exhibit_1.htm - Generated by SEC Publisher for SEC Filing
Financial Statements
Years ended December 31, 2015 and 2014
FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014
|
|
Index
|
|
|
1. |
Independent Auditors’ Report |
3 |
2. |
Balance Sheets |
5 |
3. |
Statements of Income |
7 |
4. |
Statements of Comprehensive Income |
8 |
5. |
Statements of Changes in Shareholders’ Equity |
9 |
6. |
Statements of Cash Flows |
10 |
7. |
Statements of Added Value |
11 |
8. |
Management Report |
12 |
9. |
Explanatory Notes to the Financial Statements |
36 |
10.Opinion of the Fiscal Council |
159 |
11.Opinion of the Audit Committee |
161 |
12.Opinion of the Executive Board |
162 |
A free translation from Portuguese into English of Independent Auditor´s Report on financial statements prepared in accordance with the accounting practices adopted in Brazil and International Financial Reporting Standards (IFRS) |
INDEPENDENT AUDITOR’S REPORT ON FINANCIAL STATEMENTS
The Shareholders and Officers
BRF S.A.
Itajaí - SC
We have audited the accompanying individual and consolidated financial statements of BRF S.A., identified as Parent Company and Consolidated, which comprise the balance sheet as at December 31, 2015, and the statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management’s responsibility for the financial statements
Management is responsible for the preparation and fair presentation of the individual and consolidated financial statements in accordance with the accounting practices adopted in Brazil and International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB), as well as for the internal controls management determined as necessary to enable the preparation of these financial statements that are free from material misstatement, whether due to fraud or error.
Independent auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit, conducted in accordance with the Brazilian and International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the preparation and fair presentation of the Company’s financial statements 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 internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the individual and consolidated financial statements referred to above present fairly, in all material respects, the individual and consolidated financial position of
BRF S.A. as of December 31, 2015, and the individual and consolidated results of its operations and its cash flows for the year then ended in accordance with the accounting practices adopted in Brazil and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
A free translation from Portuguese into English of Independent Auditor´s Report on financial statements prepared in accordance with the accounting practices adopted in Brazil and International Financial Reporting Standards (IFRS) |
Other matters
Statements of valued added
We have also audited the individual and consolidated statements of value added for the year ended December 31, 2015, prepared under the responsibility of the Company´s management, which presentation is required by the Brazilian Corporate Law for public companies, and as supplemental information by IFRS, which do not require the presentation of the statement of value added. These statements have been subject to the same audit procedures previously described and, in our opinion, are fairly presented, in all material respects, in relation to the financial statements taken as a whole.
São Paulo, February 25, 2016.
ERNST & YOUNG
Auditores Independentes S.S.
CRC-2SP015199/F-6
Antonio Humberto Barros dos Santos Patricia Nakano Ferreira
Accountant CRC-1SP161745/O-3 Accountant CRC-1SP234620/O-4
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014
(Amounts expressed in thousands of Brazilian Reais, unless otherwise stated)
|
|
BRF S.A.
BALANCE SHEETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent company |
|
Consolidated |
ASSETS |
Note |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
CURRENT ASSETS |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
7 |
|
845,085 |
|
1,979,357 |
|
5,362,890 |
|
6,006,942 |
Marketable securities |
8 |
|
197,807 |
|
283,623 |
|
734,711 |
|
587,480 |
Trade accounts receivable, net |
9 |
|
4,948,745 |
|
4,663,193 |
|
3,876,308 |
|
3,046,871 |
Notes receivable |
9 |
|
281,516 |
|
170,029 |
|
303,716 |
|
215,067 |
Interest on shareholders' equity receivable |
30 |
|
23,138 |
|
13,369 |
|
21,586 |
|
10,248 |
Inventories |
10 |
|
2,703,330 |
|
2,204,822 |
|
4,032,911 |
|
2,941,355 |
Biological assets |
11 |
|
1,322,317 |
|
1,122,350 |
|
1,329,861 |
|
1,130,580 |
Recoverable taxes |
12 |
|
1,074,175 |
|
914,720 |
|
1,231,759 |
|
1,009,076 |
Other financial assets |
22 |
|
118,680 |
|
42,922 |
|
129,387 |
|
43,101 |
Restricted cash |
16 |
|
- |
|
- |
|
1,346,274 |
|
- |
Other current assets |
|
|
665,582 |
|
501,549 |
|
778,198 |
|
539,518 |
|
|
|
12,180,375 |
|
11,895,934 |
|
19,147,601 |
|
15,530,238 |
|
|
|
|
|
|
|
|
|
|
Assets of discontinued operations and held for sale |
13 |
|
32,442 |
|
1,957,565 |
|
32,448 |
|
1,958,007 |
Total current assets |
|
|
12,212,817 |
|
13,853,499 |
|
19,180,049 |
|
17,488,245 |
|
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS |
|
|
|
|
|
|
|
|
|
Marketable securities |
8 |
|
456,038 |
|
62,104 |
|
456,038 |
|
62,104 |
Trade accounts receivable, net |
9 |
|
4,133 |
|
6,486 |
|
4,133 |
|
7,706 |
Notes receivable |
9 |
|
228,090 |
|
336,815 |
|
230,781 |
|
361,673 |
Recoverable taxes |
12 |
|
942,147 |
|
898,174 |
|
968,705 |
|
912,082 |
Deferred income and social contribution taxes |
14 |
|
1,248,880 |
|
751,932 |
|
1,255,976 |
|
714,015 |
Judicial deposits |
15 |
|
725,324 |
|
612,286 |
|
732,106 |
|
615,719 |
Biological assets |
11 |
|
760,267 |
|
681,823 |
|
761,022 |
|
683,210 |
Restricted cash |
16 |
|
479,828 |
|
115,179 |
|
479,828 |
|
115,179 |
Other non-current assets |
|
|
199,421 |
|
310,557 |
|
206,821 |
|
317,387 |
Investments in associates and joint ventures |
17 |
|
7,210,114 |
|
3,999,729 |
|
185,892 |
|
438,423 |
Property, plant and equipment, net |
18 |
|
10,100,986 |
|
9,424,609 |
|
10,915,752 |
|
10,059,349 |
Intangible |
19 |
|
3,451,557 |
|
3,445,090 |
|
5,010,911 |
|
4,328,643 |
Total non-current assets |
|
|
25,806,785 |
|
20,644,784 |
|
21,207,965 |
|
18,615,490 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
|
38,019,602 |
|
34,498,283 |
|
40,388,014 |
|
36,103,735 |
See accompanying notes to the financial statements.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014
(Amounts expressed in thousands of Brazilian Reais, unless otherwise stated)
|
|
BRF S.A. |
|
|
|
|
|
|
|
|
|
|
BALANCE SHEETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent company |
|
|
|
Consolidated |
LIABILITIES |
Note |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
Short-term debt |
20 |
|
2,525,646 |
|
2,601,022 |
|
2,628,179 |
|
2,738,903 |
Trade accounts payable |
21 |
|
4,024,725 |
|
3,136,860 |
|
4,744,993 |
|
3,522,207 |
Supply chain finance |
31 |
|
1,174,594 |
|
455,120 |
|
1,174,594 |
|
455,120 |
Payroll and related charges |
|
|
399,450 |
|
378,093 |
|
477,935 |
|
427,058 |
Tax payable |
|
|
196,780 |
|
216,256 |
|
353,278 |
|
299,951 |
Interest on shareholders' equity |
27 |
|
518,450 |
|
430,909 |
|
518,450 |
|
430,909 |
Employee and management profit sharing |
|
|
264,633 |
|
374,575 |
|
296,292 |
|
395,767 |
Other financial liabilities |
22 |
|
619,874 |
|
216,057 |
|
666,602 |
|
257,438 |
Provision for tax, civil and labor risks |
26 |
|
223,766 |
|
233,636 |
|
231,389 |
|
242,974 |
Pension and other post-employment plans |
25 |
|
67,264 |
|
56,096 |
|
67,264 |
|
56,096 |
Advances from related parties |
30 |
|
17,492 |
|
16,403 |
|
- |
|
- |
Other current liabilities |
|
|
317,524 |
|
159,918 |
|
462,137 |
|
234,439 |
|
|
|
10,350,198 |
|
8,274,945 |
|
11,621,113 |
|
9,060,862 |
Liabilities of discontinued operations |
13 |
|
- |
|
508,264 |
|
- |
|
508,264 |
Total current liabilities |
|
|
10,350,198 |
|
8,783,209 |
|
11,621,113 |
|
9,569,126 |
|
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
Long-term debt |
20 |
|
11,054,455 |
|
7,429,599 |
|
12,551,104 |
|
8,850,432 |
Tax payable |
|
|
7,581 |
|
6,005 |
|
25,990 |
|
25,902 |
Provision for tax, civil and labor risks |
26 |
|
957,149 |
|
919,446 |
|
974,460 |
|
942,759 |
Deferred income and social contribution taxes |
14 |
|
- |
|
- |
|
188,320 |
|
90,184 |
Liabilities with related parties |
30 |
|
36,567 |
|
19,738 |
|
- |
|
- |
Advances from related parties |
30 |
|
1,171,440 |
|
796,860 |
|
- |
|
- |
Pension and other post-employment plans |
25 |
|
231,780 |
|
257,974 |
|
231,780 |
|
257,974 |
Other non-current liabilities |
|
|
693,655 |
|
694,975 |
|
959,394 |
|
677,415 |
Total non-current liabilities |
|
|
14,152,627 |
|
10,124,597 |
|
14,931,048 |
|
10,844,666 |
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY |
27 |
|
|
|
|
|
|
|
|
Capital |
|
|
12,460,471 |
|
12,460,471 |
|
12,460,471 |
|
12,460,471 |
Capital reserves |
|
|
6,978 |
|
109,446 |
|
6,978 |
|
109,446 |
Income reserves |
|
|
6,076,775 |
|
3,945,825 |
|
6,076,775 |
|
3,945,825 |
Treasury shares |
|
|
(3,947,933) |
|
(304,874) |
|
(3,947,933) |
|
(304,874) |
Other comprehensive loss |
|
|
(1,079,514) |
|
(620,391) |
|
(1,079,514) |
|
(620,391) |
Equity attributable to interest of controlling shareholders |
|
13,516,777 |
|
15,590,477 |
|
13,516,777 |
|
15,590,477 |
Equity attributable to non-controlling interest |
|
|
- |
|
- |
|
319,076 |
|
99,466 |
Total shareholders' equity |
|
|
13,516,777 |
|
15,590,477 |
|
13,835,853 |
|
15,689,943 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
38,019,602 |
|
34,498,283 |
|
40,388,014 |
|
36,103,735 |
See accompanying notes to the financial statements.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014
(Amounts expressed in thousands of Brazilian Reais, unless otherwise stated)
|
|
BRF S.A. |
|
|
|
|
|
|
|
|
|
|
STATEMENTS OF INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent company |
|
Consolidated |
|
Note |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
CONTINUED OPERATIONS |
|
|
|
|
|
|
|
|
|
NET SALES |
32 |
|
26,725,791 |
|
25,934,135 |
|
32,196,601 |
|
29,006,843 |
Cost of sales |
36 |
|
(19,740,350) |
|
(18,901,439) |
|
(22,107,692) |
|
(20,497,430) |
GROSS PROFIT |
|
|
6,985,441 |
|
7,032,696 |
|
10,088,909 |
|
8,509,413 |
OPERATING INCOME (EXPENSES) |
|
|
|
|
|
|
|
|
|
Selling expenses |
36 |
|
(3,912,289) |
|
(3,654,697) |
|
(4,805,931) |
|
(4,216,500) |
General and administrative expenses |
36 |
|
(313,105) |
|
(289,388) |
|
(506,097) |
|
(402,054) |
Other operating expenses, net |
34 |
|
(361,495) |
|
(338,743) |
|
(444,667) |
|
(438,110) |
Income from associates and joint ventures |
17 |
|
3,116,292 |
|
673,343 |
|
(103,804) |
|
25,570 |
OPERATING INCOME |
|
|
5,514,844 |
|
3,423,211 |
|
4,228,410 |
|
3,478,319 |
Financial expenses |
35 |
|
(4,405,164) |
|
(1,755,007) |
|
(5,025,455) |
|
(2,571,454) |
Financial income |
35 |
|
1,420,166 |
|
780,366 |
|
3,355,313 |
|
1,580,756 |
INCOME BEFORE TAXES |
|
|
2,529,846 |
|
2,448,570 |
|
2,558,268 |
|
2,487,621 |
Current |
14 |
|
25,953 |
|
(77,467) |
|
(17,085) |
|
(117,361) |
Deferred |
14 |
|
372,283 |
|
(235,889) |
|
406,587 |
|
(235,205) |
INCOME FROM CONTINUED OPERATIONS |
|
|
2,928,082 |
|
2,135,214 |
|
2,947,770 |
|
2,135,055 |
DISCONTINUED OPERATIONS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM DISCONTINUED OPERATIONS |
13 |
|
183,088 |
|
89,822 |
|
183,088 |
|
89,822 |
NET PROFIT |
|
|
3,111,170 |
|
2,225,036 |
|
3,130,858 |
|
2,224,877 |
|
|
|
|
|
|
|
|
|
|
Attributable to |
|
|
|
|
|
|
|
|
|
Controlling shareholders |
|
|
3,111,170 |
|
2,225,036 |
|
3,111,170 |
|
2,225,036 |
Non-controlling interest |
|
|
- |
|
- |
|
19,688 |
|
(159) |
|
|
|
3,111,170 |
|
2,225,036 |
|
3,130,858 |
|
2,224,877 |
EARNINGS PER SHARE |
|
|
|
|
|
|
|
|
|
Earnings per share - basic |
|
|
842,000,012 |
|
870,412,068 |
|
842,000,012 |
|
870,412,068 |
Weighted average shares outstanding - basic |
28 |
|
3.69498 |
|
2.55630 |
|
3.71836 |
|
2.55612 |
Earning per share - diluted |
|
|
842,401,821 |
|
870,823,776 |
|
842,401,821 |
|
870,823,776 |
Weighted average shares outstanding - diluted |
28 |
|
3.69321 |
|
2.55509 |
|
3.71659 |
|
2.55491 |
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE FROM CONTINUED OPERATIONS |
|
|
|
|
|
|
|
|
Earnings per share - basic |
|
|
842,000,012 |
|
870,412,068 |
|
842,000,012 |
|
870,412,068 |
Weighted average shares outstanding - basic |
28 |
|
3.47753 |
|
2.45311 |
|
3.50091 |
|
2.45292 |
Earning per share - diluted |
|
|
842,401,821 |
|
870,823,776 |
|
842,401,821 |
|
870,823,776 |
Weighted average shares outstanding - diluted |
28 |
|
3.47587 |
|
2.45195 |
|
3.49924 |
|
2.45176 |
See accompanying notes to the financial statements.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014
(Amounts expressed in thousands of Brazilian Reais, unless otherwise stated)
|
|
BRF S.A. |
|
|
|
|
|
|
|
|
|
|
STATEMENTS OF COMPREHENSIVE INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BR GAAP |
|
BR GAAP and IFRS |
|
|
|
Parent company |
|
Consolidated |
|
Note |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Net Profit |
|
|
3,111,170 |
|
2,225,036 |
|
3,130,858 |
|
2,224,877 |
Other comprehensive income |
|
|
|
|
|
|
|
|
|
Gain (loss) on foreign currency translation adjustments |
|
|
184,872 |
|
(120,337) |
|
184,872 |
|
(120,337) |
Unrealized gain (loss) on available for sale marketable securities |
8 |
|
10,592 |
|
(11,931) |
|
10,592 |
|
(11,931) |
Taxes on unrealized gains (losses) on available for sale securities |
8 |
|
(1,762) |
|
41 |
|
(1,762) |
|
41 |
Unrealized losses on cash flow hedge |
4 |
|
(1,020,832) |
|
(162,817) |
|
(1,020,832) |
|
(162,817) |
Taxes on unrealized loss on cash flow hegde |
4 |
|
346,388 |
|
55,752 |
|
346,388 |
|
55,752 |
Net other comprehensive income, to be reclassified to the statement of income in subsequent periods |
|
|
(480,742) |
|
(239,292) |
|
(480,742) |
|
(239,292) |
Actuarial gains on pension and post-employment plans |
25 |
|
48,635 |
|
8,731 |
|
48,635 |
|
8,731 |
Taxes on realized gains on pension and post-employment plans |
25 |
|
(16,536) |
|
(2,969) |
|
(16,536) |
|
(2,969) |
Net other comprehensive income, with no impact into subsequent statement of income |
|
|
32,099 |
|
5,762 |
|
32,099 |
|
5,762 |
Total comprehensive income, net |
|
|
2,662,527 |
|
1,991,506 |
|
2,682,215 |
|
1,991,347 |
Attributable to |
|
|
|
|
|
|
|
|
|
Controlling shareholders |
|
|
2,662,527 |
|
1,991,506 |
|
2,662,527 |
|
1,991,506 |
Non-controlling interest |
|
|
- |
|
- |
|
19,688 |
|
(159) |
|
|
|
2,662,527 |
|
1,991,506 |
|
2,682,215 |
|
1,991,347 |
See accompanying notes to the financial statements.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014
(Amounts expressed in thousands of Brazilian Reais, unless otherwise stated)
|
|
BRF S.A. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributed to of controlling shareholders |
|
|
|
|
|
|
|
|
|
Capital reserves |
|
Income reserves |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
Paid-in capital |
|
Capital reserve |
|
Treasury shares |
|
Legal reserve |
|
Reserve for expansion |
|
Reserve for capital increases |
|
Reserve for tax incentives |
|
Acumulated foreign currency translation adjustments |
|
Available for sale marketable securities |
|
Losses on cash flow hedge |
|
Actuarial gains (losses) |
|
Retained earnings (losses) |
|
Total equity |
|
Non-controlling interest |
|
Total shareholders' equity (consolidated) |
BALANCES AT DECEMBER 31, 2013 |
12,460,471 |
|
113,797 |
|
(77,379) |
|
273,367 |
|
1,170,749 |
|
822,611 |
|
245,153 |
|
(32,258) |
|
(5,406) |
|
(341,687) |
|
25,653 |
|
- |
|
14,655,071 |
|
41,083 |
|
14,696,154 |
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on foreign currency translation adjustments |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(120,337) |
|
- |
|
- |
|
- |
|
- |
|
(120,337) |
|
- |
|
(120,337) |
Unrealized loss in available for sale marketable securities |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(11,890) |
|
- |
|
- |
|
- |
|
(11,890) |
|
- |
|
(11,890) |
Unrealized gain in cash flow hedge |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(107,065) |
|
- |
|
- |
|
(107,065) |
|
- |
|
(107,065) |
Actuarial gains (losses) on pension and post-employment plans |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(27,401) |
|
33,163 |
|
5,762 |
|
- |
|
5,762 |
Net income for the exercise |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
2,225,036 |
|
2,225,036 |
|
(159) |
|
2,224,877 |
SUB-TOTAL COMPREHENSIVE INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(120,337) |
|
(11,890) |
|
(107,065) |
|
(27,401) |
|
2,258,199 |
|
1,991,506 |
|
(159) |
|
1,991,347 |
Appropriation of income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends - R$0.09972393 per outstanding share at the end of exercise |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(86,489) |
|
(86,489) |
|
- |
|
(86,489) |
Interest on shareholders' equity - R$0.84863360 per outstanding share at the end of exercise |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(737,765) |
|
(737,765) |
|
- |
|
(737,765) |
Legal reserve |
- |
|
- |
|
- |
|
111,252 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(111,252) |
|
- |
|
- |
|
- |
Reserve for expansion |
- |
|
- |
|
- |
|
- |
|
730,684 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(730,684) |
|
- |
|
- |
|
- |
Reserve for capital increases |
- |
|
- |
|
- |
|
- |
|
- |
|
451,640 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(451,640) |
|
- |
|
- |
|
- |
Reserve for tax incentives |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
140,369 |
|
- |
|
- |
|
- |
|
- |
|
(140,369) |
|
- |
|
- |
|
- |
Share-based payments |
- |
|
20,673 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
20,673 |
|
- |
|
20,673 |
Gains on shares sold |
- |
|
(23,682) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(23,682) |
|
- |
|
(23,682) |
Goodwill on the acquisition of non-controlling interest |
- |
|
(1,342) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(1,342) |
|
- |
|
(1,342) |
Non-controlling interest |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
58,542 |
|
58,542 |
Treasury shares acquired |
- |
|
- |
|
(350,942) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(350,942) |
|
- |
|
(350,942) |
Treasury shares sold |
- |
|
- |
|
123,447 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
123,447 |
|
- |
|
123,447 |
BALANCES AT DECEMBER 31, 2014 |
12,460,471 |
|
109,446 |
|
(304,874) |
|
384,619 |
|
1,901,433 |
|
1,274,251 |
|
385,522 |
|
(152,595) |
|
(17,296) |
|
(448,752) |
|
(1,748) |
|
- |
|
15,590,477 |
|
99,466 |
|
15,689,943 |
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on foreign currency translation adjustments |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
184,872 |
|
- |
|
- |
|
- |
|
- |
|
184,872 |
|
- |
|
184,872 |
Unrealized gain in available for sale marketable securities |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
8,830 |
|
- |
|
- |
|
- |
|
8,830 |
|
- |
|
8,830 |
Unrealized loss in cash flow hedge |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(674,444) |
|
- |
|
- |
|
(674,444) |
|
- |
|
(674,444) |
Actuarial gains (losses) on pension and post-employment plans |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
21,619 |
|
10,480 |
|
32,099 |
|
- |
|
32,099 |
Net income for the exercise |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
3,111,170 |
|
3,111,170 |
|
19,688 |
|
3,130,858 |
SUB-TOTAL COMPREHENSIVE INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
184,872 |
|
8,830 |
|
(674,444) |
|
21,619 |
|
3,121,650 |
|
2,662,527 |
|
19,688 |
|
2,682,215 |
Appropriation of income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends - R$0.112896461 per outstanding share at the end of exercise |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(91,443) |
|
(91,443) |
|
- |
|
(91,443) |
Interest on shareholders' equity - R$1.086894475 per outstanding share at the end of exercise |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(899,257) |
|
(899,257) |
|
- |
|
(899,257) |
Legal reserve |
- |
|
- |
|
- |
|
155,558 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(155,558) |
|
- |
|
- |
|
- |
Reserve for expansion |
- |
|
- |
|
- |
|
- |
|
1,219,394 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(1,219,394) |
|
- |
|
- |
|
- |
Reserve for capital increases |
- |
|
- |
|
- |
|
- |
|
- |
|
624,330 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(624,330) |
|
- |
|
- |
|
- |
Reserve for tax incentives |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
131,668 |
|
- |
|
- |
|
- |
|
- |
|
(131,668) |
|
- |
|
- |
|
- |
Reserve for income retention |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Share-based payments |
- |
|
67,425 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
67,425 |
|
- |
|
67,425 |
Gains on shares sold |
- |
|
(40,257) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(40,257) |
|
- |
|
(40,257) |
Valuation of shares |
- |
|
111,247 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
111,247 |
|
- |
|
111,247 |
Acquisition of non-controlling interest |
- |
|
(240,883) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(240,883) |
|
- |
|
(240,883) |
Non-controlling interest |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
199,922 |
|
199,922 |
Treasury shares acquired |
- |
|
- |
|
(3,765,753) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(3,765,753) |
|
- |
|
(3,765,753) |
Treasury shares sold |
- |
|
- |
|
122,694 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
122,694 |
|
- |
|
122,694 |
BALANCES AT DECEMBER 31, 2015 |
12,460,471 |
|
6,978 |
|
(3,947,933) |
|
540,177 |
|
3,120,827 |
|
1,898,581 |
|
517,190 |
|
32,277 |
|
(8,466) |
|
(1,123,196) |
|
19,871 |
|
- |
|
13,516,777 |
|
319,076 |
|
13,835,853 |
See accompanying notes to the financial statements.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014
(Amounts expressed in thousands of Brazilian Reais, unless otherwise stated)
|
|
BRF S.A. |
|
|
|
|
|
|
|
|
|
|
STATEMENTS OF CASH FLOWS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent company |
|
Consolidated |
|
|
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Net profit |
|
|
2,928,082 |
|
2,135,214 |
|
2,928,082 |
|
2,135,214 |
Adjustments to reconcile net income to net cash provided by operating activities |
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
|
- |
|
- |
|
19,688 |
|
(159) |
Depreciation and amortization |
|
|
668,534 |
|
652,197 |
|
771,647 |
|
704,184 |
Depreciation and depletion of biological assets |
|
|
543,605 |
|
525,927 |
|
545,033 |
|
526,234 |
Equity in income of affiliates |
|
|
(3,116,292) |
|
(673,343) |
|
103,804 |
|
(25,570) |
Gain in business combination |
|
|
- |
|
- |
|
- |
|
(24,963) |
Results on disposal on investments |
|
|
(125,671) |
|
(179,268) |
|
(125,671) |
|
(179,268) |
Loss on disposal of property, plant and equipment |
|
|
19,795 |
|
(103,291) |
|
16,402 |
|
(111,410) |
Deferred income tax |
|
|
(372,283) |
|
235,889 |
|
(406,587) |
|
235,205 |
Provision for tax, civil and labor risks |
|
|
106,022 |
|
302,016 |
|
98,947 |
|
306,632 |
Other provisions |
|
|
317,487 |
|
15,349 |
|
345,120 |
|
70,273 |
Exchange rate variations and interest |
|
|
3,634,434 |
|
1,323,603 |
|
2,853,862 |
|
1,173,758 |
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
|
Investments in trading securities |
|
|
(76,873) |
|
(295,424) |
|
(1,023,747) |
|
(295,424) |
Redemptions of trading securities |
|
|
181,620 |
|
217,761 |
|
900,009 |
|
218,899 |
Interest received |
|
|
11,054 |
|
- |
|
13,216 |
|
- |
Other financial assets and liabilities |
|
|
(679,878) |
|
(300,181) |
|
(687,358) |
|
(284,471) |
Trade accounts receivable |
|
|
(596,754) |
|
(675,242) |
|
(1,112,454) |
|
459,197 |
Inventories |
|
|
(524,462) |
|
270,676 |
|
(1,066,189) |
|
369,183 |
Biological assets - current assets |
|
|
(199,967) |
|
76,011 |
|
(199,281) |
|
75,271 |
Trade accounts payable |
|
|
577,287 |
|
198,868 |
|
882,212 |
|
202,946 |
Supply chain finance |
|
|
719,474 |
|
- |
|
719,474 |
|
- |
Payment of tax, civil and labor provisions |
|
|
(194,350) |
|
(259,445) |
|
(194,350) |
|
(259,445) |
Interest paid |
|
|
(539,180) |
|
(452,375) |
|
(693,873) |
|
(618,724) |
Payroll and related charges |
|
|
- |
|
- |
|
(6,931) |
|
(5,556) |
Interest on shareholders' equity received |
|
|
56,895 |
|
114,572 |
|
15,889 |
|
54,674 |
Other rights and obligations |
|
|
(333,782) |
|
(1,522,672) |
|
(562,704) |
|
114,958 |
Net cash provided by operating activities from continued operations |
|
|
3,004,797 |
|
1,606,842 |
|
4,134,240 |
|
4,841,638 |
Net cash provided by operating activities from discontinued operations |
|
|
28,307 |
|
160,153 |
|
2,420 |
|
160,153 |
Net cash provided by operating activities |
|
|
3,033,104 |
|
1,766,995 |
|
4,136,660 |
|
5,001,791 |
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Investments in available for sale securities |
|
|
- |
|
- |
|
(58,907) |
|
(43,878) |
Redemptions of available for sale securities |
|
|
- |
|
1,014 |
|
130,292 |
|
43,405 |
Investments in restricted cash |
|
|
(364,649) |
|
(15,967) |
|
(1,710,923) |
|
(15,967) |
Capital increase in associates and joint ventures |
|
|
(299,961) |
|
- |
|
- |
|
- |
Business combination, net of cash |
|
|
- |
|
- |
|
(90,871) |
|
(372,751) |
Investments in associates and joint ventures |
|
|
(1,724) |
|
(3,420) |
|
(61,604) |
|
(53,520) |
Goodwill on the acquisiton of non-controlling entities |
|
|
- |
|
(1,342) |
|
- |
|
(1,342) |
Additions to property, plant and equipment |
|
|
(1,169,974) |
|
(771,100) |
|
(1,296,712) |
|
(1,020,964) |
Additions to biological assets - non-current assets |
|
|
(588,674) |
|
(515,849) |
|
(589,437) |
|
(517,488) |
Proceeds from disposals of property, plant and equipment |
|
|
204,287 |
|
141,243 |
|
252,257 |
|
170,557 |
Additions to intangible assets |
|
|
(36,099) |
|
(47,257) |
|
(205,416) |
|
(50,410) |
Receivable from discontinued operations, net of transferred cash |
|
|
1,977,310 |
|
- |
|
1,957,272 |
|
- |
Net cash used in investing activities from continued operations |
|
|
(279,484) |
|
(1,212,678) |
|
(1,674,049) |
|
(1,862,358) |
Net cash used in investing activities from discontinued operations |
|
|
(28,307) |
|
(51,161) |
|
(12,305) |
|
(51,161) |
Net cash used in investing activities |
|
|
(307,791) |
|
(1,263,839) |
|
(1,686,354) |
|
(1,913,519) |
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Proceeds from debt issuance |
|
|
5,096,663 |
|
3,985,631 |
|
6,290,122 |
|
5,116,839 |
Repayment of debt |
|
|
(4,441,692) |
|
(2,462,778) |
|
(6,031,553) |
|
(4,707,779) |
Treasury shares acquired |
|
|
(3,765,753) |
|
(350,942) |
|
(3,765,753) |
|
(350,942) |
Treasury shares disposal |
|
|
82,437 |
|
99,765 |
|
82,437 |
|
99,765 |
Payments of dividends and interest on shareholders' equity |
|
|
(889,113) |
|
(726,013) |
|
(889,113) |
|
(726,013) |
Net cash (used in) provided by financing activities from continued operations |
|
|
(3,917,458) |
|
545,663 |
|
(4,313,860) |
|
(568,130) |
Cash used in financing activities from discontinued operations |
|
|
- |
|
- |
|
20,038 |
|
- |
Net cash (used in) provided by financing activities |
|
|
(3,917,458) |
|
545,663 |
|
(4,293,822) |
|
(568,130) |
EFFECT ON EXCHANGE RATE VARIATION ON CASH AND CASH EQUIVALENTS |
|
|
57,873 |
|
25,362 |
|
1,199,464 |
|
359,085 |
Net increase in cash |
|
|
(1,134,272) |
|
1,074,181 |
|
(644,052) |
|
2,879,227 |
At the beginning of the period |
|
|
1,979,357 |
|
905,176 |
|
6,006,942 |
|
3,127,715 |
At the end of the period |
|
|
845,085 |
|
1,979,357 |
|
5,362,890 |
|
6,006,942 |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014
(Amounts expressed in thousands of Brazilian Reais, unless otherwise stated)
|
|
See accompanying notes to the financial statements.
BRF S.A. |
|
|
|
|
|
|
|
|
|
|
STATEMENT OF ADDED VALUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent company |
|
Consolidated |
|
|
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
1 - REVENUES |
|
|
30,544,261 |
|
29,259,062 |
|
36,414,426 |
|
32,751,151 |
Sales of goods and products |
|
|
29,550,380 |
|
28,570,547 |
|
35,343,447 |
|
31,895,159 |
Other income |
|
|
(37,303) |
|
11,675 |
|
(59,207) |
|
(54,946) |
Revenue related to construction of own assets |
|
|
1,344,739 |
|
675,517 |
|
1,454,360 |
|
908,443 |
Allowance for doubtful accounts |
|
|
(313,555) |
|
1,323 |
|
(324,174) |
|
2,495 |
2 - RAW MATERIAL ACQUIRED FROM THIRD PARTIES |
|
|
(19,377,953) |
|
(18,402,267) |
|
(22,064,277) |
|
(20,364,761) |
Costs of products and goods sold |
|
|
(15,506,976) |
|
(15,180,278) |
|
(17,461,432) |
|
(16,530,170) |
Materials, energy, third parties services and other |
|
|
(3,845,023) |
|
(3,234,668) |
|
(4,559,875) |
|
(3,851,677) |
Recovery (loss) of assets values |
|
|
(25,954) |
|
12,679 |
|
(42,970) |
|
17,086 |
3 - GROSS VALUE ADDED (1-2) |
|
|
11,166,308 |
|
10,856,795 |
|
14,350,149 |
|
12,386,390 |
4 - DEPRECIATION AND AMORTIZATION |
|
|
(1,212,139) |
|
(1,178,124) |
|
(1,316,680) |
|
(1,230,418) |
5 - NET VALUE ADDED (3-4) |
|
|
9,954,169 |
|
9,678,671 |
|
13,033,469 |
|
11,155,972 |
|
|
|
|
|
|
|
|
|
|
6 - RECEIVED FROM THIRD PARTIES |
|
|
4,537,539 |
|
1,461,829 |
|
3,252,645 |
|
1,614,489 |
Income from associates and joint ventures |
|
|
3,116,292 |
|
673,343 |
|
(103,804) |
|
25,570 |
Financial income |
|
|
1,420,166 |
|
780,366 |
|
3,355,313 |
|
1,580,756 |
Others |
|
|
1,081 |
|
8,120 |
|
1,136 |
|
8,163 |
|
|
|
|
|
|
|
|
|
|
7 - VALUE ADDED TO BE DISTRIBUTED (5+6) |
|
|
14,491,708 |
|
11,140,500 |
|
16,286,114 |
|
12,770,461 |
|
|
|
|
|
|
|
|
|
|
8 - DISTRIBUTION OF VALUE ADDED |
|
|
14,491,708 |
|
11,140,500 |
|
16,286,114 |
|
12,770,461 |
Payroll |
|
|
4,118,595 |
|
3,688,690 |
|
4,768,435 |
|
4,082,427 |
Salaries |
|
|
3,170,044 |
|
2,850,479 |
|
3,722,771 |
|
3,188,374 |
Benefits |
|
|
736,662 |
|
649,633 |
|
827,380 |
|
700,277 |
Government severance indemnity fund for employees guarantee fund for lenght of services - F.G.T.S. |
|
|
211,889 |
|
188,578 |
|
218,284 |
|
193,776 |
Taxes, Fees and Contributions |
|
|
2,804,209 |
|
3,334,767 |
|
3,224,153 |
|
3,696,140 |
Federal |
|
|
1,158,722 |
|
1,808,228 |
|
1,492,256 |
|
2,093,344 |
State |
|
|
1,613,564 |
|
1,498,684 |
|
1,689,165 |
|
1,565,961 |
Municipal |
|
|
31,923 |
|
27,855 |
|
42,732 |
|
36,835 |
Capital Remuneration from Third Parties |
|
|
4,640,822 |
|
1,981,829 |
|
5,345,756 |
|
2,856,839 |
Interests |
|
|
4,429,165 |
|
1,787,751 |
|
5,049,785 |
|
2,609,140 |
Rents |
|
|
211,657 |
|
194,078 |
|
295,971 |
|
247,699 |
Interest on Own-Capital |
|
|
2,928,082 |
|
2,135,214 |
|
2,947,770 |
|
2,135,055 |
Interest on shareholders' equity |
|
|
899,257 |
|
737,765 |
|
899,257 |
|
737,765 |
Dividends |
|
|
91,443 |
|
86,489 |
|
91,443 |
|
86,489 |
Retained earnings |
|
|
1,937,382 |
|
1,310,960 |
|
1,937,382 |
|
1,310,960 |
Non-controlling interest |
|
|
- |
|
- |
|
19,688 |
|
(159) |
See accompanying notes to the financial statements.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
Market Value
R$47,7 billion
US$12,5 billion
Prices
BRFS3 R$54,70
BRFS US$13,91
Shares
872.473.246 common shares
62.501.001 treasury shares
Base: 12.31.2015
Webcast
Date: 02.26.2016
09:00 Portuguese
10:30 English
Telephone:
Dial–in with
connections in
Brazil: +55 11
31931001 ou +55
11 28204001
Dial-in with
connections in the
United States: +1
8887000802
www.brf-br.com/ri
IR Contacts:
Augusto Ribeiro Júnior
CFO and IRO
André Mota
IR Manager
+55 11 23225398
acoes@brf-br.com
|
|
Dear Shareholders,
Even faced with an unstable outlook and an increasingly more competitive environment for the food industry in 2015, we created solid bases which allowed our operating result to grow. Thanks to the business model, we expanded our global presence, made progress in the strategy of forming partnerships and acquisitions, we ensured the expansion of the return on investments and cash generation and finally we were innovative in adapting to the different markets where we are present.
We also brought our organizational environment closer with the consolidation of VIVA BRF, a movementthat conveys our spirit and way of doing things, giving emphasis to the Company´s main asset which is our people. We are also moving ahead in the area of social and environmental controls for the operation by adhering to good international practices in terms of animal welfare and systemized our Suppliers Chain Monitoring Program.
We invested over R$ 2 billion in ensuring the execution of productive and energy, automation and support efficiency projects. Our efforts were fundamental in leading the main credit risk agencies to maintain our corporate rating. This development highlights the Company´s economic strength.
We maintained our sales volume in Brazil and outperformed expectations on the international markets, confirming the competitive advantage of our business model. Against this backdrop, we continue to think in the long term, investing in innovation and improving the level of service. We also launched new products and renewed our portfolio.
The return of the Perdigão brand in the important Ham and Smoked Sausages categories set a new stage for the Brazilian retail market and was a dream come true for the Company. Perdigão is a democratic brand and a leader in the categories of productsthat are more accessible in terms of price. As a result, faced with the current economic situation, the brand showed itself to be a “smart choice”, offering quality items with a tradition of more than 80 years at an accessible price.
The consolidation of Sadia as a truly global brand also brought positive results for the Company. Our sales in the Middle East, for example, were above expectations and we brought forward a project to expand productive capacity at the plant in Abu Dhabi, in the United Arab Emirates, from 70,000 to 100,000 tons/year. Besides serving the growing local demand, the initiative includes potential new clients in North Africa, Sub-Saharan Africa and Asia. |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
We also announced a series of acquisitions as part of our strategy of having strong brands, local flexibility and leadership in the sales channels. In Argentina, we acquired highly regarded sausage brands and announced the acquisition of Campo Austral, a move that heralds the entry of BRF on the Argentinean pork market. In Asia, we announced the agreement to acquire the Thai company Golden Foods Siam (GFS), the third largest exporter of chicken by-products, with access to important export markets, including the European Union, Japan and countries in Southeast Asia. In Europe, we announced the acquisition of the British food distributor Universal Meats, as a way of expanding the current portfolio of European clients in the food service segment.
The performance of the Company´s global business and consolidated earnings met our expectations. This was due mainly to the considerable improvement in the return on the international market and the decentralization of the management, with the creation of an organizational structure that includes five regions: Brazil, Latin America, Europe/Eurasia, Asia and the Middle East/Africa.
As was the case in 2015, when we transformed our challenges into opportunities, we will continue to strive in 2016 to make BRF a more profitable company, that is admired, with strong brands and a presence in the most diversified regions of the globe.
Abilio Diniz Pedro Faria
Chairman of the Board of Directors Global CEO
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
BRF S.A.
Management Report on the Results in the Fourth Quarter and for the Year 2015
Financial Highlights
· Net operating revenues in 4Q15 came to R$9.0 billion (+11.3% y/y). The NOR in the year was 11.0% higher, amounting to R$32.2 billion.
