564 |  | 6,505 |  | 1,390,069
SUB-TOTAL COMPREHENSIVE INCOME (LOSS) |  |  | - |  | - |  | - |  | - |  | (485,590) |  | 2,562 |  | (81,500) |  | 7,589 |  | 1,383,564 |  | 826,625 |  | 34,345 |  | 860,970
Employee benefits remeasurement - defined benefit |  |  | - |  | - |  |  |  | - |  | - |  | - |  | - |  | (19,393) |  | 19,393 |  | - |  | - |  | -
Appropriation of income (loss) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Dividends |  |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (4,458) |  | (4,458)
Share-based payments |  |  | - |  | - |  | 180 |  | 20,371 |  | - |  | - |  | - |  | - |  | - |  | 20,551 |  | - |  | 20,551
Acquisition of non-controlling interests |  |  | - |  | - |  | (50,945) |  | - |  | - |  | - |  | - |  | - |  | - |  | (50,945) |  | (54,863) |  | (105,808)
Acquisition of treasury shares |  |  | - |  | - |  | - |  | (106,070) |  | - |  | - |  | - |  | - |  | - |  | (106,070) |  | - |  | (106,070)
BALANCES AT DECEMBER 31, 2020 |  |  | 12,460,471 |  | 141,834 |  | 246 |  | (123,938) |  | (678,969) |  | 7,016 |  | (438,221) |  | (188,627) |  | (2,594,028) |  | 8,585,784 |  | 227,750 |  | 8,813,534
Comprehensive income (loss) (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Losses on foreign currency translation of foreign operations |  |  | - |  | - |  | - |  | - |  | (386,542) |  | - |  | - |  | - |  | - |  | (386,542) |  | (16,933) |  | (403,475)
Losses on net investment hedge |  |  | - |  | - |  | - |  | - |  | (96,555) |  | - |  | - |  | - |  | - |  | (96,555) |  | - |  | (96,555)
Marketable securities at FVTOCI (2) - changes in fair value |  |  | - |  | - |  | - |  | - |  | - |  | 26,030 |  | - |  | - |  | - |  | 26,030 |  | - |  | 26,030
Unrealized losses in cash flow hedge |  |  | - |  | - |  | - |  | - |  | - |  | - |  | (145,683) |  | - |  | - |  | (145,683) |  | (1,821) |  | (147,504)
Actuarial gains (losses) on pension and post-employment plans |  |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 131,168 |  | - |  | 131,168 |  | (497) |  | 130,671
Income for the year |  |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 419,455 |  | 419,455 |  | 17,929 |  | 437,384
SUB-TOTAL COMPREHENSIVE INCOME (LOSS) |  |  | - |  | - |  | - |  | - |  | (483,097) |  | 26,030 |  | (145,683) |  | 131,168 |  | 419,455 |  | (52,127) |  | (1,322) |  | (53,449)
Marketable securities at FVTOCI (2) - realized gain |  |  | - |  | - |  |  |  | - |  | - |  | (33,046) |  | - |  | - |  | 33,046 |  | - |  | - |  | -
Employee benefits remeasurement - defined benefit |  |  | - |  | - |  |  |  | - |  | - |  | - |  | - |  | (9,297) |  | 9,297 |  | - |  | - |  | -
Dividends |  |  | - |  | - |  |  |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (80) |  | (80)
Share-based payments |  |  | - |  | - |  | (8,762) |  | (3,348) |  | - |  | - |  | - |  | - |  | - |  | (12,110) |  | - |  | (12,110)
Acquisition of minority shareholders (3) |  |  | - |  | - |  | (79,673) |  | - |  | - |  | - |  | - |  | - |  | - |  | (79,673) |  | (157,918) |  | (237,591)
Write-off of put option held by minority shareholders (4) |  |  | - |  | - |  | 20,658 |  | - |  | - |  | - |  | - |  | - |  | - |  | 20,658 |  | 294,661 |  | 315,319
BALANCES AT DECEMBER 31, 2021 |  |  | 12,460,471 |  | 141,834 |  | (67,531) |  | (127,286) |  | (1,162,066) |  | - |  | (583,904) |  | (66,756) |  | (2,132,230) |  | 8,462,532 |  | 363,091 |  | 8,825,623

| (1) | All changes in other comprehensive income are presented net of taxes.

| (2) | FVTOCI: Fair Value Through Other Comprehensive Income.

| (3) | Acquisition of remaining participation in the subsidiary BRF Kuwait WLL (note 1.1.1).

| (4) | Recognition in Other Equity Transactions of the difference between the amount of the put option liability held by non-controlling interests and the book value of the non-controlling interest in TBQ Foods GmbH in the amount of R$20,658, and recognition of the Non-controlling Interest on the net assets of TBQ Foods GmbH in the amount of R$294,661, as detailed in note 1.1.3.

| (5) | Balance in the comparative was further breakdown into separate accounts as described in note 22.2.

The accompanying notes are an integral part of the financial statements.

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 7

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STATEMENTS OF CASH FLOWS

|  | Parent company |  | Consolidated
|  |  |  | Restated (4) |  |  |  | Restated (4)
|  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
OPERATING ACTIVITIES |  |  |  |  |  |  |  |
Income from continuing operations |  | 499,385 |  | 1,383,564 |  | 517,314 |  | 1,390,069
Adjustments for: |  |  |  |  |  |  |  |
Depreciation and amortization |  | 1,343,713 |  | 1,267,169 |  | 1,715,863 |  | 1,517,402
Depreciation and depletion of biological assets |  | 943,789 |  | 789,496 |  | 1,030,491 |  | 876,976
Result on disposal of property, plant and equipments and investment |  | (66,600) |  | 29,287 |  | (141,211) |  | 40,220
Write-down of inventories to net realizable value |  | 100,993 |  | 93,592 |  | 128,680 |  | 122,082
Provision for tax, civil and labor risks |  | 116,215 |  | 318,041 |  | 116,144 |  | 319,237
Impairment |  | - |  | - |  | - |  | 10,160
Income from investments under the equity method |  | (867,505) |  | (6,320,756) |  | - |  | -
Financial results, net |  | 3,715,557 |  | 6,417,845 |  | 3,044,575 |  | 1,698,995
Tax recoveries and gains in tax lawsuits |  | (107,380) |  | (379,087) |  | (108,785) |  | (379,087)
Deferred income tax |  | (779,862) |  | (227,906) |  | (807,744) |  | (319,644)
Employee profit sharing |  | 117,177 |  | 235,195 |  | 170,425 |  | 283,065
Other provisions |  | (923) |  | 253,512 |  | 2,793 |  | 265,621
|  | 5,014,559 |  | 3,859,952 |  | 5,668,545 |  | 5,825,096
Trade accounts receivable |  | (1,916,087) |  | 976,661 |  | 386,889 |  | (481,192)
Inventories |  | (2,343,241) |  | (2,468,706) |  | (2,878,507) |  | (2,622,702)
Biological assets - current |  | (742,404) |  | (499,161) |  | (815,699) |  | (524,414)
Trade accounts payable |  | 1,236,229 |  | 2,028,927 |  | 1,420,014 |  | 2,154,693
Supply chain finance |  | 790,946 |  | 620,232 |  | 790,946 |  | 620,232
Cash generated by operating activities |  | 2,040,002 |  | 4,517,905 |  | 4,572,188 |  | 4,971,713
Investments in securities at FVTPL (1) |  | (23,894) |  | - |  | (115,041) |  | -
Redemptions of securities at FVTPL (1) |  | 44,768 |  | 102,064 |  | 145,053 |  | 102,172
Interest received |  | 89,696 |  | 78,070 |  | 106,388 |  | 87,334
Dividends and interest on shareholders' equity received |  | 10 |  | 304,357 |  | - |  | -
Payment of tax, civil and labor provisions |  | (399,646) |  | (269,819) |  | (399,252) |  | (269,820)
Derivative financial instruments |  | 237,043 |  | 916,503 |  | 266,491 |  | 923,709
Payment of income taxes |  | - |  | - |  | - |  | (155)
Other operating assets and liabilities (2) |  | 2,628,834 |  | (78,553) |  | (652,191) |  | 24,216
Net cash provided by operating activities |  | 4,616,813 |  | 5,570,527 |  | 3,923,636 |  | 5,839,169
INVESTING ACTIVITIES |  |  |  |  |  |  |  |
Investments in securities at amortized cost |  | - |  | - |  | (4,060) |  | -
Redemptions of securities at amortized cost |  | - |  | - |  | 166,112 |  | -
Investments in securities at FVTOCI (3) |  | - |  | - |  | (12,866) |  | -
Redemptions of securities at FVTOCI (3) |  | - |  | - |  | 86,059 |  | 26,352
Redemption of restricted cash |  | 400 |  | 285,672 |  | 400 |  | 285,672
Additions to property, plant and equipment |  | (1,407,885) |  | (758,954) |  | (1,555,426) |  | (804,609)
Additions to biological assets - non-current |  | (1,142,533) |  | (907,497) |  | (1,239,746) |  | (1,006,222)
Proceeds from disposals of property, plant, equipments and investment |  | 58,836 |  | 126,540 |  | 58,836 |  | 126,540
Additions to intangible assets |  | (174,971) |  | (95,164) |  | (179,632) |  | (96,181)
Business combination, net of cash |  | (581) |  | - |  | (985,639) |  | -
Sale of participation in subsidiaries with loss of control |  | - |  | - |  | 132,951 |  | 38,546
Acquisition of participation in joint ventures and subsidiaries |  | 1,770 |  | (1,087) |  | 1,770 |  | (1,087)
Capital increase in associates |  | (1,006,073) |  | (10,065) |  | - |  | -
Net cash used in investing activities |  | (3,671,037) |  | (1,360,555) |  | (3,531,241) |  | (1,430,989)
Net cash used in investing activities from discontinued operations |  | - |  | - |  | (17,550) |  | -
Net cash used in investing activities |  | (3,671,037) |  | (1,360,555) |  | (3,548,791) |  | (1,430,989)
FINANCING ACTIVITIES |  |  |  |  |  |  |  |
Proceeds from debt issuance |  | 2,633,863 |  | 9,701,377 |  | 2,990,782 |  | 10,420,333
Repayment of debt |  | (1,209,864) |  | (9,861,770) |  | (1,395,347) |  | (10,247,359)
Payment of interest |  | (1,060,244) |  | (1,260,768) |  | (1,193,367) |  | (1,421,539)
Payment of interest derivatives - fair value hedge |  | (2,975) |  | - |  | (2,975) |  | -
Treasury shares acquisition |  | (27,721) |  | (106,070) |  | (27,721) |  | (106,070)
Acquisition of non-controlling interests |  | - |  | - |  | (238,421) |  | (100,390)
Payment of lease liabilities |  | (533,885) |  | (473,984) |  | (705,427) |  | (553,556)
Net cash used in financing activities |  | (200,826) |  | (2,001,215) |  | (572,476) |  | (2,008,581)
EFFECT OF EXCHANGE RATE VARIATION ON CASH AND CASH EQUIVALENTS |  | 12,727 |  | 298,402 |  | 149,826 |  | 939,241
Net increase (decrease) in cash and cash equivalents |  | 757,677 |  | 2,507,159 |  | (47,805) |  | 3,338,840
Balance at the beginning of the year |  | 3,876,139 |  | 1,368,980 |  | 7,576,625 |  | 4,237,785
Balance at the end of the year |  | 4,633,816 |  | 3,876,139 |  | 7,528,820 |  | 7,576,625

| (1) | FVTPL: Fair Value Through Profit and Loss.

| (2) | In the Parent company, contemplates mainly the effects of prepayments of exports with subsidiaries in the amount of R$2,850,793 for the year ended December 31, 2021 (R$2,685,566 for the year ended December 31, 2020). In the Consolidated, contemplates the payment of employee profit sharing in the amount of R$290,332 for the year ended December 31, 2021 (R$217,794 for the year ended December 31, 2020).

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

| (4) | Restated due to the change of accounting policy for the presentation of interest paid as described in note 3.1.

The accompanying notes are an integral part of the financial statements.

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STATEMENTS OF VALUE ADDED

|  | Parent company |  | Consolidated
|  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
1 - REVENUES |  | 48,221,304 |  | 37,414,179 |  | 54,744,458 |  | 44,299,525
Sales of goods and products |  | 46,703,553 |  | 36,613,811 |  | 53,046,159 |  | 43,503,289
Other income |  | 132,868 |  | 52,241 |  | 217,011 |  | 30,222
Revenue related to construction of own assets |  | 1,394,230 |  | 752,949 |  | 1,494,087 |  | 778,151
Expected credit losses |  | (9,347) |  | (4,822) |  | (12,799) |  | (12,137)
2 - SUPPLIES ACQUIRED FROM THIRD PARTIES |  | (32,826,060) |  | (24,284,767) |  | (37,820,537) |  | (28,544,203)
Costs of goods sold |  | (27,522,141) |  | (20,383,346) |  | (31,556,767) |  | (23,866,153)
Materials, energy, third parties services and other |  | (5,289,193) |  | (3,901,390) |  | (6,242,780) |  | (4,670,502)
Reversal for inventories losses |  | (14,726) |  | (31) |  | (20,990) |  | (7,548)
3 - GROSS ADDED VALUE (1-2) |  | 15,395,244 |  | 13,129,412 |  | 16,923,921 |  | 15,755,322
4 - DEPRECIATION AND AMORTIZATION |  | (2,287,502) |  | (2,056,665) |  | (2,746,354) |  | (2,394,378)
5 - NET ADDED VALUE (3-4) |  | 13,107,742 |  | 11,072,747 |  | 14,177,567 |  | 13,360,944
6 - RECEIVED FROM THIRD PARTIES |  | 1,326,695 |  | 6,690,019 |  | 534,079 |  | 419,506
Income from associates and joint ventures |  | 867,505 |  | 6,320,756 |  | - |  | -
Financial income |  | 462,847 |  | 371,496 |  | 537,736 |  | 420,757
Others |  | (3,657) |  | (2,233) |  | (3,657) |  | (1,251)
7 - ADDED VALUE TO BE DISTRIBUTED (5+6) |  | 14,434,437 |  | 17,762,766 |  | 14,711,646 |  | 13,780,450
8 - DISTRIBUTION OF ADDED VALUE |  | 14,434,437 |  | 17,762,766 |  | 14,711,646 |  | 13,780,450
Payroll |  | 5,152,065 |  | 5,219,387 |  | 5,771,862 |  | 5,784,055
Salaries |  | 3,666,797 |  | 3,736,854 |  | 4,163,183 |  | 4,195,249
Benefits |  | 1,215,761 |  | 1,231,371 |  | 1,319,454 |  | 1,321,332
Government severance indemnity fund for employees |  | 269,507 |  | 251,162 |  | 289,225 |  | 267,474
Taxes, Fees and Contributions |  | 4,426,596 |  | 4,218,820 |  | 4,657,361 |  | 4,236,084
Federal |  | 1,388,767 |  | 1,534,926 |  | 1,528,480 |  | 1,543,491
State |  | 2,993,915 |  | 2,643,539 |  | 3,077,820 |  | 2,643,201
Municipal |  | 43,914 |  | 40,355 |  | 51,061 |  | 49,392
Capital Remuneration from Third Parties |  | 4,356,391 |  | 6,940,995 |  | 3,765,109 |  | 2,370,242
Interests, including exchange variation |  | 4,234,740 |  | 6,811,017 |  | 3,639,311 |  | 2,141,428
Rents |  | 121,651 |  | 129,978 |  | 125,798 |  | 228,814
Interest on Own-Capital |  | 499,385 |  | 1,383,564 |  | 517,314 |  | 1,390,069
Income for the year from continuing operations |  | 499,385 |  | 1,383,564 |  | 499,385 |  | 1,383,564
Non-controlling interest |  | - |  | - |  | 17,929 |  | 6,505

The accompanying notes are an integral part of the financial statements.

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MANAGEMENT REPORT

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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, nº 475, Bairro Fazenda, Itajaí - Santa Catarina and the main business office is in the city of São Paulo.

BRF is a Brazilian multinational company, with global presence, which owns a comprehensive portfolio of products, and it is one of the world’s largest companies of food products. The Company operates by raising, producing and slaughtering poultry and pork for processing, production and sale of fresh meat, processed products, pasta, margarine, pet food and others.

The Company holds as main brands Sadia, Perdigão, Qualy, Chester®, Kidelli, Perdix, Banvit, Biofresh and Gran Plus, present mainly in Brazil, Turkey and Middle Eastern countries.

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1.1. Equity interest

|  |  |  |  |  |  | % equity interest
Entity |  |  | Main activity |  | Country (1) |  | 12.31.21 |  | 12.31.20
BRF GmbH | (n) |  | Holding |  | Austria |  | 100.00 |  | 100.00
BRF Foods LLC | (g) |  | Import, industrialization and commercialization of products |  | Russia |  | 99.99 |  | 99.90
BRF Global Company Nigeria Ltd. |  |  | 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. |  |  | Marketing and logistics services |  | Nigeria |  | 1.00 |  | 1.00
BRF Global GmbH |  |  | Holding and trading |  | Austria |  | 100.00 |  | 100.00
BRF Foods LLC | (h) |  | Import, industrialization and commercialization of products |  | Russia |  | 0.01 |  | 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
Eclipse Holding Cöoperatief U.A. |  |  | Holding |  | The Netherlands |  | 99.99 |  | 99.99
Buenos Aires Fortune S.A. |  |  | Holding |  | Argentina |  | 4.36 |  | 4.36
Eclipse Latam Holdings |  |  | Holding |  | Spain |  | 100.00 |  | 100.00
Buenos Aires Fortune S.A. |  |  | Holding |  | Argentina |  | 95.64 |  | 95.64
Perdigão Europe Lda. |  |  | Import, export of products and administrative services |  | Portugal |  | 100.00 |  | 100.00
Perdigão International Ltd. | (d) |  | Import and export of products |  | Cayman Island |  | - |  | 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
Wellax Food Logistics C.P.A.S.U. Lda. |  |  | Import, commercialization of products and administrative services |  | Portugal |  | 100.00 |  | 100.00
One Foods Holdings Ltd. |  |  | Holding |  | UAE |  | 100.00 |  | 100.00
Al-Wafi Food Products Factory LLC | (p) |  | Import, export, industrialization and commercialization of products |  | UAE |  | 49.00 |  | 49.00
Badi Ltd. |  |  | Holding |  | UAE |  | 100.00 |  | 100.00
Al-Wafi Al-Takamol International for Foods Products |  |  | Import and commercialization of products |  | Saudi Arabia |  | 100.00 |  | 100.00
Joody Al Sharqiya Food Production Factory LLC | (b) |  | Import and commercialization of products |  | Saudi Arabia |  | 100.00 |  | -
BRF Kuwait WLL | (c) |  | Import, commercialization and distribution of products |  | Kuwait |  | 49.00 |  | 75.00
BRF Foods GmbH |  |  | Industrialization, import and commercialization of products |  | Austria |  | 100.00 |  | 100.00
Al Khan Foodstuff LLC ("AKF") | (p) |  | Import, commercialization and distribution of products |  | Oman |  | 70.00 |  | 70.00
FFQ GmbH | (e) |  | Industrialization, import and commercialization of products |  | Austria |  | - |  | 100.00
TBQ Foods GmbH | (o) |  | 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 | (f) |  | Industrialization of grains and animal feed |  | Romania |  | - |  | 0.01
Nutrinvestments BV |  |  | Holding |  | The Netherlands |  | 100.00 |  | 100.00
Banvit ME FZE |  |  | Marketing and logistics services |  | UAE |  | 100.00 |  | 100.00
Banvit Foods SRL | (f) |  | Industrialization of grains and animal feed |  | Romania |  | - |  | 99.99
One Foods Malaysia SDN. BHD. |  |  | Marketing and logistics services |  | Malaysia |  | 100.00 |  | 100.00
Federal Foods LLC | (p) |  | Import, commercialization and distribution of products |  | UAE |  | 49.00 |  | 49.00
Federal Foods Qatar | (p) |  | 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 |  | 99.99 |  | 99.99
BRF Energia S.A. |  |  | Commercialization of eletric energy |  | Brazil |  | 100.00 |  | 100.00
BRF Pet S.A. |  |  | Industrialization, commercialization and distribution of feed and nutrients for animals |  | Brazil |  | 100.00 |  | 100.00
Affinity Petcare Brasil Participações Ltda. | (m) |  | Holding |  | Brazil |  | 100.00 |  | -
Mogiana Alimentos S.A. |  |  | Manufacturing, distribution and sale of Pet Food products |  | Brazil |  | 50.00 |  | -
Gewinner Participações Ltda. | (j) |  | Industrialization, distribution and sale of feed and nutrients for animals |  | Brazil |  | 100.00 |  | -
Hecosul Alimentos Ltda. |  |  | Manufacturing and sale of animal feed |  | Brazil |  | 100.00 |  | -
Hercosul Distribuição Ltda. |  |  | Import, export, wholesale and retail sale of food products for animals |  | Brazil |  | 100.00 |  | -
Hercosul Soluções em Transportes Ltda. |  |  | Road freight |  | Brazil |  | 100.00 |  | -
Hercosul International S.R.L. | (k) |  | Manufacturing, export, import and sale of feed and nutrients for animals |  | Paraguay |  | 99.00 |  | -
Paraguassu Participações S.A. | (m) |  | Holding |  | Brazil |  | 100.00 |  | -
Mogiana Alimentos S.A. |  |  | Manufacturing, distribution and sale of Pet Food products |  | Brazil |  | 50.00 |  | -
Hercosul International S.R.L. | (k) |  | Manufacturing, export, import and sale of feed and nutrients for animals |  | Paraguay |  | 1.00 |  | -
PP-BIO Administração de bem próprio S.A. | (i) |  | Management of assets |  | Brazil |  | - |  | 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 Chile S.A. |  |  | Import, export and commercialization of products |  | Chile |  | 60.00 |  | 60.00
Sadia International Ltd. | (l) |  | Import and commercialization of products |  | Cayman Island |  | - |  | 100.00
Sadia Uruguay S.A. |  |  | Import and commercialization of products |  | Uruguay |  | 100.00 |  | 100.00
Sadia Alimentos S.A. |  |  | Holding |  | Argentina |  | 56.90 |  | 56.90
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 |  | 0.01 |  | 0.01
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

| (1) | UAE – United Arab Emirates.

| (a) | Dormant subsidiaries. The Company is evaluating the liquidation of these subsidiaries.

| (b) | On January 18, 2021, 100% of the capital stock of Joody Al Sharqiya Food Production Factory LLC was acquired (note 1.2.1).

| (c) | On March 9, 2021, the minority stake on BRF AFC was acquired (note 1.1.1) and on December 27, 2021 its name was changed to BRF Kuwait WLL and the participation reduced to 49%. The Company has a shareholders’ agreement that ensures full economic rights on this entity.

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| (d) | On March 24, 2021, the subsidiary Perdigão International Ltd. was dissolved.

| (e) | On March 30, 2021, the subsidiary FFQ GmbH was dissolved.

| (f) | On May 4, 2021 the sale of shares held in Banvit Foods SRL was concluded (note 1.1.2).

| (g) | On May 31, 2021, BRF GmbH purchased additional 0.09% interest in BRF Food LLC from BRF Global GmbH.

| (h) | On May 31, 2021, BRF Global GmbH sold 0.09% interest in BRF Food LLC to BRF GmbH.

| (i) | On July 30, 2021, BRF S.A. sold all the shares held in PP-BIO Administração de bem próprio S.A.

| (j) | On August 02, 2021, BRF Pet S.A. acquired 100% of the capital stock of Gewinner Participações Ltda. (note 1.2.2).

| (k) | On August 02, 2021, BRF S.A. and BRF Pet S.A. acquired interest in Hercosul International S.R.L. (note 1.2.2).

| (l) | On August 19, 2021, the subsidiary Sadia International Ltd. was dissolved.

| (m) | On September 01, 2021, BRF Pet S.A. acquired 100% of the capital stock of Affinity Petcare Brasil Participações Ltda. and Paraguassu Participações S.A. (note 1.2.3).

| (n) | On October 21, 2021 the merger of BRF Austria GmbH into BRF GmbH was approved retroactively to January 01, 2021, as permitted by the Austrian law. The entities previously presented as investees of BRF Austria GmbH are currently presented as BRF GmbH’s investees.

| (o) | On December 13, 2021, the put option held by minority shareholders was terminated (note 1.1.3).

| (p) | For these entities, the Company has agreements that ensure full economic rights, except for AKF, in which the economic rights are of 99%.

Except for the associate PR-SAD, in which the Company recognizes the investments by the equity method, all other entities presented in the table above were consolidated.

| 1.1.1. | Acquisition of minority shareholding in BRF Kuwait WLL

On March 9, 2021 the Company, through its wholly-owned subsidiary One Foods Holdings Ltd. (“One Foods”) acquired from Al Yasra Food Company W.L.L their minority stake of 25% of BRF Kuwait WLL (previously named BRF Al Yasra Food K.S.C.C. or BRF AFC), entity located in Kuwait, responsible for the distribution of BRF products in the country.

The transaction was concluded for the amount equivalent to R$238,421 (USD40,828) and from this date, BRF Kuwait WLL became a wholly-owned subsidiary of One Foods. The amount paid is presented in the financing activities on the statement of cash flows and the difference between the amount paid and the book value of the participation acquired was recorded in Equity as Other Equity Transactions, in the amount of R$79,673.

| 1.1.2. | Sale of the shares held in Banvit Foods SRL

On May 4, 2021, Nutrinvestment BV and Banvit Bandirma Vitaminli, indirectly controlled subsidiaries of the Company, concluded the sale to Aaylex System Group S.A. of 100% of the shares held in Banvit Foods SRL, engaged in the activities of manufacture of animal feed and egg hatchery in Romania. The sale amount, received on that date, was equivalent to R$132,425 (EUR 20,300). In June, the parties established a price adjustment due to net debt and working capital, in the amount equivalent to R$13,059 (EUR2,157). In the year ended December 31, 2021, the Company recognized in the statement of income (loss) a gain with the sale of R$76,148, recorded under Other operating income (loss), net.

| 1.1.3. | Amendment to the shareholders’ agreement of TBQ Foods GmbH

On December 13, 2021, the Company, through its wholly-owned indirect subsidiaries BRF Foods GmbH and One Foods Holdings Ltd. has executed an amendment to the shareholders’ agreement with Qatar Holding LLC, a wholly-owned subsidiary of the Qatar Investment Authority (“QIA”). The amendment provides for new terms and conditions to the partnership between BRF and QIA in TBQ Foods GmbH (“TBQ”), a holding company held 60% by BRF and 40% by QIA, which holds 91.71% of the shares issued by Banvit Bandırma Vitaminli Yem Sanayi Anonim Şirketi (“Banvit”).

In the Amendment, BRF and QIA have agreed on the termination of the put option available to QIA under the original shareholders’ agreement. From 2023, QIA will have further alternatives to liquidate its investment in Banvit and BRF’s financial liability towards QIA has been terminated.

On this date, the financial liability related to the put option held by QIA, in the amount of R$315,319, was derecognized with the corresponding increase in the non-controlling interests in consolidated Equity, in the amount of R$294,661. The difference between the liability and the book value of the non-controlling interest on December 13, 2021, in the amount of R$20,658, was recognized under Other Equity Transactions, increasing the Equity attributable to controlling shareholders.

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1.2. Business combinations

| 1.2.1. | Joody Al Sharqiya Food Production Factory

On January 18, 2021, through its wholly-owned subsidiary Badi Limited ("Badi"), the Company concluded the acquisition of 100% of the capital stock of Joody Al Sharqiya Food Production Factory ("Joody Al"), a food processing company in Saudi Arabia. The fair value of the consideration transferred was equivalent to R$40,720 (SAR29,195) paid in cash and, from this date, Joody Al has become a wholly-owned subsidiary of Badi.

The goodwill of R$11,476 arising from the business combination consists mainly of the synergies expected with the combination of the operations of BRF and Joody Al, strengthening the Company’s presence in the Saudi Arabian market. The results and the goodwill from this business combination are presented in the International segment (note 25).

The fair value of the acquired assets and assumed liabilities in the business combination is presented below:

|  | Fair value at the acquisition date
Assets |  |
Cash and cash equivalents |  | 408
Inventories |  | 832
Property, plant and equipment |  | 30,128
Other current and non-current assets |  | 232
|  | 31,600
Liabilities |  |
Trade accounts payable |  | 1,420
Taxes payable |  | 550
Employee benefits |  | 286
Other current and non-current liabilities |  | 100
|  | 2,356
Net assets acquired |  | 29,244
Fair value of consideration transferred |  | 40,720
Goodwill |  | 11,476

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| 1.2.2. | Hercosul Group

On August 2, 2021 the Company concluded the acquisition of 100% of the capital stock of the companies that compose the Hercosul Group, after with the fulfillment of the conditions precedent. From this date, BRF Pet S.A. (“BRF Pet”) became owner of 100% of Gewinner Participações Ltda. and 99% of Hercosul International S.R.L. (“Hercosul International”) and BRF S.A. became owner of 1% of Hercosul International.

The fair value of the assets acquired and liabilities assumed in the business combination with Hercosul Group is presented below:

|  | Fair value at the acquisition date
|  | Gewinner Participações Consolidated |  | Hercosul International
Assets |  |  |  |
Cash and cash equivalents |  | 17,743 |  | 4,402
Trade and other receivables |  | 40,767 |  | 8,413
Inventories |  | 36,826 |  | 10,049
Recoverable taxes |  | 15,385 |  | 3,643
Property, plant and equipment |  | 70,796 |  | 72,035
Intangible assets |  | 393,308 |  | 3,656
Other current and non-current assets |  | 28,794 |  | 2,805
|  | 603,619 |  | 105,003
Liabilities |  |  |  |
Social and Labor Obligations |  | 6,445 |  | 200
Trade accounts payable |  | 66,597 |  | 8,582
Taxes payable |  | 14,879 |  | 200
Loans and borrowings |  | 65,892 |  | 30,268
Provision for tax, civil and labor risks (1) |  | 5,949 |  | -
Lease liability |  | 3,961 |  | 614
Deferred income taxes |  | 1,703 |  | -
Other current and non-current liabilities |  | 8,130 |  | 20,478
|  | 173,556 |  | 60,342
Net assets acquired |  | 430,063 |  | 44,661
Fair value of consideration transferred |  | 743,156 |  | 69,765
Goodwill |  | 313,093 |  | 25,104

| (1) | Includes R$5,038 related to contingent liabilities recognized in the business combination.

The fair value of the consideration transferred was of R$812,921, of which R$675,355 was paid in cash, R$119,180 will be paid in the next 4 years and R$18,386 refers to contingent consideration. The amount payable is subject to interest and was recorded as Other liabilities, with subsequent changes recorded as Financial expenses.

According to conditions established in the acquisition contract, which are common to transactions of this nature, the amount of the consideration may be adjusted based on the net debt and working capital of the Hercosul Group, for which the Company has used its best estimate at the disclosure date of these financial statements. There is no maximum amount defined for the price adjustment.

The recognized contingent consideration is linked to the gain, by the acquired entities, in administrative and legal proceedings existing on the acquisition date. In order to determine the fair value, the prognosis of the attorneys representing each case was considered, in addition to the business aspects determined in the acquisition contract. The payment of the contingent consideration will be made as the legal proceedings are terminated favorably to the Hercosul Group and it uses its economic benefits.

It is worth noting that these processes will be registered within the Hercosul Group when they meet the criteria for asset recognition.

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The measurement of assets acquired and liabilities assumed was completed up to the date of disclosure of these financial statements and the main assets and liabilities identified that received fair value allocations in the business combination were: property, plant and equipment, inventories, customer relationship, trademarks and contingent liabilities.

The contingent liability recognized at the amount of R$5,038, is related to legal proceedings classified as present obligations and for which the fair value was measured reliably, based on premises that include the metrics agreed in the share purchase agreement.

The goodwill consists mainly of the value of the synergies expected from the combination of the operations of BRF Pet, Mogiana Group (defined in the note 1.2.3) and Hercosul Group, reinforcing BRF's presence in the pet food sector. The results, intangible assets with indefinite useful life and goodwill arising from this business combination are presented in Other segments (note 25). The Company expects that the goodwill recorded will be deductible for tax purposes.

The Company incurred in expenses with advisors, lawyers and other related to the acquisition and integration of Hercosul Group in the amount of R$19,861 for the year ended December 31, 2021, which were recognized under Administrative expenses.

This business combination contributed net revenue of R$133,280 and net income of R$2,465 from the acquisition date to December 31, 2021 in the consolidated statement of income. If the business combination had taken place at the beginning of the year ended December 31, 2021, the consolidated net revenues for this year would have increased by R$198,168 and the consolidated income for the year would have increased by R$36,258.

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| 1.2.3. | Mogiana Group

On September 1, 2021, the Company, through its wholly-owned subsidiary BRF Pet concluded the acquisition of Paraguassu Participações S.A. ("Paraguassu") and Affinity Petcare Brasil Participações Ltda. ("Affinity"), both owner of 100% of the capital stock of Mogiana Alimentos S.A. (together form the “Mogiana Group”), after fulfillment of all conditions precedent. Therefore, from this date, Paraguassu and Affinity became wholly-owned subsidiaries of BRF Pet.

The fair value of the assets acquired and liabilities assumed in the business combination with Hercosul Group is presented below:

Mogiana Group Combined |  | Fair value at the acquisition date
Assets |  |
Cash and cash equivalents |  | 938
Marketable securities |  | 29,824
Trade and other receivables |  | 59,758
Inventories |  | 54,517
Recoverable taxes |  | 27,748
Property, plant and equipment |  | 139,042
Intangible assets |  | 206,553
Other current and non-current assets |  | 5,486
|  | 523,866
Liabilities |  |
Trade accounts payable |  | 55,919
Loans and borrowings |  | 22,688
Lease liability |  | 10,168
Taxes payable |  | 11,487
Payroll, related charges and employee profit sharing |  | 6,296
Provision for tax, civil and labor risks (1) |  | 34,976
Employee benefits |  | 2,081
Deferred income taxes |  | 815
Other current and non-current liabilities |  | 16,932
|  | 161,362
Net assets acquired |  | 362,504
Fair value of consideration transferred |  | 481,435
Goodwill |  | 118,931

| (1) | Includes R$28,853 related to contingent liabilities recognized in the business combination.

The fair value of the consideration transferred was of R$481,435 of which R$290,225 was paid in cash, R$145,548 will be paid in the next 6 years and R$45,662 refers to contingent consideration. The amount payable is subject to interest and was recorded as Other liabilities, with subsequent changes recorded as Financial expenses. In addition, from the term value, R$60,000 will be deposited in an escrow account (restricted cash) after the first anniversary of the acquisition, as a guarantee for BRF Pet in case of eventual indemnities provided for in the acquisition contract.

According to conditions established in the acquisition contract, which are common to transactions of this nature, the amount of the consideration may be adjusted based on the net debt and working capital of Mogiana Alimentos S.A. and for which the Company has used its best estimate at the disclosure date of these financial statements. There is no maximum amount defined for the price adjustment.

The recognized contingent consideration is linked to the gain, by the acquired entities, in administrative and legal proceedings existing on the acquisition date. In order to determine the fair value, the prognosis of the

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attorneys representing each case was considered, in addition to the business aspects determined in the purchase and sale agreement. The payment of the contingent consideration will be made as the legal proceedings are won by the Mogiana Group and it uses its economic benefits. In the year ended December 31, 2021, R$2,830 were paid in relation to the contingent consideration.

It is worth noting that these processes will be registered within the Mogiana Group when they meet the criteria for asset recognition.

The measurement of assets acquired and liabilities assumed was completed up to the date of disclosure of these financial statements and the main assets and liabilities identified that received fair value allocation in the business combination were: property, plant and equipment, inventories, customer relationship, trademarks, contingent liabilities and taxes payable (recognized under Other Non-current Liabilities).

The contingent liability recognized at the amount of R$28,853, is related to legal proceedings classified as present obligations and for which the fair value was measured reliably, based on premises that include the metrics agreed in the share purchase agreement.

The goodwill consists mainly of the value of the synergies expected from the combination of the operations of BRF Pet, Mogiana Group and Hercosul Group, reinforcing BRF's presence in the pet food sector. The results, intangible assets with indefinite useful life and goodwill arising from this business combination are presented in Other segments (note 25). The Company expects that the goodwill recorded will be deductible for tax purposes.

The Company incurred in expenses with advisors, lawyers and other related to the acquisition and integration of Mogiana in the amount of R$9,526 for the year ended December 31, 2021, which were recognized under Administrative expenses.

This business combination contributed net revenue of R$173,909 and net income of R$12,873 from the acquisition date to December 31, 2021 in the consolidated statement of income. If the business combination had taken place at the beginning of year ended December 31, 2021, the consolidated net revenues for this period would have increased by R$329,418 and the consolidated net income for the year would be increased by R$27,955.

| 1.2.4. | Effects of the business combinations as though the acquisition date had been as of the beginning of the year

If the business combinations had occurred at the beginning of the year ended December 31, 2021, the consolidated net sales for the year would be R$48,870,891 and the consolidated net profit for the year would be R$429,081.

1.3. Discontinued Operations

In the year ended December 31, 2021, the Company completed the price adjustment processes related to sale of Campo Austral S.A. and Avex S.A. The referred price adjustments totaled an expense of R$59,270 (R$47,802 net of taxes) and are presented in Net Loss from Discontinued Operations, consistently with the practice adopted in the sale of the operations in 2019.

On December 21, 2021, the Company entered into an agreement with Marfrig Global Foods S.A. (“Marfrig”) and MFG Holding S.A.U. in order to settle indemnities related to the sale of the previously controlled entity Quickfood S.A. to Marfrig, concluded on January 2, 2019. This transaction resulted in an expense of R$48,768 (R$32,128 net of income taxes), which is presented under Net Loss from Discontinued Operations, consistently with the practice adopted in the sale of operations in 2019.

1.4. Partnership – self-generation of energy

| 1.4.1. | Partnership with AES

On August 16, 2021, the Company executed an investment agreement with a subsidiary of AES Brasil Energia S.A. to incorporate a joint venture for the construction of a wind energy park for self-generation in the wind farm complex of Cajuína, Rio Grande do Norte, with an installed capacity of 160MWm (average Megawatt), generating 80MWm to be supplied to the Company by means of a 15-year power purchase agreement.

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The closing of this partnership is subject to approval of the competent authorities and the verification of other usual conditions in operations of this nature. The operation of the park is scheduled to begin by 2024.

| 1.4.2. | Partnership with PontoOn

On September 16, 2021, the Company together with Intrepid Participações S.A. (“Intrepid”) entered into a 15-year renewable energy power purchase agreement together with a call option agreement, which provides for the entry of BRF, through a holding company jointly held with Intrepid, aiming the construction of a sun energy self-generation plant in Mauriti and Milagres, Ceará, with an installed capacity of 320MWp (Megawatt-peak) generating, on average, 80MWm.

The call option agreement provides BRF with the right to acquire participation in Intrepid for a fixed price. Should BRF exercise the option, the Company will directly invest the approximate amount of R$50 million, to be disbursed during the Project’s development. The operation of the complex is scheduled to begin by 2024.

1.5. Investigations involving BRF

| 1.5.1. | Carne Fraca and Trapaça operations

The Company has been subject to two investigations conducted by Brazilian governmental entities, denominated “Carne Fraca Operation” in 2017 and “Trapaça Operation” in 2018. 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.

The main impacts observed as result of the referred investigations were recorded in Other Operating Expenses in the amount of R$9,003 for the year ended December 31, 2021 (R$28,004 for the year ended December 31, 2020) mostly related to expenditures with lawyers, legal advisors and consultants.

In addition to the impacts already recorded, there are uncertainties about the outcome of these investigations 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.