· EBITDA was R$1,885 million in 4Q15 (+7.0% y/y), with a margin of 21.0%. The accumulated EBITDA in 2015 came to R$5,738 million (+21.9% y/y), with a margin of 17.8%.
· Net income amounted to R$1,415 million (+42.8% y/y) in 4Q15, with a margin of 15.8% (+3.5 p.p. y/y) and R$3,118 million (+46.0% y/y) in 2015 as a whole, with a margin of 9,7%..
· The financial cycle showed a new decline to 34 days in 4Q15 from 37 days in 4Q14.
· Investments in 4Q15 came to R$714 million and to R$2,084 million for 2015 as a whole.
· The ROIC (Return on Invested Capital) was 13.2% in 2015 compared with 11.7% in 2014.
· The Free Cash Flow (FCF) in 4Q15 was R$1,214 million, bringing an accumulated total of R$3,422 million in 2015.
Main Financial Indicators
Results - R$ Million |
4Q15 |
4Q14 |
∆% |
2015 |
2014 |
∆% |
Net Revenues |
8,955 |
8,047 |
11.3% |
32,197 |
29,007 |
11.0% |
Gross Profit |
2,799 |
2,687 |
4.2% |
10,089 |
8,509 |
18.6% |
Gross Margin (%) |
31.3% |
33.4% |
(2.1) p.p. |
31.3% |
29.3% |
2.0 p.p. |
EBIT |
1,560 |
1,406 |
10.9% |
4,228 |
3,478 |
21.6% |
EBIT Margin (%) |
17.4% |
17.5% |
(0.1) p.p. |
13.1% |
12.0% |
1.1 p.p. |
EBITDA |
1,885 |
1,762 |
7.0% |
5,738 |
4,709 |
21.9% |
EBITDA Margin (%) |
21.0% |
21.9% |
(0.9) p.p. |
17.8% |
16.2% |
1.6 p.p. |
Net Income |
1,415 |
991 |
42.8% |
3,118 |
2,135 |
46.0% |
Net Margin (%) |
15.8% |
12.3% |
3.5 p.p. |
9.7% |
7.4% |
2.3 p.p. |
Earnings per share1 |
1.75 |
1.14 |
52.9% |
3.85 |
2.46 |
56.4% |
1 Consolidated Earnings per Share (in R$), excluding Treasury Shares. |
The EBITDA in 2015 includes R$213 million from the operating gain in the sale of the dairy operations which, in turn, had a positive impact on the Net Income in 2015 of R$190 million. |
|
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
Results of 4th Quarter 2015 (4Q15)
Strategic Highlights
· In 4Q15, we announced three acquisitions (Global Food Siam, Universal Meats and Campo Austral), totaling around US$500 million, continuing with our strategy of globalizing our operations, taking into consideration the whole supply chain and bringing us increasingly closer to the final consumer.
· In November 2015, the Company announced the expansion of production at the plant in Abu Dhabi (United Arab Emirates) from 70,000 tons/year to 100,000 tons/year. The original idea had been to conclude the expansion in 2020 but the increase was brought forward due to the success of the plant operation, aimed at serving the market demands in a more flexible and tailor-made way.
· In line with the Company´s strategy of expanding to new markets, we prepared four plants to export to Malaysia, where the Halal certification body is regarded as the strictest in the world, and five plants to export to Mexico, where we should begin to export in 2016.
· Due to a strategic decision, BRF decided to no longer nominate members to the Board of Directors of Minerva. Based on this decision, and taking into consideration the small influence of the business, we reclassified the position in accounting terms to a “financial asset available for sale”, thereby creating a revenue of R$126 million in the Other Operating Results line.
Subsequent events
· The Company also concluded the acquisition of Golden Foods Siam (GFS), on 01.26.2016, for approximately US$360 million. GFS is one of the leaders on the poultry production market in Thailand and has an integrated operation and presence in more than 15 global markets.
· At the beginning of February 2016, the Company announced the conclusion of the acquisition for approximately £34 million of Universal Meats – a food distributor in the UK which focuses on the food services segment.
· On 01.06.2016, BRF concluded the acquisition of part of the frozen food distribution business of Qatar National Import and Export Co., a company that has operated as a distributor for BRF in the state of Qatar for more than 40 years. The amount of the transaction was approximately US$140 million.
· On 02.05.2016, BRF announced the conclusion ofthe qualificationprocess of three of its plants to export to China. The units in Toledo (Paraná) and Marau (Rio Grande do Sul) are ready to export fresh chicken while the plant in Campos Novos (Santa Catarina) can export pork.
· On 01.11.2016, as part of the Company´s strategy of maximizing the allocation of capital, it announced the ending of the Share Buyback Program that was initiated on 10.29.2015 and expanded on 11.9.2015. Twenty-three million common shares, the total amount of the program, were acquired for an average price of R$57.04.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
Consolidated Result 4Q15
Net Operating Revenues (NOR)
NOR - R$ Million |
4Q15 |
4Q14 |
∆% |
2015 |
2014 |
∆% |
Brazil |
4,344 |
4,381 |
(0.8%) |
16,038 |
15,424 |
4.0% |
Europe |
1,048 |
841 |
24.6% |
3,640 |
3,093 |
17.7% |
MEA |
1,965 |
1,561 |
25.9% |
7,097 |
5,710 |
24.3% |
Asia |
882 |
819 |
7.7% |
3,290 |
3,073 |
7.1% |
LATAM |
717 |
445 |
61.1% |
2,132 |
1,707 |
24.9% |
Total |
8,955 |
8,047 |
11.3% |
32,197 |
29,007 |
11.0% |

In 4Q15, the company reported growth in all its regions, bringing NOR of R$9.0 billion (+11.3% y/y). The regions that stood out were the MEA, LATAM and EUROPE. This growth was driven by the improvement in the sales mix and the strong increase in average prices in Reais, offsetting the lower volumes.
Gross Income
Gross Profit - R$ Million |
4Q15 |
4Q14 |
∆% |
2015 |
2014 |
∆% |
Gross Profit |
2,799 |
2,687 |
4.2% |
10,089 |
8,509 |
18.6% |
Gross Margin (%) |
31.3% |
33.4% |
(2.1) p.p. |
31.3% |
29.3% |
2.0 p.p. |
The Company reported consolidated gross income in 4Q15 of R$2,799 billion (+4.2% y/y) but with a decline in the gross margin of 2.1p.p., reflecting an increase in the cost of production higher than the increase in the sales price. The main negative impacts on the margin were the currency variation in the price of grains, packaging and other imported input.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
Grains, which are the Company´s main cost components, rose in terms of Reais on an annual comparison by 26.0% for corn, 23.1% for soybeans and 28.4% for soy bran. For their part, packaging and other imported input costs, rose by 30% in the same period. As a result, the COGS as a percentage of the NOR came to 68.7% in 4Q15, compared to 66.6% in the 4Q14.
Operating Expenses
Operating Expenses - R$ Million |
4Q15 |
4Q14 |
∆% |
2015 |
2014 |
∆% |
Selling Expenses |
(1,331) |
(1,164) |
14.3% |
(4,806) |
(4,217) |
14.0% |
% of the NOR |
(14.9%) |
(14.5%) |
(0.2) p.p. |
(14.9%) |
(14.5%) |
(0.4) p.p. |
General and Administrative Expenses |
(140) |
(110) |
27.3% |
(506) |
(402) |
25.9% |
% of the NOR |
(1.6%) |
(1.4%) |
(0.2) p.p. |
(1.6%) |
(1.4%) |
(0.2) p.p. |
Operating Expenses |
(1,471) |
(1,274) |
15.4% |
(5,312) |
(4,619) |
15.0% |
% of the NOR |
(16.4%) |
(15.8%) |
(0.6) p.p. |
(16.5%) |
(15.9%) |
(0.6) p.p. |
The impacts on the operating expenses came mainly from the international regions, highlighted by: (i) investments in marketing and trade marketing in the MEA and LATAM regions (in line with the Company´s strategy of strengthening the presence of its brands in these markets); (ii) expenditure on freight, mainly in the MEA region (bearing in mind the increase in the Company´s own distribution in the region); and (iii) personnel expenses, due to the impact of the currency variation and integration of the acquisitions we carried out.
Other Operating Results
Other Operating Results - R$ Million |
4Q15 |
4Q14 |
y/y |
2015 |
2014 |
∆% |
Other Operating Revenues |
331 |
266 |
24.3% |
567 |
482 |
17.5% |
Other Operating Expenses |
(105) |
(266) |
(60.7%) |
(1,011) |
(920) |
9.9% |
Other Operating Results |
226 |
(0) |
- |
(445) |
(438) |
1.5% |
% of the NOR |
2.5% |
(0.0%) |
2.5 p.p. |
(1.4%) |
(1.5%) |
0.1 p.p. |
Non-Recurring |
4T15 |
4T14 |
∆% |
2015 |
2014 |
∆% |
Net Income - Minerva |
126 |
179 |
(29.9%) |
126 |
179 |
(29.9%) |
Recovery of Expenses |
149 |
48 |
208.9% |
241 |
64 |
278.1% |
Restructuring Charges |
(12) |
(35) |
(66.6%) |
(93) |
(215) |
(56.7%) |
Others non-Recurring |
46 |
29 |
58.3% |
(193) |
117 |
- |
Total |
309 |
221 |
39.6% |
81 |
145 |
(44.2%) |
In 4Q15, the Company presented a positive result of R$226 million in the Other Operating Results line, impacted mainly by non-recurring revenues in the period.
The two main highlights of these revenues were: (i) the accounting reclassification of Minerva, which was classified from 4Q15 as a financial asset available for sale (so it was no longer accounted as equity income), due to the strategic repositioning for the company; and (ii) “recovery of expenses”, highlighting the recovery related to a legal case on compulsory loans to Eletrobrás and the recovery of PIS/COFINS tax credits on raw materials.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
Operating Result (EBIT)
EBIT - R$ Million |
4Q15 |
4Q14 |
∆% |
2015 |
2014 |
∆% |
Gross Profit |
2,799 |
2,687 |
4.2% |
10,089 |
8,509 |
18.6% |
Operating Expenses |
(1,471) |
(1,274) |
15.4% |
(5,312) |
(4,619) |
15.0% |
Other Operating Results |
226 |
(0) |
- |
(445) |
(438) |
1.5% |
Equity Income |
6 |
(7) |
- |
(104) |
26 |
- |
EBIT |
1,560 |
1,406 |
10.9% |
4,228 |
3,478 |
21.6% |
EBIT Margin (%) |
17.4% |
17.5% |
(0.1) p.p. |
13.1% |
12.0% |
1.1 p.p. |

Consolidated EBIT was R$1,560 million in 4Q15 (+10.9% y/y), with a margin of 17.4% (-0.1 p.p. y/y). The accumulated EBIT margin for the year expanded by 1.1 p.p. over 2014 to a total of R$4,228 million (+21.6%).
Financial Result
R$ Million |
4Q15 |
4Q14 |
∆% |
2015 |
2014 |
∆% |
Financial Income |
124 |
377 |
(67.2%) |
3,355 |
1,581 |
112.3% |
Financial Expenses |
(505) |
(578) |
(12.6%) |
(5,025) |
(2,571) |
95.4% |
Net Financial Result |
(381) |
(201) |
90.0% |
(1,670) |
(991) |
68.6% |
The Company presented a Net Financial Result in 4Q15 that was negative in the amount of R$381 million which compared with a negative result of R$201 million in 4Q14, impacted mainly by the rise in interest rates on the debt denominated in foreign currency of R$110 million y/y.
The Company went from a currency exposure during this period with an impact on the result of US$65 million “short” in 3Q15 to US$40 million “short” in 4Q15.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
Net Income
Net Income - R$ Million |
4Q15 |
4Q14 |
∆% |
2015 |
2014 |
∆% |
Net Income |
1,415 |
991 |
42.8% |
3,118 |
2,135 |
46.0% |
Net Margin (%) |
15.8% |
12.3% |
3.5 p.p. |
9.7% |
7.4% |
2.3 p.p. |
The Net Income in 2015 included R$190 million referring to the operating gain from the sale of the dairy operations in the 3Q15. For more details, refer to Explanatory Note 13.3 of the Financial Statements of 12.31.2015.
The Company registered total net income of R$1,415 million in 4Q15 (+42.8% y/y), impacted positively by the Income Tax and Social Contribution line that came to R$255 million in positive terms compared with a tax expense of R$214 million in 4Q14.
As mentioned in the earnings release of the 3Q15, in the management report, BRF announced the conclusion of the sale of its dairy division to Lactalis in July 2015. The net result of that sale was R$190 million, which positively impacted the 3Q15 results, and, consequently, the full year. In 4Q15, there was not any impact related to this transaction.
EBITDA
EBITDA - R$ Million |
4Q15 |
4Q14 |
∆% |
2015 |
2014 |
∆% |
Net Income |
1,415 |
991 |
42.8% |
3,118 |
2,135 |
46.0% |
Income Tax and Social Contribution |
(255) |
214 |
(219.0%) |
(367) |
353 |
(210.5%) |
Net Financial |
381 |
201 |
90.0% |
1,670 |
991 |
68.6% |
Depreciation and Amortization |
344 |
357 |
(3.5%) |
1,317 |
1,230 |
7.0% |
EBITDA |
1,885 |
1,762 |
7.0% |
5,738 |
4,709 |
21.9% |
EBITDA Margin (%) |
21.0% |
21.9% |
(0.9) p.p. |
17.8% |
16.2% |
1.5 p.p. |
Considers R$213 million in the EBITDA and R$190 million in the Net Income in 2015, referring to the operating gain from the sale of the dairy operations in the 3Q15. For more details, refer to Explanatory Note 13.3 of the Financial Statements of 12.31.2015.
EBITDA – Quarterly Performance
(R$ Million)

(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
The Company registered EBITDA of R$1,885 million in 4Q15 (+7.0% y/y), driven mainly by the rise in the international operations. Despite this, the consolidated EBITDA margin shrank by 0.9 p.p. y/y, due to pressure from the Brazil region.
As mentioned in net income, the sale of our dairy division impacted 3Q15’s EBITDA by R$213 million and, consequently, the year 2015. In 4Q15, there was not any impact related to this transaction.
Performance by Region
Brazil
Brazil |
R$ Million |
Thousand Tons |
Average Price -R$ |
4Q15 |
4Q14 |
∆% |
4Q15 |
4Q14 |
∆% |
4Q15 |
4Q14 |
∆% |
In Natura |
787 |
831 |
(5.2%) |
122 |
134 |
(8.8%) |
6.46 |
6.22 |
3.9% |
Poultry |
620 |
603 |
2.8% |
99 |
107 |
(7.3%) |
6.25 |
5.64 |
10.9% |
Pork |
165 |
191 |
(13.6%) |
23 |
24 |
(7.1%) |
7.28 |
7.83 |
(7.0%) |
Beef |
2 |
36 |
(94.8%) |
0 |
2 |
(97.6%) |
34.14 |
16.10 |
112.0% |
Others |
0 |
1 |
(62.8%) |
0 |
0 |
(19.9%) |
19.95 |
42.96 |
(53.6%) |
Processed Foods |
3,326 |
3,346 |
(0.6%) |
462 |
461 |
0.2% |
7.20 |
7.26 |
(0.8%) |
Total without Other Sales |
4,113 |
4,177 |
(1.5%) |
584 |
595 |
(1.8%) |
7.04 |
7.02 |
0.3% |
Others Sales |
231 |
204 |
13.0% |
52 |
83 |
(38.1%) |
4.47 |
2.45 |
82.6% |
Total |
4,344 |
4,381 |
(0.8%) |
635 |
678 |
(6.3%) |
6.84 |
6.46 |
5.8% |
|
|
|
|
|
|
|
|
|
|
Brazil |
R$ Million |
Thousand Tons |
Average Price -R$ |
2015 |
2014 |
∆% |
2015 |
2014 |
∆% |
2015 |
2014 |
∆% |
In Natura |
3,027 |
3,086 |
(1.9%) |
499 |
491 |
1.6% |
6.06 |
6.28 |
(3.5%) |
Poultry |
2,293 |
2,045 |
12.2% |
401 |
364 |
10.2% |
5.72 |
5.62 |
1.8% |
Pork |
697 |
702 |
(0.8%) |
96 |
98 |
(1.7%) |
7.23 |
7.16 |
0.9% |
Beef |
34 |
339 |
(90.0%) |
2 |
29 |
(93.6%) |
17.96 |
11.53 |
55.8% |
Others |
3 |
0 |
(3418.5%) |
0 |
0 |
175.2% |
20.06 |
(1.66) |
(1305.8%) |
Processed Foods |
12,228 |
11,384 |
7.4% |
1,713 |
1,644 |
4.2% |
7.14 |
6.93 |
3.1% |
Total without Other Sales |
15,255 |
14,470 |
5.4% |
2,212 |
2,135 |
3.6% |
6.90 |
6.78 |
1.7% |
Others Sales |
783 |
955 |
(18.0%) |
182 |
339 |
(46.2%) |
4.29 |
2.82 |
52.4% |
Total |
16,038 |
15,424 |
4.0% |
2,395 |
2,474 |
(3.2%) |
6.70 |
6.23 |
7.4% |
|
|
|
|
|
|
|
|
|
|
EBIT - R$ Million |
4Q15 |
4Q14 |
∆% |
2015 |
2014 |
∆% |
|
|
|
Brazil |
702 |
808 |
(13.1%) |
1,622 |
2,002 |
(19.0%) |
|
|
|
EBIT Margin (%) |
16.1% |
18.4% |
(2.3) p.p. |
10.1% |
13.0% |
(2.9) p.p. |
|
|
|
Faced with a more challenging macroeconomic situation, volumes in Brazil were 6.3% lower y/y at the end of 4Q15, mainly as a result of the performance of In Natura products (-8.8% y/y). The volume of processed products was the same as in 4Q14, (expanding by 4.2% in accumulated terms in the year) in line with the Company´s strategy of focusing on products with higher added value. It is worth mentioning that the volume from the commemorative products operation increased (+5% y/y), boosted mainly by the auto service and wholesale channels.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
However, the situation in terms of costs we saw in 2015 was caused mainly by the impact of the exchange rate and the margins continued to be squeezed in the last quarter. Moreover, the decision to postpone to 2016 the price readjustments (aimed to focus on the return of Perdigão and the commemoratives operation) ended up not helping to offset this effect. The result was a decline of 2.3 p.p. y/y in the EBIT margin.
The strategic highlights of the region were:
Ø Return of Perdigão
With the return of Perdigão in important categories (ham and smoked sausages) in July 2015, BRF began to have a more complete portfolio of brands. The performance of these categories has been gradually improving, as we can see, for example, by the increase in the volume and number of clients in terms of ham. This shows that the cannibalization between the Sadia and Perdigão brands remains in line with expectation.
Ham Volume Client Movements per month

Having these two strong brands allowed us to begin a new market strategy, reinforcing the “premium” positioning of the Sadia brand, and directing Perdigão towards the role of a “smart choice”, i.e. a strong brand and BRF quality standard but at a more accessible price.
Ø Sales Team
4Q15 was an important quarter for BRF, as it marked the start of a new sales force. In October 2015, we concluded the process of merging the Sadia and Perdigão teams into a single BRF team, selling 100% of the Company´s portfolio.
Despite the reduction of 23% in the sales team, its productivity improved. The percentage of clients buyers of the total base increased by 4.2 p.p. from 3Q15 to 4Q15, while the average of buyer clients on a monthly basis rose from 196,000 to 197,000 in the same period.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
Ø Level of service and GTM
The Company continued with the strategy of revising its logistical processes in 2015 in order to improve the relationship with its clients. As a result, BRF Brazil increased its level of service (measured by the OTIF – “on time in full”) by 6.5 p.p. y/y in 2015.
BRF also continued to make advances in the GTM project (“Go To Market”) aimed at enhancing the return of the operation. In 2016, GTM 2.0 will focus on: (i) improving the level of service, by changing the client segmentation, with regular visits and the right delivery; and (ii) reducing costs by optimizing the logistics network. The four pilot projects carried out in 4Q15 have already brought good results and increased the return over the average of the comparative bases.
Ø Market Share
In order to give greater visibility and direction to the more important categories in the BRF Brazil business, we decided to: (i) separate the Specialty Meat category into Cold cuts and Filled products; and (ii) consider only the Ready Made Dishes category within the Frozen products.

Source: Nielsen Bimonthly Retail – Margarines and Ready Made dishes (Oct/Nov survey); Filled and Chilled (Nov/Dec survey)
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
Sales by Channel – Brazil
(% of the Net Operating Revenues - NOR)

Wholesale |
Distributors, wholesalers and small business representatives belonging to board route retail customers. |
Supermarket |
Accounts of large customers (key accounts) with national coverage from 1 to 50 checkouts, including the wholesaler branches known as "atacarejos". |
Food Services |
Clients of the Food Services channel, such as restaurants, hotels, pizzerias, industrial kitchens, Government Agency, etc.. |
Retail |
Smaller clients in the retail industry, such as supermarkets, butchers, grocery, bakery, etc.. |
Middle East/Africa (MEA)
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
MEA |
R$ Million |
Thousand Tons |
Average Price -R$ |
4Q15 |
4Q14 |
∆% |
4Q15 |
4Q14 |
∆% |
4Q15 |
4Q14 |
∆% |
In Natura |
1,762 |
1,411 |
24.8% |
253 |
268 |
(5.6%) |
6.96 |
5.26 |
32.2% |
Poultry |
1,717 |
1,357 |
26.5% |
246 |
259 |
(4.9%) |
6.97 |
5.24 |
33.0% |
Pork |
34 |
45 |
(25.9%) |
6 |
8 |
(27.5%) |
5.48 |
5.37 |
2.2% |
Beef |
0 |
6 |
(98.2%) |
0 |
1 |
(95.5%) |
4.07 |
10.43 |
(60.9%) |
Others |
11 |
3 |
350.6% |
1 |
0 |
334.4% |
14.76 |
14.23 |
3.7% |
Processed Foods |
203 |
149 |
35.6% |
28 |
30 |
(6.0%) |
7.20 |
4.99 |
44.3% |
Total |
1,965 |
1,561 |
25.9% |
281 |
298 |
(5.6%) |
6.98 |
5.23 |
33.3% |
|
|
|
|
|
|
|
|
|
|
MEA |
R$ Million |
Thousand Tons |
Average Price -R$ |
2015 |
2014 |
∆% |
2015 |
2014 |
∆% |
2015 |
2014 |
∆% |
In Natura |
6,515 |
5,163 |
26.2% |
988 |
1,019 |
(3.1%) |
6.59 |
5.06 |
30.2% |
Poultry |
6,365 |
4,910 |
29.6% |
964 |
979 |
(1.5%) |
6.60 |
5.02 |
31.6% |
Pork |
115 |
160 |
(28.1%) |
22 |
32 |
(32.3%) |
5.31 |
5.00 |
6.2% |
Beef |
2 |
73 |
(97.0%) |
0 |
7 |
(96.0%) |
7.56 |
10.13 |
(25.4%) |
Others |
33 |
21 |
58.9% |
2 |
1 |
48.5% |
15.48 |
14.47 |
7.0% |
Processed Foods |
582 |
547 |
6.5% |
91 |
111 |
(17.8%) |
6.37 |
4.91 |
29.7% |
Total |
7,097 |
5,710 |
24.3% |
1,080 |
1,131 |
(4.5%) |
6.57 |
5.05 |
30.2% |
|
|
|
|
|
|
|
|
|
|
EBIT - R$ Million |
4Q15 |
4Q14 |
∆% |
2015 |
2014 |
∆% |
|
|
|
MEA |
413 |
182 |
126.3% |
1,214 |
315 |
285.9% |
|
|
|
EBIT Margin (%) |
21.0% |
11.7% |
9.3 p.p. |
17.1% |
5.5% |
11.6 p.p. |
|
|
|
The NOR in the MEA region came to R$1,965 million in 4Q15 (+25.9% y/y), driven by the improvement in the sales mix the expansion of 33.3% in average prices in Reais. The progress BRF made in its direct distribution in the Gulf region, along with the local production in the Gulf region, has been helping the Company to gain a bigger portion of the profitability in the chain and to reduce the volatility of prices in the region.
The total volume in the quarter shrank by 5.6% y/y, led by Africa (which is facing an adverse macroeconomic situation and shortage of dollars). Despite this, it is worth noting that the volumes of processed products in the Middle East rose sharply (+30.5% y/y), in line with the Company´s strategy.
The initiatives to enhance the profitability in the region, such as advances in the value chain, (acquiring distributors) and improving the mix of products, brought a hefty rise of 126.3% y/y in the EBIT in 4Q15 to R$413 million (with a margin of 21.0%).
Asia
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
Asia |
R$ Million |
Thousand Tons |
Average Price -R$ |
4Q15 |
4Q14 |
∆% |
4Q15 |
4Q14 |
∆% |
4Q15 |
4Q14 |
∆% |
In Natura |
855 |
799 |
7.0% |
115 |
124 |
(7.3%) |
7.43 |
6.44 |
15.4% |
Poultry |
719 |
708 |
1.5% |
101 |
113 |
(10.8%) |
7.15 |
6.28 |
13.8% |
Pork |
127 |
89 |
42.7% |
14 |
11 |
23.9% |
9.22 |
8.00 |
15.2% |
Beef |
9 |
2 |
474.1% |
1 |
0 |
450.2% |
14.48 |
13.88 |
4.3% |
Processed Foods |
27 |
20 |
33.0% |
3 |
3 |
12.4% |
8.82 |
7.45 |
18.3% |
Total |
882 |
819 |
7.7% |
118 |
127 |
(6.8%) |
7.47 |
6.46 |
15.6% |
|
|
|
|
|
|
|
|
|
|
Asia |
R$ Million |
Thousand Tons |
Average Price -R$ |
2015 |
2014 |
∆% |
2015 |
2014 |
∆% |
2015 |
2014 |
∆% |
In Natura |
3,208 |
3,002 |
6.9% |
454 |
496 |
(8.5%) |
7.07 |
6.06 |
16.8% |
Poultry |
2,834 |
2,613 |
8.5% |
411 |
444 |
(7.4%) |
6.90 |
5.89 |
17.1% |
Pork |
350 |
354 |
(1.2%) |
41 |
48 |
(15.3%) |
8.53 |
7.31 |
16.7% |
Beef |
24 |
34 |
(29.8%) |
2 |
4 |
(48.0%) |
12.63 |
9.36 |
35.0% |
Processed Foods |
82 |
71 |
14.4% |
10 |
10 |
(1.9%) |
8.31 |
7.13 |
16.6% |
Total |
3,290 |
3,073 |
7.1% |
464 |
506 |
(8.3%) |
7.10 |
6.08 |
16.8% |
|
|
|
|
|
|
|
|
|
|
EBIT - R$ Million |
4Q15 |
4Q14 |
∆% |
2015 |
2014 |
∆% |
|
|
|
Asia |
170 |
213 |
(20.0%) |
703 |
547 |
28.7% |
|
|
|
EBIT Margin (%) |
19.3% |
26.0% |
(6.7) p.p. |
21.4% |
17.8% |
3.6 p.p. |
|
|
|
The NOR in Asia came to R$882 million in 4Q15 (+7.7% y/y) and was impacted positively by the higher average prices in Reais which offset the fall of 6.8% in volumes. The impacts of the volumes came mainly from the higher inventories in Japan (main market in the region) and one-off issues linked to exports to the region. However, the higher average prices in Reais did not offset the rise in costs in the region which reduced the EBIT margin by 6.7p.p. y/y.
The Company continued to carry out investments in order to strengthen its presence in the region, by entering new countries and making advances in the value chain. The Company acquired GFS – the third largest exporter of cooked products in Thailand - in a bid to add value to the portfolio. GFS will strengthen BRF´s presence in important markets, such as Europe and Japan, and also serve as a base for a potential expansion in Southeast Asia. In line with this strategy, BRF managed to qualify four plants to export to Malaysia and three plants to export to China, which should boost volumes from 2016.
Europe/Eurasia
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
Europe/Eurasia |
R$ Million |
Thousand Tons |
Average Price -R$ |
4Q15 |
4Q14 |
∆% |
4Q15 |
4Q14 |
∆% |
4Q15 |
4Q14 |
∆% |
In Natura |
481 |
404 |
19.0% |
48 |
48 |
0.0% |
10.06 |
8.46 |
18.9% |
Poultry |
248 |
151 |
64.4% |
23 |
24 |
(5.5%) |
10.88 |
6.26 |
74.0% |
Pork |
193 |
222 |
(13.1%) |
24 |
23 |
5.2% |
8.09 |
9.80 |
(17.4%) |
Beef |
41 |
32 |
27.4% |
1 |
1 |
13.0% |
33.57 |
29.78 |
12.7% |
Processed Foods |
567 |
436 |
29.8% |
45 |
46 |
(3.7%) |
12.69 |
9.41 |
34.8% |
Total |
1,048 |
841 |
24.6% |
92 |
94 |
(1.8%) |
11.33 |
8.93 |
26.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europa/Eurasia |
R$ Million |
Thousand Tons |
Average Price -R$ |
2015 |
2014 |
∆% |
2015 |
2014 |
∆% |
2015 |
2014 |
∆% |
In Natura |
1,705 |
1,379 |
23.6% |
178 |
160 |
11.5% |
9.59 |
8.64 |
10.9% |
Poultry |
855 |
484 |
76.7% |
95 |
81 |
16.8% |
9.04 |
5.98 |
51.3% |
Pork |
703 |
729 |
(3.6%) |
78 |
72 |
9.1% |
8.99 |
10.16 |
(11.6%) |
Beef |
147 |
166 |
(11.5%) |
5 |
7 |
(26.2%) |
28.94 |
24.15 |
19.8% |
Processed Foods |
1,934 |
1,713 |
12.9% |
175 |
189 |
(7.2%) |
11.03 |
9.06 |
21.7% |
Total |
3,640 |
3,093 |
17.7% |
353 |
349 |
1.3% |
10.30 |
8.87 |
16.1% |
|
|
|
|
|
|
|
|
|
|
EBIT - R$ Million |
4Q15 |
4Q14 |
∆% |
2015 |
2014 |
∆% |
|
|
|
Europe |
203 |
182 |
11.0% |
572 |
553 |
3.5% |
|
|
|
EBIT Margin (%) |
19.3% |
21.7% |
(2.4) p.p. |
15.7% |
17.9% |
(2.1) p.p. |
|
|
|
The NOR in the region came to R$1,048 million (+24.6% y/y) in 4Q15. The main highlight in the period was the Europe sub-region, where the consolidation of Invicta (distributor of processed foods), plus a better mix of products/channels and the currency depreciation, led to an increase of 43.2% in average prices in Reais.
On the other hand, Russia (the main Eurasian market) limited the growth of the NOR due to: (i) the worsening in the country´s macroeconomic outlook; (ii) the excess volumes; and (iii) the strong comparison price base with 4Q14 (due to the embargo on American and European imports).
Despite the growth of 11.0% y/y in the region´s EBIT (R$203 million) in 4Q15, the EBIT margin of 19.3% was 2.4 p.p. lower y/y, due mainly to a greater pressure of costs and the lower prices in Russia as already mentioned.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
Latin America (LATAM)
LATAM |
R$ Million |
Thousand Tons |
Average Price -R$ |
4Q15 |
4Q14 |
∆% |
4Q15 |
4Q14 |
∆% |
4Q15 |
4Q14 |
∆% |
In Natura |
273 |
197 |
38.3% |
28 |
28 |
1.2% |
9.71 |
7.10 |
36.7% |
Poultry |
186 |
97 |
91.8% |
22 |
17 |
26.8% |
8.42 |
5.56 |
51.4% |
Pork |
12 |
9 |
33.0% |
1 |
2 |
(5.6%) |
7.90 |
5.61 |
40.8% |
Beef |
62 |
84 |
(25.4%) |
3 |
7 |
(57.9%) |
19.91 |
11.23 |
77.3% |
Others |
12 |
8 |
61.1% |
1 |
1 |
4.7% |
9.11 |
5.92 |
53.9% |
Processed Foods |
432 |
233 |
85.1% |
37 |
31 |
21.7% |
11.56 |
7.60 |
52.1% |
Other Sales |
13 |
15 |
(14.9%) |
0 |
0 |
- |
- |
- |
- |
Total |
717 |
445 |
61.1% |
65 |
58 |
11.9% |
10.96 |
7.61 |
43.9% |
|
|
|
|
|
|
|
|
|
|
LATAM |
R$ Million |
Thousand Tons |
Average Price -R$ |
2015 |
2014 |
∆% |
2015 |
2014 |
∆% |
2015 |
2014 |
∆% |
In Natura |
797 |
851 |
(6.3%) |
98 |
147 |
(33.3%) |
8.15 |
5.80 |
40.5% |
Poultry |
502 |
537 |
(6.6%) |
73 |
110 |
(33.1%) |
6.84 |
4.90 |
39.6% |
Pork |
36 |
32 |
12.1% |
5 |
6 |
(14.6%) |
7.07 |
5.39 |
31.2% |
Beef |
217 |
255 |
(14.8%) |
14 |
26 |
(46.2%) |
15.36 |
9.71 |
58.3% |
Others |
42 |
27 |
56.4% |
5 |
5 |
9.1% |
8.12 |
5.66 |
43.4% |
Processed Foods |
1,284 |
806 |
59.3% |
126 |
119 |
5.7% |
10.18 |
6.76 |
50.7% |
Other Sales |
51 |
50 |
2.4% |
0 |
0 |
- |
- |
- |
- |
Total |
2,132 |
1,707 |
24.9% |
224 |
266 |
(15.8%) |
9.52 |
6.42 |
48.3% |
|
|
|
|
|
|
|
|
|
|
EBIT - R$ Million |
4Q15 |
4Q14 |
∆% |
2015 |
2014 |
∆% |
|
|
|
LATAM |
73 |
21 |
247.7% |
116 |
63 |
86.2% |
|
|
|
EBIT Margin (%) |
10.2% |
4.7% |
5.5 p.p. |
5.5% |
3.7% |
1.8 p.p. |
|
|
|
The NOR in the LATAM region came to R$717 million (+61.1% y/y) in the 4Q15. This growth was due to: (i) higher average prices in Reais (+43.9% y/y), influenced by the better mix of products in Argentina (with higher processed products); and (ii) the increase in volumes (+11.9% y/y), due to the entry into new markets and growth in the existence markets, particularly in the Caribbean, which more than offset the exit from Venezuela. (If we exclude Venezuela in the 4Q14, the volume growth would have amounted to 17.5%.) For 2016, we will still have an increase in volume coming from the five plants that will be able to export to Mexico.
The Company´s strategy of focusing on the final consumer in the Southern Cone has been bringing positive results. The bigger investments in marketing (relaunching the Paty brand, for example), the launch of new products, optimizing the portfolio and improving the execution at the sales points, translated into a record EBIT of R$73 million (+247.7% y/y) and an expansion of 5.5p.p. in the margin in 4Q15.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
Debt
R$ Million |
12.31.2015 |
12.31.2014 |
∆ % |
Current |
Non-Current |
Total |
Total |
Debt |
|
|
|
|
|
Local Currency |
(1,462) |
(2,358) |
(3,820) |
(3,993) |
(4.3%) |
Foreign Currency |
(1,833) |
(10,194) |
(12,026) |
(7,854) |
53.1% |
Gross Debt |
(3,295) |
(12,551) |
(15,846) |
(11,847) |
33.8% |
Cash Investments |
|
|
|
|
|
Local Currency |
775 |
936 |
1,711 |
2,220 |
(23.0%) |
Foreign Currency |
6,799 |
0 |
6,799 |
4,594 |
48.0% |
Total Cash Investments |
7,573 |
936 |
8,509 |
6,815 |
24.9% |
Net Debt |
4,278 |
(11,615) |
(7,337) |
(5,032) |
45.8% |
Exchange Rate Exposure - US$ Million |
- |
- |
(117) |
567 |
(120.7%) |
The Total Gross Debt of R$15,846 million, as shown above, accounts the total financial debt, plus the other financial liabilities amounting to R$667 million, as stated in Explanatory Note 20 of the Financial Statements of 12.31.2015.
Development of Net Debt/EBITDA

The EBITDA of 3Q15 includes R$213 million referring to the operating gain from the sale of dairy division.
The Company´s net debt came to R$7.3 billion in 4Q15, 5.6% above 09.30.15, bringing a net debt/EBITDA ratio (last twelve months) of 1.28x, slightly above the 3Q15 figure, impacted by the share buyback.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
Investments (CAPEX)
Investments of R$714 million were made in the quarter, of which R$538 million was directed at growth, efficiency and support and R$175 million at biological assets. We would also highlight R$177 million for other investments (including the acquisition of the Molinos brands in Argentina for US$43.5 million) and business leasing.
Among the main projects in the quarter were:
· Footprint: besides optimizing our productive and distribution network to reduce our cost of serving customers, the Footprint project investments are taking on an increasingly more global aspect. Part of our Footprint investment in 4Q15 was related to the expansion and optimization of our chicken plant in Argentina, diversifying our risk matrix and access to markets.
· Automation: the focus on Automation continued in 4Q15 and was not just aimed at the financial return but also at reducing the turnover of the plants and dealing with possible ergonomics problems affecting employees.
Investments for the year (excluding acquisitions, business leasingand others) came to R$2,084 million (+42.2% y/y).
The Company will continue to focus on the Footprint and Automation projects in 2016. Furthermore, we will be directing more investments at innovation as well as maintenance and improving the quality of our products/processes.
Financial Cycle
Financial Cycle
(Accounts Receivable + Stocks – Accounts Payable)/NOR

The Company was seen in a new reduction in 4Q15 to 34.3 days against 36.9 in 4Q14. This is due mainly to the
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
continuous monitoring of our accounts payable cycle, the result of projects implemented in 2014 and 2015, which more than offset the increase in inventories in transit due to the acquisition of distributors in the Middle East.
Free Cash Flow

The EBITDA of 3Q15 includes R$213 million referring to the operating gain from the sale of dairy division.
The free cash flow came to R$3.4 billion in accumulated terms over the last 12 months, 17,5% lower than the previous period. The better operating performance registered in the period was offset by higher investments and a growth in the operation that required working capital.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
Diffuse Control

Base: 12.31.2015
Number of shares: 872,473,246 (common shares)
Capital Stock: R$12.5 billion
Slaughtering and Production
Production |
4Q15 |
4Q14 |
∆% |
2015 |
2014 |
∆% |
Poultry Slaughter (Million Heads) |
448 |
423 |
5.9% |
1,724 |
1,664 |
3.7% |
Hog Slaughter (Thousand Heads) |
2,407 |
2,364 |
1.8% |
9,367 |
9,293 |
0.8% |
Cattle Slaughter (Thousand Heads) |
31 |
39 |
(21.4%) |
144 |
328 |
(56.2%) |
Production (Thousand Tons) |
1,099 |
1,099 |
0.0% |
4,358 |
4,307 |
1.2% |
Meats |
967 |
978 |
(1.1%) |
3,864 |
3,825 |
1.0% |
Other Processed Products |
132 |
121 |
9.4% |
494 |
482 |
2.6% |
Feed and Premix (Thousand Tons) |
2,589 |
2,619 |
(1.1%) |
10,437 |
10,360 |
0.7% |
Social Balance and Appreciation of Human Capital
BRF is continuing to capture synergies and operating efficiencies. The Company operates with a strategic geographical positioning and has 35 plants in Brazil, 6 industrial units in Argentina, 2 in Europe (England and Holland) and 1 in the United Arab Emirates (Abu Dhabi), 20 distribution centers in Brazil and 20 abroad, 23 offices on the international market along with Transit Shift Points (TSPs), poultry farms and sales associates. The Company currently has a workforce of over 96,000 employees throughout the world who are focused on continuously improving the quality indicators, the level of service and carrying out their work.