Regarding the investigations conducted by regulators offices and governmental entities in the United States of America about these operations, on February 25, 2021, the Division of Enforcement of the U.S. Securities and Exchange Commission (“SEC”) issued a letter to the Company stating that it has concluded its investigation and, based on information to date, does not intend to recommend an enforcement action by the SEC against the Company. On May 5, 2021, the U.S. Department of Justice (“DOJ”) issued a letter stating that it has closed its investigation against BRF, based on information to date. No sanctions or penalties were imposed against the Company.

| 1.5.2. | Governance enhancement

The Company has taken actions to strengthen the compliance with its policies, procedures and internal controls.

Among the actions implemented, are: (i) strengthening in the risk management, specially compliance, (ii) continuous improvement 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.

1.6. Coronavirus (COVID-19)

On January 31, 2020 the World Health Organization announced that the COVID-19 is a global health emergency and on March 11, 2020 declared it a global pandemic. The outbreak has triggered significant decisions from governments and private sector entities, which in addition to the potential impact, increased the uncertainty level for the economic agents and may cause effects in the amounts recognized in the financial statements.

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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 these financial statements, there has been no relevant change in its production plan, operation and/or commercialization. Additionally, management has developed and implemented contingency plans to maintain the operations and monitors the effects of the pandemic through a permanent multidisciplinary monitoring committee, formed by executives, specialists in the public health area and consultants.

Due to the pandemic, the Company has incurred in direct expenditures, such as transportation, personnel, prevention, control and donations, which are presented in the statement of income (loss) within the following line items:

|  |  |  | Consolidated
|  | 12.31.21 |  | 12.31.20
Cost of sales (1) |  | (185,994) |  | (356,960)
Selling expenses |  | (18,234) |  | (56,307)
General and administrative expenses |  | (84,623) |  | (86,032)
|  | (288,851) |  | (499,299)

| (1) | In the year ended December 31, 2020, includes non-incremental expenditures related do idleness in the amount of R$55,926.

As described in note 14.1 no impairment was recognized to the cash generating units. Due to the high volatility and uncertainty around the length and the impact of the pandemic, the Company will continue to monitor the situation and evaluate the impacts on assumptions and estimates used in preparing our financial reporting.

| 2. | BASIS OF PREPARATION AND PRESENTATION OF FINANCIAL STATEMENTS

The parent company’s and consolidated financial statements were prepared in accordance with the accounting practices adopted in Brazil and with international financial reporting standards (“IFRS”), issued by International Accounting Standards Board (“IASB”). All the relevant information applicable to the financial statements, and only them, are being evidenced and correspond to those used by administration in its management.

The parent company’s and consolidated financial statements are expressed in thousands of Brazilian Reais (“R$”), unless otherwise stated. For disclosures of amounts in other currencies, the values were also expressed in thousands, unless otherwise stated.

The preparation of the parent company’s and consolidated financial statements 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 financial statements 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 instances where 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.

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| 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1. Changes in accounting practices

In the year ended December 31, 2021, the Company changed the classification of payment of interest in the statement of cash flows, reclassifying this item from Operating Activities to Financing Activities. This change was made for better presentation of the Company’s cash flows and convergence with the reports used by the Administration in its management.

To ensure comparability between the years presented, the Company performed the following reclassifications for the year ended December 31, 2020:

|  |  |  |  |  |  |  |  |  | 12.31.20
|  |  |  |  |  | Parent company |  |  |  |  |  | Consolidated
|  | Previously presented |  | Reclassification |  | Restated |  | Previously presented |  | Reclassification |  | Restated
Net cash provided by operating activities |  | 4,309,759 |  | 1,260,768 |  | 5,570,527 |  | 4,417,630 |  | 1,421,539 |  | 5,839,169
Net cash used in investing activities |  | (1,360,555) |  | - |  | (1,360,555) |  | (1,430,989) |  | - |  | (1,430,989)
Net cash provided by (used in) financing activities |  | (740,447) |  | (1,260,768) |  | (2,001,215) |  | (587,042) |  | (1,421,539) |  | (2,008,581)
Effect of exchange rate variation on cash and cash equivalents |  | 298,402 |  | - |  | 298,402 |  | 939,241 |  | - |  | 939,241
Net increase in cash and cash equivalents |  | 2,507,159 |  | - |  | 2,507,159 |  | 3,338,840 |  | - |  | 3,338,840

In order to improve the level of detail in the presentation of information in the financial statements, in the year ended December 31, 2021, the Company began to classify the expenses with employee participation and bonuses by function in the statement of income (loss). To ensure comparability between the years presented, the comparative balances were restated as below:

|  |  |  |  |  |  |  |  |  |  |  | 12.31.20
|  |  |  |  |  | Parent company |  |  |  |  |  | Consolidated
|  | Previously presented |  | Reclassification |  | Restated |  | Previously presented |  | Reclassification |  | Restated |  | Corresponding Notes
Cost of sales |  | (26,227,283) |  | (120,341) |  | (26,347,624) |  | (29,998,822) |  | (134,947) |  | (30,133,769) |  | 29
Operating Income (Expenses) |  |  |  |  |  |  |  |  |  |  |  |  |  |
Selling expenses |  | (4,405,558) |  | (66,406) |  | (4,471,964) |  | (5,587,488) |  | (85,542) |  | (5,673,030) |  | 29
General and administrative expenses |  | (507,540) |  | (48,448) |  | (555,988) |  | (770,282) |  | (62,576) |  | (832,858) |  | 29
Other operating income (expenses), net |  | (185,186) |  | 235,195 |  | 50,009 |  | (254,178) |  | 283,065 |  | 28,887 |  | 27

3.2. Consolidation

The consolidated financial statements include BRF and the subsidiaries (note 1.1) of which BRF has direct or indirect control, obtained when the Company is exposed to or has right to variable returns of such subsidiaries and has the power to influence these returns.

The financial information of the subsidiaries was prepared using the same accounting policies of the Parent Company.

All transactions and balances between BRF and its subsidiaries have been eliminated upon consolidation, as well as the unrealized profits or losses arising from these transactions, net of taxes. Non-controlling interests are presented separately.

3.3. Accounting judgments, estimates and assumptions

The Management made the following judgments which have a material impact on the amounts recognized in the financial statements:

Main judgments:

| » | control, significant influence and consolidation (note 1.1);

| » | share-based payment transactions (note 19);

| » | transfer of control for revenue recognition (note 26);

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| » | probability of exercise of a renewal option or anticipated termination of the lease agreements (note 18).

Main estimates:

| » | fair value of financial instruments (note 24);

| » | annual assessment of impairment of non-financial assets (note 14);

| » | expected credit losses (note 6);

| » | write-down of inventories to net realizable value (note 7);

| » | fair value of biological assets (note 8);

| » | assessment of recoverability of taxes (note 9 and 10);

| » | useful lives of property, plant, equipment and intangible assets with definite useful life (note 13 and 14);

| » | employee benefits (note 20);

| » | provision for tax, civil and labor risks (note 21);

| » | Fair value of assets acquired and liabilities assumed in business combinations (note 1.2).

The Company reviews the estimates and underlying assumptions used in its accounting estimates in each reporting period. Revisions to accounting estimates are recognized in the period in which the estimates are revised.

3.4. Functional currency and foreign currency transactions

The financial statements of each subsidiary included in consolidation are prepared using the currency of the main economic environment where it operates.

The financial statements of foreign subsidiaries with functional currency different from Reais are translated into Brazilian Reais, under the following criteria:

| » | assets and liabilities are translated at the closing exchange rate;

| » | income and expenses are translated at the monthly average rate;

| » | the cumulative effects of gains or losses upon translation are recognized in Other Comprehensive Income, within equity.

Goodwill arising from business combinations with foreign entities is expressed in the functional currency of that entity and translated by the closing exchange rate for the reporting currency of the acquirer, with the exchange variation effects recognized in Other Comprehensive Income.

The transactions in foreign currency follow the criteria below:

| » | non-monetary assets and liabilities, as well as incomes and expenses, are translated at the historical rate of the transaction;

| » | monetary assets and liabilities are translated at the closing exchange rate;

| » | the cumulative effects of gains or losses upon translation of monetary assets and liabilities are recognized in the statements of income (loss).

3.5. Hyperinflationary economies

The Company has subsidiaries in Argentina, which is considered a hyperinflationary economy. For these subsidiaries the accounting policies below are adopted:

Non-monetary items, as well as income and expenses, are adjusted by the changes in the inflation index between the initial recognition and the closing date, so that the balances are stated at current value.

The translation of the balances of the subsidiaries with a hyperinflationary economy to the reporting currency were made at the closing rate of the reporting period for both financial position and income statement balances.

The inflation rates used in 2021 and 2020 were, respectively, 51.65% and 34.04%.

3.6. Business combination

Business combinations are recorded according to the acquisition method, which determines that the cost of an acquisition is measured by the sum of the consideration transferred, assessed based on the fair value on the

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acquisition date, and the value of any non-controlling interest in the acquired company. The Company measures the non-controlling interest based on its participation in the net assets identified in the acquired company. Costs directly attributable to the acquisition are recorded as expense when incurred.

Business combinations with related parties are recognized using the acquisition method when the agreements have a substance and at cost when no substance is observed in the transaction.

In the acquisition of a business, Management assesses the acquired assets and liabilities assumed in order to classify and allocate them in accordance with the contractual terms, economic circumstances and relevant conditions on the acquisition date.

Initially, goodwill is measured as the excess of the consideration transferred over the fair value of the net assets acquired (identifiable assets and liabilities assumed, net).

After the initial recognition, goodwill is measured at cost less any accumulated impairment losses. For purposes of testing the recoverable amount, goodwill is allocated to each of the cash-generating units that will benefit from the acquisition.

3.7. Inventories

Inventories are measured at the lower of the average cost of acquisition or production of finished products and the net realizable value. The cost of finished products includes purchased raw materials, labor, production costs, transportation and storage, which are related to all the processes necessary for bringing the products to sales conditions. Write-down to net realizable value due to obsolescence, impaired items, slow-moving and realizable value through sale are evaluated and recorded in each reporting period, as appropriate. Normal production losses are included in the production cost for the respective month, while abnormal losses, if any, are expensed in Cost of sales without movement through inventories.

3.8. Biological assets

The consumable and production biological assets (live animals) and forests are measured at their fair value, using the cost approach technique to live animals and the revenue approach for forests. In determining the fair value of live animals, all losses inherent to the breeding process are already considered.

3.9. Income taxes

In Brazil, it comprises income tax (“IRPJ“) and social contribution on profit (“CSLL“), which are calculated monthly based on taxable profit, after offsetting tax losses and negative social contribution base, limited to 30% of the taxable income, applying the rate of 15% plus an additional 10% for the IRPJ and 9% for the CSLL.

The results obtained from foreign subsidiaries are subject to taxation by the countries where they are based, according to applicable rates and legislation. In Brazil, these results suffer the effects of taxation on universal basis established by the Law No. 12,973 / 14. The Company analyzes the results of each subsidiary for the application of its Income Tax legislation, in order to respect the treaties signed by Brazil and avoid double taxation.

Deferred taxes represent credits and debits on unused tax losses carried forward and negative CSLL base, as well as temporary differences between the tax and accounting bases. Deferred income tax assets and liabilities are classified as non-current. When the Company’s internal studies indicate that the future use of these credits over a 10-year horizon is not probable, the asset is derecognized (note 10.3).

Deferred tax assets and liabilities are presented net if there is enforceable legal right to be offset, and if they are under the responsibility of the same tax authority and under the same taxable entity.

Deferred tax assets and liabilities must be measured at the rates applicable in the period in which the asset is realized or the liability is settled, based on the rates (and tax legislation) that are in force on the financial position date.

In compliance with the interpretation ICPC 22 / IFRIC 23, the Company analyzed relevant tax decisions of higher courts and whether they conflict in any way with the positions adopted by the Company. Regarding the known uncertain tax positions, the Company reviewed the corresponding legal opinions and jurisprudence and did not

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identify impacts to be recorded, since it concluded that the tax authorities are not likely to reject the positions adopted.

The Company periodically evaluates the positions assumed in which there are uncertainties about the adopted tax treatment and will set up a provision when applicable.

3.10. Assets held for sale and discontinued operations

Assets held for sale are measured at the lower of the book value and the fair value less selling costs and are not depreciated or amortized. Such items are only classified under this item when its sale is highly probable and they are available for immediate sale in their current conditions.

Losses due to impairment are recorded under Other operating expenses.

The statement of income and cash flows are classified as discontinued operations and presented separately from continued operations of the Company when the operation represents a separate major line of business or geographical area of operations.

The prior periods of the statement of income (loss) and of the statement of cash flows are restated for comparative purposes. The statement of financial position remains as disclosed in prior periods.

3.11. Investments

Investments classified in this group are: i) in associated companies, that are entities over which the Company has significant influence, which is the power to participate in decisions on the investee’s financial and operational policies, but without individual or joint control of these policies; and ii) in joint ventures, in which the control of the business is shared through contractual agreement and decisions about the relevant activities require the unanimous consent of the parties.

Investments are initially recognized at cost and subsequently adjusted using the equity method.

3.12. Property, plant and equipment

Property, plant and equipment are measured by the cost of acquisition, formation, construction or dismantling, less accumulated depreciation. Loans and borrowings costs are recorded as part of the costs of property, plant and equipment in progress, considering the weighted average rate of loans and borrowings effective on the capitalization date.

Depreciation is recognized based on the estimated economic useful life of each asset using the straight-line method. The estimated useful life, residual values and depreciation methods are reviewed annually and the effects of any changes in estimates are accounted for prospectively. Land is not depreciated.

The Company annually performs an impairment analysis for its cash-generating units, which include the balances of property, plant and equipment (note 13).

Gains and losses on disposal of property, plant and equipment are determined by comparing the sale value with the residual book value and are recognized in the statement of income on the date of sale under Other operating income (expense).

3.13. Intangible assets

Acquired intangible assets are measured at cost at initial recognition, while those arising from a business combination are recognized at fair value on the acquisition date. After initial recognition, are presented at cost less accumulated amortization and impairment losses, when applicable. Internally generated intangible assets, excluding development costs, are not capitalized and the expense is recognized in the income statement when incurred.

Intangible assets with definite useful lives are amortized on a straight-line basis over their economic useful lives. The amortization period and method for an intangible asset with definite life are reviewed at least at the end of each year, and any changes observed are applied prospectively. The amortization of intangible assets with finite lives is recognized in the income statement in the expense category related to their use.

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Intangible assets with indefinite useful lives are not amortized, but are tested annually for impairment, being allocated to the cash-generating units (note 14). The Company records in this subgroup mainly goodwill and brands, which are expected to contribute indefinitely to its cash flows.

3.14. Contingent assets

Contingent assets are possible assets to which existence needs to be confirmed by the occurrence or not of one or more uncertain future events. The Company does not record contingent assets, however when the inflow of economic benefits is more likely than not to occur, the contingent assets are disclosed.

3.15. Leasing

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company assesses whether:

| » | the contract involves the use of an identified asset, which may be explicit or implicit, and may be physically distinct or represent substantially the entire capacity of a physically distinct asset. If the supplier has a substantial right to replace the asset, then the asset is not identified;

| » | the Company has the right to obtain substantially all the economic benefits from using the asset throughout the period of use; and

| » | the Company has the right to direct the use of the asset throughout the period of use, which occurs in either of the following situations:

| o | the Company has the right to direct how and for what purpose the asset is used, or

| o | the conditions are predetermined so as the Company has the right to operate the asset or has designed the asset in a way that predetermined how and for what purpose it will be used.

At the beginning of the contract, the Company recognizes a right-of-use asset and a lease liability, which represents the obligation to make payments related to the underlying asset of the lease.

The right-of-use asset is initially measured at cost and comprises: the initial measurement of the lease liability adjusted for any payment made at or before the commencement date, less any incentive received; any initial direct costs incurred; and an estimate of costs in dismantling and removing the asset, restoring the site on which it is located or restoring the asset to the condition required by the terms of the lease. Renewal or early termination options are analyzed individually considering the type of asset involved as well as its relevance in the Company’s production process.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date until the end of the useful life of the right-of-use asset or until the end of the period of the lease. The estimated useful life of the right-of-use asset is determined on the same methodology used for the assets owned by the Company (note 3.12). Additionally, the right-of-use asset is adjusted by the subsequent measurement of the lease liability and when applicable, an impairment is recognized.

The lease liability is initially measured at the present value of the future lease payments using the incremental borrowing rate, and subsequently, measured at amortized cost using the effective interest method.

The liability is remeasured when there is a change in (i) future payments resulting from a change in index or rate, (ii) the amount expected to be payable under a residual value guarantee, or (iii) the assessment of whether the Company will exercise the purchase, renewal or termination option.

When the lease liability is remeasured, the corresponding adjustment is recorded in the book value of the right-of-use asset, or in the statement of income if the book value of the right-of-use asset has been reduced to zero.

The Company does not apply lease accounting model to: leases with a term of 12 months or less and that do not contain a purchase option; and leases for which the underlying asset is of low value. For these exemptions, the lease payments are recognized as an expense on a straight-line basis over the lease term.

Additionally, contracts with indefinite term and no fixed payments are expensed as incurred.

3.16. Share based payments

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The Company offers to its executives stock option plans and restricted stock plans of its own issuance. The Company recognizes as expense the fair value of the options or shares, measured at the grant date, on a straight-line basis during the period of service required by the plan, with a corresponding entry: to the shareholders’ equity for plans exercisable in shares; and to liabilities for cash exercisable plans. The accumulated expense recognized reflects the vesting period and the Company’s best estimate of the number of shares to be delivered.

The expense of the plans is recognized in the statement of income (loss) in accordance with the function performed by the beneficiary.

3.17. Pension and other post-employment plans

The Company sponsors supplementary defined benefit and defined contribution pension plans, as well as other post-employment benefits for which an actuarial appraisal is annually prepared by an independent actuary and is reviewed by Management. The cost of defined benefits is established separately for each plan using the projected unit credit method.

The measurements comprise the actuarial gains and losses, the effect of the limit on contributions and returns on the plan assets and are recognized in the financial position against Other Comprehensive Income when incurred, except Award for Length of Service, which its recognition occurs against statement of income. These measurements are not reclassified to statement of income in subsequent periods.

The Company recognizes the net defined benefit asset when:

| » | controls the resource and has the ability to use the surplus to generate future benefits;

| » | the control is the result of past events;

| » | future economic benefits are available for the Company in the form of a reduction in future contributions or cash refunds, either directly to the sponsor or indirectly to another loss-making fund. The effect of the asset limit (irrecoverable surplus) is the present value of these future benefits.

Past service costs are recognized in income for the year on the following dates, whichever comes first:

| » | date of changing the plan or significantly reducing the expected length of service;

| » | date in which the Company recognizes the costs related to restructuring.

The cost of services and net interest on the value of the defined benefit liability or asset are recognized in the expense categories related to the function the beneficiary performs and to the financial result, respectively.

3.18. Employee and management profit sharing

Employees are entitled to profit sharing based on certain targets agreed upon on an annual basis, whereas directors are entitled to profit sharing based on the provisions of the bylaws, proposed by the Board of Directors and approved by the shareholders. The profit-sharing amount expected to be paid is recognized by function in the statement of income (loss).

3.19. Provision for tax, civil and labor risks and contingent liabilities

The provisions are recognized when the Company has a present obligation, formalized or not, as a result of a past event, the outflow of resources to settle the obligation is likely to occur and a reliable estimate can be made.

The Company is involved in several legal and administrative procedures, mainly in Brazil. Assessments of the likelihood of loss in these lawsuits include an analysis of the available evidences, the hierarchy of laws, the available jurisprudence, the most recent court decisions and their relevance in the legal system, as well as the assessment of outside lawyers. Provisions are reviewed and adjusted to reflect changes in circumstances, such as the applicable limitation period, conclusions of tax inspections or additional exposures identified based on new matters or court decisions.

In cases where there are a large number of lawsuits and the amounts are not individually relevant, the Company use historical studies to determine the probability and amounts of losses.

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Contingent liabilities from business combinations are recognized if they arise from a present obligation that arose from past events and if their fair value can be measured reliably. The initial measurement is done by the fair value and subsequent measurements by the higher value between: the fair value on its acquisition date; and the amount by which the provision would be recognized.

3.20. Financial instruments

Financial instruments are contracts that give rise to a financial asset for one entity and a financial liability or equity instrument for another. Their presentation in the statement of financial position and explanatory notes takes place according to the characteristics of each contract.

| 3.20.1. | Financial assets

Financial assets are recognized when the entity becomes party to the contractual provisions of the instrument and classified based on the characteristics of its cash flows and on the management model for the asset. The table below shows financial assets are classified and measured:

Category |  | Initial Measurement |  | Subsequent Measurement
Amortized Cost |  | Accounts receivable from Clients and other receivables: billed amount adjusted to present value and, when applicable, reduced by expected credit losses For other assets: Fair value less costs directly attributable to its issuance, reduced by expected credit losses |  | Interest, changes in amortized cost and expected credit losses recognized in the income statement.
Fair Value through Profit and Loss (“FVTPL”) |  | Fair Value |  | Variation on the fair value recognized in the income statement.
Fair Value through Other Comprehensive Income (“FVTOCI”). |  | Fair value less costs directly attributable to its issuance. |  | Changes in fair value recognized in other comprehensive income. Upon settlement or transfer, accumulated gains or losses are directly reclassified to Retained earnings or accumulated losses. For debt instruments, expected credit losses are recognized directly in the statement of income.

The Company evaluates expected credit losses in each reporting period for instruments measured at amortized cost and for debt instruments measured at Fair Value through Other Comprehensive Income. Losses and reversals of losses are recorded in the income statement.

The interests of financial assets are recorded on Financial Income (Expenses), net.

A financial asset is only derecognized when contractual rights expire or are effectively transferred.

Cash and cash equivalents: comprise the balances of cash, banks and securities of immediate liquidity whose maturities, at the time of acquisition, are equal to or less than 90 days, readily convertible into a known amount of cash and which are subject to an insignificant risk of change in value. Securities classified in this group, by their very nature, are measured at fair value through profit or loss.

Expected credit losses in Accounts receivable from customers and other receivables: the Company regularly assesses the historical losses on the customer portfolios it has in each region, taking in consideration the dynamics of the markets in which it operates and instruments it has for reducing credit risks, such as: letters of credit, insurance and collateral, as well as identifying specific customers whose risks are significantly different than the portfolio, which are treated according to individual expectations.

Based on these assessments, estimated loss factors are generated by portfolio and aging class, which, applied to the amounts of accounts receivable, generate the expected credit losses. Additionally, the Company evaluates macroeconomic factors that may influence these losses and, if necessary, adjusts the calculation model.

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Securities receivable with legal proceedings in place are reclassified to noncurrent as well as the related estimated credit losses. The securities are written off against the estimated loss when the Management considers that they are no longer recoverable after taking all appropriate actions to collect them.

| 3.20.2. | Financial liabilities

Financial liabilities are recognized when the entity becomes party to the contractual provisions of the instrument. The initial measurement is at fair value and subsequently at amortized cost using the effective interest rate method. The interests of financial liabilities are recorded on Financial Income (Expenses), net.

A financial liability is only derecognized when the contractual obligation expires, is settled or canceled.

| 3.20.3. | Adjustment to present value

The Company measures the adjustment to present value on short and long-term balances of accounts receivable, suppliers and other obligations, being recognized as a deduction in the asset accounts against the financial result. The Company adopts the weighted average cost of capital to determine the adjustment to present value of the mentioned assets and liabilities, which corresponds to 9.3% per year on December 31, 2021 (9.8% p.a. on December 31, 2020).

| 3.20.4. | Hedge accounting

Cash flow hedge: the effective portion of the gain or loss on the hedge instrument is recognized under Other Comprehensive Income and the ineffective portion in the Financial result. Accumulated gains and losses are reclassified to the Income statement or statement of financial position when the hedge object is recognized, adjusting the item in which the hedge object was accounted for.

When the instrument is designated in a cash flow hedge relationship, changes in the fair value of the future element of the forward contracts and the time value of the options are recognized under Other Comprehensive Income. When the instrument is settled, these hedge costs are reclassified to the income statement together with the intrinsic value of the instruments.

A hedging relationship is discontinued prospectively when it no longer meets the criteria for qualifying as hedge accounting. Upon discontinuation of a cash flow hedge relationship in which the hedged future cash flows are still expected to occur, the accumulated amount remains under Other Comprehensive Income until the flows occur and are reclassified to income.

Fair value hedge: the effective portion of the hedge instrument’s gain or loss is recognized in the Income Statement or statement of financial position, adjusting the item under which the hedge object is or will be recognized. The hedge object, when designated in this relationship, is also measured at fair value.

Net investment hedge: the effective result of the exchange variation of the instrument is recorded under Other Comprehensive Income, in the same item in which the accumulated translation adjustments of the investments (hedge objects) are recognized. Only when the hedged investments are sold, the accumulated amount is reclassified to the income statement, adjusting the gain or loss on the sale.

| 3.20.5. | Reference interest rate reform

The Company does not have relationship designated for hedge accounting that involve operations indexed to the reference interest rates object from reform. Additionally, existing liabilities indexed to the reference interest rates (Libor) have contractual arrangements foreseeing the replacement for similar rates. Thus, no relevant impact is expected for the Company if such interest rates cease to exist or are replaced.

3.21. Segment information

An operating segment is a component of the Company that develops business activities to obtain revenues and incur expenses. The operating segments reflect the way in which the Company’s management reviews the financial information for decision making. The Company’s management identified the operating segments, which meet the quantitative and qualitative parameters of disclosure, pursuant its current management model (note 25).

3.22. Revenue from contracts with customers

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Sales revenues are recognized and measured observing the following steps: (i) identification of the contracts with customers, formalized through sales orders; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) revenue recognition as it satisfies the performance obligations.

Revenues are recognized by the amount that reflects the Company’s expectation to receive for the sale of products, net of applicable taxes, returns, rebates and discounts.

The sales process begins with sales orders. The discounts and rebates may be negotiated on a spot basis or may have its conditions formally defined in the agreements, generally signed with large retail and wholesale chains. In all cases, the performance condition is satisfied when the control of the goods is transferred to the client.

The Company has sales with immediate and deferred payments, for which the adjustment to present value is recognized for the financial component (note 3.20.3).

3.23. Government grants

Government grants are recognized at fair value when there is reasonable assurance that the conditions established will be met and the benefit will be received. The amounts appropriated as revenue in the income statement, when used to reduce income taxes, are transferred from retained earnings to the tax incentive reserve in the years the Company presents profit higher than the reclassification.

3.24. Statement of value added

The company prepared the individual and consolidated statements of added value (“DVA”) under the technical pronouncement CPC 09 – Statement of Value Added, which are presented as part of the financial statements in accordance with practices adopted in Brazil. For IFRS, it represents supplemental financial information.

3.25. 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 year.

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 year 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 within the share-based payment plans).

The stock options shall only be considered dilutive when the strike price is lower than the current share price.

3.26. Standards issued but not yet effective

The new and amended standards, which are effective for annual reporting periods beginning after December 31, 2021, are not expected to have a significant impact on the Company’s financial statements.

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| 4. | CASH AND CASH EQUIVALENTS

| Average rate (1) |  | Parent company |  | Consolidated
|  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Cash and bank accounts |  |  |  |  |  |  |  |  |
U.S. Dollar | - |  | 558 |  | 520 |  | 946,790 |  | 1,185,208
Saudi Riyal | - |  | - |  | - |  | 312,728 |  | 250,879
Brazilian Reais | - |  | 160,309 |  | 111,615 |  | 185,941 |  | 112,181
Euro | - |  | 1,438 |  | 6,144 |  | 103,630 |  | 54,687
Turkish lira | - |  | - |  | - |  | 42,899 |  | 347,740
Other currencies | - |  | 140 |  | 28 |  | 601,520 |  | 488,377
|  |  | 162,445 |  | 118,307 |  | 2,193,508 |  | 2,439,072
Cash equivalents |  |  |  |  |  |  |  |  |
In Brazilian Reais |  |  |  |  |  |  |  |  |
Investment funds | 4.97% |  | 3,641 |  | 4,684 |  | 3,641 |  | 4,684
Bank deposit certificates | 8.53% |  | 4,410,146 |  | 3,650,812 |  | 4,451,214 |  | 3,662,448
|  |  | 4,413,787 |  | 3,655,496 |  | 4,454,855 |  | 3,667,132
In U.S. Dollar |  |  |  |  |  |  |  |  |
Term deposit | - |  | - |  | - |  | 62,043 |  | 198,878
Overnight | 0.15% |  | 57,584 |  | 102,336 |  | 701,386 |  | 1,220,232
Other currencies |  |  |  |  |  |  |  |  |
Term deposit | - |  | - |  | - |  | 117,028 |  | 51,311
|  |  | 57,584 |  | 102,336 |  | 880,457 |  | 1,470,421
|  |  | 4,633,816 |  | 3,876,139 |  | 7,528,820 |  | 7,576,625

| (1) | Weighted average annual rate.

| 5. | MARKETABLE SECURITIES

|  |  |  |  | Average rate (2) |  | Parent company |  | Consolidated
| WAM (1) |  | Currency |  |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Fair value through other comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |
Stocks (3) | - |  | USD / HKD |  | - |  | - |  | - |  | 13,338 |  | 42,029
Fair value through profit and loss |  |  |  |  |  |  |  |  |  |  |  |  |
Financial treasury bills | 2.79 |  | R$ |  | 9.15% |  | 324,771 |  | 312,515 |  | 324,771 |  | 312,515
Investment funds - FIDC BRF | 1.96 |  | R$ |  | - |  | 15,438 |  | 15,044 |  | 15,438 |  | 15,044
Other | 0.55 |  | R$ / ARS |  | - |  | - |  | - |  | 22,084 |  | 1,643
|  |  |  |  |  |  | 340,209 |  | 327,559 |  | 362,293 |  | 329,202
Amortized cost |  |  |  |  |  |  |  |  |  |  |  |  |
Sovereign bonds and other (4) | 1.33 |  | AOA |  | 3.99% |  | - |  | - |  | 418,637 |  | 287,504
|  |  |  |  |  |  | 340,209 |  | 327,559 |  | 794,268 |  | 658,735
Current |  |  |  |  |  |  | 324,771 |  | 312,515 |  | 346,855 |  | 314,158
Non-current (5) |  |  |  |  |  |  | 15,438 |  | 15,044 |  | 447,413 |  | 344,577

| (1) | Weighted average maturity in years.

| (2) | Weighted average annual rate.

| (3) | It’s comprised of Aleph Farms Ltd. stocks on December 31, 2021 and Cofco Meats stocks on December 31, 2020.

| (4) | It’s comprised of private securities and sovereign securities of the Angola Government and are presented net of expected credit losses in the amount of R$18,630 (R$9,894 on December 31, 2020).

| (5) | Maturity until December of 2023.

On December 31, 2021, the amount of R$232,821 (R$366,671 on December 31, 2020) classified as cash and cash equivalents and marketable securities were pledged as guarantee, with no use restrictions, for future contracts traded on B3.

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| 6. | TRADE ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

| Parent company |  | Consolidated
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Trade accounts receivable |  |  |  |  |  |  |
Domestic market |  |  |  |  |  |  |
Third parties | 1,504,012 |  | 1,999,807 |  | 1,610,300 |  | 2,002,586
Related parties | 6,230 |  | 6,228 |  | - |  | -
Foreign market |  |  |  |  |  |  |
Third parties | 578,747 |  | 537,584 |  | 3,087,642 |  | 2,716,551
Related parties | 5,718,547 |  | 3,239,348 |  | - |  | -
| 7,807,536 |  | 5,782,967 |  | 4,697,942 |  | 4,719,137
( - ) Adjustment to present value | (10,688) |  | (10,026) |  | (14,394) |  | (13,316)
( - ) Expected credit losses | (588,946) |  | (555,712) |  | (638,583) |  | (605,940)
| 7,207,902 |  | 5,217,229 |  | 4,044,965 |  | 4,099,881
Current | 7,202,530 |  | 5,210,498 |  | 4,039,155 |  | 4,092,855
Non-current | 5,372 |  | 6,731 |  | 5,810 |  | 7,026
Other receivables |  |  |  |  |  |  |
Other receivables | 114,563 |  | 113,949 |  | 114,565 |  | 113,949
( - ) Adjustment to present value | (1,609) |  | (156) |  | (1,610) |  | (156)
( - ) Expected credit losses | (15,785) |  | (27,389) |  | (15,786) |  | (27,389)
| 97,169 |  | 86,404 |  | 97,169 |  | 86,404
Current | 68,001 |  | 43,566 |  | 68,001 |  | 43,566
Non-current (1) | 29,168 |  | 42,838 |  | 29,168 |  | 42,838

| (1) | Weighted average maturity of 1.92 years.

The Company performs credit assignments with no right of return to the BRF Clients’ Credit Rights Investment Fund (“FIDC BRF“), which has the sole purpose to acquire credit rights arising from commercial transactions carried out between the Company and its clients in Brazil. On December 31, 2021, FIDC BRF had an outstanding balance of R$902,679 (R$549,083 on December 31, 2020) in the parent company and consolidated related to such credit rights, which were written-off of the Company’s statement of financial position when the credits were sold.

On December 31, 2021, other receivables are mainly represented by receivables from the sale of farms and various properties, with a balance of R$88,098 (R$78,258 on December 31, 2020).

The movements of the expected credit losses are presented below:

Parent company |  | Consolidated
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Beginning balance | (555,712) |  | (457,505) |  | (605,940) |  | (503,848)
(Additions) Reversals | (9,347) |  | (4,822) |  | (12,799) |  | (12,137)
Write-offs | 6,351 |  | 5,869 |  | 15,685 |  | 19,451
Exchange rate variation | (30,238) |  | (99,254) |  | (35,529) |  | (109,406)
Ending balance | (588,946) |  | (555,712) |  | (638,583) |  | (605,940)

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The aging of trade accounts receivable is as follows:

| Parent company |  | Consolidated
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Not overdue | 7,199,276 |  | 5,206,584 |  | 3,933,343 |  | 4,010,140
Overdue |  |  |  |  |  |  |
01 to 60 days | 21,934 |  | 29,631 |  | 127,249 |  | 104,195
61 to 90 days | 1,036 |  | 1,357 |  | 6,241 |  | 6,045
91 to 120 days | 794 |  | 469 |  | 3,770 |  | 398
121 to 180 days | 1,481 |  | 458 |  | 3,002 |  | 7,024
181 to 360 days | 4,950 |  | 3,448 |  | 9,687 |  | 15,688
More than 360 days | 578,065 |  | 541,020 |  | 614,650 |  | 575,647
( - ) Adjustment to present value | (10,688) |  | (10,026) |  | (14,394) |  | (13,316)
( - ) Expected credit losses | (588,946) |  | (555,712) |  | (638,583) |  | (605,940)
| 7,207,902 |  | 5,217,229 |  | 4,044,965 |  | 4,099,881

| 7. | INVENTORIES

| Parent company |  | Consolidated
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Finished goods | 3,170,964 |  | 2,162,977 |  | 4,914,882 |  | 3,610,585
Work in progress | 253,801 |  | 191,110 |  | 272,997 |  | 192,335
Raw materials | 2,768,167 |  | 1,920,891 |  | 3,126,017 |  | 2,046,681
Packaging materials | 145,392 |  | 88,359 |  | 182,501 |  | 92,256
Secondary materials | 755,623 |  | 522,125 |  | 790,801 |  | 531,801
Supplies | 190,693 |  | 173,030 |  | 250,475 |  | 207,033
Imports in transit | 115,873 |  | 107,829 |  | 115,950 |  | 107,829
Other | 141,322 |  | 75,508 |  | 142,490 |  | 94,816
(-) Adjustment to present value | (138,332) |  | (80,568) |  | (141,243) |  | (80,577)
| 7,403,503 |  | 5,161,261 |  | 9,654,870 |  | 6,802,759

The movements in the write-down of inventories to the net realizable value, for which the additions, reversals and write-offs were recorded against Cost of Sales, are presented in the table below:

| Parent company
| Realizable value through sale |  | Impaired inventories |  | Obsolete inventories |  | Total
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Beginning balance | (23,957) |  | (9,075) |  | (23,579) |  | (37,729) |  | (7,715) |  | (8,416) |  | (55,251) |  | (55,220)
Additions | (124,735) |  | (77,039) |  | (98,090) |  | (73,895) |  | (7,757) |  | (4,815) |  | (230,582) |  | (155,749)
Reversals | 129,589 |  | 62,157 |  | - |  | - |  | - |  | - |  | 129,589 |  | 62,157
Write-offs | - |  | - |  | 76,585 |  | 88,045 |  | 9,682 |  | 5,516 |  | 86,267 |  | 93,561
Ending balance | (19,103) |  | (23,957) |  | (45,084) |  | (23,579) |  | (5,790) |  | (7,715) |  | (69,977) |  | (55,251)

| Consolidated
| Realizable value through sale |  | Impaired inventories |  | Obsolete inventories |  | Total
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Beginning balance | (31,155) |  | (10,712) |  | (29,831) |  | (42,526) |  | (14,719) |  | (14,919) |  | (75,705) |  | (68,157)
Additions | (163,274) |  | (106,357) |  | (118,691) |  | (91,237) |  | (10,047) |  | (10,304) |  | (292,012) |  | (207,898)
Reversals | 163,332 |  | 85,816 |  | - |  | - |  | - |  | - |  | 163,332 |  | 85,816
Write-offs | - |  | - |  | 94,500 |  | 104,115 |  | 13,106 |  | 10,688 |  | 107,606 |  | 114,803
Exchange rate variation | 71 |  | 98 |  | 7 |  | (183) |  | 6 |  | (184) |  | 84 |  | (269)
Ending balance | (31,026) |  | (31,155) |  | (54,015) |  | (29,831) |  | (11,654) |  | (14,719) |  | (96,695) |  | (75,705)

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| 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 presented below:

| Parent company
| Current |  | Non-current
| Live animals |  | Live animals |  |  |  |  |  |  |
| Poultry |  | Pork |  | Total |  | Poultry |  | Pork |  | Forests |  | Total
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Beginning balance | 783,706 |  | 557,773 |  | 1,260,582 |  | 987,354 |  | 2,044,288 |  | 1,545,127 |  | 405,030 |  | 350,285 |  | 425,252 |  | 337,804 |  | 324,444 |  | 328,553 |  | 1,154,726 |  | 1,016,642
Additions/Transfer | 13,757,200 |  | 9,689,719 |  | 9,480,273 |  | 7,108,084 |  | 23,237,473 |  | 16,797,803 |  | 93,164 |  | 62,286 |  | 455,831 |  | 363,027 |  | 41,825 |  | 38,536 |  | 590,820 |  | 463,849
Changes in fair value (1) | 2,486,821 |  | 2,050,419 |  | 511,574 |  | 368,019 |  | 2,998,395 |  | 2,418,438 |  | 97,787 |  | 49,623 |  | (217,418) |  | (184,005) |  | 16,443 |  | 21,711 |  | (103,188) |  | (112,671)
Harvest | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (57,818) |  | (59,586) |  | (57,818) |  | (59,586)
Write-off | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (3,957) |  | (5,099) |  | (3,957) |  | (5,099)
Transfer between current and non-current | 90,203 |  | 57,164 |  | 123,367 |  | 91,574 |  | 213,570 |  | 148,738 |  | (90,203) |  | (57,164) |  | (123,367) |  | (91,574) |  | - |  | - |  | (213,570) |  | (148,738)
Transfer to inventories | (16,077,726) |  | (11,571,369) |  | (9,629,308) |  | (7,294,449) |  | (25,707,034) |  | (18,865,818) |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | -
Ending balance | 1,040,204 |  | 783,706 |  | 1,746,488 |  | 1,260,582 |  | 2,786,692 |  | 2,044,288 |  | 505,778 |  | 405,030 |  | 540,298 |  | 425,252 |  | 320,937 |  | 324,444 |  | 1,367,013 |  | 1,154,726
| Consolidated
| Current |  | Non-current
| Live animals |  | Live animals |  |  |  |  |  |  |
| Poultry |  | Pork |  | Total |  | Poultry |  | Pork |  | Forests |  | Total
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Beginning balance | 868,428 |  | 615,685 |  | 1,260,582 |  | 987,354 |  | 2,129,010 |  | 1,603,039 |  | 472,053 |  | 414,668 |  | 425,252 |  | 337,804 |  | 324,444 |  | 328,553 |  | 1,221,749 |  | 1,081,025
Additions/Transfer | 14,078,311 |  | 9,705,994 |  | 9,480,273 |  | 7,108,084 |  | 23,558,584 |  | 16,814,078 |  | 97,765 |  | 71,494 |  | 455,831 |  | 363,027 |  | 41,825 |  | 38,536 |  | 595,421 |  | 473,057
Changes in fair value (1) | 2,628,793 |  | 2,059,397 |  | 511,574 |  | 368,019 |  | 3,140,367 |  | 2,427,416 |  | 105,385 |  | 51,660 |  | (217,418) |  | (184,005) |  | 16,443 |  | 21,711 |  | (95,590) |  | (110,634)
Harvest | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (57,818) |  | (59,586) |  | (57,818) |  | (59,586)
Write-off | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (3,957) |  | (5,099) |  | (3,957) |  | (5,099)
Transfer between current and non-current | 91,890 |  | 57,164 |  | 123,367 |  | 91,574 |  | 215,257 |  | 148,738 |  | (91,890) |  | (57,164) |  | (123,367) |  | (91,574) |  | - |  | - |  | (215,257) |  | (148,738)
Transfer to inventories | (16,469,201) |  | (11,571,369) |  | (9,629,308) |  | (7,294,449) |  | (26,098,509) |  | (18,865,818) |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | -
Exchange variation | (44,788) |  | 1,557 |  | - |  | - |  | (44,788) |  | 1,557 |  | (30,066) |  | 1,784 |  | - |  | - |  | - |  | - |  | (30,066) |  | 1,784
Ending balance | 1,153,433 |  | 868,428 |  | 1,746,488 |  | 1,260,582 |  | 2,899,921 |  | 2,129,010 |  | 553,247 |  | 472,053 |  | 540,298 |  | 425,252 |  | 320,937 |  | 324,444 |  | 1,414,482 |  | 1,221,749

| (1) | The change in the fair value of biological assets includes depreciation of breeders and depletion of forests in the amount of R$943,789 in the parent company (R$789,496 on December 31, 2020) and R$1,030,491 (R$876,976 on December 31, 2020) in the consolidated.