The strengthening of the VIVA BRF culture remained a priority throughout the whole of 2015. A new engagement survey was held in 4Q15 which showed that employees were increasingly identifying themselves with the attributes of the BRF culture as well as an awareness by the managers of their importance in campaigning for these attributes. The results of the survey highlight how VIVA BRF is becoming more mature, a development we believe is intrinsically
linked to the employees´ performance and commitment to the Company.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
Health, Safety and Environmental Management
The Health, Safety and Environmental Management supervision (HSE) continues to focus on reducing accidents at work and has been consolidating its performance every year. In 4Q15, there was an accident with lost time frequency rate of 1.54, an improvement over the rate of 1.62 registered in 3Q15. This compared with1.69 in 2014 and we registered a reduction of 9% for 2015. Meanwhile, the severity rate of accidents with lost time showed a reduction of 41% in 2015 over 2014.
Stock Options Plan
The Company currently has 17.360.870 stock options granted to 180 executives, with a maximum exercise period of five years, as established in the Regulations of the Remuneration Plan based on shares approved on 03.31.10 and amended on 04.24.2012, 04.09.2013, 04.03.2014 and 04.08.2015 at the Annual Ordinary and Extraordinary Shareholders´ Meetings. These apply to the CEO, vice-presidents and other BRF executives.
Relationship with the independent auditors
The Company announces that, under the Brazilian Securities and Exchange Commission (CVM) Instruction Nº 381 of January 14, 2003, its policy of contracting services not related to the external audit is based on principles that preserve the independence of the auditor.
Within the terms of the CVM Instruction 381/03, we announce that during the period of twelve months ending on December 31, 2015, Ernst & Young Auditores Independentes S.S. was hired to undertake services not related to the external audit (net assets evaluation report and comfort letter for the issue of Senior Notes, assistance in the development of the supply and support area for validation of the Company’s information in administrative proceedings). This project represented approximately 53% of the value of the consolidated fees related to the external auditor for BRF and its subsidiaries. Ernst & Young Auditores Independentes S.S. informed us that the provision of these services did not affect its independence and objectivity, under the description and scope of the procedures executed.
The management declares, within the terms of the CVM Instruction 480/09, that it discussed, reviewed and agreed with the information expressed in the audit report of the independent auditors´ report on the financial statements related to 12.31.2015, at a meeting held on 02.25.2016.
Disclaimer
The statements in this report related to the Company's business perspective, projections and results, and its growth potential are mere forecasts and have been based on the management's expectations of the Company's future. These expectations are highly dependent on market changes and the overall economic performance of the country, the sector and international markets; they are, therefore, subject to changes.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
Financial Statement - R$ Million |
4Q15 |
4Q14 |
∆% |
2015 |
2014 |
∆% |
|
|
|
|
|
|
|
Net Operating Revenues |
8,955 |
8,047 |
11.3% |
32,197 |
29,007 |
11.0% |
|
|
|
|
|
|
|
Cost of Sales |
(6,155) |
(5,359) |
14.9% |
(22,108) |
(20,497) |
7.9% |
% of the NOR |
(68.7%) |
(66.6%) |
(2.1) p.p. |
(68.7%) |
(70.7%) |
2.0 p.p. |
|
|
|
|
|
|
|
Gross Profit |
2,799 |
2,687 |
4.2% |
10,089 |
8,509 |
18.6% |
% of the NOR |
31.3% |
33.4% |
(2.1) p.p. |
31.3% |
29.3% |
2.0 p.p. |
|
|
|
|
|
|
|
Operating Expenses |
(1,471) |
(1,274) |
15.4% |
(5,312) |
(4,619) |
15.0% |
% of the NOR |
(16.4%) |
(15.8%) |
(0.6) p.p. |
(16.5%) |
(15.9%) |
(0.6) p.p. |
Selling Expenses |
(1,331) |
(1,164) |
14.3% |
(4,806) |
(4,217) |
14.0% |
% of the NOR |
(14.9%) |
(14.5%) |
(0.4) p.p. |
(14.9%) |
(14.5%) |
(0.4) p.p. |
Fixed |
(852) |
(699) |
21.9% |
(3,111) |
(2,564) |
21.3% |
Variable |
(478) |
(465) |
2.8% |
(1,695) |
(1,652) |
2.6% |
General and Administrative Expenses |
(140) |
(110) |
27.3% |
(506) |
(402) |
25.9% |
% of the NOR |
(1.6%) |
(1.4%) |
(0.2) p.p. |
(1.6%) |
(1.4%) |
(0.2) p.p. |
Honorary of our Administrators |
(7) |
(7) |
1.3% |
(26) |
(26) |
0.2% |
% of the NOR |
(0.1%) |
(0.1%) |
0.0 p.p. |
(0.1%) |
(0.1%) |
0.0 p.p. |
General and Administrative |
(133) |
(103) |
29.0% |
(480) |
(376) |
27.7% |
% of the NOR |
(1.5%) |
(1.3%) |
(0.2) p.p. |
(1.5%) |
(1.3%) |
(0.2) p.p. |
|
|
|
|
|
|
|
Operating Income |
1,329 |
1,413 |
(6.0%) |
4,777 |
3,891 |
22.8% |
% of the NOR |
14.8% |
17.6% |
(2.7) p.p. |
14.8% |
13.4% |
1.4 p.p. |
|
|
|
|
|
|
|
Other Operating Results |
226 |
0 |
- |
(445) |
(438) |
1.5% |
|
|
|
|
|
|
|
Equity Income |
6 |
(7) |
- |
(104) |
26 |
- |
|
|
|
|
|
|
|
EBIT |
1,560 |
1,406 |
10.9% |
4,228 |
3,478 |
21.6% |
% of the NOR |
17.4% |
17.5% |
(0.1) p.p. |
13.1% |
12.0% |
1.1 p.p. |
|
|
|
|
|
|
|
Net Financial Income |
(381) |
(201) |
90.0% |
(1,670) |
(991) |
68.6% |
|
|
|
|
|
|
|
Income before Taxes |
1,179 |
1,206 |
(2.2%) |
2,558 |
2,488 |
2.8% |
% of the NOR |
13.2% |
15.0% |
(1.8) p.p. |
7.9% |
8.6% |
(0.6) p.p. |
Income Tax and Social Contribution |
255 |
(214) |
(219.0%) |
390 |
(353) |
- |
% of Income before Taxes |
21.6% |
(17.8%) |
39.4 p.p. |
15.2% |
(14.2%) |
29.4 p.p. |
|
|
|
|
|
|
|
Net Income |
1,415 |
991 |
42.8% |
3,118 |
2,135 |
46.0% |
% of the NOR |
15.8% |
12.3% |
3.5 p.p. |
9.7% |
7.4% |
2.3 p.p. |
|
|
|
|
|
|
|
EBITDA |
1,885 |
1,762 |
7.0% |
5,738 |
4,709 |
21.9% |
% of the NOR |
21.0% |
21.9% |
(0.9) p.p. |
17.8% |
16.2% |
1.6 p.p. |
Considers R$213 million in the EBITDA and R$190 million in the Net Income in 2015, referring to the operating gain from the sale of the dairy operations.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
Cash Flow - R$ Million |
4Q15 |
4Q14 |
∆% |
2015 |
2014 |
∆% |
Operating Activities |
|
|
|
|
|
|
Result for the Fiscal Year |
1,415 |
991 |
42.8% |
2,928 |
2,135 |
37.1% |
Adjustments to the Result |
(10) |
792 |
(101.3%) |
3,424 |
2,314 |
48.0% |
|
|
|
|
|
|
|
Changes in Assets and Liabilities |
|
|
|
|
|
|
Accounts Receivable from Clients |
(490) |
(155) |
216.3% |
(1,112) |
459 |
(342.3%) |
Inventory |
129 |
577 |
(77.7%) |
(1,066) |
369 |
(388.8%) |
Biological Assets |
(59) |
(9) |
525.3% |
(199) |
75 |
(364.8%) |
Interest on Shareholders' Equity Received |
1 |
9 |
(88.5%) |
16 |
55 |
(70.9%) |
Suppliers |
(157) |
(140) |
12.1% |
882 |
203 |
334.7% |
Suppliers Chain Risk |
303 |
- |
- |
719 |
- |
- |
Payment of Contingencies |
(53) |
(36) |
46.3% |
(194) |
(259) |
(25.1%) |
Interest Payments |
(249) |
(217) |
14.8% |
(694) |
(619) |
12.1% |
Payment of Income Tax and Social Contribution |
(1) |
(1) |
(34.3%) |
(7) |
(6) |
24.7% |
Salaries, Social Obligations and Others |
(485) |
(212) |
128.7% |
(563) |
115 |
(589.5%) |
Net Cash provided by the Continued Operating Activities |
345 |
1,599 |
(78.4%) |
4,134 |
4,842 |
(14.6%) |
Cash and Cash Equivalents by Discontinued Operating Activities |
- |
48 |
- |
2 |
160 |
(98.5%) |
Net Cash provided by Operating Activities |
345 |
1,647 |
(79.0%) |
4,137 |
5,002 |
(17.3%) |
|
|
|
|
|
|
|
Investment Activities |
|
|
|
|
|
|
Financial Investments |
- |
(23) |
(100.0%) |
71 |
(0) |
- |
Investment in Restricted Cash |
(1,367) |
(5) |
282 |
(1,711) |
(16) |
- |
Goodwill on Acquisition of Non-Controlling Shareholders |
- |
- |
- |
- |
(1) |
- |
Acquisition of Companies |
(17) |
(314) |
(94.7%) |
(91) |
(373) |
(75.6%) |
Acquisition of Interests in Joint Venture |
(0) |
(45) |
(99.0%) |
(62) |
(54) |
15.1% |
Acquisition of Fixed Assets/Investments |
(234) |
(224) |
4.4% |
(1,297) |
(1,021) |
27.0% |
Acquisition of Biological Assets |
(165) |
(136) |
21.8% |
(589) |
(517) |
13.9% |
Revenue from the Sale of Fixed Assets |
44 |
39 |
12.3% |
252 |
171 |
47.9% |
Intangible Investments |
(180) |
(7) |
- |
(205) |
(50) |
307.5% |
Receivables in the sale of the discontinued op., net of the cash |
- |
- |
- |
1,957 |
- |
- |
Net Cash provided by the Continued Investment Activities |
(1,919) |
(714) |
168.9% |
(1,674) |
(1,862) |
(10.1%) |
Net Cash provided by the discontinued Investment Activities |
- |
(15) |
- |
(12) |
(51) |
(75.9%) |
Net Cash provided by Investment Activities |
(1,919) |
(729) |
163.2% |
(1,686) |
(1,914) |
(11.9%) |
|
|
|
|
|
|
|
Financing Activities |
|
|
|
|
|
|
Loans and Financing |
592 |
297 |
98.9% |
259 |
409 |
(36.8%) |
Interest on Shareholders' Equity |
- |
- |
- |
(889) |
(726) |
22.5% |
Sale of Treasury Shares |
(1,274) |
(234) |
445.4% |
(3,766) |
(351) |
973.0% |
Disposal of Treasury Shares |
(8) |
16 |
(146.8%) |
82.44 |
100 |
(17.4%) |
Net Cash provided by Financing Activities |
(690) |
80 |
(960.1%) |
(4,314) |
(568) |
659.3% |
Cash generated (applied) in the financing of Discontinued Activities |
- |
- |
- |
20 |
- |
- |
Cash generated (applied) in the financing activities |
(690) |
80 |
- |
(4,294) |
(568) |
655.8% |
Effect of Exchange Rate Variation on Cash and Cash Equivalents |
(97) |
215 |
(144.9%) |
1,199 |
359 |
234.0% |
Net Increase (Decrease) in Cash Held |
(2,361) |
1,214 |
(294.5%) |
(644) |
2,879 |
(122.4%) |
Cash and Cash Equivalents at the Beginning of the Period |
7,724 |
4,793 |
61.1% |
6,007 |
3,128 |
92.1% |
Cash and Cash Equivalents at the End of the Period |
5,363 |
6,007 |
(10.7%) |
5,363 |
6,007 |
(10.7%) |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
MANAGEMENT REPORT / COMMENTS ON THE PERFORMANCE
|
|
BRF S.A. Consolidado |
|
|
|
|
Balance Sheet - R$ Million |
12.31.15 |
09.30.15 |
12.31.14 |
Ativo |
|
|
|
Circulante |
|
|
|
Cash and Cash Equivalents |
5,363 |
7,724 |
6,007 |
Financial Investments |
735 |
703 |
587 |
Accounts Receivable |
3,876 |
3,391 |
3,047 |
Recoverable Taxes |
1,232 |
1,113 |
1,009 |
Dividends/Interest on shareholders' equity receivable |
22 |
0 |
10 |
Securities Receivable |
304 |
299 |
215 |
Inventories |
4,033 |
4,201 |
2,941 |
Biological Assets |
1,330 |
1,271 |
1,131 |
Other Financial Assets |
129 |
71 |
43 |
Other Receivables |
369 |
327 |
268 |
Anticipated expenses |
409 |
235 |
271 |
Restricted Cash |
1,346 |
- |
- |
Non-Current Assets held to sale and discontinued operation |
32 |
108 |
1,958 |
Total Current Assets |
19,180 |
19,444 |
17,488 |
|
|
|
|
Non-Current Assets |
|
|
|
Long-term assets |
5,095 |
4,352 |
3,789 |
Cash Investments |
456 |
68 |
62 |
Accounts Receivable |
4 |
5 |
8 |
Judicial Deposits |
732 |
699 |
616 |
Biological Assets |
761 |
720 |
683 |
Securities Receivable |
231 |
203 |
362 |
Recoverable Taxes |
969 |
848 |
912 |
Deferred Taxes |
1,256 |
1,129 |
714 |
Restricted Cash |
480 |
459 |
115 |
Other Receivables |
207 |
222 |
317 |
|
|
|
|
Permanent Assets |
16,113 |
16,193 |
14,826 |
Investments |
186 |
457 |
438 |
Property, Plant and Equipment |
10,916 |
10,702 |
10,059 |
Intangible |
5,011 |
5,035 |
4,329 |
Total Non-Current Assets |
21,208 |
20,545 |
18,615 |
|
|
|
|
Total Assets |
40,388 |
39,990 |
36,104 |
|
|
|
|
Liabilities and Equity |
|
|
|
Current Liabilities |
|
|
|
Loans and Financing |
2,628 |
2,154 |
2,739 |
Suppliers |
4,745 |
5,069 |
3,522 |
Supply Chain Risk |
1,175 |
417 |
455 |
Payroll and Mandatory Social Charges |
478 |
614 |
427 |
Taxes Payable |
353 |
297 |
300 |
Dividends/Interest on Shareholders’ Equity |
518 |
2 |
431 |
Management and Staff Profit Sharing |
296 |
239 |
396 |
Other Financial Liabilities |
667 |
1,052 |
257 |
Provisions |
231 |
253 |
243 |
Employee Pension Plan |
67 |
56 |
56 |
Other Liabilities |
462 |
479 |
234 |
Liabilities related to non-current assets held for sale and discontinued operations |
- |
- |
508 |
Total Current Liabilities |
11,621 |
10,633 |
9,569 |
|
|
|
|
Non-Current Liabilities |
|
|
|
Loans and Financing |
12,551 |
12,769 |
8,850 |
Suppliers |
155 |
146 |
161 |
Taxes and Social Charges Payable |
26 |
39 |
26 |
Provision for Tax, Civil and Labor Contingencies |
974 |
930 |
943 |
Deferred Taxes |
188 |
143 |
90 |
Employee Pension Plan |
232 |
246 |
258 |
Other Liabilities |
804 |
850 |
516 |
Total Non-Current Liabilities |
14,931 |
15,124 |
10,845 |
|
|
|
|
Total Liabilities |
26,552 |
25,757 |
20,414 |
|
|
|
|
Shareholders' Equity |
|
|
|
Capital Stock |
12,460 |
12,460 |
12,460 |
Capital Reserves |
7 |
(79) |
109 |
Profit Reserves |
6,077 |
4,044 |
3,946 |
Other Related Results |
(1,080) |
(1,017) |
(620) |
Retained Profits |
- |
1,696 |
- |
Interest on Shareholders’ Equity |
- |
(426) |
- |
Transfer Reserves and Tax Incentives |
- |
(98) |
- |
Treasury Shares |
(3,948) |
(2,675) |
(305) |
Non-Controling Shareholders |
319 |
327 |
99 |
Total Shareholders' Equity |
13,836 |
14,233 |
15,690 |
|
|
|
|
Total Liabilities and Shareholders' Equity |
40,388 |
39,990 |
36,104 |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
1. COMPANY’S OPERATIONS
BRF S.A. (“BRF”) and its subsidiaries (collectively the “Company”) is one of Brazil’s largest companies in the food industry. BRF is a public company, listed on the New Market of Brazilian Securities, Commodities & Futures Exchange (“BM&FBOVESPA”), under the ticker BRFS3, and listed on the New York Stock Exchange (“NYSE”), under the ticker BRFS. It´s headquarter is located at 475, Rua Jorge Tzachel in the City of Itajaí, State of Santa Catarina. With a focus on raising, producing and slaughtering of poultry, pork for processing, production and sale of fresh meat, processed products, pasta, sauce, mayonnaise, frozen vegetables and soybean by-products, among which the following are highlighted:
· Whole chickens and frozen cuts of chicken, turkey and pork;
· Ham products, bologna, sausages, frankfurters and other smoked products;
· Hamburgers, breaded meat products and meatballs;
· Lasagnas, pizzas, cheese breads, pies and frozen vegetables;
· Margarine, sauces and mayonnaise; and
· Soy meal and refined soy flour, as well as animal feed.
As disclosed in the consolidated financial statement for the year ended December 31, 2014, the Company's Management decided to discontinue the sale of dairy products after analyzing an offer for acquisition made by a subsidiary of Groupe Lactalis, details of which are presented in note 13.
The Company's Management has also changed its management structure and thus, as of 2015, the Company’s activities become organized in 5 operating segments, being Brazil, Latin America (“LATAM”), Europe, Middle East and Africa (“MEA”) and Asia, as disclosed in note 5.
In Brazil, the Company operates 35 meat processing plants, 3 margarine processing plants, 3 pasta processing plants, 1 dessert processing plant and 3 soybean crushing plant, located close to the Company’s raw material suppliers or the main consumer centers.
The Company has 20 distribution centers to deliver its products to supermarkets, retail stores, wholesalers, restaurants and other institutional customers in Brazil and International markets.
In the foreign market, the Company operates 6 meat processing plants, 1 margarine and oil processing plant, 1 sauces and mayonnaise processing plant, 1 frozen vegetables processing plant, and 20 distribution centers, besides subsidiaries or sales offices in Argentina, Austria, Cayman Island, Chile, China, France, Germany, Hungary, Italy, Japan, Kuwait, Nigeria, Oman, Portugal, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Spain, The Netherlands, United Arab Emirates, United Kingdom,
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
Uruguay and Venezuela. The Company exports to more than 120 countries.
The table below summarizes the direct and indirect equity interests of the Company, as well as the activities of each entity:
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
1.1. Equity interest
|
|
|
|
|
|
|
|
|
% equity interest |
Entity |
|
|
Main activity |
|
Country |
|
Participation |
|
12.31.15 |
|
12.31.14 |
|
|
|
|
|
|
|
|
|
|
|
|
Avipal Centro-Oeste S.A. |
(a) |
|
Industrialization and commercialization of milk |
|
Brazil |
|
Direct |
|
100.00% |
|
100.00% |
BRF GmbH |
|
|
Holding |
|
Austria |
|
Direct |
|
100.00% |
|
100.00% |
Al Khan Foodstuff LLC |
|
|
Import, commercialization and distribution of products |
|
Oman |
|
Joint venture |
|
40.00% |
|
40.00% |
Al-Wafi Food Products Factory LLC |
|
|
Industrialization and commercialization of products |
|
United Arab Emirates |
|
Indirect |
|
49.00% |
|
49.00% |
Badi Ltd. |
|
|
Holding |
|
United Arab Emirates |
|
Indirect |
|
100.00% |
|
100.00% |
Al-Wafi Al-Takamol Imp. |
|
|
Import and commercialization of products |
|
Saudi Arabia |
|
Indirect |
|
75.00% |
|
75.00% |
BRF Al Yasra Food K.S.C.C. |
|
|
Import and commercialization and distribution of products |
|
Kuwait |
|
Indirect |
|
75.00% |
|
75.00% |
BRF Foods GmbH |
|
|
Industralization, import and commercialization of products |
|
Austria |
|
Indirect |
|
100.00% |
|
100.00% |
BRF Foods LLC |
|
|
Import and commercialization of products |
|
Russia |
|
Indirect |
|
90.00% |
|
90.00% |
BRF France SARL |
(k) |
|
Marketing and logistics services |
|
France |
|
Indirect |
|
100.00% |
|
100.00% |
BRF Global Company Nigeria Ltd. |
|
|
Marketing and logistics services |
|
Nigeria |
|
Indirect |
|
99.00% |
|
99.00% |
BRF Global Company South Africa Proprietary Ltd. |
|
|
Import and commercialization of products |
|
South Africa |
|
Indirect |
|
100.00% |
|
100.00% |
BRF Global Company Nigeria Ltd. |
|
|
Marketing and logistics services |
|
Nigeria |
|
Indirect |
|
1.00% |
|
1.00% |
BRF Global GmbH |
(b) |
|
Holding and trading |
|
Austria |
|
Indirect |
|
100.00% |
|
100.00% |
Qualy 5201 B.V. |
(b) |
|
Import, commercialization of products and holding |
|
The Netherlands |
|
Indirect |
|
100.00% |
|
100.00% |
Xamol Consultores Serviços Ltda. |
|
|
Import and commercialization of products |
|
Portugal |
|
Indirect |
|
100.00% |
|
100.00% |
BRF Japan KK |
|
|
Marketing and logistics services |
|
Japan |
|
Indirect |
|
100.00% |
|
100.00% |
BRF Korea LLC |
|
|
Marketing and logistics services |
|
Korea |
|
Indirect |
|
100.00% |
|
100.00% |
BRF Shanghai Management Consulting Co. Ltd. |
(v) |
|
Advisory and related services |
|
China |
|
Indirect |
|
100.00% |
|
0.00% |
BRF Singapore PTE Ltd. |
|
|
Marketing and logistics services |
|
Singapore |
|
Indirect |
|
100.00% |
|
100.00% |
BRF Germany GmbH |
(j) |
|
Import and commercialization of products |
|
Germany |
|
Indirect |
|
100.00% |
|
100.00% |
BRF Holland B.V. |
(g) |
|
Import and commercialization of products |
|
The Netherlands |
|
Indirect |
|
100.00% |
|
100.00% |
BRF B.V. |
(f) |
|
Industrialization, import and commercializations of products |
|
The Netherlands |
|
Indirect |
|
100.00% |
|
100.00% |
BRF Hungary LLC |
(c) |
|
Import and commercialization of products |
|
Hungary |
|
Indirect |
|
100.00% |
|
100.00% |
BRF Iberia Alimentos SL |
(l) |
|
Import and commercialization of products |
|
Spain |
|
Indirect |
|
100.00% |
|
100.00% |
BRF Invicta Ltd. |
(o) |
|
Import and commercialization and distribution of products |
|
England |
|
Indirect |
|
62.00% |
|
- |
Invicta Food Products Ltd. |
(d) |
|
Import and commercialization of products |
|
England |
|
Indirect |
|
100.00% |
|
100.00% |
BRF Wrexham Ltd. |
(e) |
|
Industrialization, import and commercializations of products |
|
England |
|
Indirect |
|
100.00% |
|
100.00% |
Invicta Food Group Ltd. |
(b) (p) |
|
Import and commercialization and distribution of products |
|
England |
|
Indirect |
|
100.00% |
|
- |
Invicta Foods Ltd. |
|
|
Import and commercialization and distribution of products |
|
England |
|
Indirect |
|
100.00% |
|
- |
Invicta Foodservice Ltd. |
|
|
Import and commercialization and distribution of products |
|
England |
|
Indirect |
|
100.00% |
|
- |
BRF Italia SPA |
(h) |
|
Import and commercialization of products |
|
Italy |
|
Indirect |
|
67.00% |
|
67.00% |
Federal Foods LLC |
(w) |
|
Import and commercialization and distribution of products |
|
United Arab Emirates |
|
Indirect |
|
49.00% |
|
49.00% |
Federal Foods Qatar |
|
|
Import and commercialization and distribution of products |
|
Qatar |
|
Indirect |
|
49.00% |
|
49.00% |
Perdigão Europe Lda. |
|
|
Import and commercialization of products |
|
Portugal |
|
Indirect |
|
100.00% |
|
100.00% |
Perdigão International Ltd. |
|
|
Import and commercialization of products |
|
Cayman Island |
|
Indirect |
|
100.00% |
|
100.00% |
BFF International Ltd. |
|
|
Financial fundraising |
|
Cayman Island |
|
Indirect |
|
100.00% |
|
100.00% |
Highline International |
(a) |
|
Financial fundraising |
|
Cayman Island |
|
Indirect |
|
100.00% |
|
100.00% |
Sadia Chile S.A. |
|
|
Import and commercialization of products |
|
Chile |
|
Indirect |
|
40.00% |
|
40.00% |
Sadia Foods GmbH |
(a) |
|
Import and commercialization of products |
|
Germany |
|
Indirect |
|
100.00% |
|
100.00% |
BRF Foods LLC |
|
|
Import and commercialization of products |
|
Russia |
|
Indirect |
|
10.00% |
|
10.00% |
SATS BRF Food PTE Ltd. |
(s) |
|
Import, industrialization, commercialization and distribution of products |
|
Singapore |
|
Joint venture |
|
49.00% |
|
- |
Wellax Food Logistics C.P.A.S.U. Lda. |
|
|
Import and commercialization of products |
|
Portugal |
|
Indirect |
|
100.00% |
|
100.00% |
Elebat Alimentos S.A. |
(i) (u) |
|
Industrialization and commercialization of products |
|
Brazil |
|
Direct |
|
- |
|
99.00% |
Establecimiento Levino Zaccardi y Cia. S.A. |
|
|
Industrialization and commercializations of dairy products |
|
Argentina |
|
Direct |
|
98.26% |
|
98.26% |
K&S Alimentos S.A. |
|
|
Industrialization and commercialization of products |
|
Brazil |
|
Affiliate |
|
49.00% |
|
49.00% |
Minerva S.A. |
(t) |
|
Industrialization and commercialization of products |
|
Brazil |
|
Affiliate |
|
- |
|
16.29% |
Nutrifont Alimentos S.A. |
(u) |
|
Industrialization and commercialization of products |
|
Brazil |
|
Affiliate |
|
- |
|
50.00% |
PP-BIO Administração de bem próprio S.A. |
|
|
Management of assets |
|
Brazil |
|
Affiliate |
|
33.33% |
|
33.33% |
PSA Laboratório Veterinário Ltda. |
|
|
Veterinary activities |
|
Brazil |
|
Direct |
|
99.99% |
|
99.99% |
Elebat Alimentos S.A. |
(i) (u) |
|
Industrialization and commercialization of products |
|
Brazil |
|
Indirect |
|
- |
|
1.00% |
Sino dos Alpes Alimentos Ltda. |
(a) |
|
Industrialization and commercialization of products |
|
Brazil |
|
Indirect |
|
99.99% |
|
99.99% |
PR-SAD Administração de bem próprio S.A. |
|
|
Management of assets |
|
Brazil |
|
Affiliate |
|
33.33% |
|
33.33% |
Quickfood S.A. |
|
|
Industrialization and commercialization of products |
|
Argentina |
|
Direct |
|
90.05% |
|
90.05% |
Sadia Alimentos S.A. |
(n) |
|
Holding |
|
Argentina |
|
Direct |
|
43.10% |
|
99.98% |
Avex S.A. |
(q) |
|
Industrialization and commercialization of products |
|
Argentina |
|
Indirect |
|
94.60% |
|
95.00% |
Flora Dánica S.A. |
(r) |
|
Industrialization and commercialization of products |
|
Argentina |
|
Indirect |
|
- |
|
95.00% |
GB Dan S.A. |
(r) |
|
Industrialization and commercialization of products |
|
Argentina |
|
Indirect |
|
- |
|
5.00% |
Flora San Luis S.A. |
(r) |
|
Industrialization and commercialization of products |
|
Argentina |
|
Indirect |
|
- |
|
95.00% |
Flora Dánica S.A. |
(r) |
|
Industrialization and commercialization of products |
|
Argentina |
|
Indirect |
|
- |
|
5.00% |
GB Dan S.A. |
(r) |
|
Industrialization and commercialization of products |
|
Argentina |
|
Indirect |
|
- |
|
95.00% |
Flora San Luis S.A. |
(r) |
|
Industrialization and commercialization of products |
|
Argentina |
|
Indirect |
|
- |
|
5.00% |
Sadia International Ltd. |
|
|
Import and commercialization of products |
|
Cayman Island |
|
Direct |
|
100.00% |
|
100.00% |
Sadia Chile S.A. |
|
|
Import and commercialization of products |
|
Chile |
|
Indirect |
|
60.00% |
|
60.00% |
Sadia Uruguay S.A. |
(m) |
|
Import and commercialization of products |
|
Uruguay |
|
Indirect |
|
5.10% |
|
100.00% |
Avex S.A. |
(q) |
|
Industrialization and commercialization of products |
|
Argentina |
|
Indirect |
|
5.40% |
|
5.00% |
Sadia Alimentos S.A. |
(n) |
|
Holding |
|
Argentina |
|
Indirect |
|
56.90% |
|
0.02% |
Sadia Overseas Ltd. |
|
|
Financial fundraising |
|
Cayman Island |
|
Direct |
|
100.00% |
|
100.00% |
Sadia Uruguay S.A. |
(m) |
|
Import and commercialization of products |
|
Uruguay |
|
Direct |
|
94.90% |
|
- |
UP Alimentos Ltda. |
|
|
Industrialization and commercialization of products |
|
Brazil |
|
Affiliate |
|
50.00% |
|
50.00% |
Vip S.A. Emp. Part. Imobiliárias |
|
|
Commercialization of owned real state |
|
Brazil |
|
Direct |
|
100.00% |
|
100.00% |
Establecimiento Levino Zaccardi y Cia. S.A. |
|
|
Industrialization and commercialization of dairy products |
|
Argentina |
|
Indirect |
|
1.74% |
|
1.74% |
Sino dos Alpes Alimentos Ltda. |
(a) |
|
Industrialization and commercialization of products |
|
Brazil |
|
Indirect |
|
0.01% |
|
0.01% |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
(a) Dormant subsidiaries.
(b) The wholly-owned subsidiary BRF Global GmbH, started to operate as a trading in the European market as from May 1, 2013. In addition, it owns 101 direct subsidiaries in Madeira Island, Portugal, with an investment as of December 31, 2015 of R$4,046 (R$2,964 as of December 31, 2014) and a direct subsidiary in Den Bosch, The Netherlands, denominated Qualy 20 with an investment as of December 31, 2015 of R$8,162 (R$4,372 as of December 31, 2014). The wholly-owned subsidiary Qualy 5201 B.V. owns 213 subsidiaries in The Netherlands being the amount of this investment as of December 31, 2015 of R$22,258 (R$14,553 as of December 31, 2014).The indirect subsidiary Invicta Food Group Ltd. owns 118 direct subsidiaries in Ashford, England, with an investment of R$161,197 as of December 31, 2015. The purpose of these three subsidiaries is to operate in the European market to increase the Company’s market share, which is regulated by a system of poultry and turkey meat import quotas.
(c) On January 20, 2015, change the corporate name from Plusfood Hungary Trade and Service LLC to BRF Hungary LLC.
(d) On February 06, 2015, change the corporate name from Plusfood UK Ltd. to BRF UK Ltd.. On July 30, 2015, change the corporate name from BRF UK Ltd. to Invicta Food Products Ltd..
(e) On February 06, 2015, change the corporate name from Plusfood Wrexham to BRF Wrexham Ltd.
(f) On February 20, 2015, change the corporate name from Plusfood B.V. to BRF B.V.
(g) On February 20, 2015, change the corporate name from Plusfood Holland B.V. to BRF Holland B.V.
(h) On February 23, 2015, change the corporate name from Plusfood Italy SRL to BRF Italia SPA.
(i) On February 27, 2015, change in equity interest through capital increase.
(j) On March 16, 2015, change the corporate name from Plusfood Germany GmbH to BRF Germany GmbH.
(k) On March 18, 2015, change the corporate name from Perdigão France SARL to BRF France SARL.
(l) On March 23, 2015, change the corporate name from Plusfood Iberia SL to BRF Iberia Alimentos SL.
(m) On April 08, 2015, acquisition of equity interest, through capital increase and disposal of equity interest by the wholly-owned subsidiary Sadia International Ltd.
(n) On April 17, 2015, disposal of equity interest and acquisition of equity interest through a capital increase by the wholly-owned subsidiary Sadia Uruguay S.A..
(o) On April 22, 2015, acquisition of 62% equity interest of BRF Invicta Ltd.
(p) On April 22, 2015, Invicta Food Group Ltd., contributed with its current operation in BRF Invicta Ltd.
(q) On April 30, 2015, change in equity interest through capital increase.
(r) On June 01, 2015, merged into Avex S.A.
(s) On June 03, 2015, acquisition of 49% of equity interest of SATS BRF Food PTE Ltd.
(t) On May 25, 2015, June 15, 2015 and June 18, 2015, equity interest decreased due to a third party capital increase in Minerva S.A. without a corresponding increase from BRF S.A. On November 30, 2015 the investment in Minerva was transferred to marketable securities, being no longer considered as an equity interest (note 17.3).
(u) On July 01, 2015, disposal of equity interest.
(v) On December 11, 2014, establishment of BRF Shanghai Management Consult Co. Ltd..
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
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(w) The Company owns 49% of the equity interest with rights for 60% of the dividends, permitted by the Federal Law 8/1984, which is effective in the United Arab Emirates and according to the shareholder’s agreement, as well as 100% of the economic rights resulting in the consolidation of this wholly owned subsidiary.
1.2. Business combination – Invicta Food Group Limited (“IFGL”)
On April 22, 2015, The Company concluded the transaction with IFGL to constitute a new company, which main objective is the distribution of processed food in the United Kingdom, Ireland and Scandinavia, on which BRF will hold 62% of share capital (note 6.1.1).
1.3. Acquisition of share equity of SATS BRF Food Pte Ltd (“SATS BRF”)
On April 16, 2015, BRF signed with Singapore Food Industries Pte. Ltd. (“SFI”) the documents for the formation of a joint venture in Singapore (namely SATS BRF Food Pte. Ltd.), of which BRF would acquire 49% of the share capital (“transaction”). On June 02, 2015 BRF concluded the transaction (note 6.2.1).
1.4. Conclusion of the sales contract of the dairy segment to Groupe Lactalis ("Parmalat")
On July 01, 2015, the Company concluded the sale of its dairy segment to Lactalis (“transaction”), through the disposal of 100% of the shares of Elebat Alimentos S.A., a BRF wholly-owned subsidiary, for which all were transferred the rights and obligations relative to the dairy segment were recorded (note 13).
1.5. Trademarks acquisition in Argentina
On October 16, 2015, BRF, through its subsidiaries Avex S.A. and Quickfood S.A., concluded with Molinos Río de la Plata S.A. and one of its subsidiaries, the acquisition of certain sausage, hamburger and margarine trademarks (Vieníssima, GoodMark, Manty, Delícia, Hamond, Tres Cruces e Wilson), in the amount of US$43,500 (equivalent to R$167,136).
1.6. Execution of a binding offer with Pampa Agribusiness Fund L.P. and Pampa Agrobusiness Follow-on Fund L.P. (collectively “Pampa”).
On December 01, 2015, BRF announced to the market that it has signed a binding offer with Pampa for the acquisition of the total shares issued by Eclipse Holding Cooperatief UA (“Business”), a Dutch entity that controls Campo Austral.
Subject to the satisfaction of the conditions precedent set forth in the offer, the parties will execute the documents providing for the acquisition of the Business, based on a total value of US$85,000.
1.7. Seasonality
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
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The Company does not operate with any significant seasonality throughout the year. In general, during the fourth quarter of each year the demand in Brazil is slightly stronger than in the other quarters, mainly due to the year-end holiday season such as Christmas and New Years Eve. Our bestselling products are: turkey, Chester®, tender and pork cuts (ham/loin).
2. MANAGEMENT’S STATEMENT AND BASIS OF PREPARATION AND PRESENTATION OF FINANCIAL STATEMENTS
The Company’s individual and consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”), introduced in Brazil through Brazilian Accounting Pronouncements Committee (“CPC”) and its technical interpretations (“ICPC”) and guidelines (“OCPC”), approved by the Brazilian Securities Exchange Commission (“CVM”).
The Company’s individual and consolidated financial statements are expressed in thousands of Brazilian Reais (“R$”), as well as the amounts of other currencies disclosed in the financial statements, when applicable, were also expressed in thousands. Amounts disclosed in Brazilian Reais are informed when applicable.
The preparation of the Company’s financial statements requires Management to make judgments, use estimates and adopt assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, as well as the disclosures of contingent liabilities, as of the reporting date of these financial statements. However, the uncertainty inherent to these judgments, assumptions and estimates could lead to results requiring a material adjustments to the carrying amount of the affected asset or liability in future periods.
The Company reviews its judgments, estimates and assumptions quarterly.
The individual and consolidated financial statements were prepared on the historical cost basis except for the following items which are measured at fair value:
· derivative and non-derivative financial instruments measured at fair value;
· available for sale financial assets at fair value;
· marketable securities classified as cash and cash equivalents measured at fair value;
· share-based payments and employee benefits at fair value, and
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
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· biological assets at fair value.
As a result of the Company’s decision to discontinue the operating segment of dairy products the consolidated statements of income and cash flows for the year ended December 31, 2015 and 2014 are disclosed in accordance with the requirements of CVM Deliberation Nº 598/09 – Non-current Assets Held for Sale and Discontinued Operations.
The Company reclassified the supply chain finance transaction as of December 31, 2014, in the amount of R$455,120 (parent company and consolidated) in the presentation of the financial statements as of December 31, 2015. This balance was originally presented as “trade accounts payable” and was reclassified to “supply chain finance” in order to be comparable with the information as of December 31, 2015, as disclosed in note 31. There was no change in the total of current liabilities in the amount of R$8,783,209 (parent company) and R$9,569,126 (consolidated) as of December 31, 2014.
The statements of cash flows as of December 31, 2014 (parent company and consolidated) are not being restated as there were no changes to them.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3.1. Consolidation: includes the BRF’s individual financial statements and the financial statements from subsidiaries where BRF has direct or indirect control. All transactions and balances between BRF and its subsidiaries have been eliminated upon consolidation, as well as the unrealized profits or losses arising from transactions between the Company and its subsidiaries. Non-controlling interest is presented separately.
3.2. Functional currency: 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 are translated into Brazilian Reais in accordance with their functional currency using the following criteria:
Foreign subsidiaries with functional currency – Dirham, Euro, Argentine Peso Chinese Yuan, Kuwaiti Dinar and Pound Sterling
· Assets and liabilities are translated at the exchange rate in effect at year-end;
· Statement of income accounts are translated based on the monthly average rate; and
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
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· The cumulative effects of gains or losses upon translation are recognized as Accumulated Foreign Currency Translation Adjustments component of other comprehensive income.
Foreign subsidiaries with functional currency – Brazilian Reais
· Non-monetary assets and liabilities are translated at the historical rate of the transaction;
· Monetary assets and liabilities are translated at the exchange rate in effect at year-end;
· Statement of income accounts are translated based on monthly average rate; and
· The cumulative effects of gains or losses upon translation are recognized in the statement of income.
Goodwill arising from business combination with entities in foreign market is expressed in the functional currency of that entity and converted by the closing to exchange rate for the reporting currency of the parent company.
The accounting policies have been consistently applied by all subsidiaries included in consolidation.
3.3. Investments: investments in associates and joint ventures are initially recognized at cost and adjusted thereafter for the equity method. In the investments in associates, the Company must have significant influence, which is the power to participate in the financial and operating policy decisions of the investee, without having the control or joint control of those policies. In investments in joint ventures there is the contractually agreed sharing control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
3.4. Business combinations: are accounted for using the purchase method. The cost of an acquisition is the sum of the consideration paid, evaluated based on the fair value at acquisition date, and the amount of any non-controlling interests in the acquiree. For each business combination, the Company recognizes any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquirer’s net assets. Costs directly attributable to the acquisition are accounted for as an expense when incurred.
When acquiring a business, management evaluate the assets acquired and the liabilities assumed in order to classify and allocate them pursuant to the terms of the agreement, economic circumstances and conditions at the acquisition date.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
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Goodwill is initially measured as the excess of the consideration paid over the fair value of the net assets acquired.
After initial recognition, goodwill is measured at cost, net of any accumulated impairment losses. For purposes of impairment testing, the goodwill recognized in a business combination, as from the acquisition date, is allocated to each of the Company’s cash generating units.
3.5. Segment information: an operating segment is a component of the Company that carries out business activities from which it can obtain revenues and incur expenses. The operating segments reflect how the Company’s management reviews financial information to make decisions. The Company’s management has identified reportable segments, which meet the quantitative and qualitative disclosure requirements. The segments identified for disclosure represent mainly sales channels. The information according to the characteristics of the products is also presented, based on their nature, as follows: poultry, pork, beef, processed products and other sales.
3.6. Cash and cash equivalents: include cash on hand, bank deposits and highly liquid investments in fixed-income funds and/or securities with maturities, upon acquisition, of 90 days or less, which are readily convertible into known amounts of cash and subject to insignificant risk of change in value. The investments classified in this group, due to their nature, are measured at fair value through the profit and loss.
3.7. Financial instruments: financial assets and liabilities are recorded when the Company becomes party to the contractual provisions of the instruments and classified into the following categories: marketable securities, loans and receivables, derivatives and other.
3.7.1. Marketable securities: are financial assets that comprise public and private fixed-income securities, classified and recorded based on the purpose for which they were acquired, in accordance with the following categories:
· Trading securities: acquired for sale or repurchase in the short term, recorded at fair value with variations directly recorded in the statement of income for the year within interest income or expense;
· Held to maturity: when the Company has the intention and ability to hold them up to maturity, investments are recorded at amortized cost, plus interest, monetary and exchange rate changes, when applicable, and recognized in the statement of income when incurred, within interest income or expense; and
· Available for sale: this category is for the remaining securities that are not
classified in any of the categories above, which are measured at fair value, with changes to fair value recorded in other comprehensive income while the asset is not realized, net of taxes. Interest and monetary and exchange variation, when applicable, are recognized in the statement of income when incurred within interest income or expense.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
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3.7.2. Derivatives financial instruments measured at fair value: are those actively traded on organized markets and fair value is determined based on the amounts quoted on an active market at the balance sheet date. These financial instruments are designated at initial recognition, classified as other financial assets and/or liabilities, with a corresponding entry in the statement of income within financial income or expenses or cash flow hedge, a component of other comprehensive income, net of taxes.
3.7.3. Hedge transactions: the Company utilizes derivative and non-derivative financial instruments, to hedge the exposure to exchange rate and interest variations or to modify the characteristics of financial assets and liabilities and highly probable transactions, which are: (i) highly correlated to changes in the market value of the item being hedged, both at inception and throughout the term of the contract (effectiveness between 80% and 125%); (ii) supported by documents that identify the transaction, the hedged risk, the risk management process and the methodology used to assess effectiveness; and (iii) considered effective in the mitigation of the risk associated with the hedged exposure. These transactions are accounted for in accordance with CVM Deliberation Nº 604/09, that permits the protection accounting methodology (“hedge accounting”) with measurement of effect of fair value in equity and its realization in income for the relevant heading.
Hedges that meet the criteria of hedge accounting are recorded as cash flow hedge.
In a cash flow hedge, the effective portion of the gain or loss on the hedging instrument is recognized as other comprehensive income, while the ineffective portion of the hedge is recognized immediately as financial income or expense.
The amounts recorded as other comprehensive income are immediately transferred to the statement of income when the hedged transaction affects the statement of income.
If the occurrence of the forecasted transaction or firm commitment is no longer expected, the amounts previously recognized in other comprehensive income are transferred to the statement of income. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its classification as a hedge is revoked, the gains or losses previously recognized remain recorded in other comprehensive income until the forecasted transaction or firm commitment affect the statement of income.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
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3.7.4. Loans and receivables: these are financial assets and liabilities with fixed or determinable payments which are not quoted on an active market. Such assets and liabilities are initially recognized at fair value plus any attributable transaction costs. After initial recognition, loans and receivables are measured at amortized cost under the effective interest rate method, less any impairment losses.
3.8. Adjustment to present value: the Company and its subsidiaries measure the adjustment to present value of outstanding balances of non-current trade accounts receivable, trade payables, social obligations and other non-current liabilities, being recorded in accounts reducing their lines on the other hand financial result. The Company adopts the weighted average of the cost of funding to determine the adjustment to present value to those assets and liabilities, which corresponds to annual rate of 12.80% (11.20% p.a. on 2014).
3.9. Trade accounts receivables: are recorded at the invoiced amount and adjusted to present value, when applicable, net of allowance for doubtful accounts.
The Company adopts procedures and analysis to establish credit limits and substantially does not require collateral from customers. In the event of default, collection attempts are made, which include direct contact with customers and collection through third parties. Should these efforts prove unsuccessful, court measures are considered and the notes are reclassified to non-current assets at the same time an allowance is recognized. The notes are written-off from the allowance when management considers that they are not recoverable after taking all appropriate measures to collect them.
3.10. Inventories: are evaluated at average acquisition or formation cost, not exceeding market value. The cost of finished products includes raw materials, labor, cost of production, transport and storage, which are related to all process needed to make the products ready for sale. Provisions for obsolescence, adjustments to net realizable value, impaired items and slow-moving inventories are recorded when necessary. Usual production losses are recorded and are an integral part of the production cost of the respective month, whereas unusual losses, if any, are recorded as other operating expense.
3.11. Biological assets: The consumables and production biological assets (live animals) and the forest are measured at their fair value, being applied to cost approach technique to live animals and market approach to the forest. In the determination of the live animal’s fair value, all the inherent losses to the production process were considered.
3.12. Assets held for sale: Such assets are measured at carrying amount or fair value, whichever is lower, net of selling costs and are not depreciated or amortized.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated)
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The income statement and cash flows from discontinued operations are presented separately from those of continuing operations of the Company.
3.13. Property, plant and equipment: stated at the cost of acquisition or construction, less accumulated depreciation and impairment losses, when applicable. The borrowing costs are capitalized as a component of construction in progress, pursuant to with CVM Deliberation Nº 672/11, considering the weighted average interest rate of the Company’s debt at the capitalization date.
Depreciation is recognized based on the estimated economic useful life of each asset on a straight-line basis. The estimated useful life, residual values and depreciation methods are annually reviewed and the effects of any changes in estimates are accounted for prospectively. Land is not depreciated.
The Company annually performs an analysis of impairment indicators of property, plant and equipment along with goodwill impairment test. If an impairment indicator is identified, the corresponding assets are tested for impairment using the discounted cash flow methodology. Hence, when an impairment is identified, a provision is recorded. The recoverability of these assets was tested for impairment in 2015, and no adjustments were identified. The realization of the test involved the adoption of assumptions and judgments, as disclosed in note 19.
Gains and losses on disposals of property, plant and equipment items are calculated by comparing the proceeds of the disposals with their net book values and recognized in the statement of income at the disposal date.
3.14. Intangible assets: Intangible assets acquired are measured at cost at the time they are initially recognized. The cost of intangible assets acquired in a business combination corresponds to the fair value at the acquisition date. After initial recognition, intangible assets are presented at cost less accumulated amortization and impairment losses, when applicable. Internally-generated intangible assets, excluding development costs, are not capitalized but recognized in the statement of income as incurred.
The useful life of intangible assets is assessed as finite or indefinite.
Intangible assets with a finite life are amortized over the economic useful life and reviewed for impairment whenever there is an indication that their carrying values may be impaired. The amortization period and method for an intangible asset with a finite useful life are reviewed at least at the end of each fiscal year. The amortization of intangible assets with a finite useful life is recognized in the statement of income as an expense consistently with the use of the intangible asset.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
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Intangible assets with an indefinite useful life are not amortized, but are tested annually for impairment on an individual basis or at the cash generating unit level. The Company records goodwill and trademarks as intangibles assets with in indefinite useful life.
Goodwill recoverability was tested for fiscal year 2015 and no impairment loss was identified. Such test involved the adoption of assumptions and judgments, disclosed in note 19.
3.15. Income taxes: in Brazil, are comprised of corporate income tax (“IRPJ”) and social contribution tax (“CSLL”), which are calculated monthly on taxable income, at the rate of 15% plus 10% surtax for IRPJ, and of 9% for CSLL, considering the offset of tax loss carryforwards, up to the limit of 30% of annual taxable income.
The income from foreign subsidiaries is subject to taxation pursuant to the local tax rates and legislation. In Brazil, these incomes are taxed according to the provisional measure 2.159-35/2001 and most recently the Law 12.973/14, respecting the tax treaty signed by each country with Brazil in order to avoid double taxation.
Deferred taxes are recorded on IRPJ and CSLL tax losses, assets and liabilities and temporary differences between the tax basis the carrying amount and classified as non-current assets, as required by CVM Deliberation nº 676/11. When the Company’s analysis indicates that the realization of these credits, is not probable, a valuation allowance is recorded.
Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and they relate to income taxes levied by the same tax authority on the same taxable entity. In the consolidated financial statements, the Company’s tax assets and liabilities can be offset against the tax assets and liabilities of the subsidiaries if, and only if, these entities have a legally enforceable right to make or receive a single net payment and intend to make or receive this net payment, or recover the assets and settle the liabilities simultaneously. Therefore, for presentation purposes, the balances of tax assets and tax liabilities are being disclosed separately.
Deferred tax assets and liabilities must be measured by rates that are expected to be applicable for the period when the assets are realized and liabilities settled.
3.16. Accounts payable and trade accounts payable: are initially recognized at fair value plus any accrued charges, monetary and exchange variations incurred through the balance sheet date.
3.17. Provision for tax, civil and labor risks and contingent liabilities: are established when the Company has a present obligation, formalized or not, as a result of a
past event, it is probable that an outflow of resources will be required to settle the obligation and its amount can be reliably estimated.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
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The Company is part of various lawsuits, including, tax, labor and civil claims. The assessment of the likelihood of an unfavorable outcome in these lawsuits includes the analysis of the available evidence, the hierarchy of the laws, available former court decisions, as well as the most recent court decisions and their importance to the Brazilian legal system, as well as the opinion of external legal counsel. The provisions are reviewed and adjusted to reflect changes in the circumstances, such as the applicable statute of limitation, conclusions of tax inspections or additional exposures identified based on new claims or court decisions.
A contingent liability recognized in a business combination is initially measured at fair value and subsequently measured at the higher of:
· the amount that would be recognized in accordance with the accounting policy for the provisions above that comply with CVM Deliberation Nº 594/09; or
· the amount initially recognized less, if appropriate, cumulative amortization recognized in accordance with CVM Deliberation Nº 692/12.
As a result of the business combinations with Sadia, Avex and Dánica group the Company recognized contingent liabilities related to tax, civil and labor claims.
3.18. Leases: lease transactions in which the risks and rewards of ownership are substantially transferred to the Company are classified as finance leases. When there is no significant transfer of the risks and rewards of ownership, lease transactions are classified as operating leases.
Finance lease agreements are recognized in property, plant and equipment and in liabilities at the lower of the present value of the minimum future payments of the agreement and the fair value of the asset, including, when applicable, the initial direct costs incurred in the transaction. The amounts recorded in property, plant and equipment are depreciated and the underlying interest is recorded in the statement of income in accordance with the terms of the lease agreement.
Operating lease agreements are recognized as expenses throughout the lease terms.
3.19. Share based payments: the Company provides share based payments for its executives, which are settled with Company shares. The Company adopts the provisions of CVM Deliberation Nº 650/10, recognizing as an expense, on a straight-line basis, the fair value of the options granted, over the length of service
required by the stock options plan, with a corresponding entry to equity. The accumulated expense recognized reflects the acquired vesting period and the Company's best estimate of the number of shares to be acquired.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
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The expense or income arising from the movement during the year is recognized in the statement of income under other operating expense or income. No expense is recognized for options that have not completed their vesting period.
The dilution effect of outstanding options is reflected as additional dilution in the calculation of diluted earnings per share.
3.20. Pension and other post-employment plans: the Company sponsors four supplementary defined benefit and defined contribution plans, as well as other post-employment benefits, for those, an actuarial appraisal is annually prepared by an independent actuary. The costing 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 a limit on contributions and yields on plan contributions and are recognized in the balance sheet with a contra entry in other comprehensive income when incurred. These measurements are not reclassified to statement of income in subsequent periods.
The Company recognizes the net defined benefit asset, when:
· controls a resource and has the ability to use the surplus to generate future benefits;
· the control is a result of past events; and
· the future economic benefits are available to the Company in the form of a reduction in future contributions or a cash refund, either directly to the Company or indirectly to another deficitary plan. The asset ceiling is the present value of those future benefits.
The past service cost is recognized in the statement of income at the earliest of the following dates:
· when the plan amendment or curtailment occurs, or
· when the Company recognizes related restructuring costs.
The past service cost and net interest on net defined benefit liability or asset are recognized in the statement of income within other operating expense or income.
3.21. Earnings per share: basic earnings per share are calculated by dividing the net profit attributable to the holders of ordinary shares of the Company by the
weighted average number of ordinary shares during the year. Diluted earnings per share are calculated by dividing the net profit attributable to the holders of ordinary shares of the Company by the weighted average number of ordinary shares during the year, plus the weighted average number of ordinary shares that would be issued when converting all dilutive potential ordinary shares into ordinary shares.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
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3.22. Determination of income: results from operations are recorded on an accrual basis.
3.23. Revenue recognition: revenues comprise of the fair value of consideration received or receivable by the sale of products, net of taxes, returns, rebates and discounts.
Revenues are recognized in accordance with the accrual basis of accounting, when the sales value is reliably measurable and when the Company no longer has control over the goods sold, or otherwise related to the property, the costs incurred or to be incurred due to transaction can be reliably measured, it is probable that economic benefits will be received by the Company and the risks and benefits were fully transferred to the purchaser.
3.24. Employee and management profit sharing: employees are entitled to profit sharing based on certain targets agreed upon on an annual basis, whereas managers 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 is recognized in the statement of income for the period in which the targets are attained.
3.25. Financial income: include interest earnings on amounts invested (including available for sale financial assets), dividend income (except for dividends received from equity investees), gains on disposal of available for sale financial assets, changes in fair value of financial assets measured at fair value through income and gains on hedging instruments that are recognized in income. Interest income is recognized in earnings through the effective interest method.
3.26. Grants and government assistance: government subsidies are recognized at fair value when there is reasonable assurance that the conditions established are met and related benefits will be received. The amounts recorded in the statement of income when excluded from the income tax and social contribution calculation basis are reclassified to shareholders’ equity, as a reserve of tax incentives, unless there are accumulated losses.
3.27. Dividends and interest on shareholders’ equity: the proposal for payment of dividends and interest on shareholders’ equity made by the Company’s Management, which is within the portion equivalent to the mandatory minimum dividend, is recorded in current liabilities, as a legal obligation provided for in the
bylaws; on the other hand, the dividends that exceed the mandatory minimum dividend, declared by management before the end of the accounting period covered by the consolidated financial statements, not yet approved by the shareholders, is recorded as additional dividend proposed in shareholders’ equity.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
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For financial statement presentation purposes, interest on shareholders’ equity is stated as an allocation of income directly in shareholders’ equity.
3.28. Transactions and balances in foreign currency: the balances of assets and liabilities of foreign subsidiaries are translated into Brazilian Reais using the exchange rates in effect at the balance sheet date and statement of income accounts are translated based on monthly average rates.
The exchange rates in Brazilian Reais effective at the balance sheet dates were as follows:
Exchange rate at the balance sheet date |
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12.31.15 |
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12.31.14 |
U.S. Dollar (US$ or USD) |
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3.9048 |
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2.6562 |
Euro (€ or EUR) |
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4.2504 |
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3.2270 |
Pound Sterling (£ or GBP) |
|
5.7881 |
|
4.1405 |
Argentine Peso ($ or ARS) |
|
0.3017 |
|
0.3172 |
Rial Omã (OMR) |
|
10.1529 |
|
6.8992 |
Dirham (AED) |
|
1.0631 |
|
0.7232 |
Saudi Riyal (SAR) |
|
1.0406 |
|
0.7079 |
|
|
|
|
|
Average rates |
|
|
|
|
U.S. Dollar (US$ or USD) |
|
3.3315 |
|
2.3536 |
Euro (€ or EUR) |
|
3.6929 |
|
3.1221 |
Pound Sterling (£ or GBP) |
|
5.0931 |
|
3.8721 |
Argentine Peso ($ or ARS) |
|
0.3601 |
|
0.2905 |
Rial Omã (OMR) |
|
8.6563 |
|
6.1134 |
Dirham (AED) |
|
0.9071 |
|
0.6408 |
Saudi Riyal (SAR) |
|
0.8883 |
|
0.6275 |
3.29. Accounting judgments, estimates and assumptions: as mentioned in note 2, in the process of applying the Company’s accounting policies, management made the following judgments which have a material impact on the amounts recognized in the consolidated financial statements:
· fair value of financial instruments (see note 4);
· impairment of non-financial assets (see note 5 and 19);
· measurement of fair value of items related to business combinations (see note 6);
· allowance for doubtful accounts (see note 9);
· net realizable value provision for inventories (see note 10);
· fair value of biological assets (see note 11);
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
· loss on the reduction of recoverable value of taxes (see note 12 and 14);
· useful lives of property, plant and equipment and intangible (see note 18 and 19);
· share-based payment transactions (see note 24);
· pension and post-employment plans (see note 25); and
· provision for tax, civil and labor risks (see note 26).
The Company reviews the estimates and underlying assumptions used in its accounting estimates on a quarterly basis. Revisions to accounting estimates are recognized in the period in each the estimates are revised.
3.30. Statement of added value: the Company prepared individual and consolidated statements of added value (“DVA”) in accordance with CVM Deliberation Nº 557/08, which are submitted as part of these financial statements in accordance with BR GAAP. It represents for IFRS additional financial information.
4. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
4.1. Overview
In the normal course of its business, the Company is exposed to credit, liquidity and market risks, which are actively managed in conformity to the Financial Risk Management Policy and Strategy Papers (this set called hereafter as “Risk Policy”) and internal guidelines subject to such policy.
The Risk Policy is under the management of the Board of Directors, Risk Management Committee and Financial Risk Management, with clear and defined roles and responsibilities, as follows:
· The Board of Directors is responsible for approving the Risk Policy and defining the limits of tolerance of the different risks identified as acceptable for the Company on behalf of its shareholders. The current risk policy was reviewed and approved on November 26, 2015, with maturity of two years, and is automatically renewed once for the same period if no change is expressed during the term of the agreement;
· The Financial Risk Management Committee is in charge of the execution of the Risk Policy, which comprises the supervision of the risk management process, planning and verification of the impacts of the decisions implemented, as well as the evaluation and approval of hedging strategies and monitoring the risk exposure levels to ensure compliance with Risk Policy; and
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
· The Risk Management area has as a crucial role in monitoring, evaluating and reporting of the financial risks taken by the Company.
The Risk Policy does not authorize the Company’s management to contract leveraged derivative transactions and determines that any individual hedge operations (notional amount) must not exceed 2.5% of the Company’s shareholders’ equity.
a. Credit risk management
The Company is subject to the credit risk related to trade accounts receivable, financial investments and derivative contracts, as follows:
· Credit risk associated with trade accounts receivable is actively managed through the use of specific systems. Furthermore, it should be noted the diversification of the customer portfolio and the concession of credit to customers with good financial and operational conditions. The Company does not usually require collateral for sales to customer, and has a contracted credit insurance policy for specific markets; and
· Credit risk associated with financial investments and derivative contracts is mitigated by the Company’s policy of working with prime institutions.
On December 31, 2015, the Company had financial investments over R$100,000 at the following financial institutions: Banco Itaú, Banco Bradesco, Banco Santander, Deutsche Bank, Banco do Brasil, Caixa Econômica Federal, Standard Chartered e Banco BNP.
The Company also held derivative contracts with the following financial institutions: Banco Bradesco, Banco do Brasil, Banco HSBC, Banco Itaú, Banco Santander, Banco Votorantim, Barclays, Citibank, Deutsche Bank, ING Bank, Merrill Lynch, Morgan Stanley e Rabobank.
b. Liquidity risk management
Liquidity risk management aims to reduce the impacts caused by events which may affect the Company’s cash flow. Thus, the Company utilizes the following metrics:
· Cash Flow at Risk (“CFaR”), which aims to statistically estimates the cash flows for the next twelve months and the Company’s liquidity exposure. The Company determined that the minimum cash available should be equivalent mainly to the average monthly billing and EBITDA for the last twelve-month period; and
· Value at Risk ("VaR") is used for derivative transactions that require payments of periodic adjustments. Currently, the Company holds only BM&F Bovespa operations with daily adjustments and in order to monitor
them, such methodology is utilized, which statistically measures potential maximum adjustments to be paid at intervals of 1 to 21-days.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
The Company maintains its leverage levels in order to avoid any impact to its ability to settle commitments and obligations. As a guideline, the majority of the debt should be in long term. On December 31, 2015, the long term debt portion accounted for 82.7% (76.4% as of December 31, 2014) of the total outstanding debt with an average term greater than 5 years.
The table below summarizes the commitments and contractual obligations that may impact the Company’s liquidity:
|
Parent company |
|
12.31.15 |
|
Book value |
|
Cash flow contracted |
|
2016 |
|
2017 |
|
2018 |
|
2019 |
|
2020 |
|
After 5 years |
Non derivative financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing |
5,494,505 |
|
6,401,641 |
|
2,657,511 |
|
986,939 |
|
2,009,755 |
|
284,917 |
|
451,075 |
|
11,444 |
BRF bonds |
8,085,596 |
|
10,705,794 |
|
353,079 |
|
353,079 |
|
833,704 |
|
314,329 |
|
314,329 |
|
8,537,274 |
Trade accounts payable |
4,024,725 |
|
4,024,725 |
|
4,024,725 |
|
- |
|
- |
|
- |
|
- |
|
- |
Financial lease |
186,618 |
|
275,098 |
|
59,109 |
|
35,822 |
|
27,213 |
|
23,945 |
|
22,539 |
|
106,470 |
Operational lease |
- |
|
687,269 |
|
461,475 |
|
99,430 |
|
35,408 |
|
16,893 |
|
13,591 |
|
60,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial instruments designated as cash flow hedge |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate and exchange rate derivatives |
280,285 |
|
245,151 |
|
7,501 |
|
7,373 |
|
230,277 |
|
- |
|
- |
|
- |
Currency derivatives (NDF) |
66,703 |
|
54,894 |
|
54,894 |
|
- |
|
- |
|
- |
|
- |
|
- |
Fixed exchange rate |
33,765 |
|
40,109 |
|
40,109 |
|
- |
|
- |
|
- |
|
- |
|
- |
Currency derivatives (options) |
217,122 |
|
121,357 |
|
51,535 |
|
69,822 |
|
- |
|
- |
|
- |
|
- |
Commodities derivatives (NDF) |
11,729 |
|
28,065 |
|
28,065 |
|
- |
|
- |
|
- |
|
- |
|
- |
Financial instruments not designated as cash flow hedge |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency derivatives (NDF) |
3,502 |
|
3,848 |
|
3,848 |
|
- |
|
- |
|
- |
|
- |
|
- |
Interest rate and exchange rate derivatives |
6,768 |
|
74,757 |
|
74,103 |
|
472 |
|
182 |
|
- |
|
- |
|
- |
|
Consolidated |
|
12.31.15 |
|
Book value |
|
Cash flow contracted |
|
2016 |
|
2017 |
|
2018 |
|
2019 |
|
2020 |
|
After 5 years |
Non derivative financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing |
5,889,347 |
|
6,830,639 |
|
2,674,020 |
|
1,002,569 |
|
2,406,614 |
|
284,917 |
|
451,075 |
|
11,444 |
BRF bonds |
8,085,596 |
|
10,705,794 |
|
353,079 |
|
353,079 |
|
833,704 |
|
314,329 |
|
314,329 |
|
8,537,274 |
BFF bonds |
475,299 |
|
612,558 |
|
33,486 |
|
33,486 |
|
33,486 |
|
33,486 |
|
478,614 |
|
- |
Sadia bonds |
443,332 |
|
485,712 |
|
30,271 |
|
455,441 |
|
- |
|
- |
|
- |
|
- |
Quickfood bonds |
285,709 |
|
413,238 |
|
143,369 |
|
109,112 |
|
72,428 |
|
53,779 |
|
34,550 |
|
- |
Trade accounts payable |
4,744,993 |
|
4,744,993 |
|
4,744,993 |
|
- |
|
- |
|
- |
|
- |
|
- |
Financial lease |
186,618 |
|
275,098 |
|
59,109 |
|
35,822 |
|
27,213 |
|
23,945 |
|
22,539 |
|
106,470 |
Operational lease |
- |
|
698,331 |
|
463,641 |
|
101,596 |
|
37,574 |
|
19,175 |
|
13,591 |
|
62,754 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial instruments designated as cash flow hedge |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate and exchange rate derivatives |
326,650 |
|
309,540 |
|
28,154 |
|
28,159 |
|
252,745 |
|
482 |
|
- |
|
- |
Currency derivatives (NDF) |
66,703 |
|
54,894 |
|
54,894 |
|
- |
|
- |
|
- |
|
- |
|
- |
Fixed exchange rate |
33,765 |
|
40,109 |
|
40,109 |
|
- |
|
- |
|
- |
|
- |
|
- |
Currency derivatives (options) |
217,122 |
|
121,357 |
|
51,535 |
|
69,822 |
|
- |
|
- |
|
- |
|
- |
Commodities derivatives (NDF) |
11,729 |
|
28,065 |
|
28,065 |
|
- |
|
- |
|
- |
|
- |
|
- |
Financial instruments not designated as cash flow hedge |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency derivatives (NDF) |
3,865 |
|
4,237 |
|
4,237 |
|
- |
|
- |
|
- |
|
- |
|
- |
Interest rate and exchange rate derivatives |
6,768 |
|
74,757 |
|
74,103 |
|
472 |
|
182 |
|
- |
|
- |
|
- |
c. Interest rate risk management
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
Interest rates risk is the one the Company incurs in economic losses resulting from changes in these rates, which could 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 transaction to protect from the exposure to fluctuation of such rates and manage the mismatch between its financial investments and debts. In these transactions the Company enters into contracts that exchange floating rate for fixed rate or vice-versa. Such transactions were designated by the Company as cash flow hedge.
The Company’s indebtedness is essentially tied to the London Interbank Offered rate ("LIBOR"), fixed coupon (“R$ and USD”), Long Term Interest Rate ("TJLP") and Monetary Unit of the Bank National Economic and Social Development ("UMBNDES") rates. In case of adverse changes in the market that result in LIBOR, TJLP and UMBNDES hikes, the cost of the floating indebtedness rises and on the other hand, the cost of the fixed indebtedness decreases in relative terms.
With regards to the Company's marketable securities, the main index is the Interbank Deposit Certificate ("CDI") for investments in Brazil and fixed coupon (“USD”) for investments in the International market.
d. Foreign exchange risk management
Foreign exchange risk is the one related to variations of foreign exchange rates that may cause the Company to incur unexpected losses, leading to a reduction of assets or an increase in liabilities.
The Risk Policy is intended to protect the Company's results from these variations, in order to:
· Protect operating revenues and costs that are related to transactions arising from commercial activities, such as estimated exports and purchases of raw materials, utilizing hedging instruments, that is, to protect its future cash flow denominated in foreign currency; and
· Manage assets and liabilities denominated in foreign currencies in order to protect the balance sheet of the Company, through the use of over-the-counter and futures transactions.
The Company’s consolidated financial statements are mainly impacted by the following currencies: (i) U.S. Dollar, (ii) Euro, (iii) Iene, (iv) Pound Sterling and (v) Argentine Peso.
Assets and liabilities denominated in foreign currency are as follows:
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
Total exposure |
Cash and cash equivalents and marketable securities |
5,322,907 |
|
4,551,213 |
Trade accounts receivable |
2,146,020 |
|
1,693,314 |
Accounts receivable from subsidiaries (unconsolidated) |
250,766 |
|
1,243 |
Restricted cash |
1,346,274 |
|
- |
Future dollar agreements |
741,912 |
|
252,339 |
Embedded derivative |
- |
|
1,853,379 |
Inventories |
246 |
|
21,128 |
Exchange rate contracts (Swap) |
968,780 |
|
(4,571) |
Loans and financing |
(11,359,658) |
|
(7,596,191) |
Bonds designated as cash flow hedge |
1,171,440 |
|
796,860 |
Exports prepayments designated as cash flow hedge |
1,171,440 |
|
796,860 |
Trade accounts payable |
(1,496,833) |
|
(794,832) |
Supply chain finance |
(488,997) |
|
(162,369) |
Other assets and liabilities, net |
(232,146) |
|
97,608 |
|
(457,849) |
|
1,505,981 |
|
|
|
|
Foreign exchange exposure (in US$) (liabilities)/assets |
(117,253) |
|
566,968 |
|
|
|
|
Foreign exchange exposure impacting the statement of income (in US$) |
(39,776) |
|
550,542 |
Foreign exchange exposure included in other comprehensive income (in US$) |
(77,477) |
|
16,426 |
|
|
|
|
Foreign exchange exposure (in US$) (liabilities)/assets |
(117,253) |
|
566,968 |
On December 31, 2015, the net foreign exchange exposure is within the limit set by the Company's Risk Policy.
e. Commodity price risk management
In the normal course of its operations, the Company purchases commodities, mainly corn, soymeal, oil and live hog, which are some of the individual components of production cost.
Corn, soymeal and oil prices are subject to volatility resulting from weather conditions, crop yield, transportation and storage costs, government’s agricultural policy, foreign exchange rates and the prices of these commodities on the international market, among others factors. The prices of hog acquired from third parties are subject to market conditions and are influenced by internal availability and levels of demand in the international market, among other aspects.
The Risk Policy establishes limits for hedging the corn and soymeal purchase flow, aiming to reduce the impact resulting from a price increase of these raw materials, and may utilize derivative instruments or inventory management for this purpose. Currently, the management of inventory levels is used as a hedging instrument.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
f. Capital management
The Company’s definition of the adequate capital structure is essentially associated with (i) cash strength as a tolerance factor to liquidity volatility, (ii) financial leverage and (iii) maximization of the opportunity cost of capital.
The cash and liquidity strategy takes into consideration the historical scenarios of volatility of results as well as simulations of sectorial and systemic crises and is based on permitting the resilience in scenarios of restricted access to capital.
Financial leverage aims the balance between the different sources of funding and their conditions of allocation in order to maximize the opportunity cost to BRF in its business expansion initiatives. Moreover, the objective of maintaining the investment grade disciplines the weighting of using own and third party capital.
The Company monitors debt levels and net debt, which are shown below:
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
Current |
|
Non-current |
|
Total |
|
Total |
Foreign currency debt |
(1,166,133) |
|
(10,193,525) |
|
(11,359,658) |
|
(7,596,191) |
Local currency debt |
(1,462,046) |
|
(2,357,579) |
|
(3,819,625) |
|
(3,993,144) |
Other financial liabilities |
(666,602) |
|
- |
|
(666,602) |
|
(257,438) |
Gross debt |
(3,294,781) |
|
(12,551,104) |
|
(15,845,885) |
|
(11,846,773) |
|
|
|
|
|
|
|
|
Marketable securities and cash and cash equivalents |
6,097,601 |
|
456,038 |
|
6,553,639 |
|
6,656,526 |
Other financial assets |
129,387 |
|
- |
|
129,387 |
|
43,101 |
Restricted cash |
1,346,274 |
|
479,828 |
|
1,826,102 |
|
115,179 |
Net debt |
4,278,481 |
|
(11,615,238) |
|
(7,336,757) |
|
(5,031,967) |
4.2. Derivative and non-derivative financial instruments designated as hedge accounting
As established by CVM Deliberation Nº 604/09, the Company applies hedge accounting to its derivative instruments classified as cash flow hedge, in accordance with the Risk Policy. The cash flow hedge consists of hedging the exposure to variations of the cash flow and firm commitment which is attributable to a particular risk associated with a recognized asset or liability, or a highly probable transaction that could affect profit and loss. The firm commitment hedge is a protection against fluctuations of a specific type of risk associated to a firm agreement to exchange a determined quantity for a determined price in a specific date, or in future determined dates.
The Risk Policy has also the purpose of determining parameters of use of financial
instruments, including derivatives, which are designed to protect the operating and financial assets and liabilities, which are exposed to the variations of foreign exchange rates, the fluctuation of the interest rates and changes to the commodity prices. The Risk Management area is responsible for ensuring compliance to the requirements established by the Company’s Risk Policy.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
The Company formally designated its operations for hedge accounting treatment for the derivative financial instruments to protect cash flows and export revenues by documenting:
· The relationship of the hedge;
· The objective and risk management strategy of the Company to enter into a hedge transaction;
· The identification of the financial instrument;
· The hedge object or transaction;
· The nature of the risk to be hedged;
· The description of the hedge relationship;
· The demonstration of the correlation between the hedge transaction and the hedge object, when applicable; and
· The prospective demonstration of the effectiveness of the hedge.
The transactions for which the Company has designated hedge accounting are highly probable, present an exposure to variation in cash flow that could affect profit and loss and are highly effective in protecting changes in fair value or cash flows attributable to hedged risk, consistent with the risk originally documented in the Risk Policy.
The effectiveness tests are prepared prospectively and retrospectively at each period end.
The prospective test is based on the comparison between the critical terms of derivative and non-derivative financial instruments and the hedged items. The hedged items (e.g. future monthly export sales) and the hedge instruments have the same critical terms, as follows:
· Both fair value change due to the exchange rate variation (spot or forward rate method);
· Their nominal values (notional) are similar; and
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
· Their maturities are identical and both the hedged item (revenue) and the settlement of the financial instrument will occur at the same period.
The retrospective test is based on the analysis of the coverage ratio. This ratio compares the fair value variation accumulated since the inception of the hedged item (date of hedge designation) with the accumulated variation of the derivative and non-derivative financial instrument since its inception.
The effectiveness of the hedge is determined at the settlement date of the financial instrument, by comparing the cumulative changes of highly probable revenues with the gains or losses arising from the financial instruments.
The Company, within its hedge accounting strategy, utilizes the following financial instruments:
a. Non-deliverable forwards – NDF
Non-deliverable forward contract is the future commitment to purchase or sell certain currencies on a certain date in the future for a predetermined price. This contract does not require physical settlement of contracted positions, but the financial settlement of the difference between the settlement price and the predetermined price of the contract.
b. Interest rate and currency swap
Similar to a non-deliverable forward contract, the swap is the future commitment to buy or sell certain interest rates or currency at a specified date in the future for a predetermined price. The particularity in this type of transaction is the possibility to exchange cash flows on various dates. The Company contracts swaps that do not require the physical settlement of contracted positions, but the financial settlement of the difference between the settlement price and the price established in the contract.
c. Options
A put option gives the holder (option holder) the right to buy an asset at a certain price (strike) at certain future date (the exercise date). A call option gives the holder the right to sell an asset at a certain price at a certain future date. In addition, there is a possibility of buying (premium disbursement, with rights) or selling (premium receiving, with obligations).
d. Fixed exchange rate
Fixed exchange rate is a non-derivative financial instrument contracted from financial institutions that allows the definition of a future rate to internalization of resources arising from foreign activities. Contractually, there is the requirement of submission of export invoices to prove the nature of resources which will be internalized trough closing of exchange rate. Such contract has similar characteristics of a non-deliverable forward
derivative contract because it determines, at its inception, a future exchange rate. Nevertheless, the contract requires a physical settlement of the contracted positions.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
e. Export prepayments – PPEs
The Company utilizes the exchange rates variation of export prepayments contracts (“PPEs”) as a hedge instrument for the highly probable future sales in foreign currency.
f. Senior unsecured notes – Bonds
The Company designates part of the transactions involving Senior Unsecured Notes as hedge accounting.
g. Commodities non-deliverable forwards – NFD
Non-deliverable forward contract is the future commitment to purchase or sell determined types of commodities in a certain future date for a predetermined price. This contract does not require physical settlement of contracted positions, but the financial settlement of the difference between the settlement price and the predetermined price of the contract.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
4.2.1 Breakdown of the balances of derivative financial instruments
The positions of outstanding derivative financial instruments are as follows:
Parent company and Consolidated |
12.31.15 |
|
12.31.14 |
Instrument |
|
Hedge object |
|
Reference currency (notional) |
|
Reference value (notional) |
|
Fair value (1) |
|
Reference value (notional) |
|
Fair value (1) |
Financial instruments designated as hedge accounting |
|
|
|
|
|
|
|
|
|
|
|
|
NDF - Dollar sale (2) |
|
Currency |
|
USD |
|
44,000 |
|
(17,858) |
|
439,655 |
|
(62,699) |
NDF - Euro sale (2) |
|
Currency |
|
EUR |
|
31,800 |
|
(5,457) |
|
74,042 |
|
184 |
NDF - Pound Sterling sale (2) |
|
Currency |
|
GBP |
|
11,000 |
|
(1,566) |
|
41,574 |
|
(2,097) |
NDF - Iene sale (2) |
|
Currency |
|
JPY |
|
6,799,981 |
|
(39,569) |
|
16,993,208 |
|
(2,761) |
Currency swap - US$ (2) |
|
Currency |
|
BRL |
|
250,000 |
|
(248,456) |
|
250,000 |
|
(90,328) |
Interest rate swap - US$ (2) |
|
Interest |
|
USD |
|
200,000 |
|
(31,829) |
|
200,000 |
|
(29,060) |
Fixed exchange rate - US$ (2) |
|
Currency |
|
USD |
|
201,000 |
|
(33,765) |
|
102,470 |
|
(2,848) |
Fixed exchange rate - Euro (2) |
|
Currency |
|
EUR |
|
- |
|
- |
|
8,000 |
|
299 |
Options (Collar) - US$ (2) |
|
Currency |
|
USD |
|
1,227,000 |
|
(124,469) |
|
164,000 |
|
(3,995) |
Options (Collar) - Euro (2) |
|
Currency |
|
EUR |
|
31,000 |
|
3,500 |
|
- |
|
- |
NDF - Corn purchase (2) |
|
Commodities |
|
Ton/USD |
|
633,565 |
|
(11,729) |
|
- |
|
- |
Total in Parent company |
|
|
|
|
|
|
|
(511,198) |
|
|
|
(193,305) |
Interest rate swap - US$ (2) |
|
Interest |
|
USD |
|
200,000 |
|
(46,365) |
|
200,000 |
|
(38,587) |
Total Consolidated |
|
|
|
|
|
|
|
(557,563) |
|
|
|
(231,892) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial instruments not designated as hedge accounting |
|
|
|
|
|
|
|
|
|
|
NDF - Iene sale (2) |
|
Currency |
|
JPY |
|
6,451,363 |
|
(1,152) |
|
1,000,000 |
|
1,125 |
NDF - Purchase of US$ (2) |
|
Currency |
|
USD |
|
50,000 |
|
(2,350) |
|
- |
|
- |
Embedded derivative (2) |
|
Currency |
|
USD |
|
- |
|
- |
|
697,756 |
|
27,955 |
Currency swap - US$ (2) |
|
Currency |
|
USD |
|
250,000 |
|
(977) |
|
2,798 |
|
(1,750) |
Interest rate - R$ (2) |
|
Interest |
|
BRL |
|
50,000 |
|
(2,341) |
|
590,000 |
|
(1,466) |
NDF - Corn purchase (2) |
|
Commodities |
|
Ton/USD |
|
54,780 |
|
2,183 |
|
- |
|
- |
Future - BM&FBovespa (2) |
|
Currency |
|
USD |
|
190,000 |
|
14,641 |
|
95,000 |
|
(5,694) |
Total in Parent company |
|
|
|
|
|
|
|
10,004 |
|
|
|
20,170 |
NDF - Purchase of Euro (2) |
|
Currency |
|
EUR |
|
150,000 |
|
1,294 |
|
- |
|
- |
NDF - Euro (2) |
|
Currency |
|
EUR |
|
- |
|
- |
|
150,000 |
|
87 |
NDF - Pound Sterling sale (2) |
|
Currency |
|
GBP |
|
20,000 |
|
1,066 |
|
20,000 |
|
(2,638) |
NDF - Argentine Peso sale (2) |
|
Currency |
|
USD |
|
10,000 |
|
7,984 |
|
3,360 |
|
(64) |
Total Consolidated |
|
|
|
|
|
|
|
20,348 |
|
|
|
17,555 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total in Parent company |
|
|
|
|
|
|
|
(501,194) |
|
|
|
(173,135) |
Total Consolidated |
|
|
|
|
|
|
|
(537,215) |
|
|
|
(214,337) |
(1) The market value determination method used by the Company consists of calculating the future value based on the contracted conditions and determining the present value based on market curves, obtained from the database of Bloomberg and BM&F.