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 51

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The book value and estimated quantities of live animals are set forth below:

| Parent company
| 12.31.21 |  | 12.31.20
| Quantity (thousand of heads) |  | Book value |  | Quantity (thousand of heads) |  | Book value
Consumable biological assets |  |  |  |  |  |  |
Immature poultry | 176,802 |  | 1,040,204 |  | 178,143 |  | 783,706
Immature pork | 4,469 |  | 1,746,488 |  | 4,204 |  | 1,260,582
Total current | 181,271 |  | 2,786,692 |  | 182,347 |  | 2,044,288
Production biological assets |  |  |  |  |  |  |
Immature poultry | 5,510 |  | 174,706 |  | 6,243 |  | 152,632
Mature poultry | 10,420 |  | 331,072 |  | 10,207 |  | 252,398
Immature pork | 223 |  | 141,101 |  | 203 |  | 93,466
Mature pork | 452 |  | 399,197 |  | 457 |  | 331,786
Total non-current | 16,605 |  | 1,046,076 |  | 17,110 |  | 830,282
| 197,876 |  | 3,832,768 |  | 199,457 |  | 2,874,570
| Consolidated
| 12.31.21 |  | 12.31.20
| Quantity (thousand of heads) |  | Book value |  | Quantity (thousand of heads) |  | Book value
Consumable biological assets |  |  |  |  |  |  |
Immature poultry | 197,859 |  | 1,153,433 |  | 199,877 |  | 868,428
Immature pork | 4,469 |  | 1,746,488 |  | 4,204 |  | 1,260,582
Total current | 202,328 |  | 2,899,921 |  | 204,081 |  | 2,129,010
Production biological assets |  |  |  |  |  |  |
Immature poultry | 6,170 |  | 192,017 |  | 7,320 |  | 188,967
Mature poultry | 11,621 |  | 361,230 |  | 11,395 |  | 283,086
Immature pork | 223 |  | 141,101 |  | 203 |  | 93,466
Mature pork | 452 |  | 399,197 |  | 457 |  | 331,786
Total non-current | 18,466 |  | 1,093,545 |  | 19,375 |  | 897,305
| 220,794 |  | 3,993,466 |  | 223,456 |  | 3,026,315

The Company has forests pledged as collateral for financing and tax and civil contingencies on December 31, 2021 in the amount of R$69,308 in the parent company and in the consolidated (R$68,381 in the parent company and in the consolidated on December 31, 2020).

8.1. Sensitivity analysis

The fair value of animals and forests is determined using unobservable inputs, using the best practices available in the valuation circumstances, therefore it is classified in the Level 3 of the fair value hierarchy. The main assumptions used in the measurement of the fair value of forests and their impact on measurement are presented below.

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 52

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|  |  |  |  |  | The estimated fair value can change if:
Asset |  | Valuation methodology |  | Non observable significant inputs |  | Increase |  | Decrease
Forests |  | Income approach |  | Estimated price of standing wood |  | Increase in the price of wood |  | Decrease in the price of wood
|  | Productivity per hectare estimated |  | Increase in yield per hectare |  | Decrease in yield per hectare
|  | Harvest and transport cost |  | Decrease of harvest cost |  | Increase of harvest cost
|  | Discount rate |  | Descrease in discount rate |  | Increase in discount rate
Live animals |  | Cost approach |  | Price of the feed inputs |  | Increase in feed cost |  | Decrease in feed cost
|  | Storage costs |  | Increase in storage cost |  | Decrease in storage cost
|  | Outgrowers cost |  | Increase in outgrowers cost |  | Decrease in outgrowers cost

The prices used in the valuation are those practiced in the regions where the Company is located and were obtained through market research. The discount rate corresponds to the average cost of capital and other economic assumptions for a market participant.

The weighted average price used in the valuation of biological assets (forests) on December 31, 2021 was equivalent to R$39.40 (thirty-nine and forty Reais) per stere (R$34.63 per stere on December 31, 2020). The real discount rate used in the valuation of the biological asset (forests) on December 31, 2021 was 6.70% p.a. (6.00% p.a. on December 31, 2020).

| 9. | RECOVERABLE TAXES

The rollforward of recoverable taxes are set forth below:

|  |  |  | Parent company
|  | Note |  | 12.31.20 |  | Additions |  | Offset / Reversals |  | Transfers (1) |  | Interest |  | 12.31.21
ICMS and VAT |  | 9.1 |  |  |  |  |  |  |  |  |  |  |  |
Recoverable ICMS and VAT |  |  |  | 1,483,612 |  | 573,009 |  | (84,904) |  | (160,278) |  | 239 |  | 1,811,678
(-) Impairment |  |  |  | (154,721) |  | (30,396) |  | 29,133 |  | 18,395 |  | - |  | (137,589)
PIS and COFINS |  | 9.2 |  |  |  |  |  |  |  |  |  |  |  |
Recoverable PIS and COFINS |  |  |  | 3,167,001 |  | 467,854 |  | (1,053,651) |  | - |  | 76,863 |  | 2,658,067
(-) Impairment |  |  |  | (14,228) |  | - |  | - |  | - |  | - |  | (14,228)
IPI |  | 9.3 |  |  |  |  |  |  |  |  |  |  |  |
Recoverable IPI |  |  |  | 808,524 |  | 6,888 |  | (2,356) |  | - |  | 114,981 |  | 928,037
(-) Impairment |  |  |  | (1,984) |  | - |  | - |  | - |  | - |  | (1,984)
INSS |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recoverable INSS |  |  |  | 341,824 |  | 36,829 |  | (66,810) |  | - |  | 6,283 |  | 318,126
(-) Impairment |  |  |  | (102) |  | 102 |  | - |  | - |  | - |  | -
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other recoverable taxes |  |  |  | 52,115 |  | 34,645 |  | (957) |  | - |  | - |  | 85,803
(-) Impairment |  |  |  | (1,484) |  | 97 |  | 857 |  | - |  | - |  | (530)
|  |  |  | 5,680,557 |  | 1,089,028 |  | (1,178,688) |  | (141,883) |  | 198,366 |  | 5,647,380
Current |  |  |  | 812,338 |  |  |  |  |  |  |  |  |  | 881,927
Non-current |  |  |  | 4,868,219 |  |  |  |  |  |  |  |  |  | 4,765,453
|  | Note |  | 12.31.20 |  | Additions |  | Offset / Reversals |  | Transfers (1) |  | Restatement |  | 12.31.21
Income taxes |  | 9.4 |  |  |  |  |  |  |  |  |  |  |  |
Recoverable income taxes |  |  |  | 91,996 |  | 178,387 |  | (29,749) |  | - |  | 18 |  | 240,652
(-) Impairment |  |  |  | (8,985) |  | (6,904) |  | - |  | - |  | - |  | (15,889)
|  |  |  | 83,011 |  | 171,483 |  | (29,749) |  | - |  | 18 |  | 224,763
Current |  |  |  | 28,888 |  |  |  |  |  |  |  |  |  | 29,784
Non-current |  |  |  | 54,123 |  |  |  |  |  |  |  |  |  | 194,979

| (1) | The transfers occur from Recoverable Taxes to Other Current Assets and Other Non-Current Assets when sales of credits are made to third parties.

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 53

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|  |  |  | Parent company
|  | Note |  | 12.31.19 |  | Additions |  | Offset / Reversals |  | Transfers |  | Restatement |  | 12.31.20
ICMS and VAT |  | 9.1 |  |  |  |  |  |  |  |  |  |  |  |
Recoverable ICMS and VAT |  |  |  | 1,476,595 |  | 298,792 |  | (164,645) |  | (127,370) |  | 240 |  | 1,483,612
(-) Impairment |  |  |  | (141,192) |  | (38,033) |  | 3,022 |  | 21,482 |  | - |  | (154,721)
PIS and COFINS |  | 9.2 |  |  |  |  |  |  |  |  |  |  |  |
Recoverable PIS and COFINS |  |  |  | 2,986,235 |  | 728,955 |  | (591,245) |  | - |  | 43,056 |  | 3,167,001
(-) Impairment |  |  |  | (16,922) |  | - |  | 2,694 |  | - |  | - |  | (14,228)
IPI |  | 9.3 |  |  |  |  |  |  |  |  |  |  |  |
Recoverable IPI |  |  |  | 848,861 |  | 2,315 |  | (7,197) |  | (92,812) |  | 57,357 |  | 808,524
(-) Impairment |  |  |  | (3,818) |  | (263) |  | 2,097 |  | - |  | - |  | (1,984)
INSS |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recoverable INSS |  |  |  | 255,949 |  | 88,616 |  | (7,634) |  | - |  | 4,893 |  | 341,824
(-) Impairment |  |  |  | (102) |  | - |  | - |  | - |  | - |  | (102)
Other taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other recoverable taxes |  |  |  | 41,050 |  | 11,949 |  | (884) |  | - |  | - |  | 52,115
(-) Impairment |  |  |  | (5,160) |  | - |  | 3,676 |  | - |  | - |  | (1,484)
|  |  |  | 5,441,496 |  | 1,092,331 |  | (760,116) |  | (198,700) |  | 105,546 |  | 5,680,557
Current |  |  |  | 274,480 |  |  |  |  |  |  |  |  |  | 812,338
Non-current |  |  |  | 5,167,016 |  |  |  |  |  |  |  |  |  | 4,868,219
|  | Note |  | 12.31.19 |  | Additions |  | Offset / Reversals |  | Transfers |  | Restatement |  | 12.31.20
Income taxes |  | 9.4 |  |  |  |  |  |  |  |  |  |  |  |
Recoverable income taxes |  |  |  | 313,704 |  | 30,596 |  | (256,644) |  | - |  | 4,340 |  | 91,996
(-) Impairment |  |  |  | (8,985) |  | - |  | - |  | - |  | - |  | (8,985)
|  |  |  | 304,719 |  | 30,596 |  | (256,644) |  | - |  | 4,340 |  | 83,011
Current |  |  |  | 40,291 |  |  |  |  |  |  |  |  |  | 28,888
Non-current |  |  |  | 264,428 |  |  |  |  |  |  |  |  |  | 54,123

|  |  |  | Consolidated
|  | Note |  | 12.31.20 |  | Business combination (note 1.2) |  | Additions |  | Offset / Reversals |  | Transfers (1) |  | Interest |  | Exchange variation |  | 12.31.21
ICMS and VAT |  | 9.1 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recoverable ICMS and VAT |  |  |  | 1,568,975 |  | 6,479 |  | 668,918 |  | (185,750) |  | (160,278) |  | 239 |  | (12,556) |  | 1,886,027
(-) Impairment |  |  |  | (154,721) |  | - |  | (30,661) |  | 29,133 |  | 18,395 |  | - |  | - |  | (137,854)
PIS and COFINS |  | 9.2 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recoverable PIS and COFINS |  |  |  | 3,168,099 |  | 34,259 |  | 471,560 |  | (1,065,504) |  | - |  | 76,862 |  | - |  | 2,685,276
(-) Impairment |  |  |  | (14,228) |  | - |  | - |  | - |  | - |  | - |  | - |  | (14,228)
IPI |  | 9.3 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recoverable IPI |  |  |  | 808,528 |  | 1,109 |  | 7,392 |  | (2,363) |  | - |  | 114,979 |  | - |  | 929,645
(-) Impairment |  |  |  | (1,984) |  | - |  | - |  | - |  | - |  | - |  | - |  | (1,984)
INSS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recoverable INSS |  |  |  | 341,825 |  | 12 |  | 36,829 |  | (66,810) |  | - |  | 6,282 |  | - |  | 318,138
(-) Impairment |  |  |  | (102) |  | - |  | 102 |  | - |  | - |  | - |  | - |  | -
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other recoverable taxes |  |  |  | 52,889 |  | 3,995 |  | 39,427 |  | (4,057) |  | - |  | - |  | (38) |  | 92,216
(-) Impairment |  |  |  | (1,963) |  | - |  | 99 |  | 857 |  | - |  | - |  | - |  | (1,007)
|  |  |  | 5,767,318 |  | 45,854 |  | 1,193,666 |  | (1,294,494) |  | (141,883) |  | 198,362 |  | (12,594) |  | 5,756,229
Current |  |  |  | 899,120 |  |  |  |  |  |  |  |  |  |  |  |  |  | 976,133
Non-current |  |  |  | 4,868,198 |  |  |  |  |  |  |  |  |  |  |  |  |  | 4,780,096
|  | Note |  | 12.31.20 |  | Business combination |  | Additions |  | Offset / Reversals |  | Transfers (1) |  | Interest |  | Exchange variation |  | 12.31.21
Income taxes |  | 9.4 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recoverable income taxes |  |  |  | 107,728 |  | 922 |  | 246,162 |  | (60,058) |  | - |  | 18 |  | (722) |  | 294,050
(-) Impairment |  |  |  | (9,029) |  | - |  | (6,904) |  | - |  | - |  | - |  | - |  | (15,933)
|  |  |  | 98,699 |  | 922 |  | 239,258 |  | (60,058) |  | - |  | 18 |  | (722) |  | 278,117
Current |  |  |  | 43,840 |  |  |  |  |  |  |  |  |  |  |  |  |  | 71,762
Non-current |  |  |  | 54,859 |  |  |  |  |  |  |  |  |  |  |  |  |  | 206,355

| (1) | The transfers occur from Recoverable Taxes to Other Current Assets and Other Non-Current Assets when sales of credits are made to third parties.

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|  |  |  | Consolidated
|  | Note |  | 12.31.19 |  | Additions |  | Offset / Reversals |  | Transfers |  | Restatement |  | Exchange variation |  | 12.31.20
ICMS and VAT |  | 9.1 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recoverable ICMS and VAT |  |  |  | 1,635,663 |  | 570,056 |  | (549,446) |  | (127,370) |  | 240 |  | 39,832 |  | 1,568,975
(-) Impairment |  |  |  | (141,193) |  | (38,033) |  | 3,022 |  | 21,483 |  | - |  | - |  | (154,721)
PIS and COFINS |  | 9.2 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recoverable PIS and COFINS |  |  |  | 2,990,313 |  | 729,213 |  | (594,483) |  | - |  | 43,056 |  | - |  | 3,168,099
(-) Impairment |  |  |  | (16,922) |  | - |  | 2,694 |  | - |  | - |  | - |  | (14,228)
IPI |  | 9.3 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recoverable IPI |  |  |  | 848,865 |  | 2,319 |  | (7,201) |  | (92,812) |  | 57,357 |  | - |  | 808,528
(-) Impairment |  |  |  | (3,818) |  | (263) |  | 2,097 |  | - |  | - |  | - |  | (1,984)
INSS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recoverable INSS |  |  |  | 255,967 |  | 88,621 |  | (7,663) |  | - |  | 4,893 |  | 7 |  | 341,825
(-) Impairment |  |  |  | (102) |  | - |  | - |  | - |  | - |  | - |  | (102)
Other taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other recoverable taxes |  |  |  | 80,145 |  | 11,952 |  | (901) |  | (38,277) |  | - |  | (30) |  | 52,889
(-) Impairment |  |  |  | (5,639) |  | - |  | 3,676 |  | - |  | - |  | - |  | (1,963)
|  |  |  | 5,643,279 |  | 1,363,865 |  | (1,148,205) |  | (236,976) |  | 105,546 |  | 39,809 |  | 5,767,318
Current |  |  |  | 473,732 |  |  |  |  |  |  |  |  |  |  |  | 899,120
Non-current |  |  |  | 5,169,547 |  |  |  |  |  |  |  |  |  |  |  | 4,868,198
|  | Note |  | 12.31.19 |  | Additions |  | Offset / Reversals |  | Transfers |  | Restatement |  | Exchange variation |  | 12.31.20
Income taxes |  | 9.4 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recoverable income taxes |  |  |  | 430,778 |  | 58,007 |  | (422,496) |  | - |  | 4,341 |  | 37,098 |  | 107,728
(-) Impairment |  |  |  | (9,029) |  | - |  | - |  | - |  | - |  | - |  | (9,029)
|  |  |  | 421,749 |  | 58,007 |  | (422,496) |  | - |  | 4,341 |  | 37,098 |  | 98,699
Current |  |  |  | 152,486 |  |  |  |  |  |  |  |  |  |  |  | 43,840
Non-current |  |  |  | 269,263 |  |  |  |  |  |  |  |  |  |  |  | 54,859

9.1. ICMS – Tax on Movement of Goods and Services and VAT – Value Added Taxes

As result of (i) export activity, (ii) tax benefits, (iii) sales in the domestic market subject to reduced rates; and (iv) acquisition of property, plant and equipment, the Company generates recoverable ICMS balances that are offset against ICMS payables arising from sales in the domestic market or that are transferred to third parties.

The Company has recoverable ICMS balances in the States of Paraná, Santa Catarina, Mato Grosso do Sul, Minas Gerais and Amazonas, which will be realized in the short and long term, based on the recoverability study reviewed and approved by the Management.

In other jurisdictions outside Brazil, value added taxes (VAT) are due in regular operations of the Company with goods and services.

9.2. PIS and COFINS –Social Integration Plan and Contribution for Social Security Financing

The accumulated recoverable PIS and COFINS balances arise from taxes on raw material purchases subsequently used in the production of exported products or products for which sale is not taxed, such as fresh meat and margarine, as well as recoverable taxes on commercial and labor expenses. The realization of these balances usually occurs through the offsetting with taxes payable on sales of taxed products in the domestic market, with other federal taxes and social security contributions payable, or even, if necessary, through refund or reimbursement requests.

In the year ended December 31, 2021, the Company recognized gains arising from processes filed by the subsidiaries SHB Comércio e Indústria de Alimentos S.A. and Batávia S.A., both already incorporated by BRF S.A. and of a process filed by UP! Alimentos Ltda. (an entity jointly controlled by BRF S.A., whose operations were closed), granting the Company the right to exclude ICMS from the PIS and COFINS calculation basis. The periods involved in the processes are from 2002 until 2017, date from which the Company began to exclude the ICMS from the PIS and COFINS calculation basis. The Company, supported by its consultants, obtained the fiscal files for the period and reconciled them with the accessory obligations, measuring the balances reliably through the ICMS presented in the invoices. Thus, the amount of R$92,171 was recognized under Recoverable PIS and COFINS, being R$41,554 of principal recorded in Other Operating Income and R$50,617 of interests recorded in Financial Income.

As of December 31, 2021, the updated balance of the processes related to the exclusion of the ICMS from the PIS and COFINS calculation basis recognized by the Company is R$2,341,737 (R$2,818,391 as of December 31,

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2020). The amount of R$628,557 related do these credits was offset against other federal taxes for the year ended December 31, 2021 (null for the year ended December 31, 2020).

In the study prepared by the Management, its realization is estimated through offsetting with federal taxes or through reimbursement of the amounts as expectation below:

| PIS and COFINS
Current | 604,626
Non-current | 1,737,111
2023 | 718,149
2024 | 687,602
2025 | 331,360
| 2,341,737

9.3. IPI - Industrialized Product Tax

The Company recognized relevant tax assets as result of gains from lawsuits related to IPI, specially “crédito prêmio”. The balance referring to these assets in the parent company and consolidated on December 31, 2021 is R$945,845 (R$860,820 on December 31, 2020), of which R$919,982 (R$805,001 on December 31, 2020) is recorded as Recoverable Taxes and the remainder, referring to cases in which the government will reimburse in cash, is recorded as Other Current Assets, in the amount of R$8,936 (R$40,370 on December 31, 2020) and as Other Non-Current Assets, in the amount of R$16,927 (R$15,449 on December 31, 2020).

According to projections prepared by the Management, its realization is estimated through the refund of the amounts as expected below:

| IPI
Current | 8,936
Non-current | 936,909
2023 | 16,927
2025 | 678,852
2026 | 241,130
| 945,845

9.4. Income Taxes

The accumulated recoverable income taxes arise, mostly, from withholding taxes on securities, interest and prepayments of income tax and social contribution in Brazil. The realization occurs through the offset with federal taxes and contributions payable.

In the year ended December 31, 2021, the Federal Supreme Court, the highest instance of the Judiciary in Brazil, ruled unconstitutional the taxation of income tax (“IRPJ”) and social contribution (“CSLL”) on interest income recognized due to tax overpayments. The periods involved in the processes are from 2005 until 2020. From the date of this judgment, the Company ceased taxing such income and was entitled to recover the amounts of taxes previously paid.

For the years in which the Company had taxable income and, therefore, paid IRPJ and CSLL on income arising from interest tax overpayments, the amount of R$132,224 was recognized under Recoverable Income Taxes, being the principal of R$91,800 recorded against Income Taxes and the interest of R$40,424 recorded against Financial Income. Such recoverable taxes can be used to offset other federal taxes in Brazil. For the years in which the company presented tax losses, an increase in tax losses carryforward was calculated in the amount of R$2,526,115.

9.5. Realization of Brazilian federal tax credits

The Company received in cash, through court orders related to recoverable IPI balances, the amount of R$32,802 for the year ended December 31, 2021 in the parent company and consolidated (R$235,405 for the year ended December 31, 2020).

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The Company used PIS, COFINS, IPI, IRPJ, CSLL, INSS and other recoverable taxes to offset federal taxes payable such as INSS and Income Taxes in the amount of R$1,153,520 in the parent company and consolidated for the year ended December 31, 2021 (R$863,602 in the parent company and consolidated for the year ended December 31, 2020), preserving its liquidity and optimizing its capital structure.

| 10. | DEFERRED INCOME TAXES

10.1. Breakdown

| Parent company |  | Consolidated
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Assets |  |  |  |  |  |  |
Tax losses carryforward | 2,805,912 |  | 2,052,843 |  | 2,822,754 |  | 2,060,846
Negative calculation basis (social contribution) | 1,040,511 |  | 769,402 |  | 1,046,574 |  | 772,283
Temporary differences - Assets |  |  |  |  |  |  |
Provisions for tax, civil and labor risks | 456,206 |  | 458,019 |  | 458,229 |  | 458,019
Expected credit losses | 184,230 |  | 194,969 |  | 184,643 |  | 194,977
Impairment on tax credits | 64,297 |  | 67,900 |  | 64,297 |  | 67,900
Provision for other obligations | 136,571 |  | 115,959 |  | 150,609 |  | 115,959
Employees' profit sharing | 47,227 |  | 86,752 |  | 47,227 |  | 86,752
Write-down to net realizable value of inventories | 25,204 |  | 19,184 |  | 27,934 |  | 19,189
Employees' benefits plan | 137,174 |  | 216,510 |  | 148,990 |  | 216,510
Lease basis difference | 95,563 |  | 86,308 |  | 95,563 |  | 86,308
Unrealized losses on derivatives, net | 21,310 |  | - |  | 21,310 |  | -
Other temporary differences | 20,501 |  | 12,503 |  | 42,566 |  | 41,899
| 5,034,706 |  | 4,080,349 |  | 5,110,696 |  | 4,120,642
Temporary differences - Liabilities |  |  |  |  |  |  |
Goodwill amortization basis difference | (307,442) |  | (320,729) |  | (307,442) |  | (320,729)
Depreciation (useful life) basis difference | (884,245) |  | (851,436) |  | (895,407) |  | (851,436)
Business combination (1) | (900,108) |  | (740,385) |  | (920,214) |  | (761,429)
Unrealized gains on derivatives, net | - |  | (42,493) |  | - |  | (42,493)
Unrealized fair value gains, net | (37,109) |  | (39,269) |  | (37,692) |  | (39,269)
Other temporary differences | (20,415) |  | (17,268) |  | (32,381) |  | (22,749)
| (2,149,319) |  | (2,011,580) |  | (2,193,136) |  | (2,038,105)
Total deferred taxes | 2,885,387 |  | 2,068,769 |  | 2,917,560 |  | 2,082,537
Total Assets | 2,885,387 |  | 2,068,769 |  | 2,941,270 |  | 2,109,064
Total Liabilities | - |  | - |  | (23,710) |  | (26,527)
| 2,885,387 |  | 2,068,769 |  | 2,917,560 |  | 2,082,537

| (1) | The deferred tax liability on business combination is substantially represented by the allocation of goodwill to property, plant and equipment, brands and contingent liabilities.

The roll-forward of deferred income taxes, net, is set forth below:

Parent company |  | Consolidated
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Beginning balance | 2,068,769 |  | 1,808,494 |  | 2,082,537 |  | 1,760,552
Deferred income taxes recognized in income from continuing operations | 779,862 |  | 227,906 |  | 807,744 |  | 242,271
Deferred income taxes recognized in other comprehensive income | 8,738 |  | 32,070 |  | 8,738 |  | 32,070
Deferred income taxes recognized in loss from discontinued operations | 28,018 |  | - |  | 28,018 |  | -
Other (1) | - |  | 299 |  | (9,477) |  | 47,644
Ending balance | 2,885,387 |  | 2,068,769 |  | 2,917,560 |  | 2,082,537

| (1) | Related to the foreign exchange variation effect on the balances in foreign companies.

10.2. Estimated period of realization

Deferred tax assets arising from temporary differences will be realized as the differences 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.

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In estimating the realization of deferred tax credits on tax losses carryforward, Management considers its budget and strategic plans, which were approved by the Board of Directors, adjusted for changes in economic assumptions and based on the estimates of the main tax additions and exclusions. The recoverability study is reviewed by the Fiscal Council and approved by the Board of Directors. Based on this estimate, Management believes that it is probable that these deferred tax credits will be realized, as presented below:

| Parent company |  | Consolidated
2022 | 50,574 |  | 50,574
2023 | 307,778 |  | 309,537
2024 | 294,687 |  | 299,366
2025 | 352,431 |  | 359,969
2026 | 392,953 |  | 400,725
2027 to 2029 | 1,362,961 |  | 1,364,017
2030 and 2031 | 1,085,039 |  | 1,085,141
| 3,846,423 |  | 3,869,328

The Company has tax losses carryforward in Brazil, which at current tax rates represent R$6,204,203 on December 31, 2021 (R$4,589,674 on December 31, 2020), amount significantly increased in the year ended December 31, 2021 due to the processes described in note 9.4, in addition to other effects. Within this amount, R$3,846,423 on December 31, 2021 and (R$2,822,245 on December 31, 2020) are recognized as an asset, according to the recoverability expectation (note 3.9). 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 and the use to offset income taxes payable is limited to 30% of future taxable income.

10.3. Effective income tax rate reconciliation

| Parent company |  | Consolidated
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Income (loss) before taxes - continued operations | (125,082) |  | 1,155,658 |  | (34,788) |  | 1,147,798
Nominal tax rate | 34% |  | 34% |  | 34% |  | 34%
Benefit (expense) at nominal rate | 42,528 |  | (392,924) |  | 11,828 |  | (390,251)
Adjustments to income taxes |  |  |  |  |  |  |
Income from associates and joint ventures | 294,952 |  | 2,149,057 |  | 8,626 |  | -
Difference of tax rates on results of foreign subsidiaries | - |  | - |  | 244,822 |  | 1,018,576
Difference of functional currency of foreign subsidiaries | - |  | - |  | (129) |  | 1,142,762
Deferred tax assets not recognized (1) | (840,523) |  | (1,842,478) |  | (840,457) |  | (1,842,478)
Recognition of tax assets from previous years (2) | 1,025,000 |  | 361,000 |  | 1,025,000 |  | 361,000
Interest on overpayment of taxes (3) | 104,177 |  | - |  | 104,789 |  | -
Profits taxed by foreign jurisdictions | (32,770) |  | (63,252) |  | (33,455) |  | (63,252)
Share-based payment | (24,454) |  | (22,774) |  | (24,454) |  | (22,774)
Transfer price | (71,634) |  | (40,568) |  | (71,634) |  | (40,568)
Penalties | (11,042) |  | (5,261) |  | (11,042) |  | (5,261)
Investment grant | 109,591 |  | 52,279 |  | 109,591 |  | 52,279
Other permanent differences | 28,642 |  | 32,827 |  | 28,617 |  | 32,238
| 624,467 |  | 227,906 |  | 552,102 |  | 242,271
Effective rate | 499.2% |  | -19.7% |  | 1587.0% |  | -21.1%
Current tax | (155,395) |  | - |  | (255,642) |  | (77,373)
Deferred tax | 779,862 |  | 227,906 |  | 807,744 |  | 319,644

| (1) | Amount related to the non-recognition of deferred tax on tax losses carryforward for the year ended December 31, 2021, in the amount of R$2,472,126 in the parent company and in the consolidated, due to limited capacity of realization (note 10.2).

| (2) | The Company prepared recoverability study for deferred tax assets (according to note 10.2) and, based on it, recognized an asset in the amount of R$1,025,000.

| (3) | Related the non-taxation of interest on tax overpayments. Includes the amount of R$79,639 referring to previous years (note 9.4)

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The Company’s management determined that the total profits recorded by the holdings of its wholly-owned subsidiaries abroad will not be redistributed. Such funds will be used for investments in the wholly-owned subsidiaries.

Income tax returns in Brazil are subject to review by the tax authorities for a period of five years from the date of their delivery. The Company may be subject to additional collection of taxes, fines and interest as a result of these reviews. The results obtained by subsidiaries abroad are subject to taxation in accordance with the tax laws of each country.

| 11. | JUDICIAL DEPOSITS

The rollforward of the judicial deposits is set forth below:

| Parent company
| Tax |  | Labor |  | Civil, commercial and other |  | Total
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Beginning balance | 248,990 |  | 244,977 |  | 269,747 |  | 301,739 |  | 34,539 |  | 28,965 |  | 553,276 |  | 575,681
Additions | 5,002 |  | 12,294 |  | 100,403 |  | 133,847 |  | 10,723 |  | 6,719 |  | 116,128 |  | 152,860
Release in favor of the Company | (1,743) |  | (11,948) |  | (38,346) |  | (51,414) |  | (1,997) |  | (370) |  | (42,086) |  | (63,732)
Release in favor of the counterparty | (207) |  | (907) |  | (115,268) |  | (126,405) |  | (3,717) |  | (2,055) |  | (119,192) |  | (129,367)
Interest | 5,202 |  | 4,574 |  | 28,600 |  | 11,980 |  | 3,703 |  | 1,280 |  | 37,505 |  | 17,834
Ending balance | 257,244 |  | 248,990 |  | 245,136 |  | 269,747 |  | 43,251 |  | 34,539 |  | 545,631 |  | 553,276

| Consolidated
| Tax |  | Labor |  | Civil, commercial and other |  | Total
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Beginning balance | 248,990 |  | 244,977 |  | 269,812 |  | 301,808 |  | 34,539 |  | 28,965 |  | 553,341 |  | 575,750
Additions | 5,074 |  | 12,294 |  | 100,730 |  | 133,847 |  | 12,305 |  | 6,719 |  | 118,109 |  | 152,860
Release in favor of the Company | (1,743) |  | (11,948) |  | (38,357) |  | (51,414) |  | (1,997) |  | (370) |  | (42,097) |  | (63,732)
Release in favor of the counterparty | (236) |  | (907) |  | (115,633) |  | (126,405) |  | (3,717) |  | (2,055) |  | (119,586) |  | (129,367)
Business combination (note 1.2) | 2,132 |  | - |  | 859 |  | - |  | - |  | - |  | 2,991 |  | -
Interest | 5,251 |  | 4,574 |  | 28,604 |  | 11,980 |  | 3,714 |  | 1,280 |  | 37,569 |  | 17,834
Exchange rate variation | - |  | - |  | (8) |  | (4) |  | - |  | - |  | (8) |  | (4)
Ending balance | 259,468 |  | 248,990 |  | 246,007 |  | 269,812 |  | 44,844 |  | 34,539 |  | 550,319 |  | 553,341

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| 12. | INVESTMENTS

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

| Subsidiaries |  | Affiliates |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total
| BRF Energia S.A. |  | BRF GmbH |  | Establec. Levino Zaccardi |  | BRF Pet S.A. |  | BRF Austria GmbH |  | PSA Labor. Veter. Ltda |  | Hercosul International S.R.L. |  | Sadia Alimentos S.A. |  | Proud Food Lda |  | Sadia International Ltd. |  | Sadia Uruguay S.A. |  | Sadia Chile 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. |  | 12.31.21 |  | 12.31.20
a) Participation as of December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
% of participation | 100.00% |  | 100.00% |  | 99.99% |  | 100.00% |  | - |  | 99.99% |  | 1.00% |  | 43.10% |  | 10.00% |  | - |  | 100.00% |  | 60.00% |  | 0.01% |  | 100.00% |  | - |  | 33.33% |  |  |  |
Total quantity of shares and quotas | 7,176,530 |  | 1 |  | 9,918,875 |  | 2,087,898,669 |  | - |  | 5,463,850 |  | 200,000 |  | 594,576,682 |  | 150,000 |  | - |  | 2,352,881,073 |  | 3,027,987,368 |  | 10,000 |  | 14,249,459 |  | - |  | - |  |  |  |
Quantity of shares and quotas held | 7,176,530 |  | 1 |  | 9,918,538 |  | 2,087,898,669 |  | - |  | 5,463,849 |  | 2,000 |  | 256,253,695 |  | 15,000 |  | - |  | 2,352,881,073 |  | 1,816,792,421 |  | 1 |  | 14,249,459 |  | - |  | - |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | - |  |  |  |  |  |
b) Information as of December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Share capital | 1,311 |  | 6,523 |  | 1,765 |  | 1,069,740 |  | - |  | 5,564 |  | 63,362 |  | 338,054 |  | 3 |  | - |  | 497,012 |  | 16,169 |  | 334,999 |  | 1,311 |  | - |  | - |  |  |  |
Shareholders' equity | 596 |  | 12,101,820 |  | 77 |  | 1,051,231 |  | - |  | 8,121 |  | 33,136 |  | 4,506 |  | 6,137 |  | - |  | 95,322 |  | (63,628) |  | (559) |  | 2,350 |  | - |  | - |  |  |  |
Fair value of assets and liabilities acquired | - |  | - |  | - |  | - |  | - |  | - |  | 164 |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  |  |  |
Goodwill | - |  | - |  | - |  | - |  | - |  | - |  | 277 |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  |  |  |
Income (loss) for the year | 78 |  | 887,944 |  | (360) |  | (7,108) |  | (5,656) |  | 2,719 |  | 2,016 |  | 1,113 |  | 3,514 |  | 2,219 |  | 3,719 |  | (26,968) |  | (15,153) |  | 57 |  | - |  | - |  |  |  |
c) Movements of investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance (12.31.20) | 518 |  | 11,455,186 |  | 51 |  | 14,412 |  | 314,811 |  | 5,402 |  | - |  | 1,130 |  | 154 |  | 29,557 |  | 89,924 |  | - |  | - |  | 2,307 |  | 2,591 |  | 5,699 |  | 11,921,742 |  | 6,498,934
Result Movements |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income (loss) | 78 |  | 887,944 |  | (360) |  | (7,117) |  | (5,656) |  | 2,719 |  | 9 |  | 598 |  | 351 |  | 2,219 |  | 3,664 |  | (16,999) |  | (2) |  | 57 |  | - |  | - |  | 867,505 |  | 6,320,756
Dividends and interests on shareholders' equity | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (14) |  | - |  | - |  | (14) |  | (303,949)
Capital movements |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital increase (reduction) | - |  | - |  | - |  | 1,037,075 |  | - |  | - |  | - |  | - |  | - |  | (31,002) |  | - |  | - |  | - |  | - |  | 114 |  | 821 |  | 1,007,008 |  | 11,152
Capital transaction between subsidiaries | - |  | 9,046 |  | 352 |  | - |  | (8,542) |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 856 |  | (7,500)
Write-off of put option held by minority shareholders | - |  | 20,658 |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 20,658 |  | -
Acquisition (sale) of equity interest | - |  | - |  | - |  | - |  | - |  | - |  | 712 |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (2,705) |  | - |  | (1,993) |  | (29,979)
Goodwill on acquisition of non-controlling interests | - |  | - |  | - |  | - |  | (79,673) |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (79,673) |  | (14,344)
Exchange rate variation on goodwill | - |  | - |  | - |  | - |  | - |  | - |  | 30 |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 30 |  | -
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other comprehensive income | - |  | (245,471) |  | 34 |  | 6,861 |  | (220,940) |  | - |  | 21 |  | 214 |  | 109 |  | (774) |  | 1,734 |  | 3,546 |  | - |  | - |  | - |  | - |  | (454,666) |  | (493,128)
Constitution (reversal) of provision for loss | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 13,453 |  | 2 |  | - |  | - |  | - |  | 13,455 |  | (60,200)
Discontinued operations | - |  | (25,543) |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (25,543) |  | -
Ending balance (12.31.21) | 596 |  | 12,101,820 |  | 77 |  | 1,051,231 |  | - |  | 8,121 |  | 772 |  | 1,942 |  | 614 |  | - |  | 95,322 |  | - |  | - |  | 2,350 |  | - |  | 6,520 |  | 13,269,365 |  | 11,921,742

The Company owns other investments in the amount of R$583 in the parent company and R$593 in the consolidated (R$583 in the parent company and in the consolidated as of December 31, 2020).

On December 31, 2021, these associates, affiliates and joint ventures do not have any restriction to amortize their loans or advances to the Company.