(2) Cash flow hedge.
a. Non-deliverable forwards – NDF
i. Currency non-deliverable forwards - NDF
The position of the currency non-deliverable forward – NDF, by maturity, as well as the weighted average exchange rates and the fair value, are presented as follows:
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
Parent company and Consolidated |
12.31.15 |
PUT |
|
R$ x US$ |
|
R$ x EUR |
Maturities |
|
Notional (US$) |
|
Average rate |
|
Fair value |
|
Notional (EUR) |
|
Average rate |
|
Fair value |
Financial instruments designated as cash flow hedge |
|
|
|
|
|
|
|
|
|
|
|
|
January 2016 |
|
19,000 |
|
3.9019 |
|
(505) |
|
5,000 |
|
3.7252 |
|
(2,875) |
February 2016 |
|
- |
|
- |
|
- |
|
4,500 |
|
3.8052 |
|
(2,560) |
March 2016 |
|
- |
|
- |
|
- |
|
5,000 |
|
4.0961 |
|
(1,551) |
April 2016 |
|
25,000 |
|
3.3586 |
|
(17,353) |
|
2,000 |
|
4.5070 |
|
91 |
May 2016 |
|
- |
|
- |
|
- |
|
8,300 |
|
4.6333 |
|
973 |
June 2016 |
|
- |
|
- |
|
- |
|
4,000 |
|
4.6300 |
|
261 |
July 2016 |
|
- |
|
- |
|
- |
|
3,000 |
|
4.6790 |
|
204 |
|
|
44,000 |
|
3.5932 |
|
(17,858) |
|
31,800 |
|
4.2848 |
|
(5,457) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PUT |
|
R$ x GBP (1) |
|
R$ x JPY (1) |
Maturities |
|
Notional (GBP) |
|
Average rate |
|
Fair value |
|
Notional (JPY) |
|
Average rate |
|
Fair value |
Financial instruments designed as hedge accounting |
|
|
|
|
|
|
|
|
|
|
|
|
January 2016 |
|
3,000 |
|
5.6571 |
|
(500) |
|
2,324,067 |
|
0.0271 |
|
(13,164) |
February 2016 |
|
2,500 |
|
5.5172 |
|
(1,074) |
|
2,023,761 |
|
0.0273 |
|
(11,979) |
March 2016 |
|
1,500 |
|
5.7905 |
|
(285) |
|
2,029,407 |
|
0.0276 |
|
(11,912) |
April 2016 |
|
1,500 |
|
6.1620 |
|
165 |
|
105,694 |
|
0.0278 |
|
(629) |
May 2016 |
|
1,200 |
|
6.2570 |
|
170 |
|
105,684 |
|
0.0281 |
|
(625) |
June 2016 |
|
1,300 |
|
6.1400 |
|
(42) |
|
211,368 |
|
0.0283 |
|
(1,260) |
|
|
11,000 |
|
5.8349 |
|
(1,566) |
|
6,799,981 |
|
0.0274 |
|
(39,569) |
(1) Cash flow hedge.
CALL |
|
USD x BRL |
|
USD x EUR |
Maturities |
|
Notional (US$) |
|
Average rate |
|
Fair value |
|
Notional (EUR) |
|
Average rate |
|
Fair value |
Financial instruments not designated as cash flow hedge |
|
|
|
|
|
|
|
|
|
|
|
|
January 2016 |
|
50,000 |
|
4.0664 |
|
(2,350) |
|
- |
|
- |
|
- |
March 2016 |
|
- |
|
- |
|
- |
|
150,000 |
|
1.0864 |
|
1,294 |
|
|
50,000 |
|
4.0664 |
|
(2,350) |
|
150,000 |
|
1.0864 |
|
1,294 |
PUT |
|
USD x GBP |
|
R$ x JPY |
Maturities |
|
Notional (GBP) |
|
Average rate |
|
Fair value |
|
Notional (JPY) |
|
Average rate |
|
Fair value |
Financial instruments not designated as cash flow hedge |
|
|
|
|
|
|
|
|
|
|
|
|
January 2016 |
|
- |
|
- |
|
- |
|
6,451,363 |
|
0.0329 |
|
(1,152) |
March 2016 |
|
20,000 |
|
1.4877 |
|
1,066 |
|
- |
|
- |
|
- |
|
|
20,000 |
|
1.4877 |
|
1,066 |
|
6,451,363 |
|
0.0329 |
|
(1,152) |
PUT |
|
ARS x USD |
Maturities |
|
Notional (USD) |
|
Average rate |
|
Fair value |
Financial instruments not designated as cash flow hedge |
|
|
|
|
|
|
March 2016 |
|
3,500 |
|
9.6730 |
|
1,729 |
April 2016 |
|
4,500 |
|
9.2879 |
|
4,378 |
May 2016 |
|
2,000 |
|
9.4290 |
|
1,877 |
|
|
10,000 |
|
9.4509 |
|
7,984 |
ii. Commodities non-deliverable forwards – NDF
The position of the commodities non-deliverable forwards – NFD, by maturity, as well as weighted average exchange rates and the fair value, are presented as follows:
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
Parent company and Consolidated |
12.31.15 |
Call |
|
Quantity |
|
Average rate |
|
Fair |
Maturities |
|
Ton |
|
US$/Ton |
|
value |
Designated as hedge accounting |
|
|
|
|
|
|
January 2016 |
|
133,500 |
|
147.71 |
|
(3,377) |
February 2016 |
|
159,449 |
|
145.49 |
|
(2,651) |
March 2016 |
|
163,954 |
|
147.03 |
|
(2,262) |
April 2016 |
|
99,252 |
|
146.87 |
|
(1,307) |
May 2016 |
|
56,495 |
|
151.34 |
|
(1,209) |
July 2016 |
|
4,743 |
|
159.04 |
|
(209) |
August 2016 |
|
16,172 |
|
159.04 |
|
(714) |
|
|
633,565 |
|
147.54 |
|
(11,729) |
PUT |
|
Quantity |
|
Average rate |
|
Fair |
Maturities |
|
Ton |
|
US$/Ton |
|
value |
Not designated as hedge accounting |
|
|
|
|
|
|
June 2016 |
|
49,199 |
|
156.41 |
|
2,028 |
July 2016 |
|
3,154 |
|
154.97 |
|
89 |
September 2016 |
|
2,427 |
|
157.79 |
|
66 |
|
|
54,780 |
|
156.39 |
|
2,183 |
b. Interest rate and currency swap
The position of interest rate and currency swap is presented as follows:
|
|
|
|
|
|
|
|
Parent company |
|
Consolidated |
12.31.15 |
Instrument |
|
Maturity |
|
Assets (Hedged object) |
|
Liabilities (Protected risk) |
|
Notional |
|
Fair value |
|
Notional |
|
Fair value |
Financial instruments designated as cash flow hedge |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate |
|
01.22.18 |
|
LIBOR 6M + 2.82% p.a. |
|
5.86% p.a. |
|
100,000 |
|
(15,929) |
|
100,000 |
|
(15,929) |
Interest rate |
|
06.18.18 |
|
LIBOR 3M + 2.60% p.a. |
|
5.47% p.a. |
|
100,000 |
|
(15,900) |
|
100,000 |
|
(15,900) |
Interest rate |
|
02.01.19 |
|
LIBOR 6M + 2.70% p.a. |
|
5.90% p.a. |
|
- |
|
- |
|
100,000 |
|
(23,299) |
Interest rate |
|
02.01.19 |
|
LIBOR 6M + 2.70% p.a. |
|
5.88% p.a. |
|
- |
|
- |
|
100,000 |
|
(23,066) |
|
|
|
|
|
|
|
|
|
|
(31,829) |
|
|
|
(78,194) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency swap |
|
05.22.18 |
|
R$ + 7.75% |
|
US$ + 1.60% |
|
250,000 |
|
(248,456) |
|
250,000 |
|
(248,456) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(280,285) |
|
|
|
(326,650) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial instruments not designated as cash flow hedge |
|
|
|
|
|
|
|
|
|
|
Interest rate - Bond |
|
05.22.18 |
|
R$ (Fixed rate of 7.75% p.a.) |
|
68.84% CDI |
|
50,000 |
|
(2,341) |
|
50,000 |
|
(2,341) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency swap |
|
10.28.16 |
|
US$ + 1,76 % p.a |
|
86,60% CDI |
|
100,000 |
|
(1,202) |
|
100,000 |
|
(1,202) |
Currency swap |
|
12.02.16 |
|
US$ + L3M + 0,90 % p.a |
|
85,95% CDI |
|
50,000 |
|
3,449 |
|
50,000 |
|
3,449 |
Currency swap |
|
12.16.16 |
|
US$ + L3M + 1,10 % p.a |
|
88,95% CDI |
|
50,000 |
|
(2,734) |
|
50,000 |
|
(2,734) |
Currency swap |
|
12.23.16 |
|
US$ + 2,41 % p.a |
|
90,50% CDI |
|
50,000 |
|
(490) |
|
50,000 |
|
(490) |
|
|
|
|
|
|
|
|
|
|
(977) |
|
|
|
(977) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,318) |
|
|
|
(3,318) |
c. Fixed exchange rate
The position of fixed exchange rate designated as hedge accounting is presented as follows:
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
Parent company and Consolidated |
12.31.15 |
|
|
R$ x US$ |
Maturities |
|
Notional US$ |
|
Average US$ |
|
Fair value |
January 2016 |
|
30,000 |
|
3.0070 |
|
(27,617) |
February 2016 |
|
19,000 |
|
3.9687 |
|
(799) |
March 2016 |
|
19,000 |
|
4.0044 |
|
(716) |
April 2016 |
|
19,000 |
|
4.0538 |
|
(594) |
May 2016 |
|
19,000 |
|
4.0929 |
|
(477) |
June 2016 |
|
19,000 |
|
4.1441 |
|
(316) |
July 2016 |
|
19,000 |
|
4.1867 |
|
(168) |
August 2016 |
|
57,000 |
|
4.1688 |
|
(3,078) |
|
|
201,000 |
|
3.9422 |
|
(33,765) |
d. Options
i. Currency options
The Company designates as a cash flow hedge only the variation in the intrinsic value of its options, recognizing the time value of the premium in the financial result. If the hedge is not effective and the option is not exercised due to devaluation of the Brazilian Real, the losses related to the options will be registered as financial expenses in the statement of income.
The Company has designated transactions involving options denominated collar where there is a purchase of a put option ("PUT") and a sale of a call option ("CALL"), simultaneously, such that the premium paid for the put is compensated by the premium received in the call.
When the market price of any of the options is not available in an active market, the fair value is based on an option pricing model (Black-Scholes or Binomial).
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
Parent company and Consolidated |
12.31.15 |
R$ x US$ |
Type |
|
Maturities |
|
Notional (US$) |
|
Average US$ |
|
Fair value |
|
|
|
|
|
|
|
|
|
Financial instruments designated as cash flow hedge |
|
|
|
|
|
|
Collar - Call (Sale) |
|
January 2016 |
|
(191,000) |
|
4.0698 |
|
(20,747) |
Collar - Put (Purchase) |
|
January 2016 |
|
191,000 |
|
3.7628 |
|
10,268 |
Collar - Call (Sale) |
|
February 2016 |
|
(193,000) |
|
3.9832 |
|
(40,807) |
Collar - Put (Purchase) |
|
February 2016 |
|
193,000 |
|
3.6411 |
|
10,156 |
Collar - Call (Sale) |
|
March 2016 |
|
(130,000) |
|
3.7593 |
|
(57,862) |
Collar - Put (Purchase) |
|
March 2016 |
|
130,000 |
|
3.4552 |
|
4,158 |
Collar - Call (Sale) |
|
April 2016 |
|
(68,000) |
|
4.2237 |
|
(16,236) |
Collar - Put (Purchase) |
|
April 2016 |
|
68,000 |
|
3.6841 |
|
4,953 |
Collar - Call (Sale) |
|
May 2016 |
|
(110,000) |
|
4.4852 |
|
(12,563) |
Collar - Put (Purchase) |
|
May 2016 |
|
110,000 |
|
3.8600 |
|
10,643 |
Collar - Call (Sale) |
|
June 2016 |
|
(100,000) |
|
4.7355 |
|
(10,117) |
Collar - Put (Purchase) |
|
June 2016 |
|
100,000 |
|
3.8970 |
|
11,858 |
Collar - Call (Sale) |
|
July 2016 |
|
(85,000) |
|
4.4626 |
|
(13,956) |
Collar - Put (Purchase) |
|
July 2016 |
|
85,000 |
|
3.7988 |
|
6,936 |
Collar - Call (Sale) |
|
August 2016 |
|
(105,000) |
|
4.6536 |
|
(15,589) |
Collar - Put (Purchase) |
|
August 2016 |
|
105,000 |
|
3.8476 |
|
10,486 |
Collar - Call (Sale) |
|
September 2016 |
|
(90,000) |
|
4.7569 |
|
(13,590) |
Collar - Put (Purchase) |
|
September 2016 |
|
90,000 |
|
3.8583 |
|
9,551 |
Collar - Call (Sale) |
|
October 2016 |
|
(55,000) |
|
4.8645 |
|
(8,176) |
Collar - Put (Purchase) |
|
October 2016 |
|
55,000 |
|
3.8345 |
|
5,525 |
Collar - Call (Sale) |
|
November 2016 |
|
(40,000) |
|
4.8996 |
|
(6,290) |
Collar - Put (Purchase) |
|
November 2016 |
|
40,000 |
|
3.7900 |
|
3,538 |
Total Option (Collar) |
|
|
|
- |
|
|
|
(127,861) |
|
|
|
|
|
|
|
|
|
Put (Purchase) |
|
January 2016 |
|
30,000 |
|
3.9200 |
|
1,483 |
Put (Purchase) |
|
February 2016 |
|
30,000 |
|
3.9200 |
|
1,909 |
Total Option (Put) |
|
|
|
|
|
|
|
3,392 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(124,469) |
|
|
|
|
|
|
|
|
|
Parent company and Consolidated |
12.31.15 |
R$ x EUR |
Type |
|
Maturities |
|
Notional (EUR) |
|
Average EUR |
|
Fair value |
|
|
|
|
|
|
|
|
|
Financial instruments designated as cash flow hedge |
|
|
|
|
|
|
Collar - Call (Sale) |
|
January 2016 |
|
(8,000) |
|
4.9250 |
|
(16) |
Collar - Put (Purchase) |
|
January 2016 |
|
8,000 |
|
4.3750 |
|
1,018 |
Collar - Call (Sale) |
|
February 2016 |
|
(8,000) |
|
4.9475 |
|
(241) |
Collar - Put (Purchase) |
|
February 2016 |
|
8,000 |
|
4.3950 |
|
1,286 |
Collar - Call (Sale) |
|
March 2016 |
|
(7,000) |
|
4.9894 |
|
(342) |
Collar - Put (Purchase) |
|
March 2016 |
|
7,000 |
|
4.3843 |
|
1,152 |
Collar - Call (Sale) |
|
April 2016 |
|
(8,000) |
|
5.0395 |
|
(591) |
Collar - Put (Purchase) |
|
April 2016 |
|
8,000 |
|
4.3450 |
|
1,234 |
Total Option (Collar) |
|
|
|
- |
|
|
|
3,500 |
4.2.2 Breakdown of the balances of non-derivative financial instruments
The position of non-derivative financial instruments is presented as follows:
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
Parent company and Consolidated |
|
|
|
|
|
|
12.31.15 |
|
12.31.14 |
Hedge Instrument |
|
Hedge object |
|
Reference currency (notional) |
|
Value (notional) |
|
Fair value (1) |
|
Value (notional) |
|
Fair value (1) |
Financial instruments designated as cash flow hedge |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Export prepayment - PPEs |
|
Exchange |
|
USD |
|
300,000 |
|
1,171,440 |
|
300,000 |
|
796,860 |
Senior unsecured notes - Bonds |
|
Exchange |
|
USD |
|
300,000 |
|
1,171,440 |
|
300,000 |
|
796,860 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600,000 |
|
2,342,880 |
|
600,000 |
|
1,593,720 |
(1) Reference value converted by Ptax rate in effect at year-end.
a. Export prepayments – PPEs
The position of PPEs is presented as follows:
Parent company and Consolidated |
12.31.15 |
Hedge Instrument |
|
Type of risk hedged |
|
Maturities |
|
Notional (US$) |
|
Average rate |
|
Fair value |
|
|
|
|
|
|
|
|
|
|
|
Export prepayment - PPE |
|
US$ (E.R.) |
|
02.2017 to 02.2019 |
|
300,000 |
|
1.7796 |
|
1,171,440 |
b. Senior unsecured notes – Bonds
The position of bonds designated as cash flow hedge is presented as follows:
Parent company and Consolidated |
12.31.15 |
Hedge Instrument |
|
Type of risk hedged |
|
Maturities |
|
Notional (US$) |
|
Average rate |
|
Fair value |
|
|
|
|
|
|
|
|
|
|
|
BRF SA BRFSBZ5 |
|
US$ (E.R.) |
|
06.2022 |
|
150,000 |
|
2.0213 |
|
585,720 |
BRF SA BRFSBZ3 |
|
US$ (E.R.) |
|
05.2023 |
|
150,000 |
|
2.0387 |
|
585,720 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000 |
|
2.0300 |
|
1,171,440 |
4.3. Gains and losses of derivative and non-derivative financial instruments
The unrealized gains and losses of derivative and non-derivative financial instruments designated as cash flow hedge are recorded as a component of other comprehensive income, as set forth below:
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
Shareholders' Equity |
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Derivatives designated as cash flow hedges |
|
|
|
|
|
|
|
Foreign exchange risks |
(420,649) |
|
(152,670) |
|
(420,649) |
|
(152,670) |
Interest risks |
(27,725) |
|
(26,072) |
|
(66,597) |
|
(59,300) |
Commodity risks |
3,604 |
|
- |
|
3,604 |
|
- |
|
(444,770) |
|
(178,742) |
|
(483,642) |
|
(211,970) |
|
|
|
|
|
|
|
|
Non derivatives designated as cash flow hedges |
|
|
|
|
|
|
|
Foreign exchange risks |
(1,200,000) |
|
(450,840) |
|
(1,200,000) |
|
(450,840) |
|
|
|
|
|
|
|
|
Gross losses |
(1,644,770) |
|
(629,582) |
|
(1,683,642) |
|
(662,810) |
Deferred taxes on losses |
560,446 |
|
214,058 |
|
560,446 |
|
214,058 |
OCI recognized by subsidiaries |
(38,872) |
|
(33,228) |
|
- |
|
- |
Losses, net of taxes |
(1,123,196) |
|
(448,752) |
|
(1,123,196) |
|
(448,752) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in gross losses |
(1,015,188) |
|
(163,975) |
|
(1,020,832) |
|
(162,817) |
Income taxes on financial instruments adjustments |
346,388 |
|
55,752 |
|
346,388 |
|
55,752 |
OCI recognized by subsidiaries |
(5,644) |
|
1,158 |
|
- |
|
- |
Impact in other comprehensive income |
(674,444) |
|
(107,065) |
|
(674,444) |
|
(107,065) |
On December 31, 2015, the realized transaction with derivative and non-derivative financial instruments designated as cash flow hedge resulted in a loss of R$476,897 (loss of R$77,100 as of December 31, 2014), composed by a net loss amounting to R$469,917 (loss of R$72,347 as of December 31, 2014) recorded as gross revenues and a net loss of R$6,980 (gain of R$4,753 as of December 31, 2014) recorded in the financial result.
4.4. Breakdown of financial instruments by category – except derivatives
|
Parent company |
|
12.31.15 |
|
Loans and receivables |
|
Available for sale |
|
Trading securities |
|
Held to maturity |
|
Financial liabilities |
|
Total |
Assets |
|
|
|
|
|
|
|
|
|
|
|
Amortized cost |
|
|
|
|
|
|
|
|
|
|
|
Marketable securities |
- |
|
- |
|
- |
|
70,338 |
|
- |
|
70,338 |
Restricted cash |
- |
|
- |
|
- |
|
479,828 |
|
- |
|
479,828 |
Trade accounts receivable |
4,952,878 |
|
- |
|
- |
|
- |
|
- |
|
4,952,878 |
Other credits |
509,606 |
|
- |
|
- |
|
- |
|
- |
|
509,606 |
Other receivables |
152,965 |
|
- |
|
- |
|
- |
|
- |
|
152,965 |
Fair value |
|
|
|
|
|
|
|
|
|
|
|
Marketable securities |
- |
|
385,700 |
|
197,807 |
|
- |
|
- |
|
583,507 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
Amortized cost |
|
|
|
|
|
|
|
|
|
|
|
Trade accounts payable |
- |
|
- |
|
- |
|
- |
|
(4,024,725) |
|
(4,024,725) |
Loans and financing |
|
|
|
|
|
|
|
|
|
|
|
Local currency |
- |
|
- |
|
- |
|
- |
|
(3,819,625) |
|
(3,819,625) |
Foreign currency |
- |
|
- |
|
- |
|
- |
|
(9,760,476) |
|
(9,760,476) |
Capital lease payable |
- |
|
- |
|
- |
|
- |
|
(186,618) |
|
(186,618) |
|
5,615,449 |
|
385,700 |
|
197,807 |
|
550,166 |
|
(17,791,444) |
|
(11,042,322) |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
Parent company |
|
12.31.14 |
|
Loans and receivables |
|
Available for sale |
|
Trading securities |
|
Held to maturity |
|
Financial liabilities |
|
Total |
Assets |
|
|
|
|
|
|
|
|
|
|
|
Amortized cost |
|
|
|
|
|
|
|
|
|
|
|
Marketable securities |
- |
|
- |
|
- |
|
62,104 |
|
- |
|
62,104 |
Restricted cash |
- |
|
- |
|
- |
|
115,179 |
|
- |
|
115,179 |
Trade accounts receivable |
4,669,679 |
|
- |
|
- |
|
- |
|
- |
|
4,669,679 |
Other credits |
506,844 |
|
- |
|
- |
|
- |
|
- |
|
506,844 |
Other receivables |
195,481 |
|
- |
|
- |
|
- |
|
- |
|
195,481 |
Fair value |
|
|
|
|
|
|
|
|
|
|
|
Marketable securities |
- |
|
- |
|
283,623 |
|
- |
|
- |
|
283,623 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
Amortized cost |
|
|
|
|
|
|
|
|
|
|
|
Trade accounts payable |
- |
|
- |
|
- |
|
- |
|
(3,591,980) |
|
(3,591,980) |
Loans and financing |
|
|
|
|
|
|
|
|
|
|
|
Local currency |
- |
|
- |
|
- |
|
- |
|
(3,454,444) |
|
(3,454,444) |
Foreign currency |
- |
|
- |
|
- |
|
- |
|
(6,037,477) |
|
(6,037,477) |
Capital lease payable |
- |
|
- |
|
- |
|
- |
|
(243,606) |
|
(243,606) |
Fair value |
|
|
|
|
|
|
|
|
|
|
|
Loans and financing - NCE |
- |
|
- |
|
- |
|
- |
|
(538,700) |
|
(538,700) |
|
5,372,004 |
|
- |
|
283,623 |
|
177,283 |
|
(13,866,207) |
|
(8,033,297) |
|
Consolidated |
|
12.31.15 |
|
Loans and receivables |
|
Available for sale |
|
Trading securities |
|
Held to maturity |
|
Financial liabilities |
|
Total |
Assets |
|
|
|
|
|
|
|
|
|
|
|
Amortized cost |
|
|
|
|
|
|
|
|
|
|
|
Marketable securities |
- |
|
- |
|
- |
|
70,338 |
|
- |
|
70,338 |
Restricted cash |
- |
|
- |
|
- |
|
1,826,102 |
|
- |
|
1,826,102 |
Trade accounts receivable |
3,880,441 |
|
- |
|
- |
|
- |
|
- |
|
3,880,441 |
Other credits |
534,497 |
|
- |
|
- |
|
- |
|
- |
|
534,497 |
Other receivables |
152,965 |
|
- |
|
- |
|
- |
|
- |
|
152,965 |
Fair value |
|
|
|
|
|
|
|
|
|
|
|
Marketable securities |
- |
|
744,849 |
|
375,562 |
|
- |
|
- |
|
1,120,411 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
Amortized cost |
|
|
|
|
|
|
|
|
|
|
|
Trade accounts payable |
- |
|
- |
|
- |
|
- |
|
(4,744,993) |
|
(4,744,993) |
Loans and financing |
|
|
|
|
|
|
|
|
|
|
|
Local currency |
- |
|
- |
|
- |
|
- |
|
(3,819,625) |
|
(3,819,625) |
Foreign currency |
- |
|
- |
|
- |
|
- |
|
(11,359,658) |
|
(11,359,658) |
Capital lease payable |
- |
|
- |
|
- |
|
- |
|
(186,618) |
|
(186,618) |
Fair value |
|
|
|
|
|
|
|
|
|
|
|
Loans and financing - NCE |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
4,567,903 |
|
744,849 |
|
375,562 |
|
1,896,440 |
|
(20,110,894) |
|
(12,526,140) |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
Consolidated |
|
12.31.14 |
|
|
|
|
|
|
|
|
|
|
|
Loans and receivables |
|
Available for sale |
|
Trading
securities |
|
Held to maturity |
|
Financial liabilities |
|
Total |
Assets |
|
|
|
|
|
|
|
|
|
|
|
Amortized cost |
|
|
|
|
|
|
|
|
|
|
|
Marketable securities |
- |
|
- |
|
- |
|
62,104 |
|
- |
|
62,104 |
Restricted cash |
- |
|
- |
|
- |
|
115,179 |
|
- |
|
115,179 |
Trade accounts receivable |
3,054,577 |
|
- |
|
- |
|
- |
|
- |
|
3,054,577 |
Other credits |
576,740 |
|
- |
|
- |
|
- |
|
- |
|
576,740 |
Other receivables |
195,481 |
|
- |
|
- |
|
- |
|
- |
|
195,481 |
Fair value |
|
|
|
|
|
|
|
|
|
|
|
Marketable securities |
- |
|
303,857 |
|
283,623 |
|
- |
|
- |
|
587,480 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
Amortized cost |
|
|
|
|
|
|
|
|
|
|
|
Trade accounts payable |
- |
|
- |
|
- |
|
- |
|
(3,977,327) |
|
(3,977,327) |
Loans and financing |
|
|
|
|
|
|
|
|
|
|
|
Local currency |
- |
|
- |
|
- |
|
- |
|
(3,454,444) |
|
(3,454,444) |
Foreign currency |
- |
|
- |
|
- |
|
- |
|
(7,596,191) |
|
(7,596,191) |
Capital lease payable |
- |
|
- |
|
- |
|
- |
|
(243,790) |
|
(243,790) |
Fair value |
|
|
|
|
|
|
|
|
|
|
|
Loans and financing - NCE |
- |
|
- |
|
- |
|
- |
|
(538,700) |
|
(538,700) |
|
3,826,798 |
|
303,857 |
|
283,623 |
|
177,283 |
|
(15,810,452) |
|
(11,218,891) |
|
|
|
|
|
|
|
|
|
|
|
|
4.5. Determination of the fair value of financial instruments
The Company discloses its financial assets and liabilities at fair value, based on the appropriate accounting pronouncements, which refers to concepts of valuation and disclosure requirements.
Particularly related to the disclosure, the Company applies the hierarchy requirements set out in CVM Deliberation 699/12, which involves the following aspects:
· The fair value is the price that an asset could be exchanged and a liability could be settled, between knowledgeable willing parties in an arm’s length transaction; and
· Hierarchy on three levels for measurement of the fair value, according to observable inputs for the valuation of an asset or liability on the date of its measurement.
The valuation established on three levels of hierarchy for measurement of the fair value is based on observable and non-observable inputs. Observable inputs reflect market data obtained from independent sources, while non-observable inputs reflect the Company’s valuation technics. These two types of inputs create the hierarchy of fair value set forth below:
· Level 1 – Prices quoted (unadjusted) for identical instruments in active markets;
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
· Level 2 – 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; and
· Level 3 – Instruments whose significant inputs are non-observable.
The table below presents the overall classification of financial assets and liabilities according to the valuation hierarchy. For the year ended on December 31, 2015, there were no changes between the 3 levels of hierarchy.
|
Parent company |
|
|
|
|
|
|
|
12.31.15 |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
Assets |
|
|
|
|
|
|
|
Financial assets |
|
|
|
|
|
|
|
Stocks |
385,700 |
|
- |
|
- |
|
385,700 |
Held for trading |
|
|
|
|
|
|
|
Bank deposit certificates |
- |
|
42,545 |
|
- |
|
42,545 |
Financial treasury bills |
155,262 |
|
- |
|
- |
|
155,262 |
Other financial assets |
|
|
|
|
|
|
|
Derivatives designated as hedges |
- |
|
98,406 |
|
- |
|
98,406 |
Derivatives not designated as hedges |
- |
|
20,274 |
|
- |
|
20,274 |
|
540,962 |
|
161,225 |
|
- |
|
702,187 |
Liabilities |
|
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
|
|
|
Loans and financing |
- |
|
- |
|
- |
|
- |
Other financial liabilities |
|
|
|
|
|
|
|
Derivatives designated as hedges |
- |
|
(609,604) |
|
- |
|
(609,604) |
Derivatives not designated as hedges |
- |
|
(10,270) |
|
- |
|
(10,270) |
|
- |
|
(619,874) |
|
- |
|
(619,874) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent company |
|
12.31.14 |
|
|
|
|
|
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
Assets |
|
|
|
|
|
|
|
Financial assets |
|
|
|
|
|
|
|
Held for trading |
|
|
|
|
|
|
|
Bank deposit certificates |
- |
|
64,820 |
|
- |
|
64,820 |
Financial treasury bills |
218,803 |
|
- |
|
- |
|
218,803 |
Other financial assets |
|
|
|
|
|
|
|
Derivatives designated as hedges |
- |
|
13,842 |
|
- |
|
13,842 |
Derivatives not designated as hedges |
- |
|
29,080 |
|
- |
|
29,080 |
|
218,803 |
|
107,742 |
|
- |
|
326,545 |
Liabilities |
|
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
|
|
|
Loans and financing |
- |
|
(538,700) |
|
- |
|
(538,700) |
Other financial liabilities |
|
|
|
|
|
|
|
Derivatives designated as hedges |
- |
|
(207,147) |
|
- |
|
(207,147) |
Derivatives not designated as hedges |
- |
|
(8,910) |
|
- |
|
(8,910) |
|
- |
|
(754,757) |
|
- |
|
(754,757) |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
Consolidated |
|
12.31.15 |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
Assets |
|
|
|
|
|
|
|
Financial assets |
|
|
|
|
|
|
|
Available for sale |
|
|
|
|
|
|
|
Credit linked notes |
293,282 |
|
- |
|
- |
|
293,282 |
Brazilian foreign debt securities |
65,867 |
|
- |
|
- |
|
65,867 |
Stocks |
385,700 |
|
- |
|
- |
|
385,700 |
Held for trading |
|
|
|
|
|
|
|
Bank deposit certificates |
- |
|
42,545 |
|
- |
|
42,545 |
Financial treasury bills |
155,262 |
|
- |
|
- |
|
155,262 |
Investment funds |
177,755 |
|
- |
|
- |
|
177,755 |
Other financial assets |
|
|
|
|
|
|
|
Derivatives designed as hedges |
- |
|
98,406 |
|
- |
|
98,406 |
Derivatives not designated as hedges |
- |
|
30,981 |
|
- |
|
30,981 |
|
1,077,866 |
|
171,932 |
|
- |
|
1,249,798 |
Liabilities |
|
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
|
|
|
Loans and financing |
- |
|
- |
|
- |
|
- |
Other financial liabilities |
|
|
|
|
|
|
|
Derivatives designed as hedges |
- |
|
(655,969) |
|
- |
|
(655,969) |
Derivatives not designated as hedges |
- |
|
(10,633) |
|
- |
|
(10,633) |
|
- |
|
(666,602) |
|
- |
|
(666,602) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
12.31.14 |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
Assets |
|
|
|
|
|
|
|
Financial assets |
|
|
|
|
|
|
|
Available for sale |
|
|
|
|
|
|
|
Credit linked notes |
187,867 |
|
- |
|
- |
|
187,867 |
Brazilian foreign debt securities |
92,356 |
|
- |
|
- |
|
92,356 |
Investment funds |
23,634 |
|
- |
|
- |
|
23,634 |
Held for trading |
|
|
|
|
|
|
|
Bank deposit certificates |
- |
|
64,820 |
|
- |
|
64,820 |
Financial treasury bills |
218,803 |
|
- |
|
- |
|
218,803 |
Other financial assets |
|
|
|
|
|
|
|
Derivatives designed as hedges |
- |
|
13,842 |
|
- |
|
13,842 |
Derivatives not designated as hedges |
- |
|
29,259 |
|
- |
|
29,259 |
|
522,660 |
|
107,921 |
|
- |
|
630,581 |
Liabilities |
|
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
|
|
|
Loans and financing |
- |
|
(538,700) |
|
- |
|
(538,700) |
Other financial liabilities |
|
|
|
|
|
|
|
Derivatives designed as hedges |
- |
|
(245,734) |
|
- |
|
(245,734) |
Derivatives not designated as hedges |
- |
|
(11,704) |
|
- |
|
(11,704) |
|
- |
|
(796,138) |
|
- |
|
(796,138) |
The following is a description of the valuation methodologies utilized by the Company for financial instruments measured at fair value:
· Investments in Brazilian foreign debt securities, Financial Treasury Notes (“LFT”), financial investment funds and stocks are classified at Level 1 of the fair value hierarchy, as the market prices are available in an active market;
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
· Investments in Bank Deposit Certificates (“CDB”) are classified at Level 2, since the determination of fair value is based on the price quotation of similar financial instruments in non-active markets; and
· Derivative financial instruments are valued through existing pricing models widely accepted by financial market and described in appendix III of the Risk Policy. Readily observable market inputs are used, such as interest rate forecasts, volatility factors and foreign currency rates. These instruments are classified at Level 2 in the valuation hierarchy, including interest rates swap and foreign currency derivatives.
4.6. Comparison between book value and fair value of financial instruments
Except for the items presented below, the book value of all other financial instruments approximate fair value. The fair value of financial instruments presented below was based in prices observed in active markets, level 1 of the hierarchy for fair value measurement.
|
Parent company and Consolidated |
|
|
|
12.31.15 |
|
12.31.14 |
|
Maturity |
|
Book value |
|
Fair value |
|
Book value |
|
Fair value |
BRF bonds |
|
|
|
|
|
|
|
|
|
BRF SA BRFSBZ5 |
2022 |
|
(656,068) |
|
(695,203) |
|
(1,995,163) |
|
(2,101,511) |
BRF SA BRFSBZ4 |
2024 |
|
(2,906,435) |
|
(2,718,636) |
|
(1,961,020) |
|
(1,953,912) |
BRF SA BRFSBZ3 |
2023 |
|
(1,881,569) |
|
(1,781,229) |
|
(1,245,013) |
|
(1,241,545) |
BRF SA BRFSBZ7 |
2018 |
|
(502,061) |
|
(427,016) |
|
(501,192) |
|
(439,461) |
BRF SA BRFSBZ2 |
2022 |
|
(2,139,463) |
|
(1,990,770) |
|
- |
|
- |
Parent company |
|
|
(8,085,596) |
|
(7,612,854) |
|
(5,702,388) |
|
(5,736,429) |
|
|
|
|
|
|
|
|
|
|
BFF bonds |
|
|
|
|
|
|
|
|
|
Sadia Overseas BRFSBZ7 |
2020 |
|
(475,299) |
|
(499,662) |
|
(595,372) |
|
(679,571) |
Sadia bonds |
|
|
|
|
|
|
|
|
|
Sadia Overseas BRFSBZ6 |
2017 |
|
(443,332) |
|
(461,999) |
|
(427,285) |
|
(457,477) |
Quickfood bonds |
|
|
|
|
|
|
|
|
|
Quickfood |
2016 |
|
(285,709) |
|
(285,709) |
|
(190,139) |
|
(190,139) |
Consolidated |
|
|
(9,289,936) |
|
(8,860,224) |
|
(6,915,184) |
|
(7,063,616) |
4.7. Table of sensitivity analysis
In preparation of the sensitivity analysis, Management considered the derivative financial instruments used to mitigate the currency risk and commodities as relevant risks and could impact the Company's results. Currently, Management believes that fluctuations in interest rates do not significantly affect its financial results, since have opted for fixing through derivative financial instruments (interest rate swap), a considerable part of its post fixed debt.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
The table below presents the possible impacts of derivative and non-derivative financial instruments considering scenarios of appreciation and depreciation of the main traded currencies by the Company with respect to its functional currency (Brazilian Real) and changes in corn prices on the Chicago Board of Trade (“CBOT”). The amount of exports utilized corresponds to notional value of derivative financial instruments entered into in order to hedge highly probable transaction.
Quantitative and qualitative information used in preparing these analyzes are based on the position for the period ended December 31, 2015. Future results to be measured may differ significantly from those estimates amounts, if the reality becomes different from the assumptions used.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.9048 |
|
3.5143 |
|
2.9286 |
|
4.8810 |
|
5.8572 |
Parity - Brazilian Reais x U.S. Dollar |
|
|
|
Current |
|
Scenario I |
|
Scenario II |
|
Scenario III |
|
Scenario IV |
Transaction/Instrument |
|
Risk |
|
Scenario |
|
10% appreciation |
|
25% appreciation |
|
25% devaluation |
|
50% devaluation |
Financial instruments designated as hedge accouting |
|
|
|
|
|
|
|
|
|
|
|
|
Non-deliverable forward |
|
Devaluation of R$ |
|
(13,711) |
|
3,471 |
|
29,242 |
|
(56,663) |
|
(99,616) |
Fixed exchange rate |
|
Devaluation of R$ |
|
7,526 |
|
86,013 |
|
203,743 |
|
(188,690) |
|
(384,906) |
Options - currencies |
|
Devaluation of R$ |
|
- |
|
295,189 |
|
1,013,868 |
|
647,587 |
|
1,786,813 |
Export prepayments |
|
Devaluation of R$ |
|
(637,560) |
|
(520,416) |
|
(344,700) |
|
(930,420) |
|
(1,223,280) |
Bonds |
|
Devaluation of R$ |
|
(562,440) |
|
(445,296) |
|
(269,580) |
|
(855,300) |
|
(1,148,160) |
Swaps |
|
Devaluation of R$ |
|
(231,384) |
|
(183,246) |
|
(111,038) |
|
(351,730) |
|
(472,076) |
Exports |
|
Appreciation of R$ |
|
6,185 |
|
(384,673) |
|
(1,246,853) |
|
(402,234) |
|
(1,302,291) |
Financial instruments not designated as hedge accouting |
|
|
|
|
|
|
|
|
|
|
|
NDF - Purchase |
|
Appreciation of R$ |
|
(8,080) |
|
(27,604) |
|
(56,890) |
|
40,730 |
|
89,540 |
Dollar Future sales - BM&FBovespa |
|
Devaluation of R$ |
|
(912) |
|
73,279 |
|
184,566 |
|
(186,390) |
|
(371,868) |
Net effect |
|
|
|
(1,440,376) |
|
(1,103,283) |
|
(597,642) |
|
(2,283,110) |
|
(3,125,844) |
Shareholders' equity |
|
|
|
(1,431,384) |
|
(1,148,958) |
|
(725,318) |
|
(2,137,450) |
|
(2,843,516) |
Statement of income |
|
|
|
(8,992) |
|
45,675 |
|
127,676 |
|
(145,660) |
|
(282,328) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.2504 |
|
3.8254 |
|
3.1878 |
|
5.3130 |
|
6.3756 |
Parity - Brazilian Reais x Euro |
|
|
|
Current |
|
Scenario I |
|
Scenario II |
|
Scenario III |
|
Scenario IV |
Transaction/Instrument |
|
Risk |
|
Scenario |
|
10% appreciation |
|
25% appreciation |
|
25% devaluation |
|
50% devaluation |
Financial instruments designated as hedge accouting |
|
|
|
|
|
|
|
|
|
|
|
|
Non-deliverable forward |
|
Devaluation of R$ |
|
1,095 |
|
14,611 |
|
34,886 |
|
(32,696) |
|
(66,486) |
Currency options |
|
Devaluation of R$ |
|
3,848 |
|
17,024 |
|
36,788 |
|
10,481 |
|
43,422 |
Exports |
|
Appreciation of R$ |
|
(4,943) |
|
(31,635) |
|
(71,674) |
|
22,215 |
|
23,064 |
Financial instruments not designated as hedge accouting |
|
|
|
|
|
|
|
|
|
|
|
Non-deliverable forward |
|
Devaluation of R$ |
|
1,210 |
|
(62,545) |
|
(158,179) |
|
160,600 |
|
319,989 |
Net effect |
|
|
|
1,210 |
|
(62,545) |
|
(158,179) |
|
160,600 |
|
319,989 |
Shareholders' equity |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
Statement of income |
|
|
|
1,210 |
|
(62,545) |
|
(158,179) |
|
160,600 |
|
319,989 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.7881 |
|
5.2093 |
|
4.3411 |
|
7.2351 |
|
8.6822 |
Parity - Brazilian Reais x GBP |
|
|
|
Current |
|
Scenario I |
|
Scenario II |
|
Scenario III |
|
Scenario IV |
Transaction/Instrument |
|
Risk |
|
Scenario |
|
10% appreciation |
|
25% appreciation |
|
25% devaluation |
|
50% devaluation |
Non-deliverable forward |
|
Devaluation of R$ |
|
514 |
|
6,881 |
|
16,432 |
|
(15,403) |
|
(31,320) |
Exports |
|
Appreciation of R$ |
|
(514) |
|
(6,881) |
|
(16,432) |
|
15,403 |
|
31,320 |
Financial instruments not designated as hedge accouting |
|
|
|
|
|
|
|
|
|
|
|
NDF and Deliverable forward (hedge accouting) |
|
Devaluation of R$ |
|
(422) |
|
(11,998) |
|
(29,362) |
|
28,519 |
|
57,459 |
Net effect |
|
|
|
(422) |
|
(11,998) |
|
(29,362) |
|
28,519 |
|
57,459 |
Shareholders' equity |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
Statement of income |
|
|
|
(422) |
|
(11,998) |
|
(29,362) |
|
28,519 |
|
57,459 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.0324 |
|
0.0292 |
|
0.0243 |
|
0.0405 |
|
0.0486 |
Parity - Brazilian Reais x JPY |
|
|
|
Current |
|
Scenario I |
|
Scenario II |
|
Scenario III |
|
Scenario IV |
Transaction/Instrument |
|
Risk |
|
Scenario |
|
10% appreciation |
|
25% appreciation |
|
25% devaluation |
|
50% devaluation |
Non-deliverable forward |
|
Devaluation of R$ |
|
(34,289) |
|
(12,237) |
|
20,842 |
|
(89,420) |
|
(144,551) |
Exports |
|
Appreciation of R$ |
|
34,289 |
|
12,237 |
|
(20,842) |
|
89,420 |
|
144,551 |
Financial instruments not designated as hedge accouting |
|
|
|
|
|
|
|
|
|
|
|
Non-deliverable forward |
|
Devaluation of R$ |
|
3,032 |
|
23,954 |
|
55,337 |
|
(49,272) |
|
(101,577) |
Net effect |
|
|
|
3,032 |
|
23,954 |
|
55,337 |
|
(49,272) |
|
(101,577) |
Shareholders' equity |
|
|
|
- |
|
- |
|
- |
|
- |
|
- |
Statement of income |
|
|
|
3,032 |
|
23,954 |
|
55,337 |
|
(49,272) |
|
(101,577) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
142.80 |
|
128.52 |
|
107.10 |
|
178.50 |
|
214.20 |
Price parity CBOT - US$/Ton |
|
|
|
Current |
|
Scenario I |
|
Scenario II |
|
Scenario III |
|
Scenario IV |
Transaction/Instrument |
|
Risk |
|
Scenario |
|
Decrease 10% |
|
Decrease 25% |
|
Increase 25% |
|
Increase 50% |
Designated as hedge accounting |
|
|
|
|
|
|
|
|
|
|
|
|
Non-deliverable forward |
|
Increase in the price of corn |
|
(11,729) |
|
(47,057) |
|
(100,049) |
|
76,592 |
|
164,912 |
Not designated as hedge accounting |
|
|
|
|
|
|
|
|
|
|
|
|
NDF - Corn purchase |
|
Increase in the price of corn |
|
2,907 |
|
5,962 |
|
10,544 |
|
(4,729) |
|
(12,366) |
Net effect |
|
|
|
(8,822) |
|
(41,095) |
|
(89,505) |
|
71,863 |
|
152,546 |
Shareholders' equity |
|
|
|
(11,729) |
|
(47,057) |
|
(100,049) |
|
76,592 |
|
164,912 |
Statement of income |
|
|
|
2,907 |
|
5,962 |
|
10,544 |
|
(4,729) |
|
(12,366) |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
5. SEGMENT INFORMATION
The operating segments are reported consistently with the management reports provided to the Board of Directors and Directors for assessing the performance of each segment and allocating resources.
As disclosed in note 1, in order to reflect the management structure changes the segment information of 2015 and 2014 were prepared considering the five observable segments, as follows: Brazil, Latin America (“LATAM”), Europe, Middle East and Africa (“MEA”) and Asia, which primarily observe our geographical structure. The information as of December 31, 2014 was prepared in order to be comparable to the information as of December 31, 2015, according to the new segments of the Company.
Hence, these segments include the sales operations in all sales channels and are disclosed according to the nature of the products as described below:
· Poultry: involves the production and sale of whole poultry and in-natura cuts.
· Pork and beef cuts: involves the production and sale of in-natura cuts.
· Processed products: involves the production and sale of processed foods, frozen and processed products derived from poultry, pork and beef.
· Other processed products: involves the production and sale of processed foods like margarine and vegetable and soybean-based products.
· Other sales: involves the production and trade of animal feed, soy meal, refined soy flour, cheese and cream cheese.
The net sales for each reportable operating segment are presented below:
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
|
Consolidated |
Net sales |
|
12.31.15 |
|
12.31.14 |
Brazil |
|
|
|
|
Poultry |
|
2,293,385 |
|
2,044,614 |
Pork and beef |
|
733,905 |
|
1,041,064 |
Processed products |
|
12,227,512 |
|
11,383,894 |
Other sales |
|
782,705 |
|
954,875 |
|
|
16,037,507 |
|
15,424,447 |
|
|
|
|
|
Europe |
|
|
|
|
Poultry |
|
854,902 |
|
483,862 |
Pork and beef |
|
850,400 |
|
895,593 |
Processed products |
|
1,934,313 |
|
1,713,181 |
|
|
3,639,615 |
|
3,092,636 |
|
|
|
|
|
MEA |
|
|
|
|
Poultry |
|
6,364,934 |
|
4,909,920 |
Pork and beef |
|
150,233 |
|
253,310 |
Processed products |
|
582,260 |
|
546,590 |
Other sales |
|
46 |
|
- |
|
|
7,097,473 |
|
5,709,820 |
|
|
|
|
|
Asia |
|
|
|
|
Poultry |
|
2,834,136 |
|
2,613,180 |
Pork and beef |
|
373,815 |
|
388,393 |
Processed products |
|
81,643 |
|
71,371 |
|
|
3,289,594 |
|
3,072,944 |
|
|
|
|
|
LATAM |
|
|
|
|
Poultry |
|
501,864 |
|
537,119 |
Pork and beef |
|
294,937 |
|
313,607 |
Processed products |
|
1,284,329 |
|
806,167 |
Other sales |
|
51,282 |
|
50,103 |
|
|
2,132,412 |
|
1,706,996 |
|
|
32,196,601 |
|
29,006,843 |
The operating income for each reportable operating segment is presented below:
|
|
Consolidated |
|
|
12.31.15 |
|
12.31.14 |
|
|
|
|
|
Brazil |
|
1,622,322 |
|
2,001,984 |
Europe |
|
572,160 |
|
552,579 |
MEA |
|
1,214,196 |
|
314,606 |
Asia |
|
703,333 |
|
546,638 |
LATAM |
|
116,399 |
|
62,512 |
|
|
4,228,410 |
|
3,478,319 |
No customer was individually or in aggregate responsible for more than 5% of net sales for the years ended December 31, 2015 and 2014.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
The goodwill and intangible assets with indefinite useful life (trademarks) arising from business combination were allocated to the reportable operating segments, considering the nature of the products manufactured in each segment (cash-generating unit), as presented below:
|
Consolidated |
|
Goodwill |
|
Trademarks |
|
Total |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Brazil |
1,151,498 |
|
1,151,498 |
|
982,478 |
|
982,478 |
|
2,133,976 |
|
2,133,976 |
Europe |
481,658 |
|
303,258 |
|
20,149 |
|
20,115 |
|
501,807 |
|
323,373 |
MEA |
834,368 |
|
749,654 |
|
170,407 |
|
170,407 |
|
1,004,775 |
|
920,061 |
Ásia |
78,270 |
|
78,270 |
|
- |
|
- |
|
78,270 |
|
78,270 |
LATAM |
232,308 |
|
242,663 |
|
198,984 |
|
94,888 |
|
431,292 |
|
337,551 |
|
2,778,102 |
|
2,525,343 |
|
1,372,018 |
|
1,267,888 |
|
4,150,120 |
|
3,793,231 |
The Company performed the impairment test of the assets allocated to the reportable segments using the discounted cash flow methodology. The results and main assumptions used are disclosed in note 19.
Information referring to the total assets by reportable segments is not being disclosed, as it is not included in the set of information made available to the Company’s Management, which take investment decisions and determine allocation of assets on a consolidated basis.
6. BUSINESS COMBINATION AND ACQUSITION OF ENTITIES INTEREST
6.1. Business combination
6.1.1. Business combination – Invicta Food Group Limited (“IFGL”)
On April 22, 2015, BRF, through its wholly-owned subsidiary BRF GmbH, has signed with the shareholders of the entire share capital of Invicta Food Group Limited ("IFGL"), the final documents for the formation of a new company (denominated BRF Invicta), which shall have as main objective the distribution of processed food in the United Kingdom, Ireland and Scandinavia.
The sellers contributed with IFGL operation and BRF GmbH contributed its current operation in Europe (represented by the business of BRF UK, former corporate name of Plusfood UK) at BRF Invicta and BRF GmbH paid to the sellers the amount of GBP25,558 (equivalent to R$115,994), such that BRF GmbH will hold 62% of BRF Invicta total share capital.
Additionally, BRF GmbH recorded a provision of GBP8,000 (equivalent to R$36,291) as contingent consideration, which can be adjusted in a range of GBP4,000 to GBP12,000,
as it depends on the business operating performance and the appreciation of the shares of BRF S.A., and will be settled in January 2019.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
The agreement signed between BRF GmbH and IFGL also includes a call option held by BRF GmbH, to be exercised from January 01, 2019 to December 31, 2020 and a put option held by shareholders of the 38% remaining, to be exercised from January 01, 2023 to March 31, 2023. BRF recognized a liability, in non-current liabilities, related to the put option in the amount of GBP53,100 (equivalent to R$240,883) referring to the fair value of exercise price of put option in counterparty to the BRF GmbH’s shareholders’ equity to reflect the acquisition of non-controlling interest. On December 31, 2015, the amount of this obligation is R$307,348. This liability corresponds to R$307,348 as of December 31, 2015.
The fair value of the acquired assets and assumed liabilities for the determination of the price paid by BRF Invicta to acquire IFGL are as follows:
|
Fair value recognized
on acquisition date |
Cash and cash equivalents |
25,073 |
Trade accounts receivable, net |
37,584 |
Inventories |
68,336 |
Property, plant and equipment, net |
4,986 |
Intangible |
196,199 |
Customer relationship |
147,424 |
Import Quotas |
48,775 |
|
332,178 |
|
|
Trade accounts payable |
30,231 |
Tax payable |
1,093 |
Other liabilities |
2,341 |
Deferred taxes |
39,240 |
|
72,905 |
|
|
Net asset |
259,273 |
|
|
Fair value of consideration |
393,118 |
Cash |
115,944 |
Earn-out |
36,291 |
Transfer of shares of BRF Invicta at market value (1) |
240,883 |
Fair value of consideration |
393,118 |
|
|
Goodwill |
133,845 |
The fair value of the consideration paid was determined as follows:
Cash |
115,944 |
Earn-out |
36,291 |
Transfer of shares of BRF Invicta at market value (1) |
240,883 |
Fair value of consideration |
393,118 |
(1) A gain of R$111,247 corresponding to the difference of historical cost and market value of BRF Invicta shares recognized as capital reserve in shareholder’s equity.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
IFGL contributed with net revenues of R$393,532 and net profit of R$20,308 from the acquisition date to 31.12.15 in the consolidate balances. If the acquisition had occurred at the beginning of year 2015, the consolidated net revenues for this year would be increased by R$109,404 and the consolidated net profit of year would be increased by R$4,270.
6.2. Acquisition of Entities Interest
6.2.1. Acquisition of entity interest of SATS BRF Food Pte. Ltd (“SATS BRF”)
On June 02, 2015, BRF, through its wholly-owned subsidiary BRF GmbH, signed an agreement with Singapore Food Industries Pte. Ltd. (“SFI”) for the formation of a joint venture in Singapore, of which BRF acquired 49% of the share capital. SFI is a wholly-owned subsidiary of SATS Ltd., which is the leading provider of airport food catering in Asia, and listed on the Singapore Exchange ("SGX").
The joint venture was named SATS BRF Food Pte. Ltd. ("SATS BRF"). The total consideration was SGD26,000 (R$59,883) (see below):
Cash – consideration paid |
|
60,637 |
|
|
|
Fair value of equity interest in SATS on the acquisition date |
|
(54,853) |
|
|
|
Goodwill |
|
5,784 |
SATS BRF will focus on expand the offer of processed foods and semi-processed of high value added, initially for the Singapore market.
The SATS BRF’s investment is measured based on the equity method and classified as joint venture.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
7. CASH AND CASH EQUIVALENTS
|
Average rate (p.a.) |
|
Parent company |
|
Consolidated |
|
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Cash and bank accounts |
|
|
|
|
|
|
|
|
|
U.S. Dollar |
- |
|
33,523 |
|
13,049 |
|
665,550 |
|
1,309,800 |
Brazilian Reais |
- |
|
65,212 |
|
101,422 |
|
65,302 |
|
101,654 |
Euro |
- |
|
76,681 |
|
122,282 |
|
556,440 |
|
311,339 |
Other currencies |
- |
|
11,615 |
|
626 |
|
330,855 |
|
115,719 |
|
|
|
187,031 |
|
237,379 |
|
1,618,147 |
|
1,838,512 |
Cash equivalents |
|
|
|
|
|
|
|
|
|
In Brazilian Reais |
|
|
|
|
|
|
|
|
|
Investment funds |
15.12% |
|
14,553 |
|
13,863 |
|
14,553 |
|
13,863 |
Savings account |
5.66% |
|
10,990 |
|
- |
|
10,990 |
|
- |
Bank deposit certificates |
14.23% |
|
449,716 |
|
1,617,420 |
|
486,042 |
|
1,644,069 |
|
|
|
475,259 |
|
1,631,283 |
|
511,585 |
|
1,657,932 |
In U.S. Dollar |
|
|
|
|
|
|
|
|
|
Term deposit |
1.31% |
|
172,899 |
|
39,888 |
|
2,785,926 |
|
1,521,420 |
Overnight |
0.08% |
|
9,896 |
|
22,267 |
|
430,492 |
|
901,851 |
In Euro |
|
|
|
|
|
|
|
|
|
Term deposit |
- |
|
- |
|
48,540 |
|
- |
|
78,190 |
Other currencies |
|
|
|
|
|
|
|
|
|
Term deposit |
5.24% |
|
- |
|
- |
|
16,740 |
|
9,037 |
|
|
|
182,795 |
|
110,695 |
|
3,233,158 |
|
2,510,498 |
|
|
|
845,085 |
|
1,979,357 |
|
5,362,890 |
|
6,006,942 |
8. MARKETABLE SECURITIES
|
|
|
|
|
Average interest rate (p.a.) |
|
Parent company |
|
Consolidated |
|
WATM (1) |
|
Currency |
|
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Available for sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit linked note (a) |
4.41 |
|
US$ |
|
3.92% |
|
- |
|
- |
|
293,282 |
|
187,867 |
Brazilian foreign debt securities (b) |
2.34 |
|
US$ |
|
2.98% |
|
- |
|
- |
|
65,867 |
|
92,356 |
Stocks (f) |
- |
|
R$ |
|
- |
|
385,700 |
|
- |
|
385,700 |
|
- |
Investment funds (c) |
- |
|
ARS |
|
- |
|
- |
|
- |
|
- |
|
23,634 |
|
|
|
|
|
|
|
385,700 |
|
- |
|
744,849 |
|
303,857 |
Held for trading |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank deposit certificates ("CDB") (d) |
5.42 |
|
R$ |
|
13.97% |
|
42,545 |
|
64,820 |
|
42,545 |
|
64,820 |
Financial treasury bills (e) |
4.54 |
|
R$ |
|
14.15% |
|
155,262 |
|
218,803 |
|
155,262 |
|
218,803 |
Investment funds (c) |
1.00 |
|
ARS |
|
29.31% |
|
- |
|
- |
|
177,755 |
|
- |
|
|
|
|
|
|
|
197,807 |
|
283,623 |
|
375,562 |
|
283,623 |
Held to maturity |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial treasury bills (e) |
1.72 |
|
R$ |
|
14.15% |
|
70,338 |
|
62,104 |
|
70,338 |
|
62,104 |
|
|
|
|
|
|
|
653,845 |
|
345,727 |
|
1,190,749 |
|
649,584 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
197,807 |
|
283,623 |
|
734,711 |
|
587,480 |
Non-current |
|
|
|
|
|
|
456,038 |
|
62,104 |
|
456,038 |
|
62,104 |
(1) Weighted average maturity in years.
(a) The credit linked note is a structured operation with a first-class financial institution that bears periodic interest (LIBOR + spread) and corresponds to a credit note that contemplates the Company’s risk.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
(b) Brazilian foreign debt securities are denominated in U.S. Dollars and remunerated at pre and post-fixed rates.
(c) The fund in foreign currency is basically represented of public and private securities
(d) Bank Deposit Certificate (“CDB”) investments are denominated in Brazilian Reais and remunerated at rates varying from 98% to 100% of the Interbank Deposit Certificate (“CDI”).
(e) Financial Treasury Bills (“LFT”) are remunerated at the rate of the Special System for Settlement and Custody (“SELIC”).
(f) The stock balance comprises the market value of 29,000,000 stocks from Minerva (BEEF3) (note 17.3).
The unrealized loss by the change in fair value of the available for sale securities, recorded in other comprehensive income, corresponds to the accumulated amount of R$8,466 net of income tax of R$1,987 (loss of R$17,296 net of income tax of R$225 as of December 31, 2014).
Additionally, on December 31, 2015, of the total of marketable securities, R$99,264 (R$32,433 as of December 31, 2014) were pledged as collateral (without restrictions for use) for operations with future contracts denominated in U.S. Dollars, traded on the Futures and Commodities Exchange (“BM&FBovespa”).
The Company also has restricted cash in the amount of R$479,828 in the parent company and R$1,826,102 in the consolidate balances on December 31, 2015 (R$115,179 in the parent company and consolidate balances on December 31, 2014), see note 16.
The marketable securities non-current balance as of December 31, 2015 matures in 2017.
The Company conducted an analysis of sensitivity to foreign exchange rate as presented in note 4.7.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
9. TRADE ACCOUNTS RECEIVABLE, NET AND OTHER RECEIVABLES
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Trade accounts receivable, net |
|
|
|
|
|
|
|
Domestic customers |
1,928,197 |
|
1,476,399 |
|
1,928,197 |
|
1,476,399 |
Domestic related parties |
645 |
|
1,622 |
|
645 |
|
1,622 |
Foreign customers |
419,153 |
|
410,943 |
|
2,146,020 |
|
1,693,314 |
Foreign related parties |
3,030,221 |
|
2,889,486 |
|
250,766 |
|
1,243 |
|
5,378,216 |
|
4,778,450 |
|
4,325,628 |
|
3,172,578 |
( - ) Adjustment to present value |
(13,232) |
|
(10,220) |
|
(13,232) |
|
(10,220) |
( - ) Allowance for doubtful accounts |
(412,106) |
|
(98,551) |
|
(431,955) |
|
(107,781) |
|
|
|
|
|
|
|
|
|
4,952,878 |
|
4,669,679 |
|
3,880,441 |
|
3,054,577 |
|
|
|
|
|
|
|
|
Current |
4,948,745 |
|
4,663,193 |
|
3,876,308 |
|
3,046,871 |
Non-current |
4,133 |
|
6,486 |
|
4,133 |
|
7,706 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit notes |
544,951 |
|
532,148 |
|
569,842 |
|
602,987 |
( - ) Adjustment to present value |
(2,982) |
|
(8,640) |
|
(2,982) |
|
(9,583) |
( - ) Allowance for doubtful accounts |
(32,363) |
|
(16,664) |
|
(32,363) |
|
(16,664) |
|
|
|
|
|
|
|
|
|
509,606 |
|
506,844 |
|
534,497 |
|
576,740 |
|
|
|
|
|
|
|
|
Current |
281,516 |
|
170,029 |
|
303,716 |
|
215,067 |
Non-current (1) |
228,090 |
|
336,815 |
|
230,781 |
|
361,673 |
(1) Weighted average maturity of 3.18 years.
Of the foreign related parties balance recorded in the parent company, R$1,110,010 were transferred in the Certificate of Agribusiness Receivables operation (“CRA”) as disclosed in Note 20.
On December 31, 2015 notes receivable are comprised mainly by receivables from the (i) sale of Ana Rech assets to JBS, of R$101,161; (ii) sale of assets of Vila Anastácio, former headquarters of Sadia, of R$22,198; (iii) sale of Carambeí plant to Seara, of R$88,150 and (iv) disposal of various other assets and farms, R$309,221.
The trade accounts receivable from related parties by the parent company are disclosed in note 30. The consolidated balances, refers to transaction with associates UP!, in domestic market and with joint ventures AKF and SATS BRF, in foreign market.
The rollforward of allowance for doubtful accounts is presented below:
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Beginning balance |
98,551 |
|
99,874 |
|
107,781 |
|
107,478 |
Additions (1) |
274,281 |
|
85,163 |
|
301,441 |
|
91,315 |
Business combination |
- |
|
- |
|
- |
|
2,798 |
Reversals |
(57,618) |
|
(54,479) |
|
(65,753) |
|
(57,838) |
Write-offs |
(30,858) |
|
(32,089) |
|
(30,901) |
|
(33,953) |
Exchange rate variation |
127,750 |
|
82 |
|
119,387 |
|
(2,019) |
Ending balance |
412,106 |
|
98,551 |
|
431,955 |
|
107,781 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Refers mainly to doubtful accounts in foreign markets. |
The aging of trade accounts receivable is as follows: |
|
|
|
|
|
|
|
|
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Current |
4,902,657 |
|
4,494,352 |
|
3,483,359 |
|
2,793,427 |
Overdue |
|
|
|
|
|
|
|
01 to 60 days |
56,088 |
|
45,872 |
|
343,216 |
|
118,902 |
61 to 90 days |
7,927 |
|
29,504 |
|
30,301 |
|
29,988 |
91 to 120 days |
3,414 |
|
34,367 |
|
37,723 |
|
42,092 |
121 to 180 days |
1,922 |
|
72,658 |
|
7,027 |
|
73,992 |
181 to 360 days |
61,653 |
|
13,317 |
|
70,845 |
|
13,758 |
More than 361 days |
344,555 |
|
88,380 |
|
353,157 |
|
100,419 |
( - ) Adjustment to present value |
(13,232) |
|
(10,220) |
|
(13,232) |
|
(10,220) |
( - ) Allowance for doubtful accounts |
(412,106) |
|
(98,551) |
|
(431,955) |
|
(107,781) |
|
4,952,878 |
|
4,669,679 |
|
3,880,441 |
|
3,054,577 |
10. INVENTORIES
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Finished goods |
1,437,670 |
|
1,045,232 |
|
2,601,130 |
|
1,551,383 |
Goods for resale |
6,042 |
|
16,764 |
|
6,042 |
|
23,025 |
Work in process |
141,780 |
|
193,228 |
|
157,807 |
|
207,039 |
Raw materials |
568,957 |
|
482,863 |
|
620,734 |
|
517,460 |
Packaging materials |
54,605 |
|
75,745 |
|
83,567 |
|
96,275 |
Secondary materials |
304,750 |
|
217,604 |
|
341,687 |
|
232,657 |
Spare parts |
129,902 |
|
145,311 |
|
173,113 |
|
164,925 |
Goods in transit |
- |
|
- |
|
- |
|
77,576 |
Imports in transit |
143,757 |
|
74,864 |
|
154,769 |
|
122,593 |
Advances to suppliers |
8,709 |
|
10,678 |
|
8,709 |
|
10,678 |
(-) Provision for adjustment to realizable value |
(1,596) |
|
(67) |
|
(19,959) |
|
(1,205) |
(-) Provision for deterioration |
(49,480) |
|
(17,411) |
|
(49,618) |
|
(19,521) |
(-) Provision for obsolescense |
(8,878) |
|
(16,522) |
|
(12,182) |
|
(18,063) |
(-) Adjustment to present value |
(32,888) |
|
(23,467) |
|
(32,888) |
|
(23,467) |
|
2,703,330 |
|
2,204,822 |
|
4,032,911 |
|
2,941,355 |
The write-offs of products sold from inventories to cost of sales during the year ended December 31, 2015 totaled R$19,740,350 in the parent company and R$22,107,692 in the consolidated (R$18,901,439 in the parent company and R$20,497,430 in the consolidated in December 31, 2014). Such amounts include the additions and reversals
of inventory provisions presented in the table below:
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
Parent company |
|
Provision for adjustment
to realizable value |
|
Provision for
deterioration |
|
Provision for
obsolescence |
|
Total |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Beginning balance |
(67) |
|
(30,663) |
|
(17,411) |
|
(10,795) |
|
(16,522) |
|
(5,221) |
|
(34,000) |
|
(46,679) |
Additions |
(2,398) |
|
(13,053) |
|
(61,252) |
|
(46,631) |
|
(3,978) |
|
(15,664) |
|
(67,628) |
|
(75,348) |
Reversals |
869 |
|
43,649 |
|
- |
|
- |
|
- |
|
- |
|
869 |
|
43,649 |
Write-offs |
- |
|
- |
|
29,183 |
|
40,015 |
|
11,622 |
|
4,363 |
|
40,805 |
|
44,378 |
Ending balance |
(1,596) |
|
(67) |
|
(49,480) |
|
(17,411) |
|
(8,878) |
|
(16,522) |
|
(59,954) |
|
(34,000) |
|
Consolidated |
|
Provision for adjustment
to realizable value |
|
Provision for
deterioration |
|
Provision for
obsolescence |
|
Total |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Beginning balance |
(1,205) |
|
(31,590) |
|
(19,521) |
|
(19,064) |
|
(18,063) |
|
(5,221) |
|
(38,789) |
|
(55,875) |
Additions |
(18,181) |
|
(14,126) |
|
(70,586) |
|
(48,134) |
|
(5,105) |
|
(17,090) |
|
(93,872) |
|
(79,350) |
Reversals |
2,369 |
|
68,616 |
|
- |
|
- |
|
- |
|
- |
|
2,369 |
|
68,616 |
Write-offs |
- |
|
- |
|
39,311 |
|
46,499 |
|
12,164 |
|
4,570 |
|
51,475 |
|
51,069 |
Exchange rate variation |
(2,942) |
|
(24,105) |
|
1,178 |
|
1,178 |
|
(1,178) |
|
(322) |
|
(2,942) |
|
(23,249) |
Ending balance |
(19,959) |
|
(1,205) |
|
(49,618) |
|
(19,521) |
|
(12,182) |
|
(18,063) |
|
(81,759) |
|
(38,789) |
On December 31, 2015, there were no inventory items pledged as collateral for rural credit operations (R$40,000 in December 31, 2014).
11. BIOLOGICAL ASSETS
The balance of biological assets are segregated in current and non-current assets are presented below:
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
|
|
|
|
|
|
|
Live animals |
1,322,317 |
|
1,122,350 |
|
1,329,861 |
|
1,130,580 |
Total current |
1,322,317 |
|
1,122,350 |
|
1,329,861 |
|
1,130,580 |
|
|
|
|
|
|
|
|
Live animals |
530,114 |
|
459,381 |
|
530,869 |
|
460,768 |
Forests |
230,153 |
|
222,442 |
|
230,153 |
|
222,442 |
Total non-current |
760,267 |
|
681,823 |
|
761,022 |
|
683,210 |
|
2,082,584 |
|
1,804,173 |
|
2,090,883 |
|
1,813,790 |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
The rollforward of biological assets for the year is presented below:
|
Parent company |
|
Current |
|
Non-current |
|
Live animals |
|
Live animals |
|
Forests |
|
Total |
|
Poultry |
|
Pork |
|
Cattle |
|
Total |
|
Total |
|
Poultry |
|
Pork |
|
Cattle |
|
|
|
|
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Beginning balance |
507,707 |
|
524,189 |
|
614,643 |
|
586,463 |
|
- |
|
87,709 |
|
1,122,350 |
|
1,198,361 |
|
242,890 |
|
244,254 |
|
215,851 |
|
201,704 |
|
640 |
|
148 |
|
222,442 |
|
122,872 |
|
681,823 |
|
568,978 |
Acquisition |
182,322 |
|
146,037 |
|
1,234,582 |
|
1,088,380 |
|
- |
|
26,032 |
|
1,416,904 |
|
1,260,449 |
|
31,405 |
|
25,607 |
|
142,048 |
|
123,959 |
|
- |
|
- |
|
- |
|
- |
|
173,453 |
|
149,566 |
Fair value variation (1) |
1,307,745 |
|
1,073,534 |
|
123,164 |
|
55,977 |
|
- |
|
207 |
|
1,430,909 |
|
1,129,718 |
|
72,461 |
|
28,335 |
|
(62,118) |
|
(49,406) |
|
307 |
|
492 |
|
9,430 |
|
23,963 |
|
20,080 |
|
3,384 |
Harvest |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(26,611) |
|
(23,353) |
|
(26,611) |
|
(23,353) |
Write-off |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(2,447) |
|
(909) |
|
(2,447) |
|
(909) |
Transfer between current and non-current |
52,581 |
|
55,306 |
|
59,842 |
|
60,406 |
|
- |
|
- |
|
112,423 |
|
115,712 |
|
(52,581) |
|
(55,306) |
|
(59,842) |
|
(60,406) |
|
- |
|
- |
|
- |
|
- |
|
(112,423) |
|
(115,712) |
Transfer of the held for sale |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
27,339 |
|
99,869 |
|
27,339 |
|
99,869 |
Transfer to inventories |
(1,462,437) |
|
(1,291,359) |
|
(1,297,832) |
|
(1,176,583) |
|
- |
|
(113,948) |
|
(2,760,269) |
|
(2,581,890) |
|
- |
|
- |
|
- |
|
- |
|
(947) |
|
- |
|
- |
|
- |
|
(947) |
|
- |
Ending balance |
587,918 |
|
507,707 |
|
734,399 |
|
614,643 |
|
- |
|
- |
|
1,322,317 |
|
1,122,350 |
|
294,175 |
|
242,890 |
|
235,939 |
|
215,851 |
|
- |
|
640 |
|
230,153 |
|
222,442 |
|
760,267 |
|
681,823 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
Current |
|
Non-current |
|
Live animals |
|
Live animals |
|
Forests |
|
Total |
|
Poultry |
|
Pork |
|
Cattle |
|
Total |
|
Total |
|
Poultry |
|
Pork |
|
Cattle |
|
|
|
|
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Beginning balance |
515,937 |
|
531,679 |
|
614,643 |
|
586,463 |
|
- |
|
87,709 |
|
1,130,580 |
|
1,205,851 |
|
244,277 |
|
244,254 |
|
215,851 |
|
201,704 |
|
640 |
|
148 |
|
222,442 |
|
122,872 |
|
683,210 |
|
568,978 |
Acquisition |
183,057 |
|
146,037 |
|
1,234,582 |
|
1,088,380 |
|
- |
|
26,032 |
|
1,417,639 |
|
1,260,449 |
|
32,140 |
|
27,246 |
|
142,048 |
|
123,959 |
|
- |
|
- |
|
- |
|
- |
|
174,188 |
|
151,205 |
Fair value variation (1) |
1,336,332 |
|
1,128,241 |
|
123,164 |
|
55,977 |
|
- |
|
207 |
|
1,459,496 |
|
1,184,425 |
|
71,061 |
|
28,028 |
|
(62,118) |
|
(49,406) |
|
307 |
|
492 |
|
9,430 |
|
23,963 |
|
18,680 |
|
3,077 |
Harvest |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(26,611) |
|
(23,353) |
|
(26,611) |
|
(23,353) |
Write-off |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(2,447) |
|
(909) |
|
(2,447) |
|
(909) |
Transfer between current and non-current |
52,581 |
|
55,306 |
|
59,842 |
|
60,406 |
|
- |
|
- |
|
112,423 |
|
115,712 |
|
(52,581) |
|
(55,306) |
|
(59,842) |
|
(60,406) |
|
- |
|
- |
|
- |
|
- |
|
(112,423) |
|
(115,712) |
Transfer of the held for sale |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
27,339 |
|
99,869 |
|
27,339 |
|
99,869 |
Transfer to inventories |
(1,492,347) |
|
(1,344,716) |
|
(1,297,832) |
|
(1,176,583) |
|
- |
|
(113,948) |
|
(2,790,179) |
|
(2,635,247) |
|
- |
|
- |
|
- |
|
- |
|
(947) |
|
- |
|
- |
|
- |
|
(947) |
|
- |
Exchange variation |
(98) |
|
(610) |
|
- |
|
- |
|
- |
|
- |
|
(98) |
|
(610) |
|
33 |
|
55 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
33 |
|
55 |
Ending balance |
595,462 |
|
515,937 |
|
734,399 |
|
614,643 |
|
- |
|
- |
|
1,329,861 |
|
1,130,580 |
|
294,930 |
|
244,277 |
|
235,939 |
|
215,851 |
|
- |
|
640 |
|
230,153 |
|
222,442 |
|
761,022 |
|
683,210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The fair value variation of biological assets includes depreciation of breeding stock in the amount of R$543,605 (R$525,927 as of December 31, 2014) in the parent company and R$545,033 (R$526,234 as of December 31, 2014) in the consolidated (the fair value is reduced throughout the asset life considering its normal devaluation - see text below).
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
The acquisitions of biological assets for production (non-current) occur when there is an expectation that the production plan cannot be met with its own animals and, usually, these acquisitions refer to immature animals in the beginning of the life cycle.
The living animals comprises poultry and pork and are segregated into consumable and for production.
The animals classified as consumables are those intended for slaughtering to produce in-natura meat or processed products. Until they reach the adequate weight for slaughtering, they are classified as immature. The slaughtering and production process occurs sequentially and in a very short period of time, so that only live animals ready for slaughtering are classified as mature.
The animals classified as for production (breeding stock) are those that have the function of producing other biological assets. Until they reach the age of reproduction they are classified as immature and when they are able to initiate the reproductive cycle, they are classified as mature.
The Company determined that cost approach is the most appropriate methodology in order to obtain the fair value of its live animals, as disposed in CPC46. Mainly, due to the short life period of the animal, as well as because the price that would be received in a sale in an active market represents the cost to produce an animal in the same level of maturity.
For the breeding stock the production cost is reduced throughout its life considering its normal devaluation.
The Company determined that income approach is the most appropriate methodology in order to obtain the fair value of its forests, as the asset value is correlated to the present value of the future cash flows generated by the biological asset.