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| 13. | PROPERTY, PLANT AND EQUIPMENT

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

| Parent company
| Average rate (1) |  | 12.31.20 |  | Additions |  | Disposals |  | Transfers (2) |  | 12.31.21
Cost |  |  |  |  |  |  |  |  |  |  |
Land |  |  | 560,856 |  | 3,581 |  | (17,512) |  | 8,043 |  | 554,968
Buildings, facilities and improvements |  |  | 9,772,665 |  | 353,143 |  | (172,241) |  | 482,646 |  | 10,436,213
Machinery and equipment |  |  | 7,864,533 |  | 104,750 |  | (230,208) |  | 370,326 |  | 8,109,401
Furniture and fixtures |  |  | 106,031 |  | 391 |  | (3,613) |  | 10,549 |  | 113,358
Vehicles |  |  | 209,770 |  | 2,210 |  | (9,007) |  | 724 |  | 203,697
Construction in progress |  |  | 595,353 |  | 1,394,230 |  | - |  | (893,008) |  | 1,096,575
Advances to suppliers |  |  | 923 |  | 6,600 |  | - |  | - |  | 7,523
|  |  | 19,110,131 |  | 1,864,905 |  | (432,581) |  | (20,720) |  | 20,521,735
Depreciation |  |  |  |  |  |  |  |  |  |  |
Land (3) | 20.97% |  | (12,648) |  | (8,246) |  | 589 |  | - |  | (20,305)
Buildings, facilities and improvements | 9.45% |  | (3,683,103) |  | (599,231) |  | 102,083 |  | (8,292) |  | (4,188,543)
Machinery and equipment | 7.02% |  | (4,127,347) |  | (499,058) |  | 198,215 |  | 7,594 |  | (4,420,596)
Furniture and fixtures | 6.67% |  | (54,722) |  | (5,344) |  | 2,632 |  | 686 |  | (56,748)
Vehicles | 28.15% |  | (63,753) |  | (56,116) |  | 7,532 |  | 5 |  | (112,332)
|  |  | (7,941,573) |  | (1,167,995) |  | 311,051 |  | (7) |  | (8,798,524)
|  |  | 11,168,558 |  | 696,910 |  | (121,530) |  | (20,727) |  | 11,723,211

| (1) | Weighted average annual rate.

| (2) | Refers to the transfer of R$28,772 to intangible assets and R$8,045 from assets held for sale, in addition to transfers from Construction in progress to other items.

| (3) | Land depreciation refers to right-of-use assets. The amount of R$4,039 of depreciation was recognized in the cost of formation of forests and will be realized in the result according to the depletion (note 18.1).

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| Parent company
| Average rate |  | 12.31.19 |  | Additions |  | Disposals |  | Transfers |  | 12.31.20
Cost |  |  |  |  |  |  |  |  |  |  |
Land |  |  | 546,976 |  | 6,260 |  | (13,900) |  | 21,520 |  | 560,856
Buildings, facilities and improvements |  |  | 9,558,475 |  | 226,438 |  | (86,330) |  | 74,082 |  | 9,772,665
Machinery and equipment |  |  | 7,669,528 |  | 9,487 |  | (159,552) |  | 345,070 |  | 7,864,533
Furniture and fixtures |  |  | 101,855 |  | 468 |  | (6,505) |  | 10,213 |  | 106,031
Vehicles |  |  | 121,079 |  | 97,535 |  | (8,760) |  | (84) |  | 209,770
Construction in progress |  |  | 335,872 |  | 752,949 |  | - |  | (493,468) |  | 595,353
Advances to suppliers |  |  | - |  | - |  | - |  | 923 |  | 923
|  |  | 18,333,785 |  | 1,093,137 |  | (275,047) |  | (41,744) |  | 19,110,131
Depreciation |  |  |  |  |  |  |  |  |  |  |
Land | 20.97% |  | (4,258) |  | (6,834) |  | 244 |  | (1,800) |  | (12,648)
Buildings, facilities and improvements | 9.74% |  | (3,126,532) |  | (614,982) |  | 63,432 |  | (5,021) |  | (3,683,103)
Machinery and equipment | 6.67% |  | (3,790,298) |  | (441,873) |  | 103,623 |  | 1,201 |  | (4,127,347)
Furniture and fixtures | 6.67% |  | (54,854) |  | (5,231) |  | 5,461 |  | (98) |  | (54,722)
Vehicles | 27.12% |  | (24,541) |  | (40,913) |  | 1,617 |  | 84 |  | (63,753)
|  |  | (7,000,483) |  | (1,109,833) |  | 174,377 |  | (5,634) |  | (7,941,573)
|  |  | 11,333,302 |  | (16,696) |  | (100,670) |  | (47,378) |  | 11,168,558

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| Consolidated
| Average rate (1) |  | 12.31.20 |  | Additions |  | Disposals |  | Business combination (note 1.2) |  | Transfers (2) |  | Exchange rate variation |  | 12.31.21
Cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Land |  |  | 608,389 |  | 4,799 |  | (19,378) |  | 27,988 |  | 100,463 |  | (12,244) |  | 710,017
Buildings, facilities and improvements |  |  | 10,444,526 |  | 533,269 |  | (183,824) |  | 95,153 |  | 413,049 |  | (7,523) |  | 11,294,650
Machinery and equipment |  |  | 8,395,520 |  | 111,951 |  | (274,290) |  | 165,216 |  | 391,013 |  | (54,035) |  | 8,735,375
Furniture and fixtures |  |  | 157,085 |  | 3,959 |  | (8,076) |  | 5,092 |  | 4,833 |  | (12,028) |  | 150,865
Vehicles |  |  | 346,218 |  | 46,768 |  | (29,710) |  | 8,637 |  | 7,844 |  | 4,532 |  | 384,289
Construction in progress |  |  | 608,255 |  | 1,494,087 |  | (18,601) |  | 9,915 |  | (937,589) |  | (11,342) |  | 1,144,725
Advances to suppliers |  |  | 12,748 |  | 42,290 |  | - |  | - |  | (19,437) |  | (2,492) |  | 33,109
|  |  | 20,572,741 |  | 2,237,123 |  | (533,879) |  | 312,001 |  | (39,824) |  | (95,132) |  | 22,453,030
Depreciation |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Land (3) | 15.34% |  | (13,800) |  | (12,106) |  | 2,272 |  | - |  | (11,954) |  | (1,200) |  | (36,788)
Buildings, facilities and improvements | 8.11% |  | (3,851,225) |  | (763,843) |  | 111,746 |  | - |  | 3,668 |  | 5,219 |  | (4,494,435)
Machinery and equipment | 6.84% |  | (4,304,007) |  | (549,206) |  | 220,428 |  | - |  | 890 |  | 19,247 |  | (4,612,648)
Furniture and fixtures | 6.66% |  | (79,924) |  | (10,566) |  | 6,362 |  | - |  | 4,027 |  | 7,281 |  | (72,820)
Vehicles | 27.90% |  | (108,205) |  | (104,473) |  | 18,482 |  | - |  | 343 |  | (1,624) |  | (195,477)
|  |  | (8,357,161) |  | (1,440,194) |  | 359,290 |  | - |  | (3,026) |  | 28,923 |  | (9,412,168)
|  |  | 12,215,580 |  | 796,929 |  | (174,589) |  | 312,001 |  | (42,850) |  | (66,209) |  | 13,040,862

| (1) | Weighted average annual rate.

| (2) | Refers to the transfer of R$50,895 for intangible assets and R$8,045 from assets held for sale, in addition to transfers from Construction in progress to other items.

| (3) | Land depreciation refers to right-of-use assets. The amount of R$4,039 of depreciation was recognized in the cost of formation of forests and will be realized in the result according to the depletion (note 18.1).

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 63

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| Consolidated
| Average rate |  | 12.31.19 |  | Additions |  | Disposals |  | Transfers |  | Exchange rate variation |  | 12.31.20
Cost |  |  |  |  |  |  |  |  |  |  |  |  |
Land |  |  | 603,479 |  | 7,582 |  | (13,665) |  | 6,031 |  | 4,962 |  | 608,389
Buildings, facilities and improvements |  |  | 10,148,798 |  | 287,834 |  | (148,793) |  | 268 |  | 156,419 |  | 10,444,526
Machinery and equipment |  |  | 8,177,047 |  | 20,293 |  | (166,183) |  | 278,530 |  | 85,833 |  | 8,395,520
Furniture and fixtures |  |  | 140,439 |  | 851 |  | (8,604) |  | 18,946 |  | 5,453 |  | 157,085
Vehicles |  |  | 213,199 |  | 165,737 |  | (54,491) |  | (5,639) |  | 27,412 |  | 346,218
Construction in progress |  |  | 348,907 |  | 778,151 |  | - |  | (516,360) |  | (2,443) |  | 608,255
Advances to suppliers |  |  | 528 |  | 8,885 |  | - |  | 3,851 |  | (516) |  | 12,748
|  |  | 19,632,397 |  | 1,269,333 |  | (391,736) |  | (214,373) |  | 277,120 |  | 20,572,741
Depreciation |  |  |  |  |  |  |  |  |  |  |  |  |
Land | 21.32% |  | (5,086) |  | (7,132) |  | 813 |  | (1,802) |  | (593) |  | (13,800)
Buildings, facilities and improvements | 9.45% |  | (3,263,801) |  | (688,767) |  | 122,812 |  | 15,895 |  | (37,364) |  | (3,851,225)
Machinery and equipment | 6.64% |  | (3,950,250) |  | (487,956) |  | 110,163 |  | 56,748 |  | (32,712) |  | (4,304,007)
Furniture and fixtures | 6.67% |  | (71,779) |  | (11,704) |  | 6,931 |  | (801) |  | (2,571) |  | (79,924)
Vehicles | 25.87% |  | (64,592) |  | (72,562) |  | 41,236 |  | 2,389 |  | (14,676) |  | (108,205)
|  |  | (7,355,508) |  | (1,268,121) |  | 281,955 |  | 72,429 |  | (87,916) |  | (8,357,161)
|  |  | 12,276,889 |  | 1,212 |  | (109,781) |  | (141,944) |  | 189,204 |  | 12,215,580

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The amount of capitalized borrowing costs during the year ended December 31, 2021 was of R$56,337 in the parent company and R$57,001 in the consolidated (R$21,676 in the parent company and in the consolidated during the year ended December 31, 2020).

The weighted average rate used to determine the amount of borrowing costs subject to capitalization was 7.71% p.a. in the parent company and 7.77% p.a. in the consolidated (6.26% p.a. in the parent company and in the consolidated for the year ended December 31, 2020).

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

|  |  |  | Parent company | Consolidated
|  | Type of collateral |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Land |  | Financial/Tax |  | 150,420 |  | 223,918 |  | 150,420 |  | 223,918
Buildings, facilities and improvements |  | Financial/Tax |  | 1,207,344 |  | 1,491,531 |  | 1,209,662 |  | 1,491,531
Machinery and equipment |  | Financial/Labor/Tax/Civil |  | 1,280,116 |  | 1,470,295 |  | 1,284,033 |  | 1,470,295
Furniture and fixtures |  | Financial/Tax |  | 14,960 |  | 15,700 |  | 14,960 |  | 15,700
Vehicles |  | Financial/Tax |  | 276 |  | 294 |  | 276 |  | 294
|  |  |  | 2,653,116 |  | 3,201,738 |  | 2,659,351 |  | 3,201,738

| 14. | INTANGIBLE ASSETS

The intangible assets rollforward is set forth below:

|  |  | Parent company
| Average rate (1) |  | 12.31.20 |  | Additions |  | Disposals |  | Transfers |  | 12.31.21
Cost |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | 1,783,655 |  | - |  | - |  | - |  | 1,783,655
Trademarks |  |  | 1,152,885 |  | - |  | - |  | - |  | 1,152,885
Non-compete agreement |  |  | 71,764 |  | 1,369 |  | (3,183) |  | - |  | 69,950
Outgrowers relationship |  |  | 5,328 |  | 197 |  | (785) |  | - |  | 4,740
Patents |  |  | 6,205 |  | - |  | (3,720) |  | - |  | 2,485
Software |  |  | 613,041 |  | 5,214 |  | (64,038) |  | 171,804 |  | 726,021
Intangible in progress |  |  | 45,918 |  | 168,191 |  | - |  | (143,037) |  | 71,072
|  |  | 3,678,796 |  | 174,971 |  | (71,726) |  | 28,767 |  | 3,810,808
Amortization |  |  |  |  |  |  |  |  |  |  |
Non-compete agreement | 66.31% |  | (69,089) |  | (2,680) |  | 3,182 |  | - |  | (68,587)
Outgrowers relationship | 22.16% |  | (4,695) |  | (505) |  | 775 |  | - |  | (4,425)
Patents | 10.00% |  | (5,997) |  | (24) |  | 3,720 |  | - |  | (2,301)
Software | 39.31% |  | (412,539) |  | (176,542) |  | 63,917 |  | 5 |  | (525,159)
|  |  | (492,320) |  | (179,751) |  | 71,594 |  | 5 |  | (600,472)
|  |  | 3,186,476 |  | (4,780) |  | (132) |  | 28,772 |  | 3,210,336

| (1) | Weighted average annual rate.

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|  |  | Parent company
| Average rate (1) |  | 12.31.19 |  | Additions |  | Disposals |  | Transfers |  | 12.31.20
Cost |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | 1,783,655 |  | - |  | - |  | - |  | 1,783,655
Trademarks |  |  | 1,152,885 |  | - |  | - |  | - |  | 1,152,885
Non-compete agreement |  |  | 71,729 |  | 414 |  | (379) |  | - |  | 71,764
Outgrowers relationship |  |  | 14,604 |  | - |  | (9,276) |  | - |  | 5,328
Patents |  |  | 6,205 |  | - |  | - |  | - |  | 6,205
Software |  |  | 491,682 |  | 72,783 |  | (46,059) |  | 94,635 |  | 613,041
Intangible in progress |  |  | 11,450 |  | 94,733 |  | - |  | (60,265) |  | 45,918
|  |  | 3,532,210 |  | 167,930 |  | (55,714) |  | 34,370 |  | 3,678,796
Amortization |  |  |  |  |  |  |  |  |  |  |
Non-compete agreement | 36.27% |  | (57,690) |  | (11,779) |  | 380 |  | - |  | (69,089)
Outgrowers relationship | 12.75% |  | (12,744) |  | (1,030) |  | 9,079 |  | - |  | (4,695)
Patents | 10.00% |  | (5,524) |  | (473) |  | - |  | - |  | (5,997)
Software | 34.59% |  | (316,720) |  | (148,317) |  | 43,956 |  | 8,542 |  | (412,539)
|  |  | (392,678) |  | (161,599) |  | 53,415 |  | 8,542 |  | (492,320)
|  |  | 3,139,532 |  | 6,331 |  | (2,299) |  | 42,912 |  | 3,186,476

| (1) | Weighted average annual rate.

|  |  | Consolidated
| Average rate (1) |  | 12.31.20 |  | Additions |  | Disposals |  | Business combination (note 1.2) |  | Transfers |  | Exchange rate variation | 12.31.21
Cost |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | 2,935,577 |  | - |  | (6,145) |  | 468,604 |  | - |  | 27,147 | 3,425,183
Trademarks |  |  | 1,327,738 |  | - |  | - |  | 474,874 |  | - |  | (69,277) | 1,733,335
Non-compete agreement |  |  | 107,162 |  | 1,369 |  | (3,182) |  | 2,246 |  | - |  | 2,613 | 110,208
Outgrowers relationship |  |  | 5,328 |  | 197 |  | (785) |  | - |  | - |  | - | 4,740
Patents |  |  | 6,205 |  | - |  | (3,723) |  | - |  | 1,038 |  | (2) | 3,518
Customer relationship |  |  | 1,067,713 |  | - |  | - |  | 124,569 |  | - |  | (72,748) | 1,119,534
Software |  |  | 657,255 |  | 5,220 |  | (64,045) |  | 1,828 |  | 172,107 |  | (1,966) | 770,399
Intangible in progress |  |  | 46,054 |  | 178,059 |  | - |  | - |  | (125,275) |  | (122) | 98,716
|  |  | 6,153,032 |  | 184,845 |  | (77,880) |  | 1,072,121 |  | 47,870 |  | (114,355) | 7,265,633
Amortization |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-compete agreement | 49.02% |  | (97,408) |  | (10,086) |  | 3,182 |  | - |  | - |  | (2,437) | (106,749)
Outgrowers relationship | 22.16% |  | (4,695) |  | (505) |  | 775 |  | - |  | - |  | - | (4,425)
Patents | 10.00% |  | (5,999) |  | (42) |  | 3,723 |  | - |  | (614) |  | 4 | (2,928)
Customer relationship | 7.91% |  | (375,131) |  | (84,010) |  | - |  | - |  | - |  | 21,367 | (437,774)
Software | 39.50% |  | (449,697) |  | (180,026) |  | 63,920 |  | - |  | 3,639 |  | (1,779) | (563,943)
|  |  | (932,930) |  | (274,669) |  | 71,600 |  | - |  | 3,025 |  | 17,155 | (1,115,819)
|  |  | 5,220,102 |  | (89,824) |  | (6,280) |  | 1,072,121 |  | 50,895 |  | (97,200) | 6,149,814

| (1) | Weighted average annual rate.

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 66

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|  |  | Consolidated
| Average rate (1) |  | 12.31.19 |  | Additions |  | Disposals |  | Transfers |  | Exchange rate variation |  | 12.31.20
Cost |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | 2,713,602 |  | - |  | - |  | (6,970) |  | 228,945 |  | 2,935,577
Trademarks |  |  | 1,322,262 |  | - |  | - |  | - |  | 5,476 |  | 1,327,738
Non-compete agreement |  |  | 99,229 |  | 413 |  | (379) |  | - |  | 7,899 |  | 107,162
Outgrowers relationship |  |  | 14,604 |  | - |  | (9,276) |  | - |  | - |  | 5,328
Patents |  |  | 6,305 |  | - |  | (115) |  | - |  | 15 |  | 6,205
Customer relationship |  |  | 892,758 |  | - |  | - |  | - |  | 174,955 |  | 1,067,713
Software |  |  | 523,615 |  | 73,423 |  | (45,851) |  | 97,117 |  | 8,951 |  | 657,255
Intangible in progress |  |  | 12,151 |  | 95,111 |  | - |  | (61,434) |  | 226 |  | 46,054
|  |  | 5,584,526 |  | 168,947 |  | (55,621) |  | 28,713 |  | 426,467 |  | 6,153,032
Amortization |  |  |  |  |  |  |  |  |  |  |  |  |
Non-compete agreement | 23.41% |  | (74,190) |  | (18,784) |  | 379 |  | - |  | (4,813) |  | (97,408)
Outgrowers relationship | 12.75% |  | (12,744) |  | (1,030) |  | 9,079 |  | - |  | - |  | (4,695)
Patents | 10.00% |  | (5,626) |  | (476) |  | 115 |  | - |  | (12) |  | (5,999)
Customer relationship | 7.35% |  | (242,263) |  | (79,969) |  | - |  | - |  | (52,899) |  | (375,131)
Software | 34.22% |  | (341,624) |  | (153,288) |  | 43,718 |  | 9,562 |  | (8,065) |  | (449,697)
|  |  | (676,447) |  | (253,547) |  | 53,291 |  | 9,562 |  | (65,789) |  | (932,930)
|  |  | 4,908,079 |  | (84,600) |  | (2,330) |  | 38,275 |  | 360,678 |  | 5,220,102

| (1) | Weighted average annual rate.

14.1. Impairment test

The impairment test of assets is carried out annually based on the discounted cash flow method, which is prepared in order to determine the value in use of the Company’s cash-generating units (“CGU”). In 2021, the Company used its budget, strategic and financial planning with projections until 2026 and average perpetuity of the cash generating units of 3.10% p.a., based on the history of recent years, as well as in the economic and financial projections of each market in which the Company operates, in addition to official information from independent and governmental institutions.

The discount rate used by Management to prepare discounted cash flows varied from 9.14% p.a. to 11.60% p.a. according to the CGU. The assumptions presented in the table below were also adopted:

|  | 2022 |  | 2023 |  | 2024 |  | 2025 |  | 2026
Inflation Brazil |  | 4.13% |  | 3.12% |  | 3.12% |  | 2.99% |  | 3.06%
Inflation - United States |  | 2.40% |  | 2.17% |  | 2.01% |  | 2.01% |  | 2.05%
Exchange rate - BRL / USD |  | 5.45 |  | 5.45 |  | 5.45 |  | 5.45 |  | 5.45

The rates presented above don’t consider the effects of income taxes.

Based on Management’s analysis, no impairment adjustments were identified.

In addition to the analysis mentioned above, Management prepared a deterministic sensitivity analysis considering the variations in the Earnings Before Interest and Tax (“EBIT”) margin and in the nominal discount rate as shown below:

|  |  | Variations |  |
Apreciation (devaluation) | 1.0% |  | 0.0% |  | (1.0%)
BRAZIL CGU |  |  |  |  |
Discount rate | 12.60% |  | 11.60% |  | 10.60%
Ebit Margin | 7.85% |  | 6.85% |  | 5.85%
INTERNATIONAL CGU´s |  |  |  |  |
Discount rate | 10.62% |  | 9.62% |  | 8.62%
Ebit Margin | 8.40% |  | 7.40% |  | 6.40%

The Company, in its sensitivity analysis, did not identify any scenarios in which an impairment was necessary.

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 67

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| 15. | LOANS AND BORROWINGS

| Parent company
| Charges (p.a.) |  | Average rate (1) |  | WAMT (2) |  | 12.31.20 |  | Borrowing |  | Amortization |  | Interest paid |  | Interest accrued |  | Exchange rate variation |  | 12.31.21
Local currency |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Working capital | Fixed |  | 5.14% (3.25% on 12.31.20) |  | 0.6 |  | 368,681 |  | 400,000 |  | (387,154) |  | (11,909) |  | 13,724 |  | - |  | 383,342
Certificate of agribusiness receivables (3) | IPCA |  | 16.57% (10.21% on 12.31.20) |  | 2.0 |  | 821,093 |  | - |  | - |  | 95 |  | 146,760 |  | - |  | 967,948
Export credit facility (4) | Fixed / CDI / FX USD |  | 10.99% (3.69% on 12.31.20) |  | 4.2 |  | 2,408,697 |  | 937,250 |  | - |  | (117,679) |  | 121,936 |  | 150,671 |  | 3,500,875
Debentures | CDI / IPCA |  | 15.54% (8.28% on 12.31.20) |  | 7.3 |  | 3,022,005 |  | 965,549 |  | - |  | (188,668) |  | 411,129 |  | - |  | 4,210,015
Fiscal incentives | Fixed |  | 2.40% (2.40% on 12.31.20) |  | - |  | 44,816 |  | 82,064 |  | (123,236) |  | (797) |  | 754 |  | - |  | 3,601
|  |  |  |  |  |  | 6,665,292 |  | 2,384,863 |  | (510,390) |  | (318,958) |  | 694,303 |  | 150,671 |  | 9,065,781
Foreign currency |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Bonds | Fixed / FX USD and EUR |  | 4.92% (4.91% on 12.31.20) |  | 13.0 |  | 12,252,326 |  | - |  | (314,806) |  | (729,170) |  | 763,826 |  | 792,111 |  | 12,764,287
Export credit facility | Fixed / LIBOR /FX USD |  | 3.06% (3.13% on 12.31.20) |  | 4.2 |  | 392,636 |  | - |  | (135,668) |  | (10,874) |  | 9,818 |  | 25,200 |  | 281,112
Advances for foreign exchange rate contracts | Fixed / FX USD |  | - |  | - |  | - |  | 249,000 |  | (249,000) |  | (1,242) |  | 1,242 |  | - |  | -
|  |  |  |  |  |  | 12,644,962 |  | 249,000 |  | (699,474) |  | (741,286) |  | 774,886 |  | 817,311 |  | 13,045,399
|  |  |  |  |  |  | 19,310,254 |  | 2,633,863 |  | (1,209,864) |  | (1,060,244) |  | 1,469,189 |  | 967,982 |  | 22,111,180
Current |  |  |  |  |  |  | 811,919 |  |  |  |  |  |  |  |  |  |  |  | 2,790,926
Non-current |  |  |  |  |  |  | 18,498,335 |  |  |  |  |  |  |  |  |  |  |  | 19,320,254

| (1) | Weighted average annual rate.

| (2) | Weighted average maturity in years.

| (3) | The Certificates of Agribusiness Receivables (“CRA”) issued by the Company are backed by receivables of BRF S.A. from certain subsidiaries abroad.

| (4) | On December 31, 2021, includes the amount of R$2,160,061 (R$2,408,697 on December 31, 2020) referring to an Export Credit Facility issued in Reais simultaneously and in connection with a foreign exchange rate swap, resulting essentially in a net cash flow in U.S. Dollars. As the transactions are inseparable, both are recorded together under Loans and Borrowings by their amortized cost.

The maturity schedule of the loans and borrowings is presented on note 24.3.

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 68

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| Parent company
| Charges (p.a.) |  | Average rate |  | WAMT |  | 12.31.19 |  | Borrowing |  | Amortization |  | Interest paid |  | Interest accrued |  | Exchange rate variation |  | 12.31.20
Local currency |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Working capital | Fixed / CDI |  | 3.25% (6.07% on 12.31.19) |  | 0.6 |  | 3,312,639 |  | 1,200,000 |  | (3,947,237) |  | (340,227) |  | 143,506 |  | - |  | 368,681
Certificate of agribusiness receivables | CDI / IPCA |  | 10.21% (6.73% on 12.31.19) |  | 3.0 |  | 1,597,447 |  | - |  | (780,000) |  | (100,932) |  | 104,578 |  | - |  | 821,093
Development bank credit lines | Fixed / Selic / TJLP |  | (5.09% on 12.31.19) |  | - |  | 45,516 |  | - |  | (45,470) |  | (427) |  | 381 |  | - |  | -
Export credit facility | Fixed / CDI / USD |  | 3.69% (5.83% on 12.31.19) |  | 6.8 |  | 1,612,365 |  | 1,490,809 |  | (1,113,176) |  | (111,498) |  | 152,968 |  | 377,229 |  | 2,408,697
Special program asset restructuring | IGPM |  | (12.22% on 12.31.19) |  | - |  | 284,308 |  | - |  | (287,621) |  | (5,142) |  | 8,455 |  | - |  | -
Debentures | CDI / IPCA |  | 8.28% (7.40% on 12.31.19) |  | 7.7 |  | 755,760 |  | 2,124,725 |  | - |  | (38,339) |  | 179,859 |  | - |  | 3,022,005
Fiscal incentives | Fixed |  | 2.40% (2.40% on 12.31.19) |  | - |  | 5,720 |  | 73,671 |  | (34,609) |  | (667) |  | 701 |  | - |  | 44,816
|  |  |  |  |  |  | 7,613,755 |  | 4,889,205 |  | (6,208,113) |  | (597,232) |  | 590,448 |  | 377,229 |  | 6,665,292
Foreign currency |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Bonds | Fixed / USD / EUR |  | 4.91% (4.36% on 12.31.19) |  | 13.8 |  | 8,407,975 |  | 4,282,961 |  | (3,006,334) |  | (642,851) |  | 777,917 |  | 2,432,658 |  | 12,252,326
Export credit facility | Fixed / LIBOR / USD |  | 3.13% (5.77% on 12.31.19) |  | 2.2 |  | 407,274 |  | - |  | (118,113) |  | (20,685) |  | 17,627 |  | 106,533 |  | 392,636
Advances for foreign exchange rate contracts | Fixed / USD |  | - |  | - |  | - |  | 529,211 |  | (529,210) |  | - |  | - |  | (1) |  | -
|  |  |  |  |  |  | 8,815,249 |  | 4,812,172 |  | (3,653,657) |  | (663,536) |  | 795,544 |  | 2,539,190 |  | 12,644,962
|  |  |  |  |  |  | 16,429,004 |  | 9,701,377 |  | (9,861,770) |  | (1,260,768) |  | 1,385,992 |  | 2,916,419 |  | 19,310,254
Current |  |  |  |  |  |  | 3,033,034 |  |  |  |  |  |  |  |  |  |  |  | 811,919
Non-current |  |  |  |  |  |  | 13,395,970 |  |  |  |  |  |  |  |  |  |  |  | 18,498,335

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 69

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| Consolidated
| Charges (p.a.) |  | Average rate (1) |  | WAMT (2) |  | 12.31.20 |  | Borrowing |  | Business combination (note 1.2) |  | Amortization |  | Interest paid |  | Interest accrued |  | Exchange rate variation |  | 12.31.21
Local currency |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Working capital | Fixed / CDI |  | 5.24% (3.25% on 12.31.20) |  | 0.7 |  | 368,681 |  | 400,000 |  | 25,950 |  | (389,734) |  | (11,910) |  | 13,975 |  | - |  | 406,962
Certificate of agribusiness receivables (3) | IPCA |  | 16.57% (10.21% on 12.31.20) |  | 2.0 |  | 821,093 |  | - |  | - |  | - |  | 95 |  | 146,760 |  | - |  | 967,948
Development bank credit lines | TJLP / TLP/ IPCA / FINAME |  | 3.12% |  | 3.7 |  | - |  | - |  | 9,006 |  | (1,351) |  | (87) |  | 111 |  | - |  | 7,679
Debentures | CDI / IPCA |  | 15.54% (8.28% on 12.31.20) |  | 7.3 |  | 3,022,005 |  | 965,549 |  | - |  | - |  | (188,668) |  | 411,129 |  | - |  | 4,210,015
Export credit facility (4) | Fixed / CDI / FX USD |  | 10.87% (3.69% on 12.31.20) |  | 4.2 |  | 2,408,697 |  | 937,250 |  | 20,456 |  | (5,632) |  | (117,679) |  | 122,510 |  | 150,671 |  | 3,516,273
Fiscal incentives | Fixed |  | 2.40% (2.40% on 12.31.20) |  | - |  | 44,816 |  | 82,064 |  | - |  | (123,236) |  | (797) |  | 754 |  | - |  | 3,601
|  |  |  |  |  |  | 6,665,292 |  | 2,384,863 |  | 55,412 |  | (519,953) |  | (319,046) |  | 695,239 |  | 150,671 |  | 9,112,478
Foreign currency |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Bonds | Fixed / FX USD and EUR |  | 4.82% (4.81% on 12.31.20) |  | 11.6 |  | 14,829,993 |  | - |  | - |  | (314,806) |  | (790,836) |  | 888,804 |  | 930,857 |  | 15,544,012
Export credit facility | Fixed / LIBOR / FX USD |  | 3.43% (3.13% on 12.31.20) |  | 1.3 |  | 392,636 |  | - |  | 30,476 |  | (138,870) |  | (10,867) |  | 10,466 |  | 27,544 |  | 311,385
Advances for foreign exchange rate contracts | Fixed / FX USD |  | - |  | - |  | - |  | 249,000 |  | 2,672 |  | (249,000) |  | (1,182) |  | 1,363 |  | 250 |  | 3,103
Working capital | Fixed / FX TRY and USD |  | 13.35% (10.98% on 12.31.20) |  | 1.5 |  | 516,505 |  | 356,919 |  | 29,555 |  | (172,718) |  | (71,436) |  | 85,339 |  | (259,112) |  | 485,052
|  |  |  |  |  |  | 15,739,134 |  | 605,919 |  | 62,703 |  | (875,394) |  | (874,321) |  | 985,972 |  | 699,539 |  | 16,343,552
|  |  |  |  |  |  | 22,404,426 |  | 2,990,782 |  | 118,115 |  | (1,395,347) |  | (1,193,367) |  | 1,681,211 |  | 850,210 |  | 25,456,030
Current |  |  |  |  |  |  | 1,059,984 |  |  |  |  |  |  |  |  |  |  |  |  |  | 3,203,068
Non-current |  |  |  |  |  |  | 21,344,442 |  |  |  |  |  |  |  |  |  |  |  |  |  | 22,252,962

| (1) | Weighted average annual rate.

| (2) | Weighted average maturity in years.

| (3) | The Certificate of Agribusiness Receivable (“CRA”) issued by the Company are backed by receivables of BRF S.A. from certain subsidiaries abroad.

| (4) | On December 31, 2021, includes the amount of R$2,160,061 (R$2,408,697 on December 31, 2020) referring to an Export Credit Facility issued in Reais simultaneously and in connection with a foreign exchange rate swap, resulting essentially in a net cash flow in U.S. Dollars. As the transactions are inseparable, both are recorded together under Loans and Borrowings by their amortized cost.

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 70

Table of Contents

| Consolidated
| Charges (p.a.) |  | Average rate |  | WAMT |  | 12.31.19 |  | Borrowing |  | Amortization |  | Interest paid |  | Interest accrued |  | Exchange rate variation |  | 12.31.20
Local currency |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Working capital | Fixed / CDI |  | 3.25% (6.07% on 12.31.19) |  | 0.6 |  | 3,312,639 |  | 1,200,000 |  | (3,947,237) |  | (340,227) |  | 143,506 |  | - |  | 368,681
Certificate of agribusiness receivables | CDI / IPCA |  | 10.21% (6.73% on 12.31.19) |  | 3.0 |  | 1,597,447 |  | - |  | (780,000) |  | (100,932) |  | 104,578 |  | - |  | 821,093
Development bank credit lines | Fixed / Selic / TJLP |  | (5.09% on 12.31.19) |  | - |  | 45,516 |  | - |  | (45,470) |  | (427) |  | 381 |  | - |  | -
Debentures | CDI / IPCA |  | 8.28% (7.40% on 12.31.19) |  | 7.7 |  | 755,760 |  | 2,124,725 |  | - |  | (38,339) |  | 179,859 |  | - |  | 3,022,005
Export credit facility | Fixed / CDI / USD |  | 3.69% (5.83% on 12.31.19) |  | 6.8 |  | 1,612,365 |  | 1,490,809 |  | (1,113,176) |  | (111,498) |  | 152,968 |  | 377,229 |  | 2,408,697
Special program asset restructuring | IGPM |  | (12.22% on 12.31.19) |  | - |  | 284,308 |  | - |  | (287,621) |  | (5,142) |  | 8,455 |  | - |  | -
Fiscal incentives | Fixed |  | 2.40% (2.40% on 12.31.19) |  | - |  | 5,720 |  | 73,671 |  | (34,609) |  | (667) |  | 701 |  | - |  | 44,816
|  |  |  |  |  |  | 7,613,755 |  | 4,889,205 |  | (6,208,113) |  | (597,232) |  | 590,448 |  | 377,229 |  | 6,665,292
Foreign currency |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Bonds | Fixed / USD / EUR |  | 4.81% (4.36% on 12.31.19) |  | 12.4 |  | 10,407,484 |  | 4,282,961 |  | (3,010,421) |  | (760,879) |  | 881,137 |  | 3,029,711 |  | 14,829,993
Export credit facility | Fixed / LIBOR / USD |  | 3.13% (5.77% on 12.31.19) |  | 2.2 |  | 407,275 |  | - |  | (118,113) |  | (20,686) |  | 17,627 |  | 106,533 |  | 392,636
Advances for foreign exchange rate contracts | Fixed / USD |  | - |  | - |  | - |  | 529,211 |  | (529,210) |  | - |  | - |  | (1) |  | -
Working capital | Fixed / TRY |  | 10.98% (16.56% on 12.31.19) |  | 1.2 |  | 191,765 |  | 718,956 |  | (381,502) |  | (42,742) |  | 46,704 |  | (16,676) |  | 516,505
|  |  |  |  |  |  | 11,006,524 |  | 5,531,128 |  | (4,039,246) |  | (824,307) |  | 945,468 |  | 3,119,567 |  | 15,739,134
|  |  |  |  |  |  | 18,620,279 |  | 10,420,333 |  | (10,247,359) |  | (1,421,539) |  | 1,535,916 |  | 3,496,796 |  | 22,404,426
Current |  |  |  |  |  |  | 3,132,029 |  |  |  |  |  |  |  |  |  |  |  | 1,059,984
Non-current |  |  |  |  |  |  | 15,488,250 |  |  |  |  |  |  |  |  |  |  |  | 21,344,442

On December 31, 2021 and on December 31, 2020 the Company did not have any financial covenant clauses related to its loans and borrowings agreements.

The maturity schedule of the loans and borrowings is presented on note 24.3.

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 71

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15.1. Revolving credit facility

With the purpose of maintaining a prudential and sustainable short-term liquidity position, in line with the adoption of measures to extend its average debt maturity and reduce 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. On October 28, 2020 the Company retained an additional revolving credit facility before Banco do Brasil, up to the limit of R$1,500,000, for the next three years. The referenced credit facilities can be withdrawn totally or partially, at the Company’s will, whenever necessary. As of December 31, 2021, the credit facilities were available, but unused.

15.2. Issuance of debentures

On June 02, 2021, 1,000,000 (one million) Debentures were subscribed with a notional value of R$ 1,000.00 (one thousand Brazilian Reais), in a total amount of R$1,000,000, in a single series. The Debentures are simple, not convertible into shares, unsecured and for private placement. The Debentures were privately placed with VERT Companhia Securitizadora, to back its sixtieth issuance of Agribusiness Receivables Certificates which were object of public distribution with restricted placement efforts.

Parent company and Consolidated
12.31.21
Operation |  | Series |  | Issue date |  | Maturity |  | Rate |  | Notional |  | Updated Value
Debenture - 3rd Issue |  | 1st Series |  | 06.02.21 |  | 05.14.31 |  | IPCA + 4.78% p.a. |  | 1,000,000 |  | 1,034,706

The issuance costs of R$34,258 are recognized on the statement of income over the term of the debt according to the effective interest rate method.

| 15.3. | Senior Notes repurchase offer

During June 2021, the Company made an offer to repurchase its 4.875% Senior Notes due on 2030, in which it repurchased the principal amount equivalent to R$297,141 (USD59,402). The Company paid the amount of R$317,532 for the repurchase of these liabilities, amount that includes principal, interest and premium. The Company incurred in financial expenses in the amount of R$14,114 with the premium paid, R$2,491 with taxes and R$3,089 with the write-off of the costs of issuance. The principal outstanding after the repurchase is equivalent to R$3,454,509 (USD690,598).

15.4. Guarantees

| Parent company |  | Consolidated
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Total loans and borrowings | 22,111,180 |  | 19,310,254 |  | 25,456,030 |  | 22,404,426
Mortgage guarantees | 3,601 |  | 44,816 |  | 20,343 |  | 44,816
Related to FINAME | - |  | - |  | 16,742 |  | -
Related to tax incentives and other | 3,601 |  | 44,816 |  | 3,601 |  | 44,816

On December 31, 2021, the amount of bank guarantees contracted by the Company was of R$478,468 (R$590,933 as of December 31, 2020) which were offered mainly in litigations involving the Company’s use of tax credits. These guarantees have an average cost of 1.93% p.a. (1.95% p.a. as of December 31, 2020).

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| 16. | TRADE ACCOUNTS PAYABLE

| Parent company |  | Consolidated
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Trade accounts payable |  |  |  |  |  |  |
Domestic market |  |  |  |  |  |  |
Third parties | 9,687,524 |  | 7,596,325 |  | 9,812,778 |  | 7,611,170
Related parties | 26,106 |  | 13,100 |  | - |  | -
Foreign market |  |  |  |  |  |  |
Third parties | 850,441 |  | 648,960 |  | 2,019,824 |  | 1,487,206
| 10,564,071 |  | 8,258,385 |  | 11,832,602 |  | 9,098,376
(-) Adjustment to present value | (114,599) |  | (88,373) |  | (117,978) |  | (88,389)
| 10,449,472 |  | 8,170,012 |  | 11,714,624 |  | 9,009,987
Current | 10,440,754 |  | 8,156,231 |  | 11,701,996 |  | 8,996,206
Non-current | 8,718 |  | 13,781 |  | 12,628 |  | 13,781

Within the trade accounts payable balance as of December 31, 2021, R$3,754,104 in the parent company and R$3,905,827 in the consolidated (R$2,510,757 in the parent company and R$2,576,071 in the consolidated as of December 31, 2020) correspond 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
|  | 12.31.21 |  | 12.31.20
Supply chain finance |  |  |  |
Domestic market |  | 1,971,441 |  | 1,309,167
Foreign market |  | 293,732 |  | 165,060
|  | 2,265,173 |  | 1,474,227
(-) Adjustment to present value |  | (27,198) |  | (21,590)
|  | 2,237,975 |  | 1,452,637

The Company has agreements with several financial institutions that allow the suppliers to anticipate their receivables. The suppliers may choose whether to participate and if so, with which institution. The anticipation allows the suppliers to better manage their cash flow needs. This flexibility allows the Company to intensify its commercial relations with the network of suppliers by potentially leveraging benefits such as preference for supply in case of restricted supply, better price conditions and/or more flexible payment terms, among others, without identifiable changes in other commercial conditions. The operations presented in this line item are the ones in which there were changes in the payment terms and prices negotiated with the suppliers.

On December 31, 2021, 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 0.67% and 1.02% p.m. (0.38% to 0.47% p.m. on December 31, 2020).

On December 31, 2021, 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 0.19% and 0.39% p.m. (0.18% to 0.40% p.m. on December 31, 2020).

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| 18. | LEASES

The Company is lessee in several lease agreements for forest lands, offices, distribution centers, outgrowers, vehicles, among others. Some contracts have a renewal option for an additional period at the end of the agreement, established by contractual amendments. Automatic renewals or renewals for undetermined periods are not allowed.

The contract clauses mentioned, with respect to renewal, readjustment and purchase option, are contracted according to market practices. In addition, there are no clauses of contingent payments or restrictions on dividends distribution, payments of interest on shareholders’ equity or obtaining debt.

18.1. Right-of-use assets

The right-of-use assets as set forth below are part of the balances of property, plant and equipment and intangible assets (notes 13 and 14).

| Parent company
| Average rate (1) |  | 12.31.20 |  | Additions |  | Disposals |  | 12.31.21
Cost |  |  |  |  |  |  |  |  |
Land |  |  | 45,592 |  | 3,429 |  | (1,507) |  | 47,514
Buildings |  |  | 2,642,544 |  | 353,028 |  | (82,928) |  | 2,912,644
Machinery and equipment |  |  | 112,195 |  | 98,353 |  | (98,569) |  | 111,979
Vehicles |  |  | 201,924 |  | 2,210 |  | (7,885) |  | 196,249
Software |  |  | 74,582 |  | 5,214 |  | (64) |  | 79,732
|  |  | 3,076,837 |  | 462,234 |  | (190,953) |  | 3,348,118
Depreciation |  |  |  |  |  |  |  |  |
Land | 15.66% |  | (12,376) |  | (8,170) |  | 588 |  | (19,958)
Buildings | 26.48% |  | (848,016) |  | (389,368) |  | 53,555 |  | (1,183,829)
Machinery and equipment | 67.61% |  | (107,089) |  | (63,605) |  | 98,359 |  | (72,335)
Vehicles | 28.68% |  | (57,575) |  | (55,626) |  | 6,796 |  | (106,405)
Software | 42.19% |  | (33,048) |  | (28,209) |  | 64 |  | (61,193)
|  |  | (1,058,104) |  | (544,978) |  | 159,362 |  | (1,443,720)
|  |  | 2,018,733 |  | (82,744) |  | (31,591) |  | 1,904,398

| (1) | Weighted average annual rate.

| Parent company
| Average rate (1) |  | 12.31.19 |  | Additions |  | Disposals |  | Transfers |  | 12.31.20
Cost |  |  |  |  |  |  |  |  |  |  |
Land |  |  | 20,499 |  | 4,732 |  | (390) |  | 20,751 |  | 45,592
Buildings |  |  | 2,446,641 |  | 226,398 |  | (28,008) |  | (2,487) |  | 2,642,544
Machinery and equipment |  |  | 114,571 |  | 5,518 |  | (7,894) |  | - |  | 112,195
Vehicles |  |  | 112,917 |  | 97,535 |  | (8,528) |  | - |  | 201,924
Software |  |  | 55,705 |  | 72,766 |  | (35,625) |  | (18,264) |  | 74,582
|  |  | 2,750,333 |  | 406,949 |  | (80,445) |  | - |  | 3,076,837
Depreciation |  |  |  |  |  |  |  |  |  |  |
Land | 15.97% |  | (4,258) |  | (6,560) |  | 241 |  | (1,799) |  | (12,376)
Buildings | 28.28% |  | (459,122) |  | (408,625) |  | 26,496 |  | (6,765) |  | (848,016)
Machinery and equipment | 42.53% |  | (96,684) |  | (17,634) |  | 7,229 |  | - |  | (107,089)
Vehicles | 27.62% |  | (18,550) |  | (40,431) |  | 1,406 |  | - |  | (57,575)
Software | 45.21% |  | (44,815) |  | (32,422) |  | 35,625 |  | 8,564 |  | (33,048)
|  |  | (623,429) |  | (505,672) |  | 70,997 |  | - |  | (1,058,104)
|  |  | 2,126,904 |  | (98,723) |  | (9,448) |  | - |  | 2,018,733

| (1) | Weighted average annual rate.

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| Consolidated
| Average rate (1) |  | 12.31.20 |  | Additions |  | Disposals |  | Transfers |  | Business combination (note 1.2) |  | Exchange rate variation |  | 12.31.21
Cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Land |  |  | 48,661 |  | 3,761 |  | (2,503) |  | 90,549 |  | - |  | 4,926 |  | 145,394
Buildings |  |  | 2,861,916 |  | 532,728 |  | (88,723) |  | (90,549) |  | 6,252 |  | 2,001 |  | 3,223,625
Machinery and equipment |  |  | 112,593 |  | 98,353 |  | (98,918) |  | 596 |  | 4,527 |  | 261 |  | 117,412
Vehicles |  |  | 344,918 |  | 46,707 |  | (29,186) |  | (596) |  | 851 |  | 7,285 |  | 369,979
Software |  |  | 74,582 |  | 5,213 |  | (64) |  | - |  | - |  | - |  | 79,731
|  |  | 3,442,670 |  | 686,762 |  | (219,394) |  | - |  | 11,630 |  | 14,473 |  | 3,936,141
Depreciation |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Land | 9.03% |  | (13,526) |  | (12,030) |  | 1,533 |  | (11,954) |  | - |  | (462) |  | (36,439)
Buildings | 21.29% |  | (914,816) |  | (535,838) |  | 59,332 |  | 11,954 |  | - |  | (4,600) |  | (1,383,968)
Machinery and equipment | 57.13% |  | (107,316) |  | (64,228) |  | 98,673 |  | (338) |  | - |  | (176) |  | (73,385)
Vehicles | 28.83% |  | (101,495) |  | (102,320) |  | 17,699 |  | 338 |  | - |  | (4,039) |  | (189,817)
Software | 42.22% |  | (33,048) |  | (28,209) |  | 64 |  | - |  | - |  | - |  | (61,193)
|  |  | (1,170,201) |  | (742,625) |  | 177,301 |  | - |  | - |  | (9,277) |  | (1,744,802)
|  |  | 2,272,469 |  | (55,863) |  | (42,093) |  | - |  | 11,630 |  | 5,196 |  | 2,191,339

| (1) | Weighted average annual rate.

| Consolidated
| Average rate (1) |  | 12.31.19 |  | Additions |  | Disposals | Transfers |  |  | Exchange rate variation |  | 12.31.20
Cost |  |  |  |  |  |  |  |  |  |  |  |  |
Land |  |  | 22,790 |  | 5,900 |  | (961) | 20,751 |  |  | 181 |  | 48,661
Buildings |  |  | 2,615,883 |  | 287,451 |  | (86,557) | (2,487) |  |  | 47,626 |  | 2,861,916
Machinery and equipment |  |  | 115,173 |  | 5,518 |  | (8,289) | - |  |  | 191 |  | 112,593
Vehicles |  |  | 207,443 |  | 165,699 |  | (54,260) | - |  |  | 26,036 |  | 344,918
Software |  |  | 55,705 |  | 72,766 |  | (35,625) | (18,264) |  |  | - |  | 74,582
|  |  | 3,016,994 |  | 537,334 |  | (185,692) | - |  |  | 74,034 |  | 3,442,670
Depreciation |  |  |  |  |  |  |  |  |  |  |  |  |
Land | 16.32% |  | (5,086) |  | (6,861) |  | 813 | (1,799) |  |  | (593) |  | (13,526)
Buildings | 29.11% |  | (512,836) |  | (464,159) |  | 85,042 | (6,765) |  |  | (16,098) |  | (914,816)
Machinery and equipment | 42.48% |  | (96,958) |  | (17,865) |  | 7,610 | - |  |  | (103) |  | (107,316)
Vehicles | 26.39% |  | (57,357) |  | (71,768) |  | 41,024 | - |  |  | (13,394) |  | (101,495)
Software | 45.21% |  | (44,815) |  | (32,422) |  | 35,625 | 8,564 |  |  | - |  | (33,048)
|  |  | (717,052) |  | (593,075) |  | 170,114 | - |  |  | (30,188) |  | (1,170,201)
|  |  | 2,299,942 |  | (55,741) |  | (15,578) | - |  |  | 43,846 |  | 2,272,469

| (1) | Weighted average annual rate.

| 18.2. | Lease liabilities

| Parent company
| WAM (1) |  | 12.31.20 |  | Additions |  | Payments |  | Interest paid |  | Interest accrued |  | Disposals |  | 12.31.21
Land | 6.8 |  | 35,934 |  | 3,429 |  | (5,562) |  | (4,576) |  | 4,576 |  | (1,108) |  | 32,693
Buildings | 6.8 |  | 2,033,405 |  | 353,028 |  | (382,725) |  | (96,387) |  | 162,359 |  | (92,397) |  | 1,977,283
Machinery and equipment | 1.5 |  | 3,591 |  | 98,353 |  | (61,723) |  | (3,615) |  | 3,615 |  | (1) |  | 40,220
Vehicles | 2.3 |  | 152,554 |  | 2,210 |  | (55,118) |  | (10,861) |  | 10,861 |  | (1,186) |  | 98,460
Software | 1.5 |  | 43,210 |  | 5,214 |  | (28,757) |  | (2,306) |  | 2,306 |  | - |  | 19,667
|  |  | 2,268,694 |  | 462,234 |  | (533,885) |  | (117,745) |  | 183,717 |  | (94,692) |  | 2,168,323
Current |  |  | 302,946 |  |  |  |  |  |  |  |  |  |  |  | 364,470
Non-current |  |  | 1,965,748 |  |  |  |  |  |  |  |  |  |  |  | 1,803,853

| (1) | Weighted average maturity in years.

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| Parent company
| WAM (1) |  | 12.31.19 |  | Additions |  | Payments |  | Interest paid |  | Interest accrued |  | Disposals |  | Transfers |  | 12.31.20
Land | 6.6 |  | 18,707 |  | 4,732 |  | (5,279) |  | (4,165) |  | 4,166 |  | (1,729) |  | 19,502 |  | 35,934
Buildings | 7.6 |  | 2,106,997 |  | 249,152 |  | (374,390) |  | (87,864) |  | 159,200 |  | (761) |  | (18,929) |  | 2,033,405
Machinery and equipment | 2.0 |  | 25,349 |  | 5,518 |  | (26,544) |  | (13,268) |  | 13,268 |  | (740) |  | 8 |  | 3,591
Vehicles | 2.8 |  | 100,362 |  | 97,535 |  | (37,078) |  | (10,614) |  | 10,614 |  | (7,684) |  | (581) |  | 152,554
Software | 1.6 |  | 1,137 |  | 72,767 |  | (30,693) |  | (3,967) |  | 3,966 |  | - |  | - |  | 43,210
|  |  | 2,252,552 |  | 429,704 |  | (473,984) |  | (119,878) |  | 191,214 |  | (10,914) |  | - |  | 2,268,694
Current |  |  | 313,058 |  |  |  |  |  |  |  |  |  |  |  |  |  | 302,946
Non-current |  |  | 1,939,494 |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,965,748

| (1) | Weighted average maturity in years.

| Consolidated
| WAM (1) |  | 12.31.20 |  | Additions |  | Payments |  | Interest paid |  | Interest accrued |  | Disposals |  | Transfers |  | Business combination (note 1.2) |  | Exchange rate variation |  | 12.31.21
Land | 4.6 |  | 37,868 |  | 3,761 |  | (6,890) |  | (9,063) |  | 9,063 |  | (1,160) |  | 82,851 |  | - |  | 9,863 |  | 126,293
Buildings | 1.9 |  | 2,195,407 |  | 532,728 |  | (507,479) |  | (120,193) |  | 186,165 |  | (92,461) |  | (82,851) |  | 8,805 |  | (24,746) |  | 2,095,375
Machinery and equipment | 0.9 |  | 3,773 |  | 98,353 |  | (62,357) |  | (3,764) |  | 3,764 |  | (35) |  | - |  | 4,998 |  | 486 |  | 45,218
Vehicles | 1.8 |  | 256,423 |  | 46,707 |  | (99,944) |  | (17,577) |  | 17,577 |  | (1,680) |  | - |  | 940 |  | (9,752) |  | 192,694
Software | 1.5 |  | 43,210 |  | 5,213 |  | (28,757) |  | (2,306) |  | 2,306 |  | - |  | - |  | - |  | - |  | 19,666
|  |  | 2,536,681 |  | 686,762 |  | (705,427) |  | (152,903) |  | 218,875 |  | (95,336) |  | - |  | 14,743 |  | (24,149) |  | 2,479,246
Current |  |  | 383,162 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 471,956
Non-current |  |  | 2,153,519 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2,007,290

| (1) | Weighted average maturity in years.

| Consolidated
| WAM (1) |  | 12.31.19 |  | Additions |  | Payments |  | Interest paid |  | Interest accrued |  | Disposals |  | Transfers |  | Exchange rate variation |  | 12.31.20
Land | 4.7 |  | 20,355 |  | 5,900 |  | (5,819) |  | (4,716) |  | 4,716 |  | (1,729) |  | 18,811 |  | 350 |  | 37,868
Buildings | 3.4 |  | 2,227,026 |  | 310,204 |  | (425,594) |  | (99,426) |  | 170,763 |  | (762) |  | (18,238) |  | 31,434 |  | 2,195,407
Machinery and equipment | 1.8 |  | 25,687 |  | 5,518 |  | (26,776) |  | (13,285) |  | 13,285 |  | (755) |  | 8 |  | 91 |  | 3,773
Vehicles | 2.2 |  | 156,975 |  | 165,699 |  | (64,674) |  | (15,231) |  | 15,231 |  | (14,155) |  | (581) |  | 13,159 |  | 256,423
Software | 1.6 |  | 1,137 |  | 72,767 |  | (30,693) |  | (3,967) |  | 3,966 |  | - |  | - |  | - |  | 43,210
|  |  | 2,431,180 |  | 560,088 |  | (553,556) |  | (136,625) |  | 207,961 |  | (17,401) |  | - |  | 45,034 |  | 2,536,681
Current |  |  | 376,628 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 383,162
Non-current |  |  | 2,054,552 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2,153,519

| (1) | Weighted average maturity in years.

| 18.3. | Lease liabilities maturity schedule

The maturity schedule of the minimum required future payments is presented below:

| Parent company |  | Consolidated
| 12.31.21 |  | 12.31.21
Current | 364,470 |  | 471,956
Non-current | 1,803,853 |  | 2,007,290
2023 | 392,512 |  | 479,323
2024 | 322,034 |  | 347,096
2025 | 248,049 |  | 262,399
2026 | 180,494 |  | 186,268
2027 onwards | 660,764 |  | 732,204
| 2,168,323 |  | 2,479,246

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| 18.4. | Incremental borrowing rate

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

|  | 12.31.21 |  | 12.31.20
Contract Terms |  | Nominal rate % p.a. |  | Real rate % p.a. |  | Nominal rate % p.a. |  | Real rate % p.a.
1 year |  | 5.34% |  | 0.86% |  | 5.69% |  | 1.05%
2 years |  | 5.24% |  | 1.02% |  | 5.96% |  | 2.61%
3 years |  | 6.83% |  | 2.60% |  | 6.80% |  | 2.53%
4 years |  | 8.49% |  | 4.41% |  | 8.50% |  | 4.56%
5 years |  | 9.69% |  | 4.85% |  | 8.98% |  | 4.40%
6 years |  | 10.61% |  | 5.15% |  | - |  | -
7 years |  | 11.18% |  | 10.56% |  | - |  | -
8 years |  | - |  | - |  | 10.47% |  | 5.71%
9 years |  | - |  | - |  | 10.75% |  | 5.97%
10 years |  | - |  | - |  | 11.39% |  | 6.64%
12 years |  | 9.85% |  | 5.55% |  | - |  | -
13 years |  | - |  | - |  | 11.68% |  | 7.38%
14 years |  | - |  | - |  | 11.84% |  | 7.13%
16 years |  | 12.44% |  | 6.70% |  | - |  | -
17 years |  | 13.12% |  | 6.77% |  | - |  | -
18 years |  | 13.01% |  | 6.70% |  | - |  | -
20 years |  | 12.95% |  | 7.07% |  | 13.26% |  | 9.00%

The nominal rates presented above as of December 31, 2021 refer to the incremental borrowing rates used in contracts recognized during the year ended December 31, 2021 and the rates as of December 31, 2020 refer to the rates used in contracts recognized during the year ended December 31, 2020.

| 18.5. | Amounts recognized in the statement of income

The amounts directly recognized in the statement of income presented below relate to items exempt of recognition: low-value assets, short-term leases and leases with variable payments.

Parent Company |  | Consolidated
|  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Variable payments not included in the lease liabilities |  | 63,648 |  | 48,424 |  | 282,732 |  | 300,949
Expenses related to short-term leases |  | 57,793 |  | 51,349 |  | 171,733 |  | 162,313
Expenses related to low-value assets |  | 4,585 |  | 2,946 |  | 4,681 |  | 3,531
|  | 126,026 |  | 102,719 |  | 459,146 |  | 466,793

| 19. | SHARE-BASED PAYMENT

The Company grants to its eligible employees, stock options and restricted stocks, ruled by plans approved at the General Shareholder’s Meeting, with the purpose of: (i) stimulating the expansion, success and achievement of the Company’s social objectives; (ii) aligning the interests of the Company’s shareholders with those of the eligible employees; and (iii) enabling the Company and its subsidiaries to attract and retain the employees. The limit of grants is 2.5% of the common, registered, book-entry shares with no par value, representative of the Company’s total capital stock.

Annually, or whenever it deems appropriate, the Board of Directors approves the grant of restricted stocks, electing the beneficiaries in favor of which the Company will transfer the restricted stocks, establishing the terms, quantities and conditions of acquisition of rights related to restricted stocks.

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The vesting is conditional to the: (i) continuity of the employment relationship with the Company for three years after the grant date; (ii) achievement of a minimum shareholder return defined by the Board of Directors in the granting agreements and measured at the end of the vesting period; or (iii) any other conditions determined by the Board of Directors in each grant.

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

Date |  | Quantity |  | Grant (1)
Grant |  | Vesting date |  | Shares granted |  | Outstanding shares |  | Fair value of the shares
06.01.19 |  | 06.01.22 |  | 674,296 |  | 189,512 |  | 30.61
07.01.19 |  | 07.01.22 |  | 1,141,353 |  | 320,317 |  | 30.61
09.16.19 |  | 10.01.22 |  | 68,605 |  | 22,867 |  | 30.61
06.01.20 |  | 06.01.23 |  | 3,571,736 |  | 2,180,854 |  | 21.28
07.01.21 |  | 07.01.24 |  | 2,883,737 |  | 2,681,969 |  | 28.58
|  |  |  | 8,339,727 |  | 5,395,519 |  |

| (1) | Amounts expressed in Brazilian Reais.

The rollforward of the granted options and shares for the year ended December 31, 2021, is presented as follows:

|  | Consolidated
Outstanding options/stocks as of December 31, 2020 (1) |  | 7,873,348
Granted |  |
Restricted stocks - July 2021 |  | 2,883,737
Exercised / Delivered: |  |
Restricted stocks – grant of June, 2020 |  | (457,939)
Restricted stocks – grant of September, 2019 |  | (18,237)
Restricted stocks – grant of July, 2019 |  | (113,957)
Restricted stocks – grant of June, 2019 |  | (114,271)
Restricted stocks – grant of October, 2018 |  | (240,426)
Forfeiture (2) : |  |
Restricted stocks – grant of July, 2021 |  | (201,769)
Restricted stocks – grant of June, 2020 |  | (820,853)
Restricted stocks – grant of September, 2019 |  | (4,632)
Restricted stocks - grant of July, 2019 |  | (222,964)
Restricted stocks – grant of June, 2019 |  | (110,494)
Restricted stocks - grant of October, 2018 |  | (635,694)
Expired: |  |
Stock options - grant of May, 2016 |  | (1,145,330)
Stock options - grant of April, 2016 |  | (1,275,000)
Outstanding options/stocks as of December 31, 2021 |  | 5,395,519

| (1) | Includes stock options outstanding on December 31, 2020.

| (2) | The forfeitures are related to the resignation of eligible executive before the end of the vesting period.

The Company has registered under shareholders’ equity, the fair value of share-based compensation plans in the amount of R$205,949 (R$223,191 as of December 31, 2020) and in the amount of R$11,816 under non-current liabilities (R$21,521 as of December 31, 2020). In the statement of income for the year ended December 31, 2021 the amount recognized as expense was R$30,194 in the parent company and R$41,684 in the consolidated (R$45,219 for the year ended December 31, 2020 in the parent company and in the consolidated).

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| 20. | EMPLOYEES BENEFITS PLANS

| 20.1. | Supplementary pension plans

The Company is the sponsor of the following pension plans for its employees and executives: i) Plan II –Variable Contribution with Defined Benefit option – closed for admissions; ii) Plan III – Defined Contribution –open for admissions; and iii) FAF Plan – Defined Benefit - closed for admissions.

These plans are managed by BRF Previdência, a closed supplementary pension entity, of non-economic and non-profit nature, and through its Deliberative Board, is responsible for defining pension objectives and policies, as well as establishing fundamental guidelines aa well as organization, operation and management rules. The Deliberative Board is composed of representatives from the sponsor and participants, in the proportion of 2/3 and 1/3 respectively.

| 20.1.1. | Defined benefit plans

The Plan II is a variable contribution plan structured as defined contribution during the accumulation of mathematic provisions and at the benefit grant date the beneficiary may choose to convert the accumulated balance in a lifetime monthly income (defined benefit). The main related actuarial risks are (i) survival rates above the mortality tables and (ii) actual return on equity below the actual discount rate.

The FAF (Fundação Attílio Francisco Xavier Fontana) Plan aims to complement the benefit paid by the Brazilian Social Security (“INSS – Instituto Nacional de Seguridade Social”). The benefit is calculated based on the income of the participant and the amounts vary according to the type of the retirement, the length of the service and other criteria defined by the plan. The main actuarial risks related are: (i) survival rates above the mortality tables, (ii) turnover lower than expected, (iii) salary growth higher than expected, (iv) actual return on equity below the actual discount rate, (v) changes to the rules of social security, and (vi) actual family composition of the retired employee or executive different than the established assumption.

The actuarial calculations of the plans managed by BRF Previdência are prepared annually by independent specialists and reviewed by Management, according to the rules in force.

In the case of a deficit in the plans results, the sponsor, the participants and the beneficiaries, must support the plan according to the proportion of their contributions.

The economic benefit presented as an asset considers only the portion of the surplus that is actually recoverable. The recovery of the surplus on the plans is through reductions in future contributions.

| 20.1.2. | Defined contribution plan

The Plan III is a defined contribution plan, in which the contributions are known and the benefit depends directly on the contributions made by participants and sponsors, on the contribution time and on the returns obtained through the investment of the contributions. The contributions made by the Company in the year ended December 31, 2021 amounted R$24,258 (R$21,706 for the year ended December 31, 2020). On December 31, 2021, the plan had 40,553 participants (39,064 participants as of December 31, 2020).

When the participants of the plans II and III terminate the employment relationship with the sponsor, the unused balance of the contributions made by the sponsor forms a surplus fund that may be used to compensate future contributions of the sponsor.

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| 20.1.3. | Rollforward of defined benefit and variable contribution

The assets and actuarial liabilities, as well as the movement of the related rights and obligations are presented below:

| Consolidated
| FAF |  | Plan II
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Composition of actuarial assets and liabilities |  |  |  |  |  |  |
Present value of actuarial liabilities | 3,340,497 |  | 3,377,234 |  | 23,981 |  | 23,256
Fair value of assets | (3,547,727) |  | (3,553,215) |  | (22,298) |  | (24,170)
(Surplus) Deficit | (207,230) |  | (175,981) |  | 1,683 |  | (914)
Irrecoverable surplus - (asset ceiling) | 207,230 |  | 175,981 |  | - |  | 167
Net actuarial (assets) liabilities | - |  | - |  | 1,683 |  | (747)
Rollforward of irrecoverable surplus |  |  |  |  |  |  |
Beginning balance of irrecoverable surplus | 175,981 |  | 359,672 |  | 167 |  | 6,777
Interest on irrecoverable surplus | 13,181 |  | 26,184 |  | 12 |  | 476
Changes in irrecoverable surplus during the year | 18,068 |  | (209,875) |  | (179) |  | (7,086)
Ending balance of irrecoverable surplus | 207,230 |  | 175,981 |  | - |  | 167
Rollforward of present value of actuarial liabilities |  |  |  |  |  |  |
Beginning balance of the present value of liabilities | 3,377,234 |  | 3,412,120 |  | 23,256 |  | 19,550
Interest on actuarial obligations | 246,073 |  | 242,746 |  | 1,627 |  | 1,324
Current service cost | 26,741 |  | 42,106 |  | - |  | -
Past service cost - plan changes | - |  | (4,223) |  | - |  | -
Benefit paid | (169,962) |  | (154,096) |  | (1,712) |  | (1,612)
Actuarial losses - experience | 325,778 |  | 148,984 |  | 4,278 |  | 5,273
Actuarial losses - hypothesis | (465,367) |  | (310,403) |  | (3,468) |  | (1,279)
Ending balance of actuarial liabilities | 3,340,497 |  | 3,377,234 |  | 23,981 |  | 23,256
Rollforward of the fair value of the assets |  |  |  |  |  |  |
Beginning balance of the fair value of plan assets | (3,553,215) |  | (3,771,792) |  | (24,170) |  | (29,580)
Interest income on assets plan | (259,254) |  | (268,930) |  | (1,694) |  | (2,028)
Benefit paid | 169,962 |  | 154,096 |  | 1,712 |  | 1,612
Return on assets higher (lower) than projection | 94,780 |  | 333,411 |  | 1,854 |  | 5,826
Ending Balance of the fair value of the assets | (3,547,727) |  | (3,553,215) |  | (22,298) |  | (24,170)
Rollforward of comprehensive income |  |  |  |  |  |  |
Beginning balance | 37,883 |  | 28,172 |  | (2,734) |  | 1,213
Reversion to accumulated losses | (37,883) |  | (28,172) |  | 2,734 |  | (1,213)
Actuarial gains (losses) | 139,589 |  | 161,419 |  | (810) |  | (3,994)
Return on assets higher (lower) than projection | (94,780) |  | (333,411) |  | (1,854) |  | (5,826)
Changes on irrecoverable surplus | (18,068) |  | 209,875 |  | 179 |  | 7,086
Ending balance of comprehensive income | 26,741 |  | 37,883 |  | (2,485) |  | (2,734)
Costs recognized in statement of income |  |  |  |  |  |  |
Current service costs | (26,741) |  | (42,106) |  | - |  | -
Interest on actuarial obligations | (246,073) |  | (242,746) |  | (1,627) |  | (1,324)
Projected return on assets | 259,254 |  | 268,930 |  | 1,694 |  | 2,028
Interest on irrecoverable surplus | (13,181) |  | (26,184) |  | (12) |  | (476)
Past service cost - plan changes | - |  | 4,223 |  | - |  | -
Costs recognized in statement of income | (26,741) |  | (37,883) |  | 55 |  | 228
Estimated costs for the next year |  |  |  |  |  |  |
Costs of defined benefit | (23,190) |  | (26,741) |  | (146) |  | 54
Estimated costs for the next year | (23,190) |  | (26,741) |  | (146) |  | 54

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| 20.1.4. | Actuarial assumptions and demographic data

The main actuarial assumptions and demographic data used in the actuarial calculations are presented below:

| Consolidated
| FAF |  | Plan II
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Actuarial assumptions |  |  |  |  |  |  |
Economic hypothesis |  |  |  |  |  |  |
Discount rate | 8.76% |  | 7.49% |  | 8.68% |  | 7.25%
Inflation rate | 3.25% |  | 3.25% |  | 3.25% |  | 3.25%
Wage growth rate | 4.34% |  | 3.49% |  | N/A |  | N/A
Demographic hypothesis |  |  |  |  |  |  |
Mortality schedule | AT-2000 smoothed by 10% |  | AT-2000 smoothed by 10% |  | AT-2000 smoothed by 10% |  | AT-2000 smoothed by 10%
Mortality schedule - Disabled | CSO-58 |  | RRB-1983 |  | CSO-58 |  | RRB-1983
Demographic data |  |  |  |  |  |  |
Number of active participants | 6,054 |  | 6,495 |  | - |  | -
Number of beneficiary participants assisted | 7,565 |  | 7,206 |  | 52 |  | 51

| 20.1.5. | The composition of the investment portfolios

The composition of the investment portfolios is presented below:

|  | FAF |  | Plan II
|  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Composition of the fund's portfolio |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed income |  | 2,308,861 |  | 65.1% |  | 2,330,909 |  | 65.6% |  | 19,386 |  | 86.9% |  | 22,382 |  | 92.6%
Variable income |  | 517,259 |  | 14.6% |  | 579,174 |  | 16.3% |  | 1,106 |  | 5.0% |  | 870 |  | 3.6%
Real estate |  | 334,905 |  | 9.4% |  | 358,875 |  | 10.1% |  | 20 |  | 0.1% |  | - |  | -
Structured investments |  | 321,779 |  | 9.1% |  | 262,938 |  | 7.4% |  | 1,527 |  | 6.8% |  | 918 |  | 3.8%
Foreign |  | 45,411 |  | 1.3% |  | - |  | - |  | 259 |  | 1.2% |  | - |  | -
Transactions with participants |  | 19,512 |  | 0.5% |  | 21,319 |  | 0.6% |  | - |  | - |  | - |  | -
|  | 3,547,727 |  | 100.0% |  | 3,553,215 |  | 100.0% |  | 22,298 |  | 100.0% |  | 24,170 |  | 100.0%
% of nominal return on assets |  | 7.49% |  |  |  | 7.49% |  |  |  | 7.25% |  |  |  | 7.25% |  |

| 20.1.6. | Expected benefit payments and average term of payments

The following amounts represent the expected benefit payments for future periods and the average duration of the plan’s obligations:

| FAF |  | Plan II
2022 | 214,310 |  | 1,937
2023 | 218,072 |  | 1,923
2024 | 217,778 |  | 1,908
2025 | 217,939 |  | 1,889
2026 | 218,487 |  | 1,869
2027 to 2031 | 1,115,111 |  | 8,914
Weighted average duration - in years | 11.93 |  | 9.69

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| 20.1.7. | Sensitivity analysis of the defined benefit plan - FAF

|  | Assumptions utilized |  | Variation of (+1%) |  | Variation of (-1%)
Relevant assumptions |  |  | Average rate |  | Actuarial liabilities |  | Average rate |  | Actuarial liabilities
Benefit plan - FAF |  |  |  |  |  |  |  |  |  |
Discount rate |  | 8.76% |  | 9.76% |  | 2,996,161 |  | 7.76% |  | 3,759,792
Wage growth rate |  | 4.34% |  | 5.34% |  | 3,409,740 |  | 3.34% |  | 3,282,485

| 20.2. | Employee benefits: description and characteristics of benefits and associated risks

| Parent company |  | Consolidated
| Liabilities |  | Liabilities
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Medical assistance | 193,545 |  | 185,802 |  | 195,345 |  | 185,802
F.G.T.S. Penalty (1) | 53,881 |  | 282,229 |  | 53,881 |  | 282,229
Award for length of service | 98,474 |  | 108,908 |  | 98,474 |  | 108,908
Other | 57,553 |  | 59,854 |  | 204,885 |  | 199,616
| 403,453 |  | 636,793 |  | 552,585 |  | 776,555
Current | 42,097 |  | 114,938 |  | 54,354 |  | 125,230
Non-current | 361,356 |  | 521,855 |  | 498,231 |  | 651,325

| (1) | FGTS – Government Severance Indemnity Fund for Employees

The Company has the policy to offer the following post-employment and other employee benefits plans in addition to the pension plans, which are measured by actuarial calculation and recognized in the financial statement:

| 20.2.1. | Medical plan

The Company offers a medical plan with fixed contribution to the retired employees according to the Law No. 9,656/98.

It is ensured to the retired employee that has contributed to the health plan during the employment relationship for at least 10 years, the right of maintenance as beneficiary, on the same conditions of coverage existing when the employment contract was in force. The main related actuarial risks are (i) survival rates above the mortality tables, (ii) turnover lower than expected and (iii) medical costs growth higher than expected.

| 20.2.2. | F.G.T.S. penalty by dismissal on retirement

As settled by the Regional Labor Court (“TRT”) on April 20, 2007, retirement does not affect the employment contract between the Company and its employees. However, when the employee is retired through INSS and is dismissed from the Company, the Company may, in certain cases, enter into a mutual agreement granting the payment of the benefit equivalent to the 20% penalty on the F.G.T.S. balance. The main related actuarial risks are: (i) survival rates above the mortality tables, (ii) turnover lower than expected and (iii) salary growth higher than expected.

| 20.2.3. | Award for length of service

The Company has the policy to reward active employees that attain at least 10 years of services rendered and subsequently every 5 years, with an additional remuneration. The main related actuarial risks rare (i) survival rates above the mortality tables, (ii) turnover lower than expected and (iii) salary growth higher than expected.

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| 20.2.4. | Other parent company

| i. | Retirement compensation

On retirement, employees with more than 8 years of services rendered to the Company are eligible for additional compensation. The main actuarial related risks are (i) survival rates above the mortality tables, (ii) turnover lower than expected and (iii) salary growth higher than expected.

| ii. | Life insurance

The Company offers life insurance benefits to the employees who, at the time of their termination, are retired and during the employment contract opted for the insurance, with the period of benefit varying from 2 to 3 years. The main related actuarial risks are (i) survival rates above the mortality tables, (ii) turnover lower than expected and (iii) salary growth higher than expected.

| 20.2.5. | Other - Consolidated

The Company has a liability recorded for defined benefit plans to certain subsidiaries located in Turkey, Saudi Arabia, Qatar and United Arab Emirates, related to end of service payments when certain conditions are met, which varies based on the labor laws for each country. The main related actuarial risks are: (i) survival rates above the mortality tables, (ii) turnover lower than expected and (iii) salary growth higher than expected.

| 20.2.6. | Rollforward of actuarial liabilities

The rollforward of actuarial liabilities related to other benefits, which was prepared based on actuarial report reviewed by the Management, are as follows:

|  | Consolidated
|  | Medical plan |  | F.G.T.S. penalty |  | Award for length of service |  | Other (1)
|  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Composition of actuarial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Present value of actuarial liabilities |  | 195,345 |  | 185,802 |  | 53,881 |  | 282,229 |  | 98,474 |  | 108,908 |  | 203,202 |  | 199,616
Net actuarial liabilities |  | 195,345 |  | 185,802 |  | 53,881 |  | 282,229 |  | 98,474 |  | 108,908 |  | 203,202 |  | 199,616
Rollforward of present value of actuarial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance of present value of actuarial liabilities |  | 185,802 |  | 187,274 |  | 282,229 |  | 247,485 |  | 108,908 |  | 103,284 |  | 199,616 |  | 151,431
Interest on actuarial liabilities |  | 13,694 |  | 13,586 |  | 15,711 |  | 13,993 |  | 6,656 |  | 6,275 |  | 10,377 |  | 8,883
Current service costs |  | - |  | - |  | 14,833 |  | 12,718 |  | 6,319 |  | 5,741 |  | 23,375 |  | 23,174
Past service costs (2) |  | 40,800 |  | - |  | (135,180) |  | - |  | - |  | - |  | 15,847 |  | -
Benefits paid directly by the Company |  | (9,008) |  | (7,122) |  | (6,173) |  | (4,225) |  | (15,163) |  | (13,887) |  | (19,739) |  | (18,902)
Business combination (note 1.2) |  | 2,081 |  | - |  | - |  | - |  | - |  | - |  | 286 |  | -
Actuarial (gains) losses - experience |  | (6,892) |  | 1,167 |  | 991 |  | 14,725 |  | 10,853 |  | 10,759 |  | 9,289 |  | 10,548
Actuarial (gains) losses - demographic hypothesis |  | (6,403) |  | 13,462 |  | (91,531) |  | 10,195 |  | (7,125) |  | 5,717 |  | (13,165) |  | 1,535
Actuarial losses - economic hypothesis |  | (24,729) |  | (22,565) |  | (26,999) |  | (12,662) |  | (11,974) |  | (8,981) |  | (11,396) |  | 4,778
Actuarial (gains) losses - exchange variation |  | - |  | - |  | - |  | - |  | - |  | - |  | (11,288) |  | 18,169
Ending balance of liabilities |  | 195,345 |  | 185,802 |  | 53,881 |  | 282,229 |  | 98,474 |  | 108,908 |  | 203,202 |  | 199,616
Rollforward of the fair value of the assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Benefits paid directly by the Company |  | 9,008 |  | 7,122 |  | 6,173 |  | 4,225 |  | 15,163 |  | 13,887 |  | 19,739 |  | 18,902
Contributions of the sponsor |  | (9,008) |  | (7,122) |  | (6,173) |  | (4,225) |  | (15,163) |  | (13,887) |  | (19,739) |  | (18,902)
Ending Balance of the fair value of the assets |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | -
Rollforward of comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | (72,744) |  | (80,680) |  | (110,903) |  | (98,645) |  | - |  | - |  | (102,324) |  | (87,709)
Actuarial gains (losses) |  | 38,024 |  | 7,936 |  | 117,539 |  | (12,258) |  | - |  | - |  | 15,272 |  | (16,861)
Exchange variation |  | - |  | - |  | - |  | - |  | - |  | - |  | 3,002 |  | 2,246
Ending balance of comprehensive income |  | (34,720) |  | (72,744) |  | 6,636 |  | (110,903) |  | - |  | - |  | (84,050) |  | (102,324)
Costs recognized in statement of income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest on actuarial liabilities |  | (13,694) |  | (13,586) |  | (15,711) |  | (13,993) |  | (6,656) |  | (6,275) |  | (10,377) |  | (8,883)
Current service costs |  | - |  | - |  | (14,833) |  | (12,718) |  | (6,319) |  | (5,741) |  | (23,375) |  | (23,174)
Past service costs (2) |  | (40,800) |  | - |  | 135,180 |  | - |  | - |  | - |  | (15,847) |  | -
Immediate recognition of reduction |  | - |  | - |  | - |  | - |  | 8,246 |  | (7,495) |  | - |  | -
Cost recognized in statement of income |  | (54,494) |  | (13,586) |  | 104,636 |  | (26,711) |  | (4,729) |  | (19,511) |  | (49,599) |  | (32,057)
Estimated costs for the next year |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current service costs |  | (551) |  | - |  | (2,480) |  | (14,833) |  | (5,221) |  | (6,319) |  | (20,720) |  | (22,021)
Interest on actuarial liabilities |  | (16,805) |  | (13,975) |  | (4,071) |  | (15,711) |  | (7,997) |  | (6,656) |  | (12,646) |  | (11,217)
Estimated costs for the next year |  | (17,356) |  | (13,975) |  | (6,551) |  | (30,544) |  | (13,218) |  | (12,975) |  | (33,366) |  | (33,238)

| (1) | Considers the sum of the retirement compensation, life insurance benefits and compensation for time of service granted in certain subsidiaries of Company.

| (2) | Refers to addition of medical plan managed by BRF S.A. and change in the internal policy for FGTS penalty.