The live animals fair value is determined using non observable information and the best practices and data available at the moment the appraisal is done, being classified as level 3 in the fair value hierarchy, as disposed in CPC46.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
The quantities and balances per live animals assets are presented below:
|
Parent company |
|
12.31.15 |
|
12.31.14 |
|
Quantity (thousand of heads) |
|
Value |
|
Quantity (thousand of heads) |
|
Value |
Consumable biological assets |
|
|
|
|
|
|
|
Immature poultry |
179,990 |
|
587,918 |
|
174,855 |
|
507,707 |
Immature pork |
3,545 |
|
734,399 |
|
3,370 |
|
614,643 |
Total current |
183,535 |
|
1,322,317 |
|
178,225 |
|
1,122,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production biological assets |
|
|
|
|
|
|
|
Immature poultry |
6,618 |
|
108,209 |
|
6,793 |
|
88,652 |
Mature poultry |
11,382 |
|
185,966 |
|
11,378 |
|
154,238 |
Immature pork |
184 |
|
51,188 |
|
174 |
|
44,547 |
Mature pork |
385 |
|
184,751 |
|
379 |
|
171,304 |
Immature cattle |
- |
|
- |
|
- |
|
395 |
Mature cattle |
- |
|
- |
|
- |
|
245 |
Total non-current |
18,569 |
|
530,114 |
|
18,724 |
|
459,381 |
|
202,104 |
|
1,852,431 |
|
196,949 |
|
1,581,731 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
Quantity (thousand of heads) |
|
Value |
|
Quantity (thousand of heads) |
|
Value |
Consumable biological assets |
|
|
|
|
|
|
|
Immature poultry |
179,990 |
|
595,462 |
|
177,914 |
|
515,937 |
Immature pork |
3,545 |
|
734,399 |
|
3,370 |
|
614,643 |
Total current |
183,535 |
|
1,329,861 |
|
181,284 |
|
1,130,580 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production biological assets |
|
|
|
|
|
|
|
Immature poultry |
6,658 |
|
108,837 |
|
6,836 |
|
89,308 |
Mature poultry |
11,418 |
|
186,093 |
|
11,451 |
|
154,969 |
Immature pork |
184 |
|
51,188 |
|
174 |
|
44,547 |
Mature pork |
385 |
|
184,751 |
|
379 |
|
171,304 |
Immature cattle |
- |
|
- |
|
- |
|
395 |
Mature cattle |
- |
|
- |
|
- |
|
245 |
Total non-current |
18,645 |
|
530,869 |
|
18,840 |
|
460,768 |
|
202,180 |
|
1,860,730 |
|
200,124 |
|
1,591,348 |
12. RECOVERABLE TAXES
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
State ICMS ("VAT") |
1,119,761 |
|
990,317 |
|
1,219,662 |
|
1,048,236 |
PIS and COFINS ("Federal Taxes to Social Fund Programs") |
397,785 |
|
289,333 |
|
397,841 |
|
289,389 |
Income and social contribution tax |
359,787 |
|
551,050 |
|
416,562 |
|
585,187 |
IPI ("Federal VAT") |
60,137 |
|
59,560 |
|
60,137 |
|
59,560 |
INSS ("Brazilian Social Security") |
146,162 |
|
66,817 |
|
146,234 |
|
66,866 |
Other |
97,296 |
|
82,123 |
|
131,471 |
|
105,165 |
(-) Provision for losses |
(164,606) |
|
(226,306) |
|
(171,443) |
|
(233,245) |
|
2,016,322 |
|
1,812,894 |
|
2,200,464 |
|
1,921,158 |
|
|
|
|
|
|
|
|
Current |
1,074,175 |
|
914,720 |
|
1,231,759 |
|
1,009,076 |
Non-current |
942,147 |
|
898,174 |
|
968,705 |
|
912,082 |
|
|
|
|
|
|
|
|
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
The rollforward of the allowance for losses is presented below:
|
Parent company |
|
State ICMS ("VAT") |
|
PIS and COFINS ("Federal Taxes to Social Fund Programs") |
|
Income and social contribution tax |
|
IPI ("Federal VAT") |
|
Other |
|
Total |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Beginning balance |
(169,518) |
|
(175,685) |
|
(31,478) |
|
(17,698) |
|
(8,985) |
|
(8,550) |
|
(14,740) |
|
(14,740) |
|
(1,585) |
|
- |
|
(226,306) |
|
(216,673) |
Additions |
(17,550) |
|
(14,632) |
|
(14,482) |
|
(13,780) |
|
- |
|
(435) |
|
- |
|
- |
|
(405) |
|
(1,585) |
|
(32,437) |
|
(30,432) |
Write-offs |
73,176 |
|
20,799 |
|
20,886 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
75 |
|
- |
|
94,137 |
|
20,799 |
Ending balance |
(113,892) |
|
(169,518) |
|
(25,074) |
|
(31,478) |
|
(8,985) |
|
(8,985) |
|
(14,740) |
|
(14,740) |
|
(1,915) |
|
(1,585) |
|
(164,606) |
|
(226,306) |
|
Consolidated |
|
State ICMS ("VAT") |
|
PIS and COFINS ("Federal Taxes to Social Fund Programs") |
|
Income and social contribution tax |
|
IPI ("Federal VAT") |
|
Other |
|
Total |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Beginning balance |
(169,519) |
|
(175,686) |
|
(31,478) |
|
(17,698) |
|
(9,029) |
|
(8,550) |
|
(14,740) |
|
(14,740) |
|
(8,479) |
|
(7,854) |
|
(233,245) |
|
(224,528) |
Additions |
(17,550) |
|
(14,632) |
|
(14,482) |
|
(13,780) |
|
- |
|
(525) |
|
- |
|
- |
|
(720) |
|
(1,585) |
|
(32,752) |
|
(30,522) |
Write-offs |
73,176 |
|
20,799 |
|
20,886 |
|
- |
|
- |
|
46 |
|
- |
|
- |
|
75 |
|
32 |
|
94,137 |
|
20,877 |
Exchange rate variation |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
417 |
|
928 |
|
417 |
|
928 |
Ending balance |
(113,893) |
|
(169,519) |
|
(25,074) |
|
(31,478) |
|
(9,029) |
|
(9,029) |
|
(14,740) |
|
(14,740) |
|
(8,707) |
|
(8,479) |
|
(171,443) |
|
(233,245) |
12.1. State ICMS (“VAT”)
Due to its (i) export activity, (ii) domestic sales that are subject to reduced tax rates and (iii) investments in property, plant and equipment, the Company accumulates tax credits that are offset against debits generated in sales in the domestic market or transferred to third parties.
The Company has ICMS tax credits in the States of Mato Grosso do Sul, Paraná, Minas Gerais, Santa Catarina and Distrito Federal, for which Management understands that realization will occur in short or long term, based on a credit recoverability study prepared by Management.
12.2. PIS and COFINS
Tax credits on Contribution to the Social Integration Program (“PIS”) and Contribution to Social Fund Programs (“COFINS”) arise from credits on purchases of raw materials used in the production of exported products or products that are taxed at zero rate, such as in-natura meat, margarine and butter. The recovery of these tax credits can be achieved by offsetting them against domestic sales operations of taxed products and other federal taxes or compensation claims.
12.3. Withholding income and social contribution taxes
These correspond to withholding taxes on marketable securities, interest and prepayments of income and social contribution taxes, which are realizable by offsetting them against other federal taxes.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
13. ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS AND HELD FOR SALE
13.1. Assets and liabilities non-current held for sale
|
|
Parent company |
|
Consolidated |
|
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Assets |
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
- |
|
233,000 |
|
- |
|
233,000 |
Inventories |
|
- |
|
213,000 |
|
- |
|
213,000 |
Total current assets |
|
- |
|
446,000 |
|
- |
|
446,000 |
|
|
|
|
|
|
|
|
|
Non-current |
|
|
|
|
|
|
|
|
Investments |
|
- |
|
15,089 |
|
- |
|
15,089 |
Property, plant and equipment, net (1) |
|
32,442 |
|
825,078 |
|
32,448 |
|
825,520 |
Intangible |
|
- |
|
671,398 |
|
- |
|
671,398 |
Total non-current assets |
|
32,442 |
|
1,511,565 |
|
32,448 |
|
1,512,007 |
|
|
|
|
|
|
|
|
|
Total Assets |
|
32,442 |
|
1,957,565 |
|
32,448 |
|
1,958,007 |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
- |
|
279,000 |
|
- |
|
279,000 |
Social and labor obligations |
|
- |
|
14,277 |
|
- |
|
14,277 |
Tax Obligations |
|
- |
|
14,370 |
|
- |
|
14,370 |
Deferred Taxes |
|
- |
|
200,617 |
|
- |
|
200,617 |
Total current liabilities |
|
- |
|
508,264 |
|
- |
|
508,264 |
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
- |
|
508,264 |
|
- |
|
508,264 |
|
|
|
|
|
|
|
|
|
Assets and liabilities of discontinued operations and held for sale |
|
32,442 |
|
1,449,301 |
|
32,448 |
|
1,449,743 |
(1) In 2014 the total balance includes R$74,401 in the parent company and R$74,843 in the consolidated related to other assets held for sale, not related to the discontinued operations of the dairy segment.
13.2. Discontinued operations
On July 01, 2015, BRF concluded with Lactalis (“buyer”) the disposal of its manufacturing facilities of the dairy segment, which includes: i) manufacturing facilities located in the cities of Bom Conselho (PE), Carambeí (PR), Ravena (MG), Concórdia (SC), Teutônia (RS), Itumbiara (GO), Terenos (MS), Ijuí (RS), Três de Maio I (RS), Três de Maio II (RS) and Santa Rosa (RS); and (ii) related assets and trademarks dedicated to such segment (Batavo, Elegê, Cotochés, Santa Rosa and DoBon) (“Transaction”).
The value of such Transaction was US$697,756, fixed in U.S. Dollars (USD) at the agreement date (December 12, 2014), and was received in July 01, 2015.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
The Transaction was fixed in USD and, considering that the functional currency of BRF and of buyer is different of USD, was recognized an embedded derivative in the terms of CPC 38, approved by CVM Deliberation No.604/09. The gain registered in the determination of the fair market value by the end of the transaction totaled R$194,151 and, was recognized in financial results.
BRF recorded a gain of R$212,945 in the operation (note 13.3.1).
The profit (loss) recorded in the periods the segment was considered as discontinued operations and also the cash flows registered until the transaction conclusion (July 01, 2015), as well as the gain recognized in the disposal of the assets related to the segment are presented below:
13.3. Net income from discontinued operations
|
|
Parent company |
|
Consolidated |
|
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Net Sales |
|
983,535 |
|
2,720,406 |
|
1,122,764 |
|
2,720,406 |
Cost of sales |
|
(786,821) |
|
(2,111,487) |
|
(905,752) |
|
(2,111,487) |
Gross Profit |
|
196,714 |
|
608,919 |
|
217,012 |
|
608,919 |
Operating Income (Expenses) |
|
|
|
|
|
|
|
|
Selling |
|
(160,261) |
|
(424,899) |
|
(188,199) |
|
(424,899) |
General and administrative |
|
(9,191) |
|
(30,042) |
|
(13,477) |
|
(30,042) |
Other operating expenses, net |
|
(11,071) |
|
(30,568) |
|
(20,682) |
|
(30,568) |
Equity in income of associates |
|
(19,465) |
|
(2,826) |
|
(1,876) |
|
(2,826) |
Income (Loss) Before Financial Results |
|
(3,274) |
|
120,584 |
|
(7,222) |
|
120,584 |
Financial income |
|
- |
|
- |
|
(292) |
|
- |
Financial expenses |
|
- |
|
- |
|
10 |
|
- |
Income (Loss) Before Taxes |
|
(3,274) |
|
120,584 |
|
(7,504) |
|
120,584 |
Income and social contribution taxes expenses |
|
(3,798) |
|
(30,762) |
|
432 |
|
(30,762) |
Net income (Loss) from Discontinued Operations |
|
(7,072) |
|
89,822 |
|
(7,072) |
|
89,822 |
(1) Correspond to dairy operations until June 30, 2015.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
13.3.1. Results from the sale of discontinued operations
Proceeds received in 07.01.15 |
2,153,659 |
Cash |
1,838,110 |
Restricted cash |
315,549 |
Price adjustment (1) |
73,190 |
Gross revenue |
2,226,849 |
Gain with the embedded derivative |
(194,151) |
Net revenue of the embedded derivative |
2,032,698 |
Cost of the assets from discontinued operations |
(1,819,753) |
Gain with the sale of discontinued operations |
212,945 |
|
|
Gain with the embedded derivative |
|
Realized in 2014 |
27,955 |
Realized in 2015 |
166,196 |
|
194,151 |
(1) Price adjustment according to the signed contract.
13.3.2. Operational result from the sale of discontinued operations
Operational result from the sale of discontinued operations |
|
|
|
|
|
Loss from discontinued operations |
(7,504) |
Current income and social contribution taxes |
432 |
Net loss from discontinued operations |
(7,072) |
|
|
Operational gain |
212,945 |
Current income and social contribution taxes |
(22,785) |
Net operational gain from the sale of discontinued operations |
190,160 |
|
|
Net operational income from discontinued operations - 2015 |
183,088 |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
13.4. Statements of cash flow of discontinued operations
|
Parent company |
|
Consolidated |
|
12.31.15 (1) |
|
12.31.14 |
|
12.31.15 (1) |
|
12.31.14 |
|
|
|
|
|
|
|
|
Net profit from discontinued operations |
183,088 |
|
89,822 |
|
183,088 |
|
89,822 |
Adjustments to reconcile net income to net cash provided by discontinued operations |
|
|
|
|
|
|
|
Depreciation, amortization and exhaustion |
76 |
|
67,505 |
|
4,035 |
|
67,505 |
Equity in income of affiliates |
19,465 |
|
2,826 |
|
1,876 |
|
2,826 |
Deferred income tax |
- |
|
- |
|
(8,939) |
|
- |
Gain from discontinued operations |
(190,160) |
|
- |
|
(190,160) |
|
- |
Trade accounts receivable |
- |
|
- |
|
81,622 |
|
- |
Inventories |
- |
|
- |
|
(67,504) |
|
- |
Trade accounts payable |
- |
|
- |
|
(54,600) |
|
- |
Other rights and obligations |
15,838 |
|
- |
|
53,002 |
|
- |
Net cash provided by discontinued operating activities |
28,307 |
|
160,153 |
|
2,420 |
|
160,153 |
|
|
|
|
|
|
|
|
Investing activities from discontinued operations |
|
|
|
|
|
|
|
Capital increase in subsidiaries |
(20,038) |
|
- |
|
- |
|
- |
Additions to property, plant and equipment |
(8,269) |
|
(51,161) |
|
(12,305) |
|
(51,161) |
Net cash used investing activities from continued operations |
(28,307) |
|
(51,161) |
|
(12,305) |
|
(51,161) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from debt issuance |
- |
|
- |
|
10,038 |
|
- |
Advance for future capital increase |
- |
|
- |
|
10,000 |
|
- |
Net cash (used in) provided by financing activities from discontinued operations |
- |
|
- |
|
20,038 |
Net increase in cash and cash equivalents |
- |
|
- |
|
10,153 |
|
- |
Net cash provided by discontinued operations |
- |
|
108,992 |
|
10,153 |
|
108,992 |
(1) Correspond to dairy operations until June 30, 2015.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
14. INCOME AND SOCIAL CONTRIBUTION TAXES
14.1. Deferred income and social contribution taxes
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Assets |
|
|
|
|
|
|
|
Tax loss carryforwards (corporate income tax) |
1,008,022 |
|
640,745 |
|
1,077,653 |
|
697,843 |
Negative calculation basis (social contribution tax) |
399,886 |
|
262,731 |
|
400,092 |
|
263,159 |
|
|
|
|
|
|
|
|
Temporary differences |
|
|
|
|
|
|
|
Provisions for tax, civil and labor risks |
216,564 |
|
200,748 |
|
220,047 |
|
204,212 |
Suspended collection taxes |
62,954 |
|
69,074 |
|
62,954 |
|
69,074 |
Allowance for doubtful accounts |
112,251 |
|
6,783 |
|
113,120 |
|
7,652 |
Provision for property, plant and equipment losses |
5,546 |
|
15,529 |
|
5,546 |
|
15,529 |
Provision for tax credits |
52,260 |
|
73,350 |
|
52,803 |
|
73,893 |
Provision for other obligations |
91,834 |
|
50,810 |
|
93,744 |
|
52,914 |
Employees' profit sharing |
87,254 |
|
118,899 |
|
87,254 |
|
118,899 |
Provision for inventory losses |
19,985 |
|
11,560 |
|
19,985 |
|
11,560 |
Employees' benefits plan |
101,675 |
|
106,784 |
|
101,675 |
|
106,784 |
Business combination - Sadia (1) |
451,222 |
|
583,770 |
|
451,222 |
|
583,770 |
Unrealized losses on derivatives financial instruments |
105,359 |
|
56,615 |
|
105,359 |
|
56,615 |
Provision for losses - other debtors |
11,321 |
|
8,220 |
|
11,321 |
|
8,220 |
Other temporary differences |
77,280 |
|
47,493 |
|
85,110 |
|
51,079 |
|
2,803,413 |
|
2,253,111 |
|
2,887,885 |
|
2,321,203 |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
Temporary differences |
|
|
|
|
|
|
|
Business combination - Sadia (1) |
(719,374) |
|
(750,509) |
|
(719,374) |
|
(750,509) |
Business combination - other companies |
- |
|
- |
|
(21,588) |
|
(75,729) |
Unrealized gains on derivatives |
(28,035) |
|
(10,601) |
|
(28,035) |
|
(10,601) |
Difference between tax basis and accounting basis of goodwill amortization |
(206,770) |
|
(222,278) |
|
(206,770) |
|
(222,278) |
Difference between tax depreciation rate and accounting depreciation rate (useful life) |
(601,040) |
|
(511,404) |
|
(601,040) |
|
(511,404) |
Other temporary differences |
686 |
|
(6,387) |
|
(55,102) |
|
(36,667) |
|
(1,554,533) |
|
(1,501,179) |
|
(1,631,909) |
|
(1,607,188) |
|
|
|
|
|
|
|
|
Total net deferred tax assets |
1,248,880 |
|
751,932 |
|
1,255,976 |
|
714,015 |
|
|
|
|
|
|
|
|
Business combination - Dánica and Avex |
- |
|
- |
|
(12,474) |
|
(15,633) |
Business combination - AFC |
- |
|
- |
|
(45,164) |
|
(34,636) |
Business combination - AKF |
- |
|
- |
|
(5,870) |
|
(4,334) |
Business combination - Federal Foods |
- |
|
- |
|
(10,228) |
|
(7,751) |
Business combination - Invicta |
- |
|
- |
|
(50,067) |
|
- |
Other - exchange variation |
- |
|
- |
|
(64,517) |
|
(27,830) |
|
- |
|
- |
|
(188,320) |
|
(90,184) |
Total deferred tax |
1,248,880 |
|
751,932 |
|
1,067,656 |
|
623,831 |
(1) The deferred tax asset on the business combination with Sadia is mainly computed on the difference between the goodwill tax basis and goodwill accounting basis identified in the purchase price allocation. Deferred tax liability on business combination with Sadia is substantially represented by the fair value of property, plant and equipment, trademarks and contingent liabilities.
The rollforward of deferred tax is set forth below:
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
|
|
|
|
|
|
|
Beginning balance |
751,932 |
|
745,875 |
|
623,831 |
|
645,111 |
Deferred income and social contribution taxes recognized in the statement of income |
372,283 |
|
(235,889) |
|
406,587 |
|
(235,205) |
Deferred income and social contribution taxes - write-off dairy business |
(200,617) |
|
200,617 |
|
(200,617) |
|
200,617 |
Deferred income and social contribution taxes recognized in other comprehensive income |
327,387 |
|
52,783 |
|
328,090 |
|
52,824 |
Business combination |
- |
|
- |
|
(39,240) |
|
(46,722) |
Exchange variation over deferred income and social contribution taxes related to business combination |
- |
|
- |
|
(30,266) |
|
(294) |
Other |
(2,105) |
|
(11,454) |
|
(20,729) |
|
7,500 |
Ending balance |
1,248,880 |
|
751,932 |
|
1,067,656 |
|
623,831 |
|
|
|
|
|
|
|
|
Certain subsidiaries of the Company located in Brazil have tax loss carryforwards and
negative basis of social contribution of R$16,365 and R$16,181, respectively, (R$16,474 and R$16,291 as of December 31, 2014), for which no deferred tax asset was recorded. If there was an expectation that such tax credits would be realized the amount recognized in the balance sheet would be R$5,547 (R$5,585 as of December 31, 2014).
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
14.2. Estimated time of realization
Deferred tax arising from temporary differences will be realized as these differences are realized. The period of the settlement or realization of such differences is uncertain and is tied to several factors that are not under control of the Management.
When assessing the likelihood of the realization of deferred tax assets on income tax loss carryforward and negative calculation basis of social contribution tax, Management considers the Company’s budget, strategic plan and projected taxable income. Based on this estimate, Management believes that it is more likely than not that the deferred tax will be realized, as shown below:
|
Parent company |
|
Consolidated |
2016 |
85,418 |
|
89,570 |
2017 |
148,053 |
|
161,540 |
2018 |
214,693 |
|
228,921 |
2019 |
256,690 |
|
271,610 |
2020 onwards |
703,054 |
|
726,104 |
|
1,407,908 |
|
1,477,745 |
|
|
|
|
14.3. Income and social contribution taxes reconciliation
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
|
|
|
|
|
|
|
Income before taxes from continued operations |
2,529,846 |
|
2,448,570 |
|
2,558,268 |
|
2,487,621 |
Nominal tax rate |
34% |
|
34% |
|
34% |
|
34% |
Expected tax expense at nominal tax rate |
(860,148) |
|
(832,514) |
|
(869,811) |
|
(845,791) |
|
|
|
|
|
|
|
|
Reconciling itens: |
|
|
|
|
|
|
|
Equity interest in income of subsidiaries, associates and joint venture |
686,160 |
|
222,469 |
|
(35,293) |
|
8,694 |
Exchange rate variation on foreign investments |
373,964 |
|
6,467 |
|
460,200 |
|
43,087 |
Difference of tax rates on results of foreign subsidiaries |
- |
|
- |
|
641,528 |
|
150,394 |
Interest on shareholders' equity |
305,747 |
|
250,840 |
|
305,747 |
|
250,840 |
Results from foreign subsidiaries |
(54,597) |
|
- |
|
(54,597) |
|
- |
Stock options |
(20,041) |
|
(7,029) |
|
(20,041) |
|
(7,029) |
Transfer price |
(8,430) |
|
(2,734) |
|
(8,430) |
|
(2,734) |
Profit sharing |
(10,541) |
|
(8,996) |
|
(10,541) |
|
(8,996) |
Penalties |
(4,178) |
|
(15,066) |
|
(4,183) |
|
(15,066) |
Investment grant |
44,767 |
|
47,726 |
|
44,767 |
|
47,726 |
Other permanent differences |
(54,467) |
|
25,481 |
|
(59,844) |
|
26,309 |
|
398,236 |
|
(313,356) |
|
389,502 |
|
(352,566) |
|
|
|
|
|
|
|
|
Current income tax |
25,953 |
|
(77,467) |
|
(17,085) |
|
(117,361) |
Deferred income tax |
372,283 |
|
(235,889) |
|
406,587 |
|
(235,205) |
The taxable income, current and deferred income tax from foreign subsidiaries is
presented below:
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
Taxable income (loss) from foreign subsidiaries |
2,064,684 |
|
576,048 |
Current income tax credit (expense) from foreign subsidiaries |
(41,012) |
|
(37,559) |
Deferred income tax from foreign subsidiaries |
5,773 |
|
(8,311) |
Company determined that the earnings recorded by the holdings of its wholly-owned subsidiaries located abroad will not be redistributed. Such resources will be used for investments in the subsidiaries, and thus no deferred income tax was recognized. The total of undistributed earnings corresponds to R$4,949,957 as of December 31, 2015 (R$1,896,478 as of December 31, 2014).
Brazilian income taxes are subject to review for a five year period, during which the tax authorities might audit and assess the Company for additional taxes and penalties. Subsidiaries located abroad are taxed in their respective jurisdictions, according to local regulations.
15. JUDICIAL DEPOSITS
The rollforward of the judicial deposits is presented below:
|
Parent company |
|
Tax |
|
Labor |
|
Civil, commercial and other |
|
Total |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Beginning balance |
352,274 |
|
292,456 |
|
228,309 |
|
155,938 |
|
31,703 |
|
24,223 |
|
612,286 |
|
472,617 |
Additions |
28,112 |
|
39,729 |
|
126,519 |
|
106,933 |
|
8,757 |
|
7,188 |
|
163,388 |
|
153,850 |
Reversals |
(31,504) |
|
(9,016) |
|
(14,841) |
|
(13,829) |
|
(183) |
|
(539) |
|
(46,528) |
|
(23,384) |
Write-offs |
(4,575) |
|
(931) |
|
(59,597) |
|
(31,515) |
|
(63) |
|
(1,754) |
|
(64,235) |
|
(34,200) |
Price index update |
32,353 |
|
30,036 |
|
24,552 |
|
10,782 |
|
3,508 |
|
2,585 |
|
60,413 |
|
43,403 |
Ending balance |
376,660 |
|
352,274 |
|
304,942 |
|
228,309 |
|
43,722 |
|
31,703 |
|
725,324 |
|
612,286 |
|
Consolidated |
|
Tax |
|
Labor |
|
Civil, commercial
and other |
|
Total |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Beginning balance |
352,184 |
|
292,633 |
|
231,369 |
|
155,979 |
|
32,166 |
|
30,064 |
|
615,719 |
|
478,676 |
Additions |
28,176 |
|
42,543 |
|
131,632 |
|
111,809 |
|
8,757 |
|
7,394 |
|
168,565 |
|
161,746 |
Reversals |
(31,504) |
|
(9,328) |
|
(15,855) |
|
(13,829) |
|
(248) |
|
(5,255) |
|
(47,607) |
|
(28,412) |
Write-offs |
(4,575) |
|
(3,731) |
|
(59,597) |
|
(33,574) |
|
(63) |
|
(1,754) |
|
(64,235) |
|
(39,059) |
Price index update |
32,386 |
|
30,080 |
|
24,554 |
|
10,784 |
|
3,508 |
|
2,585 |
|
60,448 |
|
43,449 |
Exchange rate variation |
- |
|
(13) |
|
(784) |
|
200 |
|
- |
|
(868) |
|
(784) |
|
(681) |
Ending balance |
376,667 |
|
352,184 |
|
311,319 |
|
231,369 |
|
44,120 |
|
32,166 |
|
732,106 |
|
615,719 |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
16. RESTRICTED CASH
|
|
|
|
|
Average interest rate (p.a.) |
|
Parent company |
|
Consolidated |
|
Maturity (1) |
|
Currency |
|
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank deposit certificates (2) |
1.49 |
|
R$ |
|
13.97% |
|
337,041 |
|
- |
|
337,041 |
|
- |
National treasury certificates (3) |
4.23 |
|
R$ |
|
22.54% |
|
142,787 |
|
115,179 |
|
142,787 |
|
115,179 |
Bank deposit (4) |
- |
|
US$ |
|
- |
|
- |
|
- |
|
1,346,274 |
|
- |
|
|
|
|
|
|
|
479,828 |
|
115,179 |
|
1,826,102 |
|
115,179 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
- |
|
- |
|
1,346,274 |
|
- |
Non-current |
|
|
|
|
|
|
479,828 |
|
115,179 |
|
479,828 |
|
115,179 |
(1) Weighted average maturity in years.
(2) The deposit, which matures on 2017, was pledged as collateral in the disposal of the dairy segment to Groupe Lactalis (“Parmalat”).
(3) The national treasury certificates, which mature on 2020, are pledged as collateral for the loan obtained through the Special Program Asset Restructuring (“PESA”) (note 20).
(4) Deposit related to the business combination with Golden Foods Siam, which was related to the counterparty at January 26, 2016 (note 40.3).
The national treasury certificates are pledged as collateral for the loan obtained through the Special Program Asset Restructuring (“PESA”) (see note 20).
17. INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
17.1. Investments breakdown
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Investment in subsidiaries and associates |
6,918,123 |
|
3,439,320 |
|
102,465 |
|
137,359 |
Goodwill Quickfood |
290,884 |
|
312,177 |
|
- |
|
- |
Goodwill Minerva |
- |
|
247,283 |
|
- |
|
247,283 |
Goodwill AKF |
- |
|
- |
|
75,113 |
|
52,428 |
Goodwill SATS BRF |
- |
|
- |
|
6,838 |
|
- |
Advance for future capital increase |
- |
|
100 |
|
- |
|
- |
|
7,209,007 |
|
3,998,880 |
|
184,416 |
|
437,070 |
Other investments |
1,107 |
|
849 |
|
1,476 |
|
1,353 |
|
7,210,114 |
|
3,999,729 |
|
185,892 |
|
438,423 |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
17.2. Summary of financial information in associates and joint ventures
|
Avipal Centro Oeste S.A. |
|
BRF GmbH |
|
Elebat Alimentos S.A. |
|
Establec. Levino Zaccardi |
|
Perdigão Trading S.A. |
|
PSA Labor. Veter. Ltda. |
|
Quickfood S.A. |
|
Sadia International Ltd. |
|
Sadia Uruguay S.A. |
|
Sadia Overseas S.A. |
|
VIP S.A. Empr. e Particip. Imob. |
|
12.31.15 |
|
12.31.15 |
|
12.31.15 |
|
12.31.15 |
|
12.31.15 |
|
12.31.15 |
|
12.31.15 |
|
12.31.15 |
|
12.31.15 |
|
12.31.15 |
|
12.31.15 |
Current assets |
38 |
|
1,983,779 |
|
- |
|
694 |
|
- |
|
3,627 |
|
376,754 |
|
1,761 |
|
22,563 |
|
16,754 |
|
53,216 |
Non-current assets |
- |
|
4,985,251 |
|
- |
|
105 |
|
- |
|
2,497 |
|
215,704 |
|
264,059 |
|
295,004 |
|
341,238 |
|
1,090 |
Current liabilities |
- |
|
(24,150) |
|
- |
|
(614) |
|
- |
|
(560) |
|
(358,517) |
|
(2,182) |
|
(9,503) |
|
(3,027) |
|
(1,518) |
Non-current liabilities |
- |
|
(736,469) |
|
- |
|
(22) |
|
- |
|
- |
|
(248,232) |
|
- |
|
- |
|
(440,306) |
|
(25) |
Shareholders' equity |
(38) |
|
(6,208,411) |
|
- |
|
(163) |
|
- |
|
(5,564) |
|
14,291 |
|
(263,638) |
|
(308,064) |
|
85,341 |
|
(52,763) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
- |
|
15,514 |
|
170,579 |
|
- |
|
- |
|
- |
|
1,326,887 |
|
- |
|
35,658 |
|
- |
|
- |
Net income (loss) |
- |
|
2,094,392 |
|
(18,164) |
|
(1,107) |
|
- |
|
550 |
|
(43,418) |
|
5,956 |
|
85,345 |
|
(19,819) |
|
5,907 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.14 |
|
12.31.14 |
|
12.31.14 |
|
12.31.14 |
|
12.31.14 |
|
12.31.14 |
|
12.31.14 |
|
12.31.14 |
|
12.31.14 |
|
12.31.14 |
|
12.31.14 |
Current assets |
38 |
|
391,669 |
|
1 |
|
3,921 |
|
- |
|
3,698 |
|
232,850 |
|
1,428 |
|
- |
|
39 |
|
65,907 |
Non-current assets |
- |
|
2,767,582 |
|
- |
|
124 |
|
- |
|
2,503 |
|
217,735 |
|
180,728 |
|
- |
|
385,891 |
|
22,870 |
Current liabilities |
- |
|
(13,402) |
|
- |
|
(1,729) |
|
- |
|
(637) |
|
(270,110) |
|
(1,737) |
|
- |
|
(2,917) |
|
(2,608) |
Non-current liabilities |
- |
|
(205,604) |
|
- |
|
(1,235) |
|
- |
|
- |
|
(161,763) |
|
- |
|
- |
|
(424,367) |
|
(26) |
Shareholders' equity |
(38) |
|
(2,940,245) |
|
(1) |
|
(1,081) |
|
- |
|
(5,564) |
|
(18,712) |
|
(180,419) |
|
- |
|
41,354 |
|
(86,143) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
- |
|
10,283 |
|
- |
|
3,718 |
|
- |
|
- |
|
860,071 |
|
- |
|
- |
|
- |
|
- |
Net income (loss) |
(44) |
|
717,782 |
|
- |
|
(2,960) |
|
(52) |
|
630 |
|
(23,500) |
|
(10,024) |
|
- |
|
(20,030) |
|
10,489 |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
17.3. Rollforward of the interest in subsidiaries and associates - Parent company
|
Subsidiaries |
|
Associates |
|
|
|
|
|
Avipal Centro Oeste S.A. |
|
BRF GmbH |
|
Elebat Alimentos S.A. |
|
Establec. Levino Zaccardi |
|
PSA Labor. Veter. Ltda |
|
Quickfood S.A. |
|
Sadia Alimentos S.A. |
|
Sadia International Ltd. |
|
Sadia Uruguay S.A. |
|
Sadia Overseas S.A. |
|
VIP S.A. Empr. e Particip. Imob |
|
K&S Alimentos S.A. |
|
Minerva S.A. |
|
Nutrifont Alimentos S.A. |
|
PP-BIO Adm. Bem próprio S.A. |
|
PR-SAD Adm. Bem próprio S.A. |
|
UP! Alimentos Ltda |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.15 |
|
12.31.14 |
a) Capital share as of December 31, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of share |
100.00% |
|
100.00% |
|
- |
|
98.26% |
|
99.99% |
|
90.05% |
|
43.10% |
|
100.00% |
|
94.90% |
|
100.00% |
|
100.00% |
|
49.00% |
|
15.11% |
|
- |
|
33.33% |
|
33.33% |
|
50.00% |
|
|
|
|
Total number of shares and membership interests |
6,963,854 |
|
1 |
|
- |
|
100 |
|
5,463,850 |
|
36,469,606 |
|
594,576,682 |
|
900 |
|
2,444,753,091 |
|
50,000 |
|
14,249,459 |
|
27,664,086 |
|
191,993,702 |
|
- |
|
- |
|
- |
|
1,000 |
|
|
|
|
Number of shares and membership interest held |
6,963,854 |
|
1 |
|
- |
|
98 |
|
5,463,849 |
|
32,841,224 |
|
256,253,695 |
|
900 |
|
2,319,989,778 |
|
50,000 |
|
14,249,459 |
|
13,555,402 |
|
29,000,000 |
|
- |
|
- |
|
- |
|
500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
b) Information as of December 31, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock |
5,972 |
|
8,064 |
|
- |
|
1,420 |
|
5,564 |
|
28,117 |
|
338,800 |
|
3,514 |
|
307,286 |
|
4 |
|
40,061 |
|
27,664 |
|
- |
|
- |
|
- |
|
- |
|
1 |
|
|
|
|
Shareholders' equity |
38 |
|
6,208,411 |
|
- |
|
163 |
|
5,564 |
|
(14,291) |
|
158,384 |
|
263,638 |
|
308,064 |
|
(85,341) |
|
52,763 |
|
44,715 |
|
- |
|
- |
|
- |
|
- |
|
1 |
|
|
|
|
Fair value adjustments of assets and liabilities acquired |
- |
|
- |
|
- |
|
- |
|
- |
|
123,901 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
Goodwill based on expectation of future profitability |
- |
|
- |
|
- |
|
- |
|
- |
|
166,983 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
Income (loss) for the period |
- |
|
2,094,392 |
|
(18,164) |
|
(1,107) |
|
550 |
|
(43,418) |
|
(15,230) |
|
5,956 |
|
85,345 |
|
(19,819) |
|
5,907 |
|
11,729 |
|
(830,191) |
|
(2,603) |
|
- |
|
- |
|
51,988 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
c) Balance of investments as of December 31, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
38 |
|
2,940,251 |
|
- |
|
1,060 |
|
5,561 |
|
328,960 |
|
78,307 |
|
180,418 |
|
- |
|
- |
|
86,142 |
|
17,528 |
|
357,246 |
|
- |
|
1,354 |
|
2,014 |
|
1 |
|
3,998,880 |
|
3,203,993 |
Equity pick-up (1) |
- |
|
2,094,392 |
|
(18,164) |
|
(1,088) |
|
550 |
|
(39,098) |
|
(13,747) |
|
5,956 |
|
81,183 |
|
(19,819) |
|
5,907 |
|
5,748 |
|
(131,944) |
|
(1,301) |
|
- |
|
- |
|
25,994 |
|
1,994,569 |
|
659,572 |
Unrealized profit in inventory |
- |
|
5,439 |
|
- |
|
166 |
|
- |
|
3,002 |
|
37 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
8,644 |
|
512 |
Goodwill in the acquisition of non-controlling entities |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
245,941 |
Exchange rate variation on goodwill in the acquisiton of non-controlling entities |
- |
|
(5,016) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(5,016) |
|
3 |
Exchange rate variation on goodwill |
- |
|
- |
|
- |
|
- |
|
- |
|
(14,087) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(14,087) |
|
(126,664) |
Goodwill |
- |
|
- |
|
- |
|
- |
|
- |
|
(7,206) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(7,206) |
|
(8,033) |
Write-off of fair value of property, plant and equipment |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(555) |
Exchange rate variation on foreign investments |
- |
|
1,040,014 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
82,289 |
|
1,755 |
|
(24,167) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
1,099,891 |
|
19,021 |
Other comprehensive income |
- |
|
281,189 |
|
- |
|
22 |
|
- |
|
6,676 |
|
3,606 |
|
(5,026) |
|
(90,555) |
|
- |
|
- |
|
- |
|
24,676 |
|
- |
|
- |
|
- |
|
- |
|
220,588 |
|
(4,402) |
Increase / decrease in capital |
- |
|
- |
|
318,453 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
299,961 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
310 |
|
1,414 |
|
- |
|
620,138 |
|
180,769 |
Acquisition of non-controlling interest |
- |
|
(259,101) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(259,101) |
|
- |
Appreciation in exchange of shares |
- |
|
111,247 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
111,247 |
|
- |
Dividends and interests on shareholders' equity |
- |
|
- |
|
- |
|
- |
|
(550) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(39,288) |
|
(1,365) |
|
- |
|
- |
|
- |
|
- |
|
(25,994) |
|
(67,197) |
|
(127,941) |
Write-off of investment |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(181,349) |
Loss of ownership interest |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(2,696) |
|
- |
|
- |
|
- |
|
- |
|
(2,696) |
|
- |
Write-off of investment - Minerva (2) |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(247,282) |
|
- |
|
- |
|
- |
|
- |
|
(247,282) |
|
- |
Acquisition of equity interest |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
127,210 |
Impairment losses for investments |
- |
|
- |
|
- |
|
- |
|
- |
|
12,637 |
|
- |
|
- |
|
- |
|
43,986 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
56,623 |
|
25,892 |
Transfer to held for sale and discontinued operations |
- |
|
- |
|
(300,289) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
1,301 |
|
- |
|
- |
|
- |
|
(298,988) |
|
(15,089) |
|
38 |
|
6,208,415 |
|
- |
|
160 |
|
5,561 |
|
290,884 |
|
68,203 |
|
263,637 |
|
292,344 |
|
- |
|
52,761 |
|
21,911 |
|
- |
|
- |
|
1,664 |
|
3,428 |
|
1 |
|
7,209,007 |
|
3,998,880 |
(1) The amount of R$1,301 must be disregarded from the total of equity pick-up as it is related to Nutrifont, investment reclassified to the discontinued operations, and the amount of R$2,696 must be added as is related to gains due to the change of equity interest in Minerva during 2015.
(2) Reclassification of the investment balance in Minerva S.A. to marketable securities as Minerva ceased to be an associate, as per CPC 18 (R2) in its item 22. The accounting treatment change generated a net gain of R$125,671 (note 34).
The exchange rate variation result on the investments in foreign subsidiaries, whose functional currency is Brazilian Reais, totaling a gain of R$1,353,528 on December 31, 2015 (R$126,726 as of December 31, 2014), was recognized as financial result in the consolidated statement of income.
On December 31, 2015, these associates, affiliates and joint ventures do not have any significant restriction to transfer dividends or repay their loans or advances to the Company.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
17.4. Summary of financial information in associate
|
K&S |
|
Minerva |
|
Nutrifont |
|
PP-BIO |
|
PR-SAD |
|
UP! |
|
Total |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Current assets |
54,679 |
|
46,133 |
|
- |
|
2,648,897 |
|
- |
|
40,350 |
|
- |
|
- |
|
- |
|
- |
|
79,250 |
|
73,105 |
|
|
|
|
Non-current assets |
13,211 |
|
8,916 |
|
- |
|
3,566,269 |
|
- |
|
123,654 |
|
4,992 |
|
4,065 |
|
10,284 |
|
6,045 |
|
217 |
|
201 |
|
|
|
|
Current liabilities |
(22,293) |
|
(18,467) |
|
- |
|
(1,357,818) |
|
- |
|
(130,710) |
|
- |
|
- |
|
- |
|
- |
|
(79,466) |
|
(73,305) |
|
|
|
|
Non-current liabilities |
(882) |
|
(810) |
|
- |
|
(4,182,311) |
|
- |
|
(3,118) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
Shareholder's equity |
44,715 |
|
35,772 |
|
- |
|
675,037 |
|
- |
|
30,176 |
|
4,992 |
|
4,065 |
|
10,284 |
|
6,045 |
|
1 |
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of participation |
49.00% |
|
49.00% |
|
15.11% |
|
16.29% |
|
50.00% |
|
50.00% |
|
33.33% |
|
33.33% |
|
33.33% |
|
33.33% |
|
50.00% |
|
50.00% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value of investment |
21,911 |
|
17,528 |
|
- |
|
109,963 |
|
- |
|
15,089 |
|
1,664 |
|
1,355 |
|
3,428 |
|
2,015 |
|
1 |
|
1 |
|
|
|
|
Transfer to held for sale |
- |
|
- |
|
- |
|
- |
|
- |
|
(15,089) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
Book value of investment |
21,911 |
|
17,528 |
|
- |
|
109,963 |
|
- |
|
- |
|
1,664 |
|
1,355 |
|
3,428 |
|
2,015 |
|
1 |
|
1 |
|
27,004 |
|
130,862 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared |
1,365 |
|
1,221 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
25,994 |
|
63,700 |
|
27,359 |
|
64,921 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
K&S |
|
|
|
Minerva |
|
|
|
Nutrifont |
|
|
|
PP-BIO |
|
|
|
PR-SAD |
|
|
|
UP! |
|
|
|
|
|
|
|
12.31.15 |
|
12.31.14 |
|
12.31.15 (1) |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
|
|
|
Net revenues |
117,595 |
|
105,260 |
|
4,049,469 |
|
981,025 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
192,193 |
|
212,679 |
|
|
|
|
Net income (loss) |
11,729 |
|
10,491 |
|
(830,191) |
|
(104,487) |
|
(2,603) |
|
(5,652) |
|
- |
|
- |
|
- |
|
- |
|
51,988 |
|
70,518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity pick-up |
5,748 |
|
5,139 |
|
(131,944) |
|
(17,021) |
|
(1,301) |
|
(2,826) |
|
- |
|
- |
|
- |
|
- |
|
25,994 |
|
35,259 |
|
(101,503) |
|
20,551 |
(1) Refers to Minerva S.A. loss until November 30, 2015, date when the investment was reclassified to marketable securities (note 17.3).
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
17.5. Summary of financial information of joint ventures
|
|
AKF |
|
Federal Foods |
|
Rising Star |
|
SATS BRF |
|
Total |
|
|
12.31.15 |
|
12.31.14 |
|
12.31.14 |
|
12.31.14 |
|
12.31.15 |
|
12.31.15 |
|
12.31.14 |
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
138,208 |
|
73,914 |
|
- |
|
- |
|
253,452 |
|
|
|
|
Cash and cash equivalents |
|
27,549 |
|
8,271 |
|
- |
|
- |
|
84,148 |
|
|
|
|
Prepaid expenses |
|
1,642 |
|
93 |
|
- |
|
- |
|
386 |
|
|
|
|
Other current assets |
|
109,017 |
|
65,550 |
|
- |
|
- |
|
168,918 |
|
|
|
|
Non-current |
|
9,122 |
|
5,667 |
|
- |
|
- |
|
14,414 |
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
(105,290) |
|
(60,973) |
|
- |
|
- |
|
(145,547) |
|
|
|
|
Trade accounts payable |
|
(4,514) |
|
(7,312) |
|
- |
|
- |
|
(126,931) |
|
|
|
|
Tax payable |
|
(5,989) |
|
(3,632) |
|
- |
|
- |
|
- |
|
|
|
|
Other current liabilities |
|
(94,787) |
|
(50,029) |
|
- |
|
- |
|
(18,616) |
|
|
|
|
Non-current |
|
(3,228) |
|
(2,364) |
|
- |
|
- |
|
- |
|
|
|
|
Loans and financing |
|
- |
|
(165) |
|
- |
|
- |
|
- |
|
|
|
|
Deferred taxes |
|
(3,228) |
|
(2,199) |
|
- |
|
- |
|
- |
|
|
|
|
Shareholder's equity |
|
38,812 |
|
16,244 |
|
- |
|
- |
|
122,319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of equity interest |
|
40.00% |
|
40.00% |
|
49.00% |
|
50.00% |
|
49.00% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value of investment |
|
15,525 |
|
6,497 |
|
- |
|
- |
|
59,936 |
|
75,461 |
|
6,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AKF |
|
Federal Foods |
|
Rising Star |
|
SATS BRF |
|
Total |
|
|
12.31.15 |
|
12.31.14 |
|
12.31.14 |
|
12.31.14 |
|
12.31.15 |
|
12.31.15 |
|
12.31.14 |
Net sales |
|
347,800 |
|
67,540 |
|
173,993 |
|
137,416 |
|
370,376 |
|
|
|
|
Depreciation and amortization |
|
(3,420) |
|
(498) |
|
(25,204) |
|
(5,520) |
|
(145) |
|
|
|
|
Financial expense |
|
(555) |
|
(669) |
|
- |
|
- |
|
(23) |
|
|
|
|
Income before taxes |
|
9,756 |
|
115 |
|
5,337 |
|
(938) |
|
(9,809) |
|
|
|
|
Net income (loss) |
|
9,756 |
|
115 |
|
5,337 |
|
(938) |
|
(9,809) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of equity interest |
|
40.00% |
|
40.00% |
|
49.00% |
|
50.00% |
|
49.00% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity pick-up |
|
3,902 |
|
46 |
|
2,615 |
|
(469) |
|
(4,807) |
|
(905) |
|
2,192 |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
18. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment rollforward is presented below:
|
Parent company |
|
Weighted average depreciation rate (p.a.) |
|
12.31.14 |
|
Additions |
|
Additions from discontinued operations |
|
Disposals |
|
Reversals |
|
Transfers (1) |
|
12.31.15 |
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land |
- |
|
549,494 |
|
667 |
|
39 |
|
(10,319) |
|
- |
|
53,720 |
|
593,601 |
Buildings and improvements |
- |
|
4,854,292 |
|
1,067 |
|
- |
|
(92,057) |
|
- |
|
321,152 |
|
5,084,454 |
Machinery and equipment |
- |
|
5,980,863 |
|
54,199 |
|
79 |
|
(113,576) |
|
- |
|
613,254 |
|
6,534,819 |
Facilities |
- |
|
1,644,353 |
|
43 |
|
- |
|
(39,713) |
|
- |
|
94,330 |
|
1,699,013 |
Furniture |
- |
|
87,821 |
|
16 |
|
50 |
|
(3,361) |
|
- |
|
28,421 |
|
112,947 |
Vehicles |
- |
|
131,418 |
|
383 |
|
- |
|
(4,229) |
|
- |
|
(110,771) |
|
16,801 |
Construction in progress |
- |
|
457,777 |
|
1,344,739 |
|
8,101 |
|
- |
|
- |
|
(1,094,785) |
|
715,832 |
Advances to suppliers |
- |
|
3,570 |
|
73,542 |
|
- |
|
- |
|
- |
|
(72,956) |
|
4,156 |
|
|
|
13,709,588 |
|
1,474,656 |
|
8,269 |
|
(263,255) |
|
- |
|
(167,635) |
|
14,761,623 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings and improvements |
3.04% |
|
(1,348,195) |
|
(143,954) |
|
- |
|
13,621 |
|
- |
|
1,148 |
|
(1,477,380) |
Machinery and equipment |
5.85% |
|
(2,310,811) |
|
(349,005) |
|
- |
|
83,657 |
|
- |
|
(550) |
|
(2,576,709) |
Facilities |
3.73% |
|
(475,997) |
|
(67,542) |
|
- |
|
13,352 |
|
- |
|
(197) |
|
(530,384) |
Furniture |
7.99% |
|
(41,371) |
|
(8,241) |
|
- |
|
2,243 |
|
- |
|
184 |
|
(47,185) |
Vehicles |
19.74% |
|
(57,921) |
|
(7,589) |
|
- |
|
2,035 |
|
- |
|
54,275 |
|
(9,200) |
|
|
|
(4,234,295) |
|
(576,331) |
|
- |
|
114,908 |
|
- |
|
54,860 |
|
(4,640,858) |
Provision for losses |
|
|
(50,684) |
|
(21,757) |
|
- |
|
36,441 |
|
16,221 |
|
- |
|
(19,779) |
|
|
|
9,424,609 |
|
876,568 |
|
8,269 |
|
(111,906) |
|
16,221 |
|
(112,775) |
|
10,100,986 |
(1) Refers to the transfer of R$63,117 to intangible assets, R$27,339 to biological assets and R$22,319 to held for sale.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
Parent company |
|
Weighted average depreciation rate (p.a.) |
|
12.31.13 |
|
Additions |
|
Additions from discontinued operations |
|
Disposals |
|
Reversals |
|
Transfers (1) |
|
Net transfers between held for sale |
|
12.31.14 |
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land |
- |
|
567,115 |
|
7,497 |
|
- |
|
(2,449) |
|
- |
|
16,698 |
|
(39,367) |
|
549,494 |
Buildings and improvements |
- |
|
5,250,780 |
|
26,527 |
|
- |
|
(49,953) |
|
- |
|
64,267 |
|
(437,329) |
|
4,854,292 |
Machinery and equipment |
- |
|
6,215,598 |
|
66,043 |
|
- |
|
(109,642) |
|
- |
|
388,844 |
|
(579,980) |
|
5,980,863 |
Facilities |
- |
|
1,538,825 |
|
1,893 |
|
- |
|
(3,110) |
|
- |
|
107,642 |
|
(897) |
|
1,644,353 |
Furniture |
- |
|
94,376 |
|
302 |
|
- |
|
(4,647) |
|
- |
|
6,963 |
|
(9,173) |
|
87,821 |
Vehicles |
- |
|
156,121 |
|
1 |
|
- |
|
(20,424) |
|
- |
|
(825) |
|
(3,455) |
|
131,418 |
Construction in progress |
- |
|
647,081 |
|
675,517 |
|
51,161 |
|
(187) |
|
- |
|
(879,324) |
|
(36,471) |
|
457,777 |
Advances to suppliers |
- |
|
3,649 |
|
23,341 |
|
- |
|
- |
|
- |
|
(23,420) |
|
- |
|
3,570 |
|
|
|
14,473,545 |
|
801,121 |
|
51,161 |
|
(190,412) |
|
- |
|
(319,155) |
|
(1,106,672) |
|
13,709,588 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings and improvements |
3.06% |
|
(1,341,344) |
|
(127,558) |
|
(22,523) |
|
29,161 |
|
- |
|
16,841 |
|
97,228 |
|
(1,348,195) |
Machinery and equipment |
5.86% |
|
(2,261,586) |
|
(340,542) |
|
(41,365) |
|
75,302 |
|
- |
|
34,861 |
|
222,519 |
|
(2,310,811) |
Facilities |
3.81% |
|
(423,821) |
|
(62,532) |
|
(2,433) |
|
2,448 |
|
- |
|
9,637 |
|
704 |
|
(475,997) |
Furniture |
7.96% |
|
(41,305) |
|
(6,231) |
|
(758) |
|
2,793 |
|
- |
|
417 |
|
3,713 |
|
(41,371) |
Vehicles |
18.61% |
|
(47,609) |
|
(21,595) |
|
(426) |
|
9,518 |
|
- |
|
483 |
|
1,708 |
|
(57,921) |
|
|
|
(4,115,665) |
|
(558,458) |
|
(67,505) |
|
119,222 |
|
- |
|
62,239 |
|
325,872 |
|
(4,234,295) |
Provision for losses |
|
|
(18,983) |
|
(50,998) |
|
- |
|
- |
|
19,297 |
|
- |
|
- |
|
(50,684) |
|
|
|
10,338,897 |
|
191,665 |
|
(16,344) |
|
(71,190) |
|
19,297 |
|
(256,916) |
|
(780,800) |
|
9,424,609 |
(1) Besides the balance presented to intangible assets and biological assets, also was included the value of R$180,319 relating to the capital paid with property, plan and equipment related to division of beef BRF in its wholly-subsidiary Mato Grosso Bovino S.A., as disclosed in note 17.3.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
Consolidated |
|
Weighted average depreciation rate (p.a.) |
|
12.31.14 |
|
Additions |
|
Additions from discontinued operations |
|
Business combinations |
|
Disposals |
|
Reversals |
|
Transfers (1) |
|
Exchange rate variation |
|
12.31.15 |
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land |
- |
|
544,998 |
|
667 |
|
39 |
|
- |
|
(11,759) |
|
- |
|
53,993 |
|
(3,217) |
|
584,721 |
Buildings and improvements |
- |
|
5,099,255 |
|
8,047 |
|
- |
|
4,731 |
|
(93,912) |
|
- |
|
350,460 |
|
69,356 |
|
5,437,937 |
Machinery and equipment |
- |
|
6,303,425 |
|
62,696 |
|
79 |
|
3,153 |
|
(127,129) |
|
- |
|
740,751 |
|
44,170 |
|
7,027,145 |
Facilities |
- |
|
1,757,408 |
|
138 |
|
- |
|
- |
|
(39,738) |
|
- |
|
110,133 |
|
26,526 |
|
1,854,467 |
Furniture |
- |
|
100,430 |
|
1,622 |
|
50 |
|
- |
|
(4,782) |
|
- |
|
35,276 |
|
5,273 |
|
137,869 |
Vehicles |
- |
|
144,048 |
|
974 |
|
- |
|
1,627 |
|
(6,812) |
|
- |
|
(110,624) |
|
(8,896) |
|
20,317 |
Construction in progress |
- |
|
607,709 |
|
1,454,360 |
|
8,101 |
|
- |
|
- |
|
- |
|
(1,285,886) |
|
5,498 |
|
789,782 |
Advances to suppliers |
- |
|
20,267 |
|
72,891 |
|
- |
|
- |
|
(41) |
|
- |
|
(72,956) |
|
(1,401) |
|
18,760 |
|
|
|
14,577,540 |
|
1,601,395 |
|
8,269 |
|
9,511 |
|
(284,173) |
|
- |
|
(178,853) |
|
137,309 |
|
15,870,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings and improvements |
3.05% |
|
(1,359,840) |
|
(154,922) |
|
- |
|
(244) |
|
14,884 |
|
- |
|
(18,182) |
|
(7,639) |
|
(1,525,943) |
Machinery and equipment |
5.82% |
|
(2,486,173) |
|
(381,492) |
|
- |
|
(3,045) |
|
97,910 |
|
- |
|
4,765 |
|
(17,968) |
|
(2,786,003) |
Facilities |
3.82% |
|
(507,934) |
|
(73,483) |
|
- |
|
- |
|
13,371 |
|
- |
|
17,806 |
|
350 |
|
(549,890) |
Furniture |
7.94% |
|
(54,606) |
|
(10,450) |
|
- |
|
- |
|
3,708 |
|
- |
|
214 |
|
(3,518) |
|
(64,652) |
Vehicles |
19.97% |
|
(58,954) |
|
(8,577) |
|
- |
|
(772) |
|
3,385 |
|
- |
|
54,083 |
|
1,856 |
|
(8,979) |
|
|
|
(4,467,507) |
|
(628,924) |
|
- |
|
(4,061) |
|
133,258 |
|
- |
|
58,686 |
|
(26,919) |
|
(4,935,467) |
Provision for losses |
|
|
(50,684) |
|
(21,757) |
|
- |
|
- |
|
36,441 |
|
16,221 |
|
- |
|
- |
|
(19,779) |
|
|
|
10,059,349 |
|
950,714 |
|
8,269 |
|
5,450 |
|
(114,474) |
|
16,221 |
|
(120,167) |
|
110,390 |
|
10,915,752 |
(1) Refers to the transfer of R$70,509 to intangible assets, R$27,339 to biological assets and R$22,319 to held for sale.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
Consolidated |
|
Weighted average depreciation rate (p.a.) |
|
12.31.13 |
|
Additions |
|
Additions from discontinued operations |
|
Business combination (1) |
|
Disposals |
|
Reversals |
|
Transfers |
|
Net transfers between held for sale |
|
Exchange rate variation |
|
12.31.14 |
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land |
- |
|
567,129 |
|
7,497 |
|
- |
|
- |
|
(3,869) |
|
- |
|
17,754 |
|
(39,367) |
|
(4,146) |
|
544,998 |
Buildings and improvements |
- |
|
5,414,069 |
|
28,424 |
|
- |
|
2,540 |
|
(143,333) |
|
- |
|
249,924 |
|
(438,494) |
|
(13,875) |
|
5,099,255 |
Machinery and equipment |
- |
|
6,538,245 |
|
69,410 |
|
- |
|
6,064 |
|
(201,553) |
|
- |
|
496,107 |
|
(579,980) |
|
(24,868) |
|
6,303,425 |
Facilities |
- |
|
1,573,355 |
|
2,757 |
|
- |
|
- |
|
(27,112) |
|
- |
|
211,957 |
|
(897) |
|
(2,652) |
|
1,757,408 |
Furniture |
- |
|
111,478 |
|
1,240 |
|
- |
|
1,279 |
|
(13,870) |
|
- |
|
4,807 |
|
(9,173) |
|
4,669 |
|
100,430 |
Vehicles |
- |
|
160,474 |
|
561 |
|
- |
|
20,772 |
|
(32,926) |
|
- |
|
(64) |
|
(3,455) |
|
(1,314) |
|
144,048 |
Construction in progress |
- |
|
798,372 |
|
908,443 |
|
51,161 |
|
4,010 |
|
(36,673) |
|
- |
|
(1,090,310) |
|
(36,471) |
|
9,177 |
|
607,709 |
Advances to suppliers |
- |
|
13,707 |
|
32,653 |
|
- |
|
- |
|
- |
|
- |
|
(27,539) |
|
- |
|
1,446 |
|
20,267 |
|
|
|
15,176,829 |
|
1,050,985 |
|
51,161 |
|
34,665 |
|
(459,336) |
|
- |
|
(137,364) |
|
(1,107,837) |
|
(31,563) |
|
14,577,540 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings and improvements |
3.07% |
|
(1,348,171) |
|
(133,557) |
|
(22,523) |
|
(2,442) |
|
31,336 |
|
- |
|
16,641 |
|
97,958 |
|
918 |
|
(1,359,840) |
Machinery and equipment |
5.86% |
|
(2,427,892) |
|
(362,877) |
|
(41,365) |
|
(5,485) |
|
87,357 |
|
- |
|
34,624 |
|
222,519 |
|
6,946 |
|
(2,486,173) |
Facilities |
3.89% |
|
(459,156) |
|
(64,153) |
|
(2,433) |
|
- |
|
5,599 |
|
- |
|
9,716 |
|
704 |
|
1,789 |
|
(507,934) |
Furniture |
7.94% |
|
(53,389) |
|
(7,582) |
|
(758) |
|
(1,217) |
|
3,908 |
|
- |
|
775 |
|
3,713 |
|
(56) |
|
(54,606) |
Vehicles |
18.74% |
|
(47,660) |
|
(22,571) |
|
(426) |
|
(17,050) |
|
22,619 |
|
- |
|
483 |
|
1,708 |
|
3,943 |
|
(58,954) |
|
|
|
(4,336,268) |
|
(590,740) |
|
(67,505) |
|
(26,194) |
|
150,819 |
|
- |
|
62,239 |
|
326,602 |
|
13,540 |
|
(4,467,507) |
Provision for losses |
|
|
(18,983) |
|
(50,998) |
|
- |
|
- |
|
- |
|
19,297 |
|
- |
|
- |
|
- |
|
(50,684) |
|
|
|
10,821,578 |
|
409,247 |
|
(16,344) |
|
8,471 |
|
(308,517) |
|
19,297 |
|
(75,125) |
|
(781,235) |
|
(18,023) |
|
10,059,349 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) On January 16, 2012, the Company through its wholly-owned subsidiary BRF GmbH, acquired control and consequently started to consolidate the financial statement of wholly-owned subsidiary Federal Foods (note 6.1.1).
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
The Company has fully depreciated items that are still in operation, which are set forth below:
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Cost |
|
|
|
|
|
|
|
Buildings and improvements |
166,614 |
|
114,984 |
|
169,995 |
|
127,168 |
Machinery and equipment |
704,822 |
|
633,241 |
|
752,458 |
|
671,054 |
Facilities |
96,273 |
|
71,313 |
|
102,017 |
|
71,676 |
Furniture |
15,994 |
|
14,499 |
|
19,338 |
|
19,140 |
Vehicles |
3,500 |
|
4,494 |
|
4,166 |
|
4,494 |
Others |
56,185 |
|
39,852 |
|
56,185 |
|
39,852 |
|
1,043,388 |
|
878,383 |
|
1,104,159 |
|
933,384 |
During year ended December 31, 2015, the Company capitalized interest in the amount of R$24,001 in the parent company and R$24,330 in the consolidated (R$32,744 in the parent company and R$37,686 in the consolidated as of December 31, 2014). The weighted average interest rate utilized to determine the capitalized amount was 5.51% p.a in the parent company and 5.70% in the consolidated (5.43% in the parent company and 5.98% in the consolidated p.a. as of December 31, 2014).
On December 31, 2015, except for the built to suit agreement mentioned in note 23.2, the Company had no commitments assumed related to acquisition or construction of property, plant and equipment items.
The property, plant and equipment items that are pledged as collateral for transactions of different natures are presented below:
|
|
|
|
Parent company and Consolidated |
|
|
|
|
12.31.15 |
|
12.31.14 |
|
|
Type of collateral |
|
Book value of the
collateral |
|
Book value of the
collateral |
Land |
|
Financial/Tax |
|
217,427 |
|
320,905 |
Buildings and improvements |
|
Financial/Tax |
|
1,522,478 |
|
1,670,522 |
Machinery and equipment |
|
Financial/Labor/Tax/Civil |
|
1,774,781 |
|
2,053,784 |
Facilities |
|
Financial/Tax |
|
493,103 |
|
640,400 |
Furniture |
|
Financial/Tax |
|
27,004 |
|
18,699 |
Vehicles |
|
Financial/Tax |
|
2,306 |
|
10,835 |
Others |
|
Financial/Tax |
|
70,083 |
|
76,944 |
|
|
|
|
4,107,182 |
|
4,792,089 |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
19. INTANGIBLES
Intangible assets are comprised of the following items:
|
Parent company |
|
Weighted average amortization rate (p.a.) |
|
Cost |
|
Accumulated
amortization |
|
12.31.15 |
|
12.31.14 |
Goodwill |
- |
|
2,096,587 |
|
- |
|
2,096,587 |
|
2,096,587 |
Outgrowers relationship |
12.50% |
|
14,197 |
|
(5,777) |
|
8,420 |
|
9,727 |
Trademarks |
- |
|
1,173,000 |
|
- |
|
1,173,000 |
|
1,173,000 |
Patents |
16.51% |
|
3,720 |
|
(2,092) |
|
1,628 |
|
2,325 |
Software |
20.00% |
|
404,673 |
|
(232,751) |
|
171,922 |
|
163,451 |
|
|
|
3,692,177 |
|
(240,620) |
|
3,451,557 |
|
3,445,090 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
Weighted average amortization rate (p.a.) |
|
Cost |
|
Accumulated
amortization |
|
12.31.15 |
|
12.31.14 |
Non-compete agreement |
2.44% |
|
15,738 |
|
(786) |
|
14,952 |
|
- |
Goodwill |
- |
|
2,778,102 |
|
- |
|
2,778,102 |
|
2,525,343 |
Import quotas |
100.00% |
|
62,233 |
|
- |
|
62,233 |
|
- |
Outgrowers relationship |
12.50% |
|
14,197 |
|
(5,777) |
|
8,420 |
|
9,727 |
Trademarks |
- |
|
1,372,018 |
|
- |
|
1,372,018 |
|
1,267,888 |
Patents |
17.33% |
|
4,870 |
|
(3,025) |
|
1,845 |
|
2,557 |
Customer relationship |
7.71% |
|
620,853 |
|
(49,788) |
|
571,065 |
|
330,012 |
Supplier relationship |
42.00% |
|
9,670 |
|
(9,670) |
|
- |
|
2,484 |
Software |
20.00% |
|
462,760 |
|
(260,484) |
|
202,276 |
|
190,632 |
|
|
|
5,340,441 |
|
(329,530) |
|
5,010,911 |
|
4,328,643 |
The intangible assets rollforward is set forth below:
|
Parent company |
|
12.31.14 |
|
Additions |
|
Disposals |
|
Transfers |
|
12.31.15 |
Cost |
|
|
|
|
|
|
|
|
|
Goodwill |
2,096,587 |
|
- |
|
- |
|
- |
|
2,096,587 |
Ava |
49,368 |
|
- |
|
- |
|
- |
|
49,368 |
Eleva Alimentos |
808,140 |
|
- |
|
- |
|
- |
|
808,140 |
Incubatório Paraíso |
656 |
|
- |
|
- |
|
- |
|
656 |
Paraíso Agroindustrial |
16,751 |
|
- |
|
- |
|
- |
|
16,751 |
Perdigão Mato Grosso |
7,636 |
|
- |
|
- |
|
- |
|
7,636 |
Sadia |
1,214,036 |
|
- |
|
- |
|
- |
|
1,214,036 |
Outgrowers relationship |
13,682 |
|
515 |
|
- |
|
- |
|
14,197 |
Trademarks |
1,173,000 |
|
- |
|
- |
|
- |
|
1,173,000 |
Patents |
3,722 |
|
- |
|
(2) |
|
- |
|
3,720 |
Software |
414,941 |
|
35,584 |
|
(108,767) |
|
62,915 |
|
404,673 |
|
3,701,932 |
|
36,099 |
|
(108,769) |
|
62,915 |
|
3,692,177 |
|
|
|
|
|
|
|
|
|
|
Amortization |
|
|
|
|
|
|
|
|
|
Outgrowers relationship |
(3,955) |
|
(1,822) |
|
- |
|
- |
|
(5,777) |
Patents |
(1,397) |
|
(697) |
|
2 |
|
- |
|
(2,092) |
Software |
(251,490) |
|
(89,684) |
|
108,221 |
|
202 |
|
(232,751) |
|
(256,842) |
|
(92,203) |
|
108,223 |
|
202 |
|
(240,620) |
|
3,445,090 |
|
(56,104) |
|
(546) |
|
63,117 |
|
3,451,557 |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
Parent company |
|
12.31.13 |
|
Additions |
|
Disposals |
|
Transfers |
|
Transfer to held for sale |
|
12.31.14 |
Cost: |
|
|
|
|
|
|
|
|
|
|
|
Goodwill: |
2,767,985 |
|
- |
|
- |
|
- |
|
(671,398) |
|
2,096,587 |
Ava |
49,368 |
|
- |
|
- |
|
- |
|
- |
|
49,368 |
Batavia |
133,163 |
|
- |
|
- |
|
- |
|
(133,163) |
|
- |
Cotochés |
39,590 |
|
- |
|
- |
|
- |
|
(39,590) |
|
- |
Eleva Alimentos |
1,273,324 |
|
- |
|
- |
|
- |
|
(465,184) |
|
808,140 |
Heloísa |
33,461 |
|
- |
|
- |
|
- |
|
(33,461) |
|
- |
Incubatório Paraíso |
656 |
|
- |
|
- |
|
- |
|
- |
|
656 |
Paraíso Agroindustrial |
16,751 |
|
- |
|
- |
|
- |
|
- |
|
16,751 |
Perdigão Mato Grosso |
7,636 |
|
- |
|
- |
|
- |
|
- |
|
7,636 |
Sadia |
1,214,036 |
|
- |
|
- |
|
- |
|
- |
|
1,214,036 |
Outgrowers relationship |
12,463 |
|
1,219 |
|
- |
|
- |
|
- |
|
13,682 |
Trademarks |
1,173,000 |
|
- |
|
- |
|
- |
|
- |
|
1,173,000 |
Patents |
3,722 |
|
- |
|
- |
|
- |
|
- |
|
3,722 |
Supplier relationship |
135,000 |
|
- |
|
(135,000) |
|
- |
|
- |
|
- |
Software |
290,396 |
|
46,038 |
|
(1,447) |
|
79,954 |
|
- |
|
414,941 |
|
4,382,566 |
|
47,257 |
|
(136,447) |
|
79,954 |
|
(671,398) |
|
3,701,932 |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization: |
|
|
|
|
|
|
|
|
|
|
|
Outgrowers relationship |
(2,313) |
|
(1,642) |
|
- |
|
- |
|
- |
|
(3,955) |
Patents |
(826) |
|
(571) |
|
- |
|
- |
|
- |
|
(1,397) |
Supplier relationship |
(135,000) |
|
- |
|
135,000 |
|
- |
|
- |
|
- |
Software |
(160,288) |
|
(91,526) |
|
1,442 |
|
(1,118) |
|
- |
|
(251,490) |
|
(298,427) |
|
(93,739) |
|
136,442 |
|
(1,118) |
|
- |
|
(256,842) |
|
4,084,139 |
|
(46,482) |
|
(5) |
|
78,836 |
|
(671,398) |
|
3,445,090 |
|
Consolidated |
|
12.31.14 |
|
Additions |
|
Disposals |
|
Business combination |
|
Transfers |
|
Exchange rate variation |
|
12.31.15 |
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill |
2,525,343 |
|
- |
|
- |
|
330,821 |
|
(196,199) |
|
118,137 |
|
2,778,102 |
Ava |
49,368 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
49,368 |
Avex |
28,965 |
|
- |
|
- |
|
- |
|
- |
|
(1,415) |
|
27,550 |
BRF AFC |
138,341 |
|
- |
|
- |
|
- |
|
- |
|
57,722 |
|
196,063 |
BRF Invicta |
- |
|
- |
|
- |
|
330,044 |
|
(196,199) |
|
36,931 |
|
170,776 |
Dánica |
7,373 |
|
- |
|
- |
|
- |
|
- |
|
(360) |
|
7,013 |
Eleva Alimentos |
808,140 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
808,140 |
Federal Foods |
57,428 |
|
- |
|
- |
|
- |
|
- |
|
26,991 |
|
84,419 |
Incubatório Paraíso |
656 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
656 |
Invicta Food Group |
- |
|
- |
|
- |
|
777 |
|
- |
|
148 |
|
925 |
Paraíso Agroindustrial |
16,751 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
16,751 |
Perdigão Mato Grosso |
7,636 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
7,636 |
Plusfood |
21,087 |
|
- |
|
- |
|
- |
|
- |
|
6,699 |
|
27,786 |
Quickfood |
175,562 |
|
- |
|
- |
|
- |
|
- |
|
(8,579) |
|
166,983 |
Sadia |
1,214,036 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
1,214,036 |
Non-compete agreement |
332 |
|
21,141 |
|
(350) |
|
- |
|
- |
|
(5,385) |
|
15,738 |
Import quotas |
- |
|
- |
|
- |
|
- |
|
48,775 |
|
13,458 |
|
62,233 |
Outgrowers relationship |
13,682 |
|
515 |
|
- |
|
- |
|
- |
|
- |
|
14,197 |
Trademarks |
1,267,888 |
|
145,995 |
(1) |
- |
|
- |
|
- |
|
(41,865) |
|
1,372,018 |
Patents |
4,823 |
|
17 |
|
(2) |
|
- |
|
- |
|
32 |
|
4,870 |
Customer relationship |
351,449 |
|
- |
|
- |
|
- |
|
147,424 |
|
121,980 |
|
620,853 |
Supplier relationship |
10,064 |
|
- |
|
- |
|
- |
|
- |
|
(394) |
|
9,670 |
Software |
453,551 |
|
37,748 |
|
(108,867) |
|
- |
|
74,133 |
|
6,195 |
|
462,760 |
|
4,627,132 |
|
205,416 |
|
(109,219) |
|
330,821 |
|
74,133 |
|
212,158 |
|
5,340,441 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-compete agreement |
(332) |
|
(1,054) |
|
350 |
|
- |
|
- |
|
250 |
|
(786) |
Outgrowers relationship |
(3,955) |
|
(1,822) |
|
- |
|
- |
|
- |
|
- |
|
(5,777) |
Patents |
(2,266) |
|
(743) |
|
2 |
|
- |
|
- |
|
(18) |
|
(3,025) |
Customer relationship |
(21,437) |
|
(31,153) |
|
- |
|
- |
|
- |
|
2,802 |
|
(49,788) |
Supplier relationship |
(7,580) |
|
(2,820) |
|
- |
|
- |
|
- |
|
730 |
|
(9,670) |
Software |
(262,919) |
|
(99,559) |
|
108,278 |
|
- |
|
(3,624) |
|
(2,660) |
|
(260,484) |
|
(298,489) |
|
(137,151) |
|
108,630 |
|
- |
|
(3,624) |
|
1,104 |
|
(329,530) |
|
4,328,643 |
|
68,265 |
|
(589) |
|
330,821 |
|
70,509 |
|
213,262 |
|
5,010,911 |
(1) Refers to the trademarks acquisition in Argentina (see note 1.5)
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
Consolidated |
|
12.31.13 |
|
Additions |
|
Disposals |
|
Business combination |
|
Transfers |
|
Transfer to held for sale |
|
Exchange rate variation |
|
12.31.14 |
Cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill: |
3,101,750 |
|
- |
|
- |
|
322,276 |
|
(167,893) |
|
(671,398) |
|
(59,392) |
|
2,525,343 |
AKF |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Ava |
49,368 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
49,368 |
Avex |
32,819 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(3,854) |
|
28,965 |
Batavia |
133,163 |
|
- |
|
- |
|
- |
|
- |
|
(133,163) |
|
- |
|
- |
BRF AFC |
- |
|
- |
|
- |
|
274,112 |
|
(138,544) |
|
- |
|
2,773 |
|
138,341 |
Cotochés |
39,590 |
|
- |
|
- |
|
- |
|
- |
|
(39,590) |
|
- |
|
- |
Dánica |
8,354 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(981) |
|
7,373 |
Eleva Alimentos |
1,273,324 |
|
- |
|
- |
|
- |
|
- |
|
(465,184) |
|
- |
|
808,140 |
Federal Foods |
25,249 |
|
- |
|
- |
|
48,164 |
|
(29,349) |
|
- |
|
13,364 |
|
57,428 |
Heloísa |
33,461 |
|
- |
|
- |
|
- |
|
- |
|
(33,461) |
|
- |
|
- |
Incubatório Paraíso |
656 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
656 |
Minerva |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Paraíso Agroindustrial |
16,751 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
16,751 |
Perdigão Mato Grosso |
7,636 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
7,636 |
Plusfood |
21,084 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
3 |
|
21,087 |
Quickfood |
246,259 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(70,697) |
|
175,562 |
Sadia |
1,214,036 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
1,214,036 |
Non-compete agreement |
375 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(43) |
|
332 |
Exclusivity agreement |
497 |
|
- |
|
(382) |
|
- |
|
- |
|
- |
|
(115) |
|
- |
Outgrowers relationship |
12,463 |
|
1,219 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
13,682 |
Trademarks |
1,302,305 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(34,417) |
|
1,267,888 |
Patents |
5,546 |
|
50 |
|
(774) |
|
- |
|
- |
|
- |
|
1 |
|
4,823 |
Customer relationship |
179,561 |
|
- |
|
- |
|
- |
|
214,074 |
|
- |
|
(42,186) |
|
351,449 |
Supplier relationship |
146,138 |
|
- |
|
(135,000) |
|
- |
|
- |
|
- |
|
(1,074) |
|
10,064 |
Software |
329,340 |
|
49,141 |
|
(1,448) |
|
2,040 |
|
78,363 |
|
- |
|
(3,885) |
|
453,551 |
|
5,077,975 |
|
50,410 |
|
(137,604) |
|
324,316 |
|
124,544 |
|
(671,398) |
|
(141,111) |
|
4,627,132 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-compete agreement |
(251) |
|
(100) |
|
- |
|
- |
|
- |
|
- |
|
19 |
|
(332) |
Exclusivity agreement |
(497) |
|
- |
|
377 |
|
- |
|
- |
|
- |
|
120 |
|
- |
Outgrowers relationship |
(2,312) |
|
(1,643) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(3,955) |
Patents |
(2,061) |
|
(606) |
|
399 |
|
- |
|
- |
|
- |
|
2 |
|
(2,266) |
Customer relationship |
(11,495) |
|
(10,150) |
|
- |
|
- |
|
- |
|
- |
|
208 |
|
(21,437) |
Supplier relationship |
(140,509) |
|
(2,275) |
|
135,000 |
|
- |
|
- |
|
- |
|
204 |
|
(7,580) |
Software |
(162,928) |
|
(98,670) |
|
1,442 |
|
(1,410) |
|
(1,118) |
|
- |
|
(235) |
|
(262,919) |
|
(320,053) |
|
(113,444) |
|
137,218 |
|
(1,410) |
|
(1,118) |
|
- |
|
318 |
|
(298,489) |
|
4,757,922 |
|
(63,034) |
|
(386) |
|
322,906 |
|
123,426 |
|
(671,398) |
|
(140,793) |
|
4,328,643 |
Amortization of outgrowers relationship and suppliers relationship are recognized as a cost of sales in the statement of income, the amortization of customer relationship is recognized in selling expenses, while software amortization is recorded according to its use as cost of sales, administrative or sales expenses.
Trademarks in intangible assets contemplate acquired brands as well as brands arising from the business combination with Sadia, Quickfood and Avex and are considered assets with indefinite useful life as they are expected to indefinitely contribute to the Company’s cash flows.
The goodwill is based on expected future profitability supported by valuation reports, after purchase price allocation.
Goodwill and intangible assets with indefinite useful life (trademarks) are allocated to cash-generating units as presented in note 5.
The Company annually performs an impairment test of its assets through the discounted