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| 20.2.7. | Actuarial assumptions and demographic data

The main actuarial assumptions and demographic data used in the actuarial calculations are summarized below:

|  | Consolidated
|  | Medical plan |  | F.G.T.S. penalty |  | Other (1)
Actuarial assumptions |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Economic hypothesis |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  | 8.75% |  | 7.68% |  | 8.62% |  | 6.51% |  | 7.11% |  | 6.02%
Inflation rate |  | 3.25% |  | 3.25% |  | 3.25% |  | 3.25% |  | 9.04% |  | 6.39%
Medical inflation |  | 6.35% |  | 6.35% |  | N/A |  | N/A |  | N/A |  | N/A
Wage growth rate |  | N/A |  | N/A |  | 3.25% |  | 3.25% |  | 9.04% |  | 6.39%
F.G.T.S. balance growth |  | N/A |  | N/A |  | 3.70% |  | 3.80% |  | N/A |  | N/A
Demographic hypothesis |  |  |  |  |  |  |  |  |  |  |  |
Mortality schedule |  | AT-2000 smoothed by 10% |  | AT-2000 smoothed by 10% |  | AT-2000 smoothed by 10% |  | AT-2000 smoothed by 10% |  |  |  |
Disability entry schedule |  | N/A |  | N/A |  | RRB-44 |  | RRB-44 |  |  |  |
Schedule of turnover - BRF's historical |  | 2021 |  | 2020 |  | 2021 |  | 2020 |  |  |  |
Demoraphic data |  |  |  |  |  |  |  |  |  |  |  |
Number of active participants |  | 14,584 |  | 1,245 |  | 96,635 |  | 93,245 |  |  |  |
Number of assisted beneficiary participants |  | 1,686 |  | 559 |  | - |  | - |  |  |  |

| 20.2.8. | Expected benefit payments and average duration of obligations

The following amounts represent the expected benefit payments for future years (10 years), from the obligation of benefits granted and the average duration of the plan obligations:

Payments |  | Medical plan |  | F.G.T.S. penalty |  | Award for length of service |  | Other |  | Total
2022 |  | 6,792 |  | 13,304 |  | 11,395 |  | 21,316 |  | 52,807
2023 |  | 7,350 |  | 3,783 |  | 11,819 |  | 15,067 |  | 38,019
2024 |  | 8,030 |  | 4,512 |  | 14,239 |  | 15,445 |  | 42,226
2025 |  | 8,735 |  | 4,656 |  | 12,416 |  | 15,688 |  | 41,495
2026 |  | 9,512 |  | 5,559 |  | 11,720 |  | 16,876 |  | 43,667
2027 to 2031 |  | 60,942 |  | 32,114 |  | 53,740 |  | 110,413 |  | 257,209
Weighted average duration - in years |  | 16.41 |  | 6.12 |  | 5.59 |  | 8.53 |  | 8.35

| 20.2.9. | Sensitivity analysis of post-employment plans

The Company prepared sensitivity analysis regarding the relevant assumptions of the plans as of December 31, 2021, as presented below:

|  | Assumptions utilized |  | (+) Variation |  | (-) Variation
Relevant assumptions |  |  | Average (%) |  | Actuarial liabilities |  | Average (%) |  | Actuarial liabilities
Medical plan |  |  |  |  |  |  |  |  |  |
Discount rate |  | 8.75% |  | 9.75% |  | 166,929 |  | 7.75% |  | 227,381
Medical inflation |  | 6.35% |  | 7.35% |  | 226,983 |  | 5.35% |  | 167,828
F.G.T.S. penalty |  |  |  |  |  |  |  |  |  |
Discount rate |  | 8.62% |  | 9.62% |  | 57,124 |  | 8.62% |  | 51,015
Wage growth rate |  | 3.25% |  | 4.25% |  | 54,466 |  | 2.25% |  | 53,345
Turnover |  | Historical |  | +3% |  | 44,883 |  | -3% |  | 66,993

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| 21. | PROVISION FOR TAX, CIVIL AND LABOR 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 these financial statements, 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.

The rollforward of the provisions for tax, labor, civil, commercial and other risks classified as with probable loss, and contingent liabilities is presented below:

| Parent company
| Tax |  | Labor |  | Civil, commercial and other |  | Contingent liabilities (1) |  | Total
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Beginning balance | 427,166 |  | 583,316 |  | 631,025 |  | 600,510 |  | 342,707 |  | 306,476 |  | 297,097 |  | 300,561 |  | 1,697,995 |  | 1,790,863
Additions | 174,491 |  | 103,773 |  | 299,531 |  | 434,264 |  | 59,968 |  | 52,858 |  | - |  | - |  | 533,990 |  | 590,895
Reversals | (100,438) |  | (246,499) |  | (186,330) |  | (249,666) |  | (70,194) |  | (34,556) |  | (199,238) |  | (3,464) |  | (556,200) |  | (534,185)
Payments | (165,578) |  | (70,699) |  | (282,956) |  | (298,599) |  | (70,304) |  | (29,889) |  | - |  | - |  | (518,838) |  | (399,187)
Interest | 61,426 |  | 57,275 |  | 162,988 |  | 144,516 |  | 92,354 |  | 47,818 |  | - |  | - |  | 316,768 |  | 249,609
Ending balance | 397,067 |  | 427,166 |  | 624,258 |  | 631,025 |  | 354,531 |  | 342,707 |  | 97,859 |  | 297,097 |  | 1,473,715 |  | 1,697,995
Current |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 956,193 |  | 860,889
Non-current |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 517,522 |  | 837,106

| (1) | Contingent liabilities recognized at fair value as of the acquisition date, arising from the business combination with Sadia.

| Consolidated
| Tax |  | Labor |  | Civil, commercial and other |  | Contingent liabilities (1) |  | Total
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Beginning balance | 427,302 |  | 583,464 |  | 634,706 |  | 603,074 |  | 343,530 |  | 307,177 |  | 297,182 |  | 300,654 |  | 1,702,720 |  | 1,794,369
Additions | 174,491 |  | 103,773 |  | 301,192 |  | 435,723 |  | 60,561 |  | 52,961 |  | - |  | - |  | 536,244 |  | 592,457
Business combination (note 1.2) | 2,848 |  | - |  | 1,969 |  | - |  | 2,217 |  | - |  | 33,891 |  | - |  | 40,925 |  | -
Reversals | (100,438) |  | (246,499) |  | (187,520) |  | (250,029) |  | (71,275) |  | (34,556) |  | (199,311) |  | (3,464) |  | (558,544) |  | (534,548)
Payments | (165,578) |  | (70,699) |  | (282,956) |  | (298,599) |  | (70,304) |  | (29,889) |  | - |  | - |  | (518,838) |  | (399,187)
Interest | 61,493 |  | 57,275 |  | 163,020 |  | 144,516 |  | 92,438 |  | 47,818 |  | - |  | - |  | 316,951 |  | 249,609
Exchange rate variation | (17) |  | (12) |  | (1,644) |  | 21 |  | (154) |  | 19 |  | (11) |  | (8) |  | (1,826) |  | 20
Ending balance | 400,101 |  | 427,302 |  | 628,767 |  | 634,706 |  | 357,013 |  | 343,530 |  | 131,751 |  | 297,182 |  | 1,517,632 |  | 1,702,720
Current |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 959,132 |  | 865,338
Non-current |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 558,500 |  | 837,382

| (1) | Contingent liabilities recognized at fair value as of the acquisition date, arising from the business combination with Sadia, Hercosul (note 1.2.2) and Mogiana (note 1.2.3).

| 21.1. | Contingencies with probable losses

| 21.1.1. | Tax

The tax contingencies classified as probable losses relate to the following main legal proceedings:

ICMS: The Company is involved in administrative and judicial disputes related to the ICMS tax arising from credits on the acquisition of goods for consumption, presumed credit, tax substitution, isolated fines, tax rate differential on seasoned product and others, in the amount of R$71,928 (R$248,560 as of December 31, 2020).

PIS and COFINS: The Company is involved in administrative and judicial disputes related to the use of certain tax credits arising from the acquisition of supplies to offset federal taxes payable, in the amount of R$141,729 (R$149,945 as of December 31, 2020).

Other tax contingencies: The Company has other provisions for tax claims related to the payment of social security contribution, INCRA, FUNRURAL, SESI/SENAI/SEBRAE, debts included in the government regularization program (REFIS) with deposits awaiting consolidation and conversion into payment, differences in supplementary fiscal obligations, disputes related to presumed IPI credit, import taxes, IOF, Finsocial and others, in the amount of R$186,444 (R$75,360 as of December 31, 2020).

| 21.1.2. | Labor

The Company is defendant in several labor claims either filed by individuals or by the Public Prosecutors Office, mainly related to overtime, thermal rest, unhealthy environment, occupational accidents, among others. None

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of these claims is individually significant. The Company recorded a provision based on past history of payments, statistical models and on prognosis of loss.

| 21.1.3. | Civil, commercial and others

Civil, commercial and other contingencies are mainly related to litigations containing allegations of contractual breaches and noncompliance of legal obligations of several natures as disputes arising from contracts in general, intellectual property disputes, regulatory issues, environmental and real state, consumer relations, among others. The claims are mostly for compensation of losses and damages, application of penalties and compliance with obligations to do or not to do. None of these claims is individually significant.

| 21.2. | Contingencies with possible losses

The Company is involved in contingencies for which losses are possible, in accordance with the assessment prepared by Management with support from legal advisors. On December 31, 2021, the total amount of contingencies classified as possible was R$14,518,170 (R$14,257,611 as of December 31, 2020), of which solely the ones arising from the business combination with Sadia, Hercosul and Mogiana are provisioned, measured by the estimated fair value at the business combination date: R$131,751 (R$297,182 as of December 31, 2020). The remaining possible contingencies are presented below.

| 21.2.1. | Tax

The tax contingencies for which losses have been assessed as possible amounted to R$12,499,764 as of December 31, 2021 (R$12,536,528 as of December 31, 2020). The most relevant cases are set forth below:

PIS and COFINS: The Company is involved in administrative and judicial disputes related to the non-cumulative system due to divergence on the concept of input and the use in the productive process, the requirement of taxation of revenues related to presumed ICMS credits, disputes on the fiscal classification of seasoned meats, Laws 2.445/88 and 2.449/88 (“semestralidade”), untimely credits and others, in the amount of R$6,371,171 (R$5,549,431 as of December 31, 2020).

ICMS: The Company is involved in disputes related to: (i) non-acceptance of ICMS credits in interstate sales from states that unilaterally granted fiscal benefits without the approval of the National Finance Policy Council (“CONFAZ”), the so-called “guerra fiscal” in the amount of R$253,765 (R$416,238 as of December 31, 2020); (ii) lack of evidence of exports in the amount of R$63,361 (R$265,590 as of December 31, 2020);(iii) infraction notices from State of Rio de Janeiro related to the supposed non-compliance of Agreement Terms (“TARE”) regarding tax benefits, in the amount of R$567,903 (R$550,367 as of December 31, 2020); (iv) Public Civil Action in Rio de Janeiro due do the use of tax benefits, in the amount of R$249,715 (R$239,845 as of December 31, 2020); (v) infraction notice about ICMS in Goiás related to the exclusion of the reversal of the tax credit from the calculation base of PROTEGE, in the amount of R$184,300 (R$105,866 as of December 31, 2020); and (vi) R$2,063,603 (R$2,228,462 on December 31, 2020) related to other claims. The relevant reduction in the amounts related to (i) “guerra fiscal”, is mainly due to the recognition of the credits by the state of São Paulo, for which the probability of loss has been changed to remote; and (ii) lack of evidence of exports, due to the termination of proceedings in which the Company provided evidence that was accepted by the fiscal authority.

Income Tax and Social Contribution (IRPJ and CSLL): The Company is involved in administrative and judicial disputes related to refunds and compensation of negative income tax and social contribution balances, including credits arising from the Plano Verão and requirement of IRPJ and CSLL related to the compensation of tax loss carryforwards above the limit of 30% in the incorporation of entities. The contingencies related to these taxes totaled R$1,326,862 (R$1,249,062 as of December 31, 2020).

Profits earned abroad: The Company was assessed by the Brazilian Federal Revenue for alleged underpayment of income tax and social contribution on profits earned by its subsidiaries located abroad, in a total amount of R$638,361 (R$629,341 as of December 31, 2020). The Company’s legal defense is based on the facts that the subsidiaries located abroad are subject exclusively to the full taxation in the countries in which they are based as a result of the treaties signed to avoid double taxation.

IPI: The Company disputes administratively and judicially the denial of compensation of presumed IPI credits resulting from purchases of duty-free goods and secondary items. Such discussed cases totaled the amount of R$182,246 (R$209,314 as of December 31, 2020).

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Social security taxes: The Company disputes cases related to the charges of social security on payroll, employees profit sharing, GILRAT additional for special retirement financing, SAT/RAT, as well as other cases, in a total amount of R$417,903 (R$418,957 as of December 31, 2020).

Other contingencies: The Company disputes cases related to the requirement of 50% fine on the compensations of PIS, COFINS and IRPJ not approved awaiting final decision of the compensation processes, drawback proof, tax on services and others of several natures, fees, property tax, import tax and IOF, totaling R$180,574 (R$674,055 as of December 31, 2020). The reduction in the year ended December 31, 2021 is mainly due to the development in the proceedings related to isolated fine on denial of tax credits compensation, for which the probability of loss was reviewed and classified as remote.

| 21.2.2. | Labor

On December 31, 2021 the labor contingencies assessed as possible loss totaled R$338,999 (R$197,097 as of December 31, 2020).

| 21.2.3. | Civil, commercial and others

Civil commercial and other contingencies for which losses were assessed as possible totaled R$1,679,407 (R$1,523,987 as of December 31, 2020) and are mainly related to litigations containing allegations of contractual breaches and noncompliance of legal obligations of several natures as disputes arising from contracts in general, intellectual property disputes, regulatory issues, environmental and real state, consumer relations, among others. The claims are mostly for compensation of losses and damages, application of penalties and obligations to do or not to do.

Additionally, see the development of the processes described in the note 1.5.

| 22. | EQUITY

22.1. Capital stock

On December 31, 2021, 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 (one billion) common book-entry shares with no par value.

On February 4, 2022, a capital increase was concluded (note 35.2).

| 22.1.1. | Breakdown of capital stock by nature

Parent company
| 12.31.21 |  | 12.31.20
Common shares | 812,473,246 |  | 812,473,246
Treasury shares | (5,053,554) |  | (4,766,084)
Outstanding shares | 807,419,692 |  | 807,707,162

| 22.1.2. | Breakdown of capital stock by owner

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

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|  | 12.31.21 |  | 12.31.20
Shareholders |  | Quantity |  | % |  | Quantity |  | %
Major shareholders |  |  |  |  |  |  |  |
Marfrig Global Food S.A. |  | 269,734,803 |  | 33.20 |  | Not available (2)
Fundação Petrobras de Seguridade Social - Petros (1) |  | 56,947,828 |  | 7.01 |  | 92,716,266 |  | 11.41
Caixa de Previd. dos Func. do Banco do Brasil (1) |  | 49,829,952 |  | 6.13 |  | 74,856,852 |  | 9.21
Kapitalo Investimentos Ltda. |  | 40,784,398 |  | 5.02 |  | Not available (2)
Management |  |  |  |  |  |  |  |
Board of Directors |  | 6,314,932 |  | 0.78 |  | 6,865,302 |  | 0.84
Executives |  | 917,317 |  | 0.11 |  | 605,902 |  | 0.07
Treasury shares |  | 5,053,554 |  | 0.62 |  | 4,766,084 |  | 0.59
Other |  | 382,890,462 |  | 47.13 |  | 632,662,840 |  | 77.88
|  | 812,473,246 |  | 100.00 |  | 812,473,246 |  | 100.00

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

| (2) | Information not available, as participation was null or less than 5%.

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

| 22.1.3. | Rollforward of outstanding shares

On December 31, 2021, the quantity of outstanding of shares was 807,419,692. In the year ended December 31, 2021, 944,830 shares were delivered in accordance with the Company’s Restricted Share plan.

Parent company
Quantity of outstanding of shares
|  | 12.31.21 |  | 12.31.20
Shares at the beginning of the year |  | 807,707,162 |  | 811,759,800
Purchase of treasury shares |  | (1,232,300) |  | (4,836,000)
Delivery of restricted shares |  | 944,830 |  | 783,362
Shares at the end of the year |  | 807,419,692 |  | 807,707,162

22.2. Capital reserves and Other equity transactions

For better presentation of the transactions, the balance previously presented in Capital reserves was split between Capital reserves and Other equity transactions. In the current presentation, Capital reserves contemplate only the balances related with results on the sale and exchange of stocks, in compatibility with the Law 6.404/1976 (“Lei das S.A”) – Brazilian Corporate Law.

Parent company and Consolidated
|  | 12.31.21 |  | 12.31.20
Capital reserves |  | 141,834 |  | 141,834
Other equity transactions |  | (67,531) |  | 246
Share-based payments |  | 205,949 |  | 214,711
Acquisition of non-controlling interest |  | (273,260) |  | (214,245)
Capital transactions with controlled entities |  | (220) |  | (220)
|  | 74,303 |  | 142,080

22.3. Absorption of accumulated losses

The Net income attributable to controlling shareholders for the year ended December 31, 2021, in the amount of R$419,455 was fully used to offset accumulated losses.

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22.4. Treasury shares

The Company has 5,053,554 shares held in treasury, with an average cost of R$25.19 (twenty-five Brazilian Reais and nineteen cents) per share and corresponding market value of R$113,806. In the year ended December 31, 2021, 944,830 shares were delivered in accordance with the Company’s Restricted Share plan.

Parent company
Quantity of outstanding of shares
|  | 12.31.21 |  | 12.31.20
Shares at the beggining of the year |  | 4,766,084 |  | 713,446
Purchase of treasury shares |  | 1,232,300 |  | 4,836,000
Delivery of restricted shares |  | (944,830) |  | (783,362)
Shares at the end of the year |  | 5,053,554 |  | 4,766,084

On September 30, 2021, the Company’s Board of Directors approved the Company’s share buyback program up to the limit of 3,696,858 common shares, in an 18-month term. The goal of the program is to comply with the obligations assumed by the Company under the Restricted Shares Plan.

In the year ended December 2021, the Company purchased 1,232,300 common shares at the total cost of R$27,721.

| 23. | EARNINGS (LOSS) PER SHARE

| Continued operations |  | Discontinued operations |  | Continued and discontinued operations
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.21
Basic numerator |  |  |  |  |  |  |
Net earnings (loss) for the year attributable to controlling shareholders | 499,385 |  | 1,383,564 |  | (79,930) |  | 419,455
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) | 807,929,481 |  | 809,110,872 |  | 807,929,481 |  | 807,929,481
Net earnings (loss) per share basic - R$ | 0.62 |  | 1.71 |  | (0.10) |  | 0.52
Diluted numerator |  |  |  |  |  |  |
Net earnings (loss) for the year attributable to controlling shareholders | 499,385 |  | 1,383,564 |  | (79,930) |  | 419,455
Diluted denominator |  |  |  |  |  |  |
Weighted average number of outstanding shares - basic (except treasury shares) | 807,929,481 |  | 809,110,872 |  | 807,929,481 |  | 807,929,481
Number of potential shares | 749,167 |  | 2,237,936 |  | - |  | 749,167
Weighted average number of outstanding shares - diluted | 808,678,648 |  | 811,348,808 |  | 807,929,481 |  | 808,678,648
Net earnings (loss) per share diluted - R$ | 0.62 |  | 1.71 |  | (0.10) |  | 0.52

For the year ended December 31, 2020, the Income (loss) from discontinued operations was null.

| 24. | FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

24.1. Overview

In the ordinary course of business, the Company is exposed to credit, liquidity and market risks, which are actively managed in compliance with the Financial Risk Management Policy (“Risk Policy”) and internal guidelines and strategic documents subject to such policy, executing the formal designation of its hedge accounting relations. The Risk Policy was approved by the Board of Directors on December 16, 2021, is valid for one year and is available at the Company’s website.

The Company’s risk management strategy, guided by the Risk Policy, has as main objectives:

| » | To protect the Company’s operating and financial results, as well as its equity from adverse changes in the market prices, particularly commodities, foreign exchange and interests;

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| » | To protect the Company against counterparty risks in existing financial operations as well as to establish guidelines for sustaining the necessary liquidity to fulfil its financial commitments;

| » | To protect the cash of Company against price volatilities, adverse conditions in the markets in which the Company acts and adverse conditions in its production chain.

The Risk Policy defines the governance of the bodies responsible for the execution, tracking and approval of the risk management strategies, as well as the limits and instruments that can be used.

Additionally, the Management of the Company approved the following policies on November 10, 2021, which are available at the Company’s website:

| » | Financial Policy, which aims to: (i) establish guidelines for the management of the Company's financial debt and capital structure; and (ii) guide the Company's decision-making in connection with cash management (financial investments).

| » | Profit Allocation Policy, which aims to establish the practices adopted by the Company regarding the allocation of its profits, providing, among others, the periodicity of payment of dividends and the baseline used to establish the respective amount.

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. The Company’s credit risk exposure can be assessed in notes 4, 5 and 6.

| 24.2.1. | Credit risk in accounts receivable

The credit risk associated with trade accounts receivable is actively managed through specific systems and is supported by internal policies for credit analysis. The significant level of diversification and geographical dispersion of the customer portfolio significantly reduces the risk. However, the Company chooses to complement the risk management by contracting insurance policies for specific markets. The impairment of these financial assets is carried out based on expected credit losses.

| 24.2.2. | Counterparty credit risk

The credit risk associated with marketable securities, cash and cash equivalents and derivative instruments in general is directed to counterparties with Investment Grade ratings. The maintenance of assets with counterparty risk is constantly assessed according to credit ratings and the Company’s portfolio concentration, aligned with the applicable impairment requisites.

On December 31, 2021, the Company held financial investments over R$100,000 at the following financial institutions: Banco Bradesco, Banco do Brasil, Banco BTG Pactual, Banco Inter, Banco Itaú, Banco Pan, Banco Safra, Banco Santander, Banco Votorantim, Banco XP, Caixa Econômica Federal, Citibank, Emirates NBD, First Abu Dhabi Bank, HSBC, J.P. Morgan Chase Bank and Vakiflar Bankasi.

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, Goldman Sachs, J.P. Morgan Chase Bank, Morgan Stanley, Rabobank, T. Garanti Bankasi A.Ş. and Banco XP.

24.3. Capital management and liquidity risk

The Company is exposed to liquidity risk as far as it needs cash or other financial assets to settle its obligations in the respective terms. The Company’s cash and liquidity strategy takes into consideration historical volatility scenarios of results as well as simulations of sectorial and systemic crisis. It is grounded on allowing resilience in scenarios of capital restriction.

The ideal capital structure definition at BRF is essentially associated with (i) strong cash position as a tolerance factor for liquidity shocks, which includes minimum cash analysis; (ii) net indebtedness; and (iii) maximization of the capital opportunity cost.

On December 31, 2021, the non-current consolidated gross debt, as presented below, represented 86.78% (93.66% as of December 31, 2020) of the total gross debt, which has an average term higher than nine years.

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The Company monitors the gross debt and net debt as set forth below:

| Consolidated
| 12.31.21 |  | 12.31.20
| Current |  | Non-current |  | Total |  | Total
Foreign currency loans and borrowings | (2,166,249) |  | (14,177,303) |  | (16,343,552) |  | (15,739,134)
Local currency loans and borrowings | (1,036,819) |  | (8,075,659) |  | (9,112,478) |  | (6,665,292)
Derivative financial instruments, net | (192,892) |  | (31,057) |  | (223,949) |  | (7,706)
Gross debt | (3,395,960) |  | (22,284,019) |  | (25,679,979) |  | (22,412,132)
Cash and cash equivalents | 7,528,820 |  | - |  | 7,528,820 |  | 7,576,625
Marketable securities | 346,855 |  | 447,413 |  | 794,268 |  | 658,735
Restricted cash | 24,963 |  | 1 |  | 24,964 |  | 24,358
| 7,900,638 |  | 447,414 |  | 8,348,052 |  | 8,259,718
Net debt | 4,504,678 |  | (21,836,605) |  | (17,331,927) |  | (14,152,414)

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

| Parent company
| 12.31.21
| Book value |  | Contractual cash flow |  | 2022 |  | 2023 |  | 2024 |  | 2025 |  | 2026 |  | 2027 onwards
Non derivative financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans and borrowings | 22,111,180 |  | 38,272,342 |  | 3,689,144 |  | 4,032,903 |  | 3,078,359 |  | 2,287,742 |  | 1,813,401 |  | 23,370,793
Principal |  |  | 25,462,497 |  | 2,434,990 |  | 2,907,304 |  | 2,114,428 |  | 1,396,164 |  | 986,693 |  | 15,622,918
Interest |  |  | 12,809,845 |  | 1,254,154 |  | 1,125,599 |  | 963,931 |  | 891,578 |  | 826,708 |  | 7,747,875
Trade accounts payable | 10,449,472 |  | 10,564,071 |  | 10,555,353 |  | 5,756 |  | 2,856 |  | 106 |  | - |  | -
Supply chain finance | 2,237,975 |  | 2,265,173 |  | 2,265,173 |  | - |  | - |  | - |  | - |  | -
Lease liabilities | 2,168,323 |  | 2,788,435 |  | 389,436 |  | 448,128 |  | 392,849 |  | 323,322 |  | 251,383 |  | 983,317
Derivative financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial instruments designated as cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate derivatives | 40,565 |  | 40,565 |  | - |  | - |  | - |  | - |  | - |  | 40,565
Currency derivatives | 36,676 |  | 36,676 |  | 36,375 |  | 301 |  | - |  | - |  | - |  | -
Commodities derivatives | 57,608 |  | 57,096 |  | 56,102 |  | 994 |  | - |  | - |  | - |  | -
Financial instruments not designated as cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Currency derivatives | 232,442 |  | 232,442 |  | 232,442 |  | - |  | - |  | - |  | - |  | -

| Consolidated
| 12.31.21
| Book value |  | Contractual cash flow |  | 2022 |  | 2023 |  | 2024 |  | 2025 |  | 2026 |  | 2027 onwards
Non derivative financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans and borrowings | 25,456,030 |  | 41,664,411 |  | 3,810,339 |  | 4,154,098 |  | 3,199,554 |  | 2,408,937 |  | 4,720,689 |  | 23,370,794
Principal |  |  | 28,248,591 |  | 2,434,990 |  | 2,907,304 |  | 2,114,428 |  | 1,396,164 |  | 3,772,786 |  | 15,622,919
Interest |  |  | 13,415,820 |  | 1,375,349 |  | 1,246,794 |  | 1,085,126 |  | 1,012,773 |  | 947,903 |  | 7,747,875
Trade accounts payable | 11,714,624 |  | 11,832,602 |  | 11,823,884 |  | 5,756 |  | 2,856 |  | 106 |  | - |  | -
Supply chain finance | 2,237,975 |  | 2,265,173 |  | 2,265,173 |  | - |  | - |  | - |  | - |  | -
Lease liabilities | 2,479,246 |  | 3,166,028 |  | 504,285 |  | 547,239 |  | 423,422 |  | 342,027 |  | 259,424 |  | 1,089,631
Derivative financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial instruments designated as cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate derivatives | 40,565 |  | 40,565 |  | - |  | - |  | - |  | - |  | - |  | 40,565
Currency derivatives | 37,959 |  | 37,959 |  | 37,658 |  | 301 |  | - |  | - |  | - |  | -
Commodities derivatives | 57,608 |  | 57,608 |  | 56,614 |  | 994 |  | - |  | - |  | - |  | -
Financial instruments not designated as cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Currency derivatives | 233,172 |  | 233,172 |  | 233,172 |  | - |  | - |  | - |  | - |  | -

The Company does not expect that the cash outflows to fulfill the obligations shown above will be significantly anticipated by factors unrelated to its best interests, or have its value substantially modified outside the normal course of business.

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 91

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24.4. Market risk management

| 24.4.1. | Interest rate risk

The interest rate risk may cause economic losses to the Company resulting from volatility in interest rates that affect its assets and liabilities.

The Company’s Risk Policy does not restrict exposure to different interest rates, neither establishes limits for fixed or floating rates. However, the Company continually monitors the market interest rates in order to evaluate any need to enter into hedging transactions to protect from the volatility of such rates and manage the mismatch between its financial assets and liabilities.

The Company’s exposure to interest rates is set forth below:

Consolidated
|  |  |  |  |  |  |  |  | 12.31.21
|  |  | Notional |  |
Index |  |  | Assets |  | Liabilities |  | Derivative financial instruments |  | Exposure, Net
Fixed |  |  |  |  |  |  |  |  |
Fixed Reais |  |  | 199,904 |  | (427,102) |  | (8,454,971) |  | (8,682,169)
Fixed U.S. Dollars (USD) |  |  | 2,489,430 |  | (16,114,760) |  | 7,036,609 |  | (6,588,721)
Fixed Turkish Liras (TRY) |  |  | 147,313 |  | (452,917) |  | - |  | (305,604)
Fixed Euros (EUR) |  |  | 87,385 |  | (1,053,534) |  | 1,539,537 |  | 573,388
Fixed Other |  |  | 614,129 |  | - |  | (121,175) |  | 492,954
Floating |  |  |  |  |  |  |  |  |
Floating IPCA Reais |  |  | - |  | (4,331,732) |  | 3,300,000 |  | (1,031,732)
Floating CDI Reais |  |  | 4,809,891 |  | (1,678,268) |  | (3,300,000) |  | (168,377)
Floating Libor U.S. Dollars (USD) |  | - |  | (279,025) |  | - |  | (279,025)
|  |  | 8,348,052 |  | (24,337,338) |  | - |  | (15,989,286)
Interest and fair value adjustment of derivatives | - |  | (1,118,692) |  | (223,949) |  | (1,342,641)
Total |  |  | 8,348,052 |  | (25,456,030) |  | (223,949) |  | (17,331,927)

The derivative financial instruments used to hedge the exposure to interest rates as of December 31, 2021 are presented in the table below:

12.31.21
|  |  |  |  |  |  |  |  |  |  |  |  | Fair value (R$)
Fair value hedge - Derivative instruments |  | Hedged Object |  | Maturity |  | Asset |  | Liability |  | Notional |  | Instrument |  | Object (1)
Parent company and Consolidated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swap |  | Debenture - 1st Issue - 3rd series - IPCA + 5.50% p.a. |  | 2nd Qtr. 2026 |  | IPCA + 5.50% p.a. |  | CDI + 0.57% p.a. |  | 200,000 | BRL |  | 1,863 |  | (1,179)
Interest rate swap |  | Debenture - 2nd Issue - 1st series - IPCA + 5.30% p.a. |  | 3rd Qtr. 2027 |  | IPCA + 5.30% p.a. |  | CDI + 2.16% p.a. |  | 705,000 | BRL |  | (3,204) |  | 46,560
Interest rate swap |  | Debenture - 2nd Issue - 2nd series - IPCA + 5.60% p.a. |  | 3rd Qtr. 2030 |  | IPCA + 5.60% p.a. |  | CDI + 2.29% p.a. |  | 1,495,000 | BRL |  | (34,368) |  | 112,240
Interest rate swap |  | Debenture - 3rd Issue - single series - IPCA + 4.78% p.a. |  | 2nd Qtr. 2031 |  | IPCA + 4.78% p.a. |  | CDI + 0.20% p.a. |  | 900,000 | BRL |  | 5,601 |  | 6,853
|  |  |  |  |  |  |  |  |  | 3,300,000 |  |  | (30,108) |  | 164,474

| (1) | Corresponds to the accumulated amount of fair value hedge adjustments on the hedged items, included in the carrying amount of the debentures.

| 24.4.2. | Foreign exchange risk

The risk is the one that may cause unexpected losses to the Company resulting from volatility of the FX rates, reducing its assets and revenues, or increasing its liabilities and costs. The Company’s exposure is managed in three dimensions: statement of financial position exposure, operating income exposure and investments exposure.

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 92

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i. Statement of financial position exposure

The Risk Policy regarding statement of financial position exposure has the objective to balance assets and liabilities denominated in foreign currencies, hedging the Company’s statement of financial position by using natural hedges, over-the-counter derivatives and exchange traded futures.

Assets and liabilities denominated in foreign currency for which the exchange variations are recognized in the Financial Results are as follows, summarized in Brazilian Reais:

|  | Consolidated
|  | 12.31.21 |  | 12.31.20
Cash and cash equivalents |  | 2,064,631 |  | 2,855,979
Trade accounts receivable |  | 6,377,104 |  | 5,765,753
Trade accounts payable |  | (1,221,354) |  | (859,790)
Loans and borrowings |  | (16,726,412) |  | (14,947,793)
Other assets and liabilities, net |  | 49,732 |  | 225,694
Exposure of assets and liabilities in foreign currencies |  | (9,456,299) |  | (6,960,157)
Derivative financial instruments (hedge) |  | 8,454,971 |  | 6,849,947
Exposure in result, net |  | (1,001,328) |  | (110,210)

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

Net P&L Exposure |  | 12.31.21 |  | 12.31.20
Argentinian Peso (ARS) |  | (5,783) |  | (5,310)
Angolan kwanza (AOA) |  | 318,660 |  | -
Euros (EUR) |  | 33,381 |  | 112,672
Yen (JPY) |  | 77,178 |  | 29,976
Turkish Liras (TRY) |  | 266,541 |  | 178,906
U.S. Dollars (USD) |  | (1,691,305) |  | (426,454)
Total |  | (1,001,328) |  | (110,210)

The Company is exposed to other currencies, although they have been grouped in the currencies above due to its high correlation or for not being individually significant.

The derivative financial instruments acquired to hedge the foreign currency statement of financial position exposure on December 31, 2021 are not designated as hedge accounting and are set forth below:

12.31.21
Derivative instruments not designated |  | Asset |  | Liability |  | Maturity |  | Notional |  | Exercise rate |  | Fair value (R$)
Parent company |  |  |  |  |  |  |  |  |  |  |  |  |
Non-deliverable forward |  | EUR |  | BRL |  | 1st Qtr. 2022 |  | EUR | 265,000 |  | 6.5766 |  | (46,336)
Non-deliverable forward |  | USD |  | BRL |  | 1st Qtr. 2022 |  | USD | 935,928 |  | 5.8088 |  | (151,493)
Futures - B3 |  | USD |  | BRL |  | 1st Qtr. 2022 |  | USD | 279,000 |  | 5.6169 |  | (34,613)
|  |  |  |  |  |  |  |  |  |  |  |  | (232,442)
Subsidiaries |  |  |  |  |  |  |  |  |  |  |  |  |
Non-deliverable forward |  | EUR |  | JPY |  | 1st Qtr. 2022 |  | EUR | 19,491 |  | 128.2633 |  | 2,054
Non-deliverable forward |  | USD |  | EUR |  | 1st Qtr. 2022 |  | EUR | 40,669 |  | 1.1311 |  | (731)
Total Consolidated |  |  |  |  |  |  |  |  |  |  |  |  | (231,119)

| ii. | Operating income exposure

The Risk Policy regarding operating income exposure has the objective to hedge revenues and costs denominated in foreign currencies. The Company is supported by internal models to measure and monitor these risks, and uses financial instruments for hedging, designating the relations as cash flow hedges.

The derivative financial instruments designated as cash flow hedges for foreing exchange operating income exposure on December 31, 2021 are set forth below:

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 93

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12.31.21
Cash flow hedge - Derivative instruments |  | Hedged object |  | Asset |  | Liability |  | Maturity |  | Notional |  | Designation rate |  | Fair value
Parent company and consolidated |  |  |  |  |  |  |  |  |  |  |  |  |
Non-deliverable forward |  | USD Exports |  | BRL |  | USD |  | 1st Qtr. 2022 |  | USD | 261,000 |  | 5.6261 |  | 1,392
Non-deliverable forward |  | USD Exports |  | BRL |  | USD |  | 2nd Qtr. 2022 |  | USD | 23,000 |  | 5.7978 |  | 1,569
Collar |  | USD Exports |  | BRL |  | USD |  | 1st Qtr. 2022 |  | USD | 35,000 |  | 5.7164 |  | 878
Collar |  | USD Exports |  | BRL |  | USD |  | 2nd Qtr. 2022 |  | USD | 30,000 |  | 5.8056 |  | 35
Collar |  | USD Exports |  | BRL |  | USD |  | 3rd Qtr. 2022 |  | USD | 10,000 |  | 6.0750 |  | 90
|  |  |  |  |  |  |  |  |  |  |  |  |  |  | 3,964

| iii. | Investments exposure

The Company holds investments abroad in functional currencies different than the Brazilian Real, which generate currency exposure that affects directly the Company’s Equity, in Other Comprehensive Income.

The non-derivative financial instruments designated as net investment hedge instruments on December 31, 2021 are set forth below:

12.31.21
Net investment hedge - Non-derivative instruments |  | Object (Investment) |  | Liability |  | Maturity |  | Notional |  | Rate |  | Fair value (1)
Parent company and consolidated |  |  |  |  |  |  |  |  |  |  |
Bond - BRF SA BRFSBZ 4.35 |  | Federal Foods LLC |  | USD |  | 3rd Qtr. 2026 |  | USD | 75,673 |  | 3.7649 |  | (138,080)
Bond - BRF SA BRFSBZ 4.35 |  | BRF Kuwait WLL |  | USD |  | 3rd Qtr. 2026 |  | USD | 108,757 |  | 3.7649 |  | (184,667)
Bond - BRF SA BRFSBZ 4.35 |  | Al Khan Foodstuff LLC |  | USD |  | 3rd Qtr. 2026 |  | USD | 65,570 |  | 3.7649 |  | (118,482)
|  |  |  |  |  |  |  |  |  |  |  |  | (441,229)

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

| 24.4.3. | Commodities price risk

In the ordinary course of business, the Company purchases commodities, mainly corn, soybean, soybean meal and soybean oil, individual components of the production costs.

Corn and soy prices are subject to volatility resulting from weather conditions, harvest productivity, transport and warehouse costs, government agricultural policies, FX rates and international market prices, among other factors.

The Risk Policy establishes coverage limits to the flow of purchases of corn and soy with the purpose of reducing the impact due to a price increase of these raw materials. The hedge may be reached using derivatives or by inventory management.

The financial instruments designated as cash flow hedges and fair value hedges for the commodities price exposure on December 31, 2021 are set forth below:

12.31.21
Cash flow hedge - Derivative instruments |  | Hedged object |  | Index |  | Maturity |  | Quantity |  | Exercise price (1) |  | Fair value
Parent company and consolidated |  |  |  |  |  |  |  |  |  |  |
Non-deliverable forward - buy |  | Soybean meal purchase - floating price |  | Soybean meal - CBOT |  | 1st Qtr. 2022 |  | 55,975 | ton |  | 413.32 |  | 9,896
Non-deliverable forward - buy |  | Soybean meal purchase - floating price |  | Soybean meal - CBOT |  | 2nd Qtr. 2022 |  | 174,257 | ton |  | 391.73 |  | 47,504
Non-deliverable forward - buy |  | Soybean meal purchase - floating price |  | Soybean meal - CBOT |  | 3rd Qtr. 2022 |  | 59,628 | ton |  | 373.67 |  | 19,006
Collar - buy |  | Soybean meal purchase - floating price |  | Soybean meal - CBOT |  | 1st Qtr. 2022 |  | 40,000 | ton |  | 441.25 |  | 3,407
Collar - buy |  | Soybean meal purchase - floating price |  | Soybean meal - CBOT |  | 2nd Qtr. 2022 |  | 40,000 | ton |  | 440.65 |  | 4,362
Corn future - buy |  | Corn purchase - floating price |  | Corn - B3 |  | 1st Qtr. 2022 |  | 5,400 | ton |  | 1,494.17 |  | (77)
Corn future - buy |  | Corn purchase - floating price |  | Corn - B3 |  | 2nd Qtr. 2022 |  | 48,492 | ton |  | 1,415.59 |  | (816)
Collar - buy |  | Corn purchase - floating price |  | Corn - B3 |  | 1st Qtr. 2022 |  | 31,995 | ton |  | 1,675.54 |  | (181)
Collar - buy |  | Corn purchase - floating price |  | Corn - B3 |  | 2nd Qtr. 2022 |  | 66,015 | ton |  | 1,604.70 |  | (1,381)
Non-deliverable forward - buy |  | Soybean oil purchase - floating price |  | Soybean oil - CBOT |  | 1st Qtr. 2022 |  | 1,000 | ton |  | 1,303.37 |  | (374)
Non-deliverable forward - buy |  | Soybean oil purchase - floating price |  | Soybean oil - CBOT |  | 2nd Qtr. 2022 |  | 500 | ton |  | 1,286.84 |  | (138)
Collar - buy |  | Soybean oil purchase - floating price |  | Soybean oil - CBOT |  | 1st Qtr. 2022 |  | 1,300 | ton |  | 1,230.35 |  | 394
Collar - buy |  | Soybean oil purchase - floating price |  | Soybean oil - CBOT |  | 2nd Qtr. 2022 |  | 1,100 | ton |  | 1,243.40 |  | 383
Collar - buy |  | Soybean oil purchase - floating price |  | Soybean oil - CBOT |  | 3rd Qtr. 2022 |  | 500 | ton |  | 1,256.63 |  | 236
|  |  |  |  |  |  |  |  |  |  |  |  | 82,221

| (1) | Base price of each commodity in USD/ton, except for Corn – B3 denominated in R$/ton.

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 94

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12.31.21
Cash flow hedge - Derivative instruments |  | Protection object |  | Assets |  | Liabilities |  | Maturity |  | Notional |  | Exercise price |  | Fair value (R$)
Subsidiaries |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-deliverable forward |  | Cost in USD |  | USD |  | TRY |  | 1st Qtr. 2022 |  | USD | 4,368 |  | 13.9818 |  | (1,283)
|  |  |  |  |  |  |  |  |  |  |  |  |  |  | (1,283)

12.31.21
Fair value hedge - Derivative instruments |  | Hedged object |  | Index |  | Maturity |  | Quantity |  | Exercise price (1) |  | Fair value
Parent company and consolidated |  |  |  |  |  |  |  |  |  |  |
Non-deliverable forward - sell |  | Soybean purchase - fixed price |  | Soybean - CBOT |  | 1st Qtr. 2022 |  | 30,999 | ton |  | 482.61 |  | (1,593)
Non-deliverable forward - sell |  | Corn purchase - fixed price |  | Corn - CBOT |  | 1st Qtr. 2022 |  | 29,538 | ton |  | 213.72 |  | (3,446)
Non-deliverable forward - sell |  | Corn purchase - fixed price |  | Corn - CBOT |  | 2nd Qtr. 2022 |  | 265,660 | ton |  | 218.85 |  | (22,518)
Non-deliverable forward - sell |  | Corn purchase - fixed price |  | Corn - CBOT |  | 3rd Qtr. 2022 |  | 61,938 | ton |  | 197.41 |  | (8,351)
Non-deliverable forward - sell |  | Corn purchase - fixed price |  | Corn - CBOT |  | 4th Qtr. 2022 |  | 5,800 | ton |  | 216.21 |  | 44
Non-deliverable forward - sell |  | Corn purchase - fixed price |  | Corn - CBOT |  | 2nd Qtr. 2023 |  | 28,442 | ton |  | 212.15 |  | (994)
Corn future - sell |  | Corn purchase - fixed price |  | Corn - B3 |  | 1st Qtr. 2022 |  | 25,569 | ton |  | 1,673.67 |  | 37
Corn future - sell |  | Corn purchase - fixed price |  | Corn - B3 |  | 2nd Qtr. 2022 |  | 5,373 | ton |  | 1,527.26 |  | 90
Corn future - sell |  | Corn purchase - fixed price |  | Corn - B3 |  | 3rd Qtr. 2022 |  | 268,893 | ton |  | 1,344.18 |  | 2,308
Corn future - sell |  | Corn purchase - fixed price |  | Corn - B3 |  | 4th Qtr. 2022 |  | 15,579 | ton |  | 1,349.89 |  | 60
Corn future - sell |  | Corn purchase - fixed price |  | Corn - B3 |  | 1st Qtr. 2023 |  | 2,484 | ton |  | 1,433.33 |  | 21
Corn future - sell |  | Corn purchase - fixed price |  | Corn - B3 |  | 3rd Qtr. 2023 |  | 15,174 | ton |  | 1,226.62 |  | (215)
Collar - sell |  | Corn purchase - fixed price |  | Corn - B3 |  | 1st Qtr. 2022 |  | 5,400 | ton |  | 1,541.67 |  | (44)
|  |  |  |  |  |  |  |  |  |  |  |  | (34,601)

| (1) | Base price of each commodity in USD/ton, except for Corn – B3 denominated in R$/ton.

12.31.21
Fair value hedge - Derivative instruments |  | Protection object |  | Assets |  | Liabilities |  | Maturity |  | Notional |  | Exercise price |  | Fair value
Parent company and consolidated |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-deliverable forward |  | Cost in USD |  | BRL |  | USD |  | 1st Qtr. 2022 |  | USD | 21,273 |  | 5.4942 |  | (3,132)
Non-deliverable forward |  | Cost in USD |  | BRL |  | USD |  | 2nd Qtr. 2022 |  | USD | 58,140 |  | 5.7103 |  | (7,405)
Non-deliverable forward |  | Cost in USD |  | BRL |  | USD |  | 3rd Qtr. 2022 |  | USD | 12,227 |  | 5.7418 |  | (2,469)
Non-deliverable forward |  | Cost in USD |  | BRL |  | USD |  | 4th Qtr. 2022 |  | USD | 1,254 |  | 6.0520 |  | (62)
Non-deliverable forward |  | Cost in USD |  | BRL |  | USD |  | 2nd Qtr. 2023 |  | USD | 6,034 |  | 6.4463 |  | 45
|  |  |  |  |  |  |  |  |  |  |  |  |  |  | (13,023)

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 95

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24.5. Effects of hedge instruments on financial information

The effects of the financial instruments for hedging exchange rate, commodities price and interest rates in the income (loss) for the year, in Other Comprehensive Income and in the financial position are set forth below:

Income for the year |  |  |  |  |  |  |  |  |  | Consolidated
12.31.21 |  | Note |  | Exposure |  | Hedge accounting |  | Foreign Exchange |  | Commodities |  | Interest Rate |  | Total
Net Sales |  |  |  |  |  |  |  | 48,327,703 |  | - |  | - |  | 48,327,703
Derivatives result |  |  |  | Operating Results |  | Cash flow |  | 15,602 |  | - |  | - |  | 15,602
Net Revenue |  | 26 |  |  |  |  |  | 48,343,305 |  | - |  | - |  | 48,343,305
Cost of Sales |  |  |  |  |  |  |  | - |  | (37,858,788) |  | - |  | (37,858,788)
Derivatives result |  |  |  | Operating Results |  | Cash flow / Fair value |  | - |  | (318,821) |  | - |  | (318,821)
Cost of Sales |  |  |  |  |  |  |  | - |  | (38,177,609) |  | - |  | (38,177,609)
Interests on loans and borrowings |  |  |  |  |  |  |  | - |  | - |  | (1,681,078) |  | (1,681,078)
Interest Rate Derivatives result |  |  |  | Interest expenses |  | Fair value |  | - |  | - |  | (33,084) |  | (33,084)
Foreign Exchange variation on assets and liabilities |  |  |  |  |  |  |  | (408,269) |  | - |  | - |  | (408,269)
Foreign Exchange Derivatives result |  |  |  | Financial Position |  | Not designated |  | 157,573 |  | - |  | - |  | 157,573
Effects on Financial Result |  | 28 |  |  |  |  |  | (250,696) |  | - |  | (1,714,162) |  | (1,964,858)
Other Comprehensive Income |  |  |  |  |  |  |  |  |  | Consolidated
12.31.21 |  |  |  | Exposure |  | Hedge accounting |  | Foreign Exchange |  | Commodities |  | Interest Rate |  | Total
Derivative Instruments - current |  |  |  | Operating Results |  | Cash flow |  | (43,978) |  | (67,560) |  | - |  | (111,538)
Non-derivative Instruments – current (1) |  |  |  | Operating Results |  | Cash flow |  | (444,953) |  | - |  | - |  | (444,953)
Non-derivative Instruments – non-current (1) |  | Operating Results |  | Cash flow |  | 334,577 |  | - |  | - |  | 334,577
Non-derivative Instruments - non-current |  |  |  | Foreign investments |  | Net investment |  | (96,555) |  | - |  | - |  | (96,555)
Other Comprehensive Income (2) |  |  |  |  |  |  |  | (250,909) |  | (67,560) |  | - |  | (318,469)
Statement of financial position |  |  |  |  |  |  |  |  |  | Consolidated
12.31.21 |  | Note |  | Exposure |  | Hedge accounting |  | Foreign Exchange |  | Commodities |  | Interest Rate |  | Total
Designated derivatives |  |  |  | Operating Results |  | Cash flow / Fair value |  | (10,342) |  | 47,620 |  | (30,108) |  | 7,170
Not designated derivatives |  |  |  | Financial Position |  | Not designated |  | (231,119) |  | - |  | - |  | (231,119)
Asset / (Liability) net |  |  |  |  |  |  |  | (241,461) |  | 47,620 |  | (30,108) |  | (223,949)
Derivative Instruments - current (3) |  |  |  | Operating Results |  | Cash flow |  | 3,964 |  | 103,746 |  | - |  | 107,710
Non-derivative instruments – current |  |  |  | Operating Results |  | Cash flow |  | (444,953) |  | - |  | - |  | (444,953)
Non-derivative instruments – non-current |  |  |  | Operating Results |  | Cash flow |  | (548,640) |  | - |  | - |  | (548,640)
Non-derivative Instruments - non-current |  |  |  | Foreign investments |  | Net investment |  | (441,229) |  | - |  | - |  | (441,229)
Other Comprehensive Income (2) |  |  |  |  |  |  |  | (1,430,858) |  | 103,746 |  | - |  | (1,327,112)
Derivatives result |  |  |  | Operating Results |  | Cash flow / Fair value |  | - |  | 531,732 |  | - |  | 531,732
Inventories |  | 7 |  |  |  |  |  | - |  | 531,732 |  | - |  | 531,732

| (1) | In the year ended December 31, 2021, the amount of R$395,722 was reclassified from non-current to current.

| (2) | All effects are presented gross of taxes.

| (3) | Includes R$(1,126) related to the time value of the foreign exchange option contracts, and R$4,409 related to the time value of the commodity options contracts.

BRF S.A. | 2021 AND 2020 FINANCIAL STATEMENTS | 96

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Income for the year |  |  |  |  |  |  |  |  |  | Consolidated
12.31.20 |  | Note |  | Exposure |  | Hedge accounting |  | Foreign Exchange |  | Commodities |  | Interest Rate |  | Total
Net Sales |  |  |  |  |  |  |  | 40,841,803 |  | - |  | - |  | 40,841,803
Derivatives result |  |  |  | Operating Results |  | Cash flow |  | (1,372,103) |  | - |  | - |  | (1,372,103)
Net Revenue |  | 26 |  |  |  |  |  | 39,469,700 |  | - |  | - |  | 39,469,700
Cost of Sales |  |  |  |  |  |  |  | - |  | (29,816,160) |  | - |  | (29,816,160)
Derivatives result |  |  |  | Operating Results |  | Cash flow / Fair value |  | - |  | (182,662) |  | - |  | (182,662)
Cost of Sales |  |  |  |  |  |  |  | - |  | (29,998,822) |  | - |  | (29,998,822)
Interests on loans and borrowings |  |  |  |  |  |  |  | - |  | - |  | (1,545,825) |  | (1,545,825)
Interest Rate Derivatives result |  |  |  | Interest expenses |  | Cash flow |  | - |  | - |  | (32,909) |  | (32,909)
Foreign Exchange variation on assets and liabilities |  |  |  |  |  |  |  | (1,179,236) |  | - |  | - |  | (1,179,236)
Foreign Exchange Derivatives result |  |  |  | Financial Position |  | Not designated |  | 981,847 |  | - |  | - |  | 981,847
Effects on Financial Result |  | 28 |  |  |  |  |  | (197,389) |  | - |  | (1,578,734) |  | (1,776,123)
Other Comprehensive Income |  |  |  |  |  |  |  |  |  | Consolidated
12.31.20 |  |  |  | Exposure |  | Hedge accounting |  | Foreign Exchange |  | Commodities |  | Interest Rate |  | Total
Derivative Instruments - current |  |  |  | Operating Results |  | Cash flow |  | (28,893) |  | 211,751 |  | - |  | 182,858
Non-derivative Instruments – non-current |  |  |  | Operating Results |  | Cash flow |  | (306,340) |  | - |  | - |  | (306,340)
Non-derivative Instruments - non-current |  |  |  | Foreign investments |  | Net investment |  | (277,856) |  | - |  | - |  | (277,856)
Other Comprehensive Income |  |  |  |  |  |  |  | (613,089) |  | 211,751 |  | - |  | (401,338)
Statement of financial position |  |  |  |  |  |  |  |  |  | Consolidated
12.31.20 |  | Note |  | Exposure |  | Hedge accounting |  | Foreign Exchange |  | Commodities |  | Interest Rate |  | Total
Designated derivatives |  |  |  | Operating Results |  | Cash flow / Fair value |  | 95,558 |  | (144,057) |  | - |  | (48,499)
Not designated derivatives |  |  |  | Financial Position |  | Not designated |  | 55,442 |  | - |  | (14,649) |  | 40,793
Asset / (Liability) net |  |  |  |  |  |  |  | 151,000 |  | (144,057) |  | (14,649) |  | (7,706)
Derivative Instruments - current |  |  |  | Operating Results |  | Cash flow |  | 47,942 |  | 171,306 |  | - |  | 219,248
Non-derivative instruments – non-current |  |  |  | Operating Results |  | Cash flow |  | (883,218) |  | - |  | - |  | (883,218)
Non-derivative Instruments - non-current |  |  |  | Foreign investments |  | Net investment |  | (344,674) |  | - |  | - |  | (344,674)
Other Comprehensive Income |  |  |  |  |  |  |  | (1,179,950) |  | 171,306 |  | - |  | (1,008,644)
Derivatives result |  |  |  | Operating Results |  | Cash flow / Fair value |  | - |  | 442,398 |  | - |  | 442,398
Inventories |  | 7 |  |  |  |  |  | - |  | 442,398 |  | - |  | 442,398

In the statement of cash flows, the effect of the derivative financial instruments designated as hedge accounting is presented in the line item in which the hedged object is recorded. For the instruments not designated, the effects are presented in the Derivative Financial Instruments line item.

On December 16, 2021, the Financial Risk Management Policy was amended and from this date, non-derivative financial instruments may only be designated as hedge instruments in net investment hedge relations. Thus, on December 16, 2021, the cash flow hedge relations presented below were discontinued because the hedging instruments were non-derivative financial instruments (loans) and no longer met the Company’s strategies and objectives.

12.31.21
Cash flow hedge - Non-derivative instruments |  | Hedged object |  | Liability |  | Maturity |  | Notional |  | Designation rate |  | Rate (1) |  | Balance (2)
Parent company and consolidated |  |  |  |  |  |  |  |  |  |  |  |  |
Bond BRF SA BRFSBZ 5 7/8 (3) |  | USD Exports |  | USD |  | 2nd Qtr. 2022 |  | USD | 150,000 |  | 2.0213 |  | 4.9877 |  | (444,953)
Bond BRF SA BRFSBZ 3.95 |  | USD Exports |  | USD |  | 2nd Qtr. 2023 |  | USD | 150,000 |  | 2.0387 |  | 5.6963 |  | (548,640)
|  |  |  |  |  |  |  |  |  |  |  |  |  |  | (993,593)

| (1) | Average discontinuance rates.

| (2) | Effective portion of the accumulated foreign exchange variations on the designated loans.

| (3) | During the existence of the loan, there were early settlements with the corresponding discontinuance of the hedge relation.

The amounts above will be kept under Other Comprehensive Income until their respective months of maturity, according to the previous designation and effectiveness of each relationship.

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Summarized financial position of derivative financial instruments:

| Parent company |  | Consolidated
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Assets |  |  |  |  |  |  |
Designated as hedge accounting |  |  |  |  |  |  |
Currency derivatives | 27,617 |  | 177,208 |  | 27,617 |  | 177,208
Commodities derivatives | 105,228 |  | 125,304 |  | 105,228 |  | 125,304
Interest rate derivatives | 10,457 |  | - |  | 10,457 |  | -
Not designated as hedge accounting |  |  |  |  |  |  |
Currency derivatives | - |  | 59,037 |  | 2,053 |  | 75,478
| 143,302 |  | 361,549 |  | 145,355 |  | 377,990
Current assets | 132,498 |  | 361,315 |  | 134,551 |  | 377,756
Non-current assets | 10,804 |  | 234 |  | 10,804 |  | 234
Liabilities |  |  |  |  |  |  |
Designated as hedge accounting |  |  |  |  |  |  |
Currency derivatives | (36,676) |  | (81,650) |  | (37,959) |  | (81,650)
Commodities derivatives | (57,608) |  | (269,361) |  | (57,608) |  | (269,361)
Interest rate derivatives | (40,565) |  | - |  | (40,565) |  | -
Not designated as hedge accounting |  |  |  |  |  |  |
Currency derivatives | (232,442) |  | (13,610) |  | (233,172) |  | (20,036)
Interest rate derivatives | - |  | (14,649) |  | - |  | (14,649)
| (367,291) |  | (379,270) |  | (369,304) |  | (385,696)
Current liabilities | (325,430) |  | (378,543) |  | (327,443) |  | (384,969)
Non-current liabilities | (41,861) |  | (727) |  | (41,861) |  | (727)

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24.6. Sensitivity analysis

The Management believes 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 amounts below represent the possible impacts (incremental results) of the hedging instruments and their respective hedged positions, considering situations of increase and decrease in the selected risk factors.

The information used in the preparation of the analysis is based on the position as of December 31, 2021, which has been described in the items above. The estimated values may differ significantly to numbers and results that will be effectively registered by the Company. Positive values indicate gains and negative values indicate losses.

|  | Scenario
Exchange rate - Balance |  | Base |  | - 50% |  | - 25% |  | - 10% |  | + 10% |  | + 25% |  | + 50%
USD |  | 5.5805 |  | 2.7903 |  | 4.1854 |  | 5.0225 |  | 6.1386 |  | 6.9756 |  | 8.3708
Monetary Assets and Liabilities |  |  |  | 4,363,957 |  | 2,181,979 |  | 872,791 |  | (872,791) |  | (2,181,979) |  | (4,363,957)
Derivative Instruments - Not designated |  |  |  | (3,518,304) |  | (1,759,152) |  | (703,661) |  | 703,661 |  | 1,759,152 |  | 3,518,304
Net effect |  |  |  | 845,653 |  | 422,827 |  | 169,130 |  | (169,130) |  | (422,827) |  | (845,653)
EUR |  | 6.3210 |  | 3.1605 |  | 4.7408 |  | 5.6889 |  | 6.9531 |  | 7.9013 |  | 9.4815
Monetary Assets and Liabilities |  |  |  | 757,905 |  | 378,953 |  | 151,581 |  | (151,581) |  | (378,953) |  | (757,905)
Derivative Instruments - Not designated |  |  |  | (770,243) |  | (385,122) |  | (154,049) |  | 154,049 |  | 385,122 |  | 770,243
Net effect |  |  |  | (12,338) |  | (6,169) |  | (2,468) |  | 2,468 |  | 6,169 |  | 12,338
JPY |  | 0.0485 |  | 0.0243 |  | 0.0364 |  | 0.0437 |  | 0.0534 |  | 0.0606 |  | 0.0728
Monetary Assets and Liabilities |  |  |  | (99,177) |  | (49,588) |  | (19,835) |  | 19,835 |  | 49,588 |  | 99,177
Derivative Instruments - Not designated |  |  |  | 60,588 |  | 30,294 |  | 12,118 |  | (12,118) |  | (30,294) |  | (60,588)
Net effect |  |  |  | (38,589) |  | (19,294) |  | (7,717) |  | 7,717 |  | 19,294 |  | 38,589
TRY |  | 0.4223 |  | 0.2112 |  | 0.3167 |  | 0.3801 |  | 0.4645 |  | 0.5279 |  | 0.6335
Monetary Assets and Liabilities |  |  |  | (133,270) |  | (66,635) |  | (26,654) |  | 26,654 |  | 66,635 |  | 133,270
Net effect |  |  |  | (133,270) |  | (66,635) |  | (26,654) |  | 26,654 |  | 66,635 |  | 133,270
AOA |  | 0.0099 |  | 0.0050 |  | 0.0074 |  | 0.0089 |  | 0.0109 |  | 0.0124 |  | 0.0149
Monetary Assets and Liabilities |  |  |  | (159,330) |  | (79,665) |  | (31,866) |  | 31,866 |  | 79,665 |  | 159,330
Net effect |  |  |  | (159,330) |  | (79,665) |  | (31,866) |  | 31,866 |  | 79,665 |  | 159,330

|  | Scenario
Exchange rate - Operating results |  | Base |  | - 50% |  | - 25% |  | - 10% |  | + 10% |  | + 25% |  | + 50%
USD |  | 5.5805 |  | 2.7903 |  | 4.1854 |  | 5.0225 |  | 6.1386 |  | 6.9756 |  | 8.3708
Revenue in USD |  |  |  | (1,001,700) |  | (500,850) |  | (200,340) |  | 200,340 |  | 500,850 |  | 1,001,700
NDF |  |  |  | 792,431 |  | 396,216 |  | 158,486 |  | (158,486) |  | (396,216) |  | (792,431)
Collar |  |  |  | 202,303 |  | 97,668 |  | 34,888 |  | (11,743) |  | (69,018) |  | (173,652)
Net effect |  |  |  | (6,966) |  | (6,966) |  | (6,966) |  | 30,111 |  | 35,616 |  | 35,617

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|  | Scenario
Exchange rate - Operating results |  | Base |  | - 50% |  | - 25% |  | - 10% |  | + 10% |  | + 25% |  | + 50%
USD |  | 5.5805 |  | 2.7903 |  | 4.1854 |  | 5.0225 |  | 6.1386 |  | 6.9756 |  | 8.3708
Cost of Sales |  |  |  | (276,035) |  | (138,018) |  | (55,207) |  | 55,207 |  | 138,018 |  | 276,035
NDF |  |  |  | 276,035 |  | 138,018 |  | 55,207 |  | (55,207) |  | (138,018) |  | (276,035)
Net effect |  |  |  | - |  | - |  | - |  | - |  | - |  | -
|  | Scenario
Operating results - Commodities |  | Base (1) |  | - 50% |  | - 25% |  | - 10% |  | + 10% |  | + 25% |  | + 50%
Soy Grain - CBOT |  | 492 |  | 246 |  | 369 |  | 443 |  | 541 |  | 615 |  | 738
Cost of Sales |  |  |  | (7,623) |  | (3,811) |  | (1,525) |  | 1,525 |  | 3,811 |  | 7,623
NDF |  |  |  | 7,623 |  | 3,811 |  | 1,525 |  | (1,525) |  | (3,811) |  | (7,623)
Net effect |  |  |  | - |  | - |  | - |  | - |  | - |  | -
Soybean Meal - CBOT |  | 434 |  | 217 |  | 326 |  | 391 |  | 478 |  | 543 |  | 651
Cost of Sales |  |  |  | 80,312 |  | 40,156 |  | 16,062 |  | (16,062) |  | (40,156) |  | (80,312)
Collar |  |  |  | (15,414) |  | (6,550) |  | (1,819) |  | 919 |  | 5,883 |  | 14,747
NDF |  |  |  | (63,696) |  | (31,848) |  | (12,739) |  | 12,739 |  | 31,848 |  | 63,696
Net effect |  |  |  | 1,202 |  | 1,758 |  | 1,504 |  | (2,404) |  | (2,425) |  | (1,869)
Soybean Oil - CBOT |  | 1,237 |  | 618 |  | 927 |  | 1,113 |  | 1,360 |  | 1,546 |  | 1,855
Cost of Sales |  |  |  | 2,721 |  | 1,360 |  | 544 |  | (544) |  | (1,360) |  | (2,721)
Collar |  |  |  | (1,299) |  | (402) |  | - |  | - |  | 383 |  | 1,280
NDF |  |  |  | (927) |  | (464) |  | (185) |  | 185 |  | 464 |  | 927
Net effect |  |  |  | 495 |  | 494 |  | 359 |  | (359) |  | (513) |  | (514)
Corn - CBOT |  | 231 |  | 115 |  | 173 |  | 208 |  | 254 |  | 288 |  | 346
Cost of Sales |  |  |  | (45,151) |  | (22,575) |  | (9,030) |  | 9,030 |  | 22,575 |  | 45,151
NDF |  |  |  | 45,151 |  | 22,575 |  | 9,030 |  | (9,030) |  | (22,575) |  | (45,151)
Net effect |  |  |  | - |  | - |  | - |  | - |  | - |  | -
Corn - B3 |  | 1,418 |  | 709 |  | 1,064 |  | 1,276 |  | 1,560 |  | 1,773 |  | 2,127
Cost of Sales |  |  |  | (132,309) |  | (66,154) |  | (26,462) |  | 26,462 |  | 66,154 |  | 132,309
Collar |  |  |  | (63,107) |  | (28,749) |  | (8,188) |  | 1,611 |  | 21,039 |  | 55,397
Future |  |  |  | 199,465 |  | 99,733 |  | 39,893 |  | (39,893) |  | (99,733) |  | (199,465)
Net effect |  |  |  | 4,049 |  | 4,830 |  | 5,243 |  | (11,820) |  | (12,540) |  | (11,759)

| (1) | Base price of each commodity in USD/ton, except for Corn – B3 denominated in R$/ton.

24.7. Financial instruments by category

| Parent company
| 12.31.21
| Amortized cost |  | Fair value through profit and loss |  | Total
Assets |  |  |  |  |
Cash and bank | 162,445 |  | - |  | 162,445
Cash equivalents | - |  | 4,471,371 |  | 4,471,371
Marketable securities | - |  | 340,209 |  | 340,209
Restricted cash | 24,964 |  | - |  | 24,964
Trade accounts receivable | 6,872,336 |  | 335,566 |  | 7,207,902
Other receivables | 97,169 |  | - |  | 97,169
Derivatives not designated | - |  | - |  | -
Derivatives designated as hedge accounting (1) | - |  | 143,302 |  | 143,302
Liabilities |  |  |  |  |
Trade accounts payable | (10,449,472) |  | - |  | (10,449,472)
Supply chain finance | (2,237,975) |  | - |  | (2,237,975)
Loans and borrowings (2) | (18,742,749) |  | (3,368,431) |  | (22,111,180)
Derivatives not designated | - |  | (232,442) |  | (232,442)
Derivatives designated as hedge accounting (1) | - |  | (134,849) |  | (134,849)
| (24,273,282) |  | 1,554,726 |  | (22,718,556)

| (1) | All derivatives are classified at fair value through profit and loss. Those designated as hedge accounting instruments have their gains and losses also affecting Equity and Inventories.

| (2) | The part of the loans and borrowings that is object in a fair value hedge is classified as Fair value through profit and loss. The rest of the loans and borrowings balance is classified as amortized cost and those designated as cash flow or net investment hedge accounting instruments have their gains and losses also affecting Equity.

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| Parent company
| 12.31.20
| Amortized cost |  | Fair value through profit and loss |  | Total
Assets |  |  |  |  |
Cash and bank | 118,307 |  | - |  | 118,307
Cash equivalents | - |  | 3,757,832 |  | 3,757,832
Marketable securities | - |  | 327,559 |  | 327,559
Restricted cash | 24,358 |  | - |  | 24,358
Trade accounts receivable | 4,906,964 |  | 310,265 |  | 5,217,229
Other receivables | 86,404 |  | - |  | 86,404
Derivatives not designated | - |  | 59,037 |  | 59,037
Derivatives designated as hedge accounting | - |  | 302,512 |  | 302,512
Liabilities |  |  |  |  |
Trade accounts payable | (8,170,012) |  | - |  | (8,170,012)
Supply chain finance | (1,452,637) |  | - |  | (1,452,637)
Loans and borrowings | (19,310,254) |  | - |  | (19,310,254)
Derivatives not designated | - |  | (28,259) |  | (28,259)
Derivatives designated as hedge accounting | - |  | (351,011) |  | (351,011)
| (23,796,870) |  | 4,377,935 |  | (19,418,935)

| Consolidated
| 12.31.21
| Amortized cost |  | Fair value through other comprehensive income | Fair value through profit and loss |  | Total
|  | Equity instruments |  |
Assets |  |  |  |  |  |  |
Cash and bank | 2,193,508 |  | - |  | - |  | 2,193,508
Cash equivalents | - |  | - |  | 5,335,312 |  | 5,335,312
Marketable securities | 418,637 |  | 13,338 |  | 362,293 |  | 794,268
Restricted cash | 24,964 |  | - |  | - |  | 24,964
Trade accounts receivable | 3,709,399 |  | - |  | 335,566 |  | 4,044,965
Other receivables | 97,169 |  | - |  | - |  | 97,169
Derivatives not designated | - |  | - |  | 2,053 |  | 2,053
Derivatives designated as hedge accounting (1) | - |  | - |  | 143,302 |  | 143,302
Liabilities |  |  |  |  |  |  |
Trade accounts payable | (11,714,624) |  | - |  | - |  | (11,714,624)
Supply chain finance | (2,237,975) |  | - |  | - |  | (2,237,975)
Loans and borrowings (2) | (22,087,599) |  | - |  | (3,368,431) |  | (25,456,030)
Derivatives not designated | - |  | - |  | (233,172) |  | (233,172)
Derivatives designated as hedge accounting (1) | - |  | - |  | (136,132) |  | (136,132)
| (29,596,521) |  | 13,338 |  | 2,440,791 |  | (27,142,392)

| (1) | All derivatives are classified at fair value through profit and loss. Those designated as hedge accounting instruments have their gains and losses also affecting Equity and Inventories.

| (2) | The part of the loans and borrowings that is object in a fair value hedge is classified as Fair value through profit and loss. The rest of the loans and borrowings balance is classified as amortized cost and those designated as cash flow or net investment hedge accounting instruments have their gains and losses also affecting Equity.

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| Consolidated
| 12.31.20
| Amortized cost |  | Fair value through other comprehensive income | Fair value through profit and loss |  | Total
|  | Equity instruments |  |
Assets |  |  |  |  |  |  |
Cash and bank | 2,439,072 |  | - |  | - |  | 2,439,072
Cash equivalents | - |  | - |  | 5,137,553 |  | 5,137,553
Marketable securities | 287,504 |  | 42,029 |  | 329,202 |  | 658,735
Restricted cash | 24,358 |  | - |  | - |  | 24,358
Trade accounts receivable | 3,789,616 |  | - |  | 310,265 |  | 4,099,881
Other receivables | 86,404 |  | - |  | - |  | 86,404
Derivatives not designated | - |  | - |  | 75,478 |  | 75,478
Derivatives designated as hedge accounting | - |  | - |  | 302,512 |  | 302,512
Liabilities |  |  |  |  |  |  |
Trade accounts payable | (9,009,987) |  | - |  | - |  | (9,009,987)
Supply chain finance | (1,452,637) |  | - |  | - |  | (1,452,637)
Loans and borrowings | (22,404,426) |  | - |  | - |  | (22,404,426)
Derivatives not designated | - |  | - |  | (34,685) |  | (34,685)
Derivatives designated as hedge accounting | - |  | - |  | (351,011) |  | (351,011)
Written option– business combination | - |  | - |  | (185,401) |  | (185,401)
| (26,240,096) |  | 42,029 |  | 5,583,913 |  | (20,614,154)

24.8. Fair value of financial instruments

The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Depending on the inputs used for measurement, the financial instruments at fair value may be classified into 3 hierarchy levels:

| » | Level 1 – Uses quoted prices (unadjusted) for identical instruments in active markets. In this category are classified investments in stocks, savings accounts, overnights, term deposits, Financial Treasury Bills (“LFT”) and investment funds;

| » | Level 2 – Uses prices quoted in active markets for similar instruments, prices quoted for identical or similar instruments in non-active markets and evaluation models for which inputs are observable. In this level are classified the investments in Bank Deposit Certificates (“CDB”) and derivatives, which are measured by well-known pricing models: discounted cash flows and Black-Scholes. The observable inputs are interest rates and curves, volatility factors and foreign exchange rates;

| » | Level 3 – Instruments for which significant inputs are non-observable. The Company had a financial liability arising from a put option written in the context of a business combination, which was terminated on December 13, 2021 (notes 1.1.3 and 24.8.1).

The table below presents the overall classification of financial instruments measured at fair value by measurement hierarchy. For the year ended December 31, 2021, there were no changes among the 3 levels of hierarchy.

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| Parent company
| 12.31.21 |  | 12.31.20
| Level 1 |  | Level 2 |  | Total |  | Level 1 |  | Level 2 |  | Total
Financial Assets |  |  |  |  |  |  |  |  |  |  |
Fair value through profit and loss |  |  |  |  |  |  |  |  |  |  |
Savings account and overnight | 57,584 |  | - |  | 57,584 |  | 102,336 |  | - |  | 102,336
Bank deposit certificates | - |  | 4,410,146 |  | 4,410,146 |  | - |  | 3,650,812 |  | 3,650,812
Financial treasury bills | 324,771 |  | - |  | 324,771 |  | 312,515 |  | - |  | 312,515
Investment funds | 19,079 |  | - |  | 19,079 |  | 19,728 |  | - |  | 19,728
Trade accounts receivable | - |  | 335,566 |  | 335,566 |  | - |  | 310,265 |  | 310,265
Derivatives | - |  | 143,302 |  | 143,302 |  | - |  | 361,549 |  | 361,549
Financial Liabilities |  |  |  |  |  |  |  |  |  |  |
Fair value through profit and loss |  |  |  |  |  |  |  |  |  |  |
Derivatives | - |  | (367,291) |  | (367,291) |  | - |  | (379,270) |  | (379,270)
Loans and borrowings | - |  | (3,368,431) |  | (3,368,431) |  | - |  | - |  | -
| 401,434 |  | 1,153,292 |  | 1,554,726 |  | 434,579 |  | 3,943,356 |  | 4,377,935

| Consolidated
| 12.31.21 |  | 12.31.20
| Level 1 |  | Level 2 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Financial Assets |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value through other comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |
Stocks | 13,338 |  | - |  | 13,338 |  | 42,029 |  | - |  | - |  | 42,029
Fair value through profit and loss |  |  |  |  |  |  |  |  |  |  |  |  |
Savings account and overnight | 701,386 |  | - |  | 701,386 |  | 1,220,232 |  | - |  | - |  | 1,220,232
Term deposits | 179,071 |  | - |  | 179,071 |  | 250,189 |  | - |  | - |  | 250,189
Bank deposit certificates | - |  | 4,451,214 |  | 4,451,214 |  | - |  | 3,662,448 |  | - |  | 3,662,448
Financial treasury bills | 324,771 |  | - |  | 324,771 |  | 312,515 |  | - |  | - |  | 312,515
Investment funds | 35,718 |  | - |  | 35,718 |  | 21,371 |  | - |  | - |  | 21,371
Trade accounts receivable | - |  | 335,566 |  | 335,566 |  | - |  | 310,265 |  | - |  | 310,265
Derivatives | - |  | 145,355 |  | 145,355 |  | - |  | 377,990 |  | - |  | 377,990
Other titles | 5,445 |  | - |  | 5,445 |  | - |  | - |  | - |  | -
Financial Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value through profit and loss |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives | - |  | (369,304) |  | (369,304) |  | - |  | (385,696) |  | - |  | (385,696)
Loans and borrowings | - |  | (3,368,431) |  | (3,368,431) |  | - |  | - |  | - |  | -
Written option– business combination | - |  | - |  | - |  | - |  | - |  | (185,401) |  | (185,401)
| 1,259,729 |  | 1,194,400 |  | 2,454,129 |  | 1,846,336 |  | 3,965,007 |  | (185,401) |  | 5,625,942

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 on prices observed in active markets, level 1 of the fair value hierarchy, while the debentures are based on level 2 and are measured by discounted cash flows.

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|  |  |  | Parent company and Consolidated
|  |  |  |  |  | 12.31.21 |  | 12.31.20
|  | Currency |  | Maturity |  | Book value |  | Fair value |  | Book value |  | Fair value
BRF S.A. |  |  |  |  |  |  |  |  |  |  |  |
BRF SA BRFSBZ 5 7/8 |  | USD |  | 2022 |  | (396,802) |  | (409,454) |  | (367,714) |  | (389,611)
BRF SA BRFSBZ 4 3/4 |  | USD |  | 2024 |  | (1,653,847) |  | (1,726,951) |  | (1,538,086) |  | (1,659,891)
BRF SA BRFSBZ 3.95 |  | USD |  | 2023 |  | (1,303,821) |  | (1,337,246) |  | (1,207,468) |  | (1,275,598)
BRF SA BRFSBZ 2 3/4 |  | EUR |  | 2022 |  | (1,072,454) |  | (1,076,964) |  | (1,081,404) |  | (1,105,478)
BRF SA BRFSBZ 4 7/8 |  | USD |  | 2030 |  | (3,914,280) |  | (3,993,593) |  | (3,951,539) |  | (4,333,054)
BRF SA BRFSBZ 5 3/4 |  | USD |  | 2050 |  | (4,423,083) |  | (4,521,103) |  | (4,106,115) |  | (4,705,851)
Debenture - 1st Issue |  | BRL |  | 2026 |  | (823,946) |  | (821,444) |  | (771,138) |  | (778,016)
Debenture - 2nd Issue |  | BRL |  | 2030 |  | (2,351,363) |  | (2,382,298) |  | (2,250,867) |  | (2,225,796)
Debenture - 3rd Issue |  | BRL |  | 2031 |  | (1,034,706) |  | (915,353) |  | - |  | -
Parent company |  |  |  |  |  | (16,974,302) |  | (17,184,406) |  | (15,274,331) |  | (16,473,295)
BRF GmbH |  |  |  |  |  |  |  |  |  |  |  |
BRF SA BRFSBZ 4.35 |  | USD |  | 2026 |  | (2,779,725) |  | (2,854,701) |  | (2,577,667) |  | (2,779,574)
Consolidated |  |  |  |  |  | (19,754,027) |  | (20,039,107) |  | (17,851,998) |  | (19,252,869)

| 24.8.1. | Level 3 measurement

The Company had a financial liability arising from a put option written in the context of a business combination, option that gave the non-controlling shareholder the right to sell its equity stake in the subsidiary for an amount equivalent, in Turkish Liras, to a multiple of the Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of the economic group of this subsidiary in the last 12 months prior to the exercise.

This liability was measured at the present value of redemption amount using internal assumptions regarding the results of that economic group. The effects of the subsequent measurement resulted in a loss recorded in Financial expenses of R$278,618 in the year ended December 31, 2021 (gain of R$579,946 in the year ended December 31, 2020), as per note 28.

On December 31, 2021, this liability was terminated, as described in note 1.1.3.

| 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 is prepared 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, for which the characteristics are described below:

| » | Poultry: production and sale of whole poultry and in-natura cuts.

| » | Pork and others: production and sale of in-natura cuts.

| » | Processed: production and sale of processed food, frozen and processed products derived from poultry, pork and beef, margarine, vegetables and soybean-based products.

| » | Other sales: sale of flour for food service and others.

Other segments are comprised of commercialization and development of animal nutrition ingredients, human nutrition, plant nutrition (fertilizers), healthcare (health and wellness), pet food, as well as commercialization of agricultural products.

The items not allocated to the segments are presented as Corporate and refer to relevant events not attributable to the operating segments.

The net sales by nature for each reportable operating segment is set forth below:

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|  | Consolidated
Net sales |  | 12.31.21 |  | 12.31.20
Brazil |  |  |  |
In-natura |  | 6,002,585 |  | 5,014,250
Poultry |  | 4,544,724 |  | 3,738,560
Pork and other |  | 1,457,861 |  | 1,275,690
Processed |  | 18,729,686 |  | 15,944,162
Other sales |  | 76,618 |  | 26,707
|  | 24,808,889 |  | 20,985,119
International |  |  |  |
In-natura |  | 18,212,688 |  | 14,570,620
Poultry |  | 15,818,512 |  | 12,246,499
Pork and other |  | 2,394,176 |  | 2,324,121
Processed |  | 2,955,431 |  | 2,366,204
Other sales |  | 346,585 |  | 303,370
|  | 21,514,704 |  | 17,240,194
Other segments |  | 2,019,712 |  | 1,244,387
|  | 48,343,305 |  | 39,469,700

The income (loss) before financial results for each segment and for Corporate is set forth below:

|  | Consolidated
|  | 2021 |  | 2020
|  | 12.31.21 |  | 12.31.20
Brazil |  | 1,583,899 |  | 2,081,150
International |  | 942,006 |  | 1,100,212
Other segments |  | 393,477 |  | 197,233
Sub total |  | 2,919,382 |  | 3,378,595
Corporate |  | 90,405 |  | (531,802)
|  | 3,009,787 |  | 2,846,793

The composition of the main effects not allocated to the operating segments and presented as Corporate is set forth below:

|  | Consolidated
Corporate |  | 12.31.21 |  | 12.31.20
Impairment and result in the sale of investments |  | 76,148 |  | (62,006)
Results with sale and disposal of fixed assets |  | 65,884 |  | (28,178)
Reversal/(provision) for tax and civil contingencies |  | 30,587 |  | (109,088)
Expenses with demobilization |  | (6,814) |  | (16,494)
Investigations involving the Company (note 1.5) |  | (9,003) |  | (28,004)
Expenses COVID-19 (1) |  | (74,482) |  | (81,562)
Arbitration reversal |  | - |  | 14,520
Restructuring plan |  | - |  | (58)
Results with disposal of businesses |  | - |  | (29,471)
Agreement - Class Action |  | - |  | (204,436)
Other |  | 8,085 |  | 12,975
|  | 90,405 |  | (531,802)

| (1) | Mainly comprised of donations in Brazil, consultants and expenses with health and safety, which are not associated with the business segments.

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No customer individually or in aggregate (economic group) accounted for more than 5% of net sales for the years ended December 31, 2021 and 2020.

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
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Brazil | 1,151,498 |  | 1,151,498 |  | 982,478 |  | 982,478 |  | 2,133,976 |  | 2,133,976
International | 1,813,986 |  | 1,784,079 |  | 275,982 |  | 345,260 |  | 2,089,968 |  | 2,129,339
Other segments | 459,699 |  | - |  | 474,875 |  | - |  | 934,574 |  | -
| 3,425,183 |  | 2,935,577 |  | 1,733,335 |  | 1,327,738 |  | 5,158,518 |  | 4,263,315

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 management, which makes investment decisions and determine allocation of resources based on information about the consolidated assets.

| 26. | NET SALES

| Parent company |  | Consolidated
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Gross sales |  |  |  |  |  |  |
Brazil | 30,700,510 |  | 26,017,981 |  | 30,700,510 |  | 26,017,981
International | 15,752,886 |  | 10,498,363 |  | 22,959,318 |  | 18,514,099
Other segments | 1,757,620 |  | 1,329,579 |  | 2,319,991 |  | 1,378,344
| 48,211,016 |  | 37,845,923 |  | 55,979,819 |  | 45,910,424
Sales deductions |  |  |  |  |  |  |
Brazil | (5,891,621) |  | (5,032,862) |  | (5,891,621) |  | (5,032,862)
International | (36,560) |  | (103,382) |  | (1,444,614) |  | (1,273,905)
Other segments | (164,357) |  | (126,543) |  | (300,279) |  | (133,957)
| (6,092,538) |  | (5,262,787) |  | (7,636,514) |  | (6,440,724)
Net sales |  |  |  |  |  |  |
Brazil | 24,808,889 |  | 20,985,119 |  | 24,808,889 |  | 20,985,119
International | 15,716,326 |  | 10,394,981 |  | 21,514,704 |  | 17,240,194
Other segments | 1,593,263 |  | 1,203,036 |  | 2,019,712 |  | 1,244,387
| 42,118,478 |  | 32,583,136 |  | 48,343,305 |  | 39,469,700

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| 27. | OTHER OPERATING INCOME (EXPENSES), NET

| Parent company |  | Consolidated
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Recovery of expenses (1) | 134,224 |  | 407,690 |  | 135,662 |  | 408,161
Provision reversal | 1,107 |  | 73,315 |  | 1,143 |  | 73,361
Scrap sales | 12,199 |  | 11,936 |  | 12,763 |  | 12,204
Provision for civil and tax risks | 33,984 |  | (67,264) |  | 33,311 |  | (68,295)
Other employees benefits | (52,521) |  | (27,741) |  | (52,521) |  | (27,741)
Insurance claims costs | (35,883) |  | (14,196) |  | (35,102) |  | (8,762)
Gains (losses) on the disposal of non-financial assets | 66,600 |  | (29,287) |  | 141,211 |  | (40,220)
Demobilization expenses | (5,632) |  | (21,445) |  | (6,814) |  | (19,988)
Expected credit losses in other receivables | (579) |  | (1,016) |  | (579) |  | (989)
Impairment of investments | - |  | - |  | - |  | (62,090)
Other (2) | (24,288) |  | (281,983) |  | (17,811) |  | (236,754)
| 129,211 |  | 50,009 |  | 211,263 |  | 28,887

| (1) | Includes recovery of PIS, COFINS and ICMS taxes on inputs, INSS and other in the amount of R$62,439 and effects of the final decision related to the exclusion of ICMS from the PIS and COFINS calculation basis of SHB, Batávia and UP! Alimentos Ltda. in the amount of R$41,554 (note 9.2) for year ended December 31, 2021 (R$295,593 of recovery of PIS and COFINS taxes on inputs for the year ended December 31, 2020).

| (2) | In the year ended December 31, 2020, includes expenses with class action agreement.

| 28. | FINANCIAL INCOME (EXPENSES), NET

|  |  | Parent company |  |  | Consolidated
| Note |  | 12.31.21 |  | 12.31.20 |  |  | 12.31.21 |  | 12.31.20
Financial income |  |  |  |  |  |  |  |  |  |
Interest on cash and cash equivalents | 4 |  | 116,630 |  | 100,225 |  |  | 153,278 |  | 119,068
Income with marketable securities | 5 |  | 14,732 |  | 25,205 |  |  | 49,738 |  | 54,094
Fair value through other comprehensive income |  |  | - |  | - |  |  | - |  | 538
Fair value through profit and loss |  |  | 13,722 |  | 9,115 |  |  | 14,027 |  | 8,771
Amortized cost |  |  | 1,010 |  | 16,090 |  |  | 35,711 |  | 44,785
Interest on recoverable taxes (1) | 9 |  | 287,453 |  | 204,933 |  |  | 289,770 |  | 205,066
Interest on other assets |  |  | 44,032 |  | 41,133 |  |  | 44,950 |  | 42,529
|  |  | 462,847 |  | 371,496 |  |  | 537,736 |  | 420,757
Financial expenses |  |  |  |  |  |  |  |  |  |
Interests on loans and borrowings | 15 |  | (1,505,554) |  | (1,375,915) |  |  | (1,714,162) |  | (1,545,825)
Interest with related parties | 30 |  | (357,465) |  | (345,133) |  |  | - |  | -
Interest on contingencies | 21 |  | (239,174) |  | (42,641) |  |  | (239,174) |  | (42,641)
Interest on leases | 18 |  | (183,713) |  | (190,844) |  |  | (226,446) |  | (207,598)
Interest on actuarial liabilities |  |  | (39,881) |  | (28,084) |  |  | (46,741) |  | (33,549)
Interest on other liabilities |  |  | 8,416 |  | 9,224 |  |  | 1,923 |  | 11,412
Written option - Business combination | 24.8.1 |  | - |  | - |  |  | (278,618) |  | 579,946
Adjustment to present value | 6 and 16 |  | (631,843) |  | (417,780) |  |  | (634,048) |  | (418,234)
Other |  |  | (120,374) |  | (176,976) |  |  | (194,349) |  | (232,965)
|  |  | (3,069,588) |  | (2,568,149) |  |  | (3,331,615) |  | (1,889,454)
Foreign exchange and monetary variations |  |  |  |  |  |  |  |  |  |
Exchange rate variation on monetary assets and liabilities |  |  | (1,248,153) |  | (5,153,490) |  |  | (408,269) |  | (1,179,236)
Derivative results |  |  | 139,337 |  | 932,298 |  |  | 157,573 |  | 948,938
|  |  | (1,108,816) |  | (4,221,192) |  |  | (250,696) |  | (230,298)
|  |  | (3,715,557) |  | (6,417,845) |  |  | (3,044,575) |  | (1,698,995)

| (1) | For the year ended December 31, 2021, includes the effects of the final decision related to the exclusion of ICMS from the PIS and COFINS calculation basis from SHB, Batávia and UP! Alimentos Ltda. (note 9.2) in the amount of R$50,617 (null in the same period of the previous year).

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| 29. | STATEMENT OF INCOME BY NATURE

The Company discloses its statement of income by function and thus presents below the details by nature:

| Parent company |  | Consolidated
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Costs of sales |  |  |  |  |  |  |
Raw materials and supplies (1) | 24,875,915 |  | 18,068,942 |  | 28,806,780 |  | 21,619,848
Salaries and employees benefits | 4,192,367 |  | 4,095,560 |  | 4,280,574 |  | 4,181,001
Depreciation | 1,910,104 |  | 1,714,668 |  | 2,080,306 |  | 1,873,422
Amortization | 71,388 |  | 60,842 |  | 150,514 |  | 123,270
Other | 2,760,245 |  | 2,407,612 |  | 2,859,435 |  | 2,336,228
| 33,810,019 |  | 26,347,624 |  | 38,177,609 |  | 30,133,769
Sales expenses |  |  |  |  |  |  |
Indirect and direct logistics expenses | 2,790,629 |  | 2,202,889 |  | 3,171,689 |  | 2,531,506
Marketing | 538,164 |  | 467,252 |  | 718,151 |  | 632,870
Salaries and employees benefits | 1,079,123 |  | 1,182,643 |  | 1,480,314 |  | 1,528,659
Depreciation | 177,980 |  | 148,543 |  | 345,624 |  | 217,732
Amortization | 70,040 |  | 63,386 |  | 94,332 |  | 91,683
Other | 506,815 |  | 407,251 |  | 721,303 |  | 670,580
| 5,162,751 |  | 4,471,964 |  | 6,531,413 |  | 5,673,030
Administrative expenses |  |  |  |  |  |  |
Salaries and employees benefits | 234,201 |  | 249,593 |  | 395,892 |  | 402,335
Fees | 68,340 |  | 67,192 |  | 68,378 |  | 67,192
Depreciation | 19,655 |  | 31,856 |  | 35,193 |  | 47,682
Amortization | 38,335 |  | 37,370 |  | 40,385 |  | 40,589
Other | 182,071 |  | 169,977 |  | 283,112 |  | 275,060
| 542,602 |  | 555,988 |  | 822,960 |  | 832,858

| (1) | Includes recoveries of ICMS, PIS and COFINS taxes on inputs, INSS credits and export credits in the amount of R$62,910 for the year ended December 31, 2021 (null in the previous year).

The Company incurred in expenses with internal research and development of new products of R$42,010 for the year ended December 31, 2021 in the parent company and in the consolidated (R$65,168 in the parent company and in the consolidated for the year ended December 31, 2020).

| 30. | RELATED PARTIES

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 Directors and applies to all subsidiaries of the group.

The policy mentioned above provides the conditions that must be observed for the realization of a transaction between related parties, as well as establishes approval hierarchies according to the value and nature of the transactions involved. The policy also foresees situations of conflict of interests and how they must be conducted.

In the year ended December 31, 2021, Marfrig Global Foods S.A. (“Marfrig”) acquired common shares issued by BRF S.A., achieving 33.20% of participation in the Company’s capital stock. With such participation, Marfrig is able to exercise significant influence over BRF S.A., becoming a related party. On October 20, 2021, the Administrative Council for Economic Defense’s Court (Tribunal do Conselho Administrativo de Defesa Econômica − CADE) confirmed the approval without restrictions of the acquisition of interest by Marfrig in the Company’s capital stock. The transactions and balances with Marfrig and its subsidiaries during the period are presented below.

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The balances of the transactions with related parties are as follows:

|  |  |  |  |  |  |  |  |  |  | Parent company
| Accounts receivable |  | Dividends and interest on shareholders' equity receivable |  | Loans |  | Trade accounts payable |  | Other rights |  | Advances and other liabilities
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
Banvit | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 609 |  | 190 |  | - |  | -
BRF Energia S.A. | - |  | - |  | - |  | - |  | - |  | (25,932) |  | (13,063) |  | - |  | - |  | - |  | -
BRF Foods GmbH | 608,379 |  | 799,571 |  | - |  | - |  | - |  | - |  | - |  | 137 |  | 54 |  | (61) |  | (56)
BRF Foods LLC | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 501 |  | - |  | (2)
BRF Global GmbH | 4,937,329 |  | 2,319,292 |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (10,562,776) | (1) | (7,095,587)
BRF GmbH | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 995 |  | (1,830,251) | (2) | (1,845,759)
BRF Pet S.A. | 3,489 |  | 6,228 |  | - |  | - |  | - |  | (174) |  | (37) |  | 588 |  | 480 |  | - |  | -
Establecimiento Levino Zaccardi y Cia. S.A. | - |  | - |  | - |  | - |  | 315 |  | - |  | - |  | - |  | - |  | - |  | -
Federal Foods | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (517) |  | -
Hercosul Alimentos Ltda. | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 4 |  | - |  | - |  | -
Joody Al Sharqiya Food Production Factory LLC | - |  | - |  | - |  | - |  | - |  | - |  | - |  | 62 |  | - |  | - |  | -
Mogiana Alimentos S.A. | 2,741 |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | -
Sadia Alimentos S.A. | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (4,265) |  | (3,069)
Sadia Chile S.A. | 172,499 |  | 114,742 |  | - |  | - |  | - |  | - |  | - |  | 5 |  | 3 |  | - |  | -
Sadia International Ltd. | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (18,990)
Sadia Uruguay S.A. | 340 |  | 5,743 |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | (41,655) |  | (38,823)
VIP S.A. Empreendimentos e Partic. Imob. | - |  | - |  | 14 |  | 10 |  | - |  | - |  | - |  | - |  | - |  | - |  | -
Marfrig Global Foods S.A. | 9,252 |  | - |  | - |  | - |  | - |  | (35,312) |  | - |  | - |  | - |  | - |  | -
Quickfood S.A. | 8,690 |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | - |  | -
Total | 5,742,719 |  | 3,245,576 |  | 14 |  | 10 |  | 315 |  | (61,418) |  | (13,100) |  | 1,405 |  | 2,223 |  | (12,439,525) |  | (9,002,286)

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

| (2) | 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.

| Consolidated
| Accounts receivable | Trade accounts payable
| 12.31.21 |  | 12.31.21
Marfrig Global Foods S.A. | 9,252 |  | (36,058)
Marfrig Chile S.A. | 1,434 |  | (24)
Quickfood S.A. | 8,690 |  | -
Total | 19,376 |  | (36,082)

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|  |  |  |  | Parent company
| Sales |  | Financial results, net |  | Purchases
| 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20 |  | 12.31.21 |  | 12.31.20
BRF Energia S.A. | - |  | - |  | - |  | - |  | (371,008) |  | (249,759)
BRF Foods GmbH | 243,153 |  | 179,656 |  | - |  | - |  | - |  | -
BRF Global GmbH | 14,548,332 |  | 11,150,215 |  | (354,483) |  | (290,627) |  | - |  | -
BRF Pet S.A. | 12,892 |  | 5,650 |  | - |  | - |  | (137) |  | (62)
Establecimiento Levino Zaccardi y Cia. S.A. | - |  | - |  | 9 |  | 14 |  | - |  | -
Mogiana Alimentos S.A. | 6,490 |  | - |  | - |  | - |  | - |  | -
Perdigão International Ltd. | - |  | - |  | - |  | (51,939) |  | - |  | -
Sadia Alimentos S.A. | - |  | - |  | (160) |  | (447) |  | - |  | -
Sadia Chile S.A. | 194,716 |  | 136,063 |  | - |  | - |  | - |  | -
Sadia Uruguay S.A. | 68,104 |  | 53,041 |  | (2,831) |  | (2,134) |  | - |  | -
Marfrig Global Foods S.A. (1) | 89,311 |  | - |  | - |  | - |  | (280,535) |  | -
Marfrig Chile S.A. (1) | 1,311 |  | - |  | - |  | - |  | - |  | -
Quickfood S.A. (1) | 38,058 |  | - |  | - |  | - |  | - |  | -
Marfrig Alimentos S.A. (1) | 139 |  | - |  | - |  | - |  | - |  | -
Total | 15,202,506 |  | 11,524,625 |  | (357,465) |  | (345,133) |  | (651,680) |  | (249,821)

| (1) | Comprehends the period from May 21, 2021 to December 31, 2021.

| Consolidated
| Sales | Purchases
| 12.31.21 |  | 12.31.21 |
Marfrig Global Foods S.A. (1) | 89,311 |  | (328,956) |
Marfrig Chile S.A. (1) | 4,866 |  | (93) |
Quickfood S.A. (1) | 38,058 |  | - |
Marfrig Alimentos S.A. (1) | 139 |  | - |
Total | 132,374 |  | (329,049) |

| (1) | Comprehends the period from May 21, 2021 to December 31, 2021.

The subsidiaries of the Company enter into loan agreements pursuant its cash management strategy. As of December 31, 2021, the balance of these transactions was R$2,327,576 (R$2,116,463 as of December 31, 2020) with a weighted average rate of 4.27% p.a. (3.01% p.a. as of December 31, 2020).

The Company made contributions related to the post-employment benefit plans of its employees to BRF Previdência, which holds these plans (note 20). Additionally, the Company leased properties owned by BRF Previdência, and for the year ended December 31, 2021 the total amount of lease payments was R$20,647 (R$19,528 for the year ended December 31, 2020).

The Company maintains other transactions with related parties resulting from guarantees, transferences and donations to related associations and institutes, as well as leasing and other commercial transactions with related people and entities. Such transactions are compliant with the Related Party Transactions Policy and are not relevant, individually or in aggregate.

30.1. Management remuneration

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

| Consolidated
| 12.31.21 |  | 12.31.20
Salary and profit sharing | 61,088 |  | 67,814
Short-term benefits (1) | 1,149 |  | 2,777
Private pension | 1,189 |  | 1,323
Termination benefits | 2,118 |  | 8,417
Share-based payment | 29,198 |  | 17,397
| 94,742 |  | 97,728

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

In addition, the executive officers (non-statutory) received among remuneration and benefits the total amount of R$29,526 for the year ended December 31, 2021 (R$20,319 for the year ended December 31, 2020).

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| 31. | GOVERNMENT GRANTS

The Company has tax benefits related to ICMS granted by the state governments as follows: Programa de Desenvolvimento Industrial e Comercial de Mato Grosso (“PRODEIC”), Programa de Desenvolvimento do Estado de Pernambuco (“PRODEPE”) and Fundo de Participação e Fomento à Industrialização do Estado de Goiás (“FOMENTAR”). Such incentives are directly associated to the manufacturing facilities operations, job generation and to the economic and social development.

For the year ended December 31, 2021, the government grants totaled R$147,463 (R$153,762 for the year ended December 31, 2020), which were registered in the statement of income (loss) as Net sales, Cost of sales and Other operating income (expenses), net, according to the nature of each grant.

| 32. | 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
|  | 12.31.21 |  | 12.31.21
Current |  | 4,560,344 |  | 5,090,205
Non-current |  | 3,039,073 |  | 3,281,309
2023 |  | 1,226,306 |  | 1,395,346
2024 |  | 651,861 |  | 703,803
2025 |  | 390,001 |  | 411,255
2026 |  | 273,528 |  | 273,528
2027 onwards |  | 497,377 |  | 497,377
|  | 7,599,417 |  | 8,371,514

| 33. | INSURANCE COVERAGE – CONSOLIDATED

The Company’s policy for insurance considers the concentration and relevance of the risks identified in its risk management program. Thus, according to Managements understanding, the contracted insurance coverage is adequate to the entity’s size and nature of activities being sufficient to cover eventual damages. The Company also takes into consideration orientations provided by its advisors.

|  |  |  | 12.31.21
Assets covered |  | Coverage |  | Amount of coverage
Operational risks |  | Coverage against damage to buildings, facilities, inventory, machinery and equipment, loss of profits. |  | 3,298,543
Transport of goods |  | Coverage of goods in transit and in inventories. |  | 792,114
Civil responsability |  | Third party complaints. |  | 446,440

Each legal entity has its own coverages, which are not complementary.

| 34. | TRANSACTIONS THAT DO NOT INVOLVE CASH

The following transactions did not involve cash or cash equivalents during the year ended December 31, 2021:

| (i) | Capitalized loan interest: as referred in note 13.

| (ii) | Addition of lease by right-of-use assets and respective lease liability: for the year ended December 31, 2021 amounted to R$462,234 in the parent company and R$686,764 in the consolidated (R$429,704 in the parent company and R$560,088 for the year ended December 31, 2020).

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| 35. | EVENTS AFTER THE REPORTING PERIOD

35.1. Memorandum of Understanding with the Public Investment Fund

On January 13, 2022, The Company executed a Memorandum of Understanding (“MOU”) with the Public Investment Fund (“PIF”), Saudi Arabia’s sovereign wealth fund. The MOU is non-binding and aims the incorporation of a joint operation that will act in the complete chain of chicken production in Saudi Arabia and promote the sale of fresh, frozen and processed products, in addition to a Halal Business Hub in Saudi Arabia. The MOU reinforces the Company’s commitment with its strategic plan, in particular with food security in the Gulf region.

35.2. Capital Increase through a Public Offering of Shares

On January 17, 2022 an Extraordinary General Shareholders’ Meeting was held and approved the amendment to the limit of authorization for capital increase, regardless of statutory reform, which was set to 1,325,000,000 ordinary shares. The increase in the capital of the Company was also approved, through public offering of up to 325,000,000 new ordinary shares.

The pricing of the public offering of shares was on February 2, 2022 and the Board of Directors approved the offering of 270,000,000 shares at the price of R$20.00 (twenty Brazilian Reais), in a total amount of R$5,400,000. From this amount, R$500,000 shall be allocated to the capital stock and the remaining will be allocated to the formation of a capital reserve. The settlement of the offering was on February 4, 2022.

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| 36. | APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements were approved and the issuance authorized by the Board of Directors on February 22, 2022.

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 | André Vicentini
Member | Maria Paula Soares Aranha
AUDIT AND INTEGRITY COMMITTEE |
Comittee Coordinator (Independent) | Augusto Marques da Cruz Filho
Non-Independent Member | Ivandré Motiel da Silva
Independent Member | Marcelo Feriozzi Bacci
External Member | Jerônimo Antunes
External Member | Valmir Pedro Rossi
BOARD OF EXECUTIVE OFFICERS |
Global Chief Executive Officer | Lorival Nogueira Luz Júnior
Chief Financial and Investor Relations Officer | Carlos Alberto Bezerra de Moura
Vice-President of People, Services and Technology | Alessandro Rosa Bonorino
Vice-President of Institutional Relations and Sustainability | Grazielle Tallia Parenti
Vice-President of Integrated Planning and Logistics | Leonardo Campo Dallorto
Vice-President of New Business | Marcel Sacco
Vice-President of Brazil Market | Sidney Rogério Manzaro
Vice-President of Operations and Procurement | Vinícius Guimarães Barbosa
Marcos Roberto Badollato | Heitor Carpigiani de Paula
Accounting Director | Accountant – CRC 1SP336262/O-4

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COMENTARY ABOUT THE BEHAVIOR OF THE COMPANY’S PROJECTIONS

On December 07, 2021, the Management disclosed certain estimates and expectations in connection with the Company updating the perspectives scenarios as follows:

(a) Investments estimates of, approximately, R$55 billion up to 2030, including disbursements made in 2021, setting up a prudent net financial leverage limit (ratio between net debt and Adjusted EBITDA of the 12 prior months) up to three times;

(b) Period between 2021 and 2024: expectation to achieve a net revenue of approximately R$65 billion, with a growing EBITDA twice the size in comparison to the last 12 months ended September 30, 2020;

(c) Period between 2025 and 2027: growth expectation of the net revenue and of the EBITDA of approximately 2,5 times in relation to the last 12 months ended September 30, 2020 and a revenue growth of more than 60% in the Brazilian market;

(d) Period between 2028 and 2030: expectation to reach a net revenue of more than R$100 billion and an EBITDA growth of more than 3,5 times in relation to the last 12 months ended September 30, 2020, average EBITDA Margin above 15%, average net margin of 6% and return on invested capital (“ROIC”) of 16%, approximately.

The projections disclosed above are mere forecast and reflect the current Management’s expectation in relation to BRF’s future. Nevertheless, these projections depend on volatile market conditions and factors that are not under the Company's control and, therefore, may differ in relation to numbers and results that will be effectively registered by the Company.

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INDEPENDENT AUDITORS’ REPORT ON INDIVIDUAL AND CONSOLIDATED FINANCIAL STATEMENTS

(A free translation of the original report in Portuguese, as filed with the Brazilian Securities Commission (CVM), containing individual and consolidated financial statements prepared in accordance with accounting practices adopted in Brazil and in accordance with International Financial Reporting Standards (IFRS) issued by International Accounting Standards Board – IASB)

To the Shareholders and Management of BRF S.A. Itajaí - SC
Opinion
We have audited the individual and consolidated financial statements of BRF S.A. (the Company), respectively referred to as parent company and consolidated, which comprise the statement of financial position as of December 31, 2021 and the statements of income (loss), comprehensive income (loss), changes in equity and cash flows for the year then ended, and the notes, comprising the significant accounting policies and other explanatory information. In our opinion, the accompanying financial statements present fairly, in all material respects, the individual and consolidated financial position of BRF S.A. as of December 31, 2021, and its individual and consolidated financial performance and its cash flows for the year then ended, in accordance with accounting practices adopted in Brazil and with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).
Basis for opinion
We conducted our audit in accordance with the Brazilian and International Standards on Auditing. Our responsibilities under those standards are further described in the “Auditors’ responsibilities for the audit of the individual and consolidated financial statements” section of our report. We are independent of the Company and its subsidiaries in accordance with the relevant ethical requirements included in the Brazilian Accountant’s Code of Professional Ethics and in the professional standards issued by the Brazilian Federal Accounting Council, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of matter
We draw attention to explanatory notes 1.5.1 to the financial statements, individual and consolidated, which describe the investigations concluded by United States Government authorities and the ongoing investigations conducted by Brazilian Government authorities involving the Company, as well as their current and potential developments. In the current stage of the ongoing 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 opinion is not modified in respect to this matter.
Key audit matters
The key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the individual and consolidated financial statements as a whole, and in forming our opinion thereon and therefore, we do not provide a separate opinion on these matters.

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Realization of deferred tax assets - income tax and social contribution
See notes 3.9 and 10 to the individual and consolidated financial statements
Key Audit Matter | How the matter was addressed in our audit
The deferred income tax and social contribution (deferred tax assets) relate to tax losses, negative basis of social contribution and temporary differences. The estimate of probable future taxable profit is based on subjective judgments regarding prospective assumptions such as sales prices of the products, commodity costs, operating and administrative expenses. The deferred tax assets are recorded to the extent that the Company considers probable the generation of future taxable income against which the deferred tax assets will be realized and their book value may change depending on their expected recovery. The process of estimating the realization of deferred tax assets involves high degree of judgment required in assessing the significant assumptions that are considered in the forecast of future taxable income. For these reasons, we considered this matter as a key audit matter. | We evaluated the design, implementation and effectiveness of the key internal controls over estimate of probable future taxable profit relating to the recoverability of deferred taxes assets, including controls related to the determination of estimates used in the preparation and review of the business plan, budget, technical studies prepared by the Company. We involved corporate finance specialists, who assisted in: (i) evaluating the main assumptions and methodology used in the Company’s forecast in the determination of the future taxable income, especially those related to expectations of sales prices of the products, commodity costs, operating and administrative expenses and the consistency of these assumptions with the budget and strategic plan approved by the Board of Directors; and (ii) sensitivity analysis on the key assumptions to assess their impact on the Company’s forecast of the future taxable income. We also evaluated whether the disclosures in the individual and consolidated financial statements consider the relevant information related to the expected realization of deferred tax assets. Based on the evidences obtained as a result of the procedures summarized above, we considered acceptable the balance of the deferred tax assets recognized and the related disclosures, in the context of the individual and consolidated financial statements taken as a whole.
Measurement of the acquisition-date fair value of the brands acquired through the business combination of Grupo Hercosul and Grupo Mogiana
See notes 1.2.2., 1.2.3 and 14 to the consolidated financial statements
Key Audit Matter | How the matter was addressed in our audit
During the months of August and September 2021, the Company completed the acquisitions of Hercosul Group and Mogiana Group (both from the pet food sector) for a total consideration of R$ 812,921 thousand and R$ 481,435 thousand, respectively. The Company measured the identifiable assets acquired and liabilities assumed at fair value, which resulted in the recognition of assets, including brands intangible assets in the total amount of R$ 474,875 thousand. The fair value measurement involves relevant assumptions, specifically, determining the revenue growth rates, royalty rate, and discount rate, which involve a high degree of judgment due to the uncertainty in measuring the assumptions. In addition, the revenue growth rates for each brand and the royalty rates are assumptions for which there are limited observable market information, and the fair values estimate may change as a result of changes in these assumptions. For these reasons, we considered the fair value measurement, at the acquisition-date, of intangibles related to brands as a key audit matter. | We evaluated the design, implementation and effectiveness of the key internal controls over the development of the revenue growth rates related to each brand, royalty rate, and the discount rate assumptions used in the calculation of fair value of the brands. We involved corporate finance specialists, who assisted in: (i) comparing the Company’s forecasted revenue growth rates for each brand to historical results and to forecasted growth rates in the sector; (ii) sensitivity analyses over those assumptions to assess their impact on the Company’s determination of the fair value of the brands; and (iii) evaluating the assumptions used in the determination of the fair value of the brands, especially those related to revenue growth rates related to each brand, royalty rate, and the discount rate. We also evaluated whether the disclosures in the consolidated financial statements consider the relevant information related to the brands acquired in the business combinations. Based on the evidences obtained as a result of the procedures summarized above, we considered acceptable the fair value measurement of brands recognized at the acquisition date and the related disclosures, in the context of the consolidated financial statements taken as a whole.

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Other matters – Statements of value added
The individual and consolidated statements of value added (DVA) for the year ended December 31, 2021, prepared under the responsibility of the Company’s management, and presented herein as supplementary information for IFRS purposes, have been subject to audit procedures performed with the audit of the Company's financial statements. In order to form our opinion, we assessed whether those statements are reconciled with the financial statements and accounting records, as applicable, and whether their format and contents are in accordance with criteria determined in the CPC 09 Technical Pronouncement - Statement of Value Added. In our opinion, the statements of value added have been fairly prepared, in all material respects, in accordance with the criteria determined by the aforementioned Technical Pronouncement, and are consistent with the individual and consolidated financial statements taken as a whole.
Other information accompanying the individual and consolidated financial statements and the auditor's report
Management is responsible for the other information comprising the management report. Our opinion on the individual and consolidated financial statements does not cover the management report and we do not express any form of assurance conclusion thereon. In connection with our audit of the individual and consolidated financial statements, our responsibility is to read the management report and, in doing so, consider whether the management report is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement on the management report, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Individual and Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the individual and consolidated financial statements in accordance with accounting practices adopted in Brazil and International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the individual and consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company and its subsidiaries’ financial reporting process.

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Auditors’ responsibilities for the audit of the individual and consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the individual and consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Brazilian and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Brazilian and International Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: – Identify and assess the risks of material misstatement of the individual and consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. – Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's and its subsidiaries internal control. – Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. – Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the individual and consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern. – Evaluate the overall presentation, structure and content of the individual and consolidated financial statements, including the disclosures, and whether the individual and consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. – Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the individual and consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit and, consequently, for the audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. São Paulo, February 22nd, 2022 KPMG Auditores Independentes Ltda. CRC 2SP014428/O-6 Original report in Portuguese signed by Fabian Junqueira Sousa Accountant CRC 1SP235639/O-0

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OPINION OF THE FISCAL COUNCIL

The Fiscal Council of BRF S.A., in fulfilling its statutory and legal duties, examined:

| (i) | the financial statements (parent company and consolidated) for the fiscal year ended December 31, 2021.

| (ii) | the Management Report; and

| (iii) | the report issued without qualification by KPMG Auditores Independentes on February 22, 2022.

Based on the documents reviewed and the explanations provided, the members of the Fiscal Council, undersigned, issued the opinion that the financial statements and the management report are appropriately presented and in condition of appreciation by the Annual General Meeting.

São Paulo, February 22, 2022.

Attílio Guaspari

Chairman

Maria Paula Soares Aranha

Fiscal Council Member

André Vicentini

Fiscal Council Member

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SUMMARIZED ANNUAL REPORT OF THE AUDIT AND INTEGRITY COMMITTEE

Summary of the Audit Committee Activities in 2021

The current composition of the Audit and Integrity Committee (“CAI”) was elected on April 27, 2021, pursuant to the meeting of the Board of Directors. The Internal By-laws of the CAI is available at the website https://ri.brf-global.com. The Committee met monthly since the election, in ordinary and extraordinary meetings, in the total of 15 meetings. The main topics of discussion are described below, which were presented and discussed with the Company’s Board of Directors.

Issues discussed by the Audit and Integrity Committee

The meetings were attended, whenever required and in accordance with the Agenda, by the Global Chief Executive Officer of the Company, the Vice-Presidents, Executive Directors, Executive Managers, Internal Auditors, Independent Auditors and external advisors to enable the understanding of the processes, internal controls, risks, possible deficiencies and eventual plans for improvement, as well as issuing their recommendations to the Board of Directors and Executive Board of the Company.

The main topics discussed by the Audit and Integrity Committee were:

| » | The Internal Audit received a “Certification of Evaluation of the Quality of the Internal Audit Department”, granted by the Institute of Internal Auditors (The IIA), international independent organization which evaluates globally the quality of the internal audit activities in public and private organizations, turning BRF the 25th company certified in Brazil, what demonstrates the ongoing investment in an efficient structure of governance, with high ethical and transparency standards;

| » | The achievement of the first Antibribery certification to an Animal Protein company in Brazil, based on international standards of the International Organization for Standardization (ISO 37.001);

| » | Follow-up and supervision of the negotiations with North American authorities SEC and DOJ which have closed their investigations with no sanctions or remediation measures against the Company;

| » | Follow-up and supervision of the international investigations by the international authorities, specifically the Turkish Competition Authority, which closed its investigations with no sanctions or remediation measures against the Company;

| » | Discussion of the planning, scope and main conclusions obtained in the quarterly review (ITR) and opinion on the issuance of the financial statements of 2021;

| » | Follow-up on the analysis on the internal controls of the Company with emphasis on the most critical items;

| » | Follow-up on the implementation of improvements indicated in the internal controls report, as well as the respective action plans of the internal areas for the correction or improvement of the issues identified;

| » | Discussion, approval and supervision of the work plan and budget of the Internal Audit, as well and its reviews;

| » | Follow-up and analysis of the outcomes of special investigations;

| » | Follow-up on the Internal Audit reports;

| » | Follow-up on the implementation of the action plans resulting from the audit reports, with emphasis on the most critical issues, reporting to the Board of Directors the most relevant ones;

| » | Evaluation and follow-up on the effectiveness of Internal Controls for processes mapping, key controls and indicators, as well as monitoring the action plans to avoid significant deficiencies that could be reported in the financial statements;

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| » | Discussion and evaluation of the corporate risks map;

| » | Follow-up on the operation of the Transparency Hotline and on the inquiries and complaints classified as highly critical;

| » | Follow-up on the adoption of the Compliance policies, practices and trainings by the management and employees pursuant the anti-corruption law requirements;

| » | Follow-up on the management of the conduct adjustment terms entered with regulatory bodies;

| » | Follow-up on the questions related to the regulatory bodies and the respective answers sent by the management;

| » | Discussion about the implementation of controls in the subsidiaries of the Company;

| » | Opinion for approval, by the Board of Directors, of the annual financial statements;

| » | Review and comments on the quarterly financials (“ITR”);

| » | Evaluation and monitoring, with the management and Internal Audit, of the adequacy of the related parties’ transactions executed by the Company;

| » | Discussion and follow-up on the update of the Reference Form (“Formulário de Referência”);

| » | Analysis and opinion of the proposal sent to the Board of Directors for Independent Auditors services, supervision of activities of Independent Auditing, involving the scope and work plan, insurance of their independence and of the quality of the services provided;

| » | Follow-up on the themes related to LGPD – General Data Protection Law and themes related to cyber security; and

| » | Participation of the members of the Committee in trainings, lectures, and update programs about themes related to the Committee’s activities and normative acts that are in the interest of and impact the Company.

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STATUTORY AUDIT AND INTEGRITY COMMITTEE OPINION

In the exercise of its legal and statutory duties, BRF’s Audit Committee has examined the financial statements (parent company and consolidated) for the fiscal year ended December 31, 2021, the management report and the report issued without qualification by KPMG Auditores Independentes on February 22, 2022.

Based on the examined documents and the clarifications rendered, the members of the Audit Committee, undersigned, issued the opinion that the financial statements are appropriately presented and in conditions for approval.

São Paulo, February 22, 2022.

Augusto Marques da Cruz Filho

Coordinator (Independent)

Ivandré Motiel da Silva

Non-Independent member

Marcelo Feriozzi Bacci

Independent member

Jerônimo Antunes

External member

Valmir Pedro Rossi

External member

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OPINION OF EXECUTIVE BOARD ON THE CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR’S REPORT

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

| (i) | reviewed, discussed and agreed with the Company's financial statements for the fiscal year ended December 31, 2021, and

| (ii) | reviewed, discussed and agreed with the opinions expressed in the audit report issued by KPMG Auditores Independentes on February 22, 2022 for the Company's financial statements for the fiscal year ended December 31, 2021.

São Paulo, February 22, 2022.

Lorival Nogueira Luz Júnior

Global Chief Executive Officer

Carlos Alberto Bezerra de Moura

Chief Financial and Investor Relations Officer

Alessandro Rosa Bonorino

Vice-President of People, Services and Technology

Grazielle Tallia Parenti

Vice-President of Institutional Relations and Sustainability

Leonardo Campo Dallorto

Vice-President of Integrated Planning and Logistics

Marcel Sacco

Vice-President of New Business

Sidney Rogério Manzaro

Vice-President of Brazil Market

Vinícius Guimarães Barbosa

Vice-President of Operations and Procurement

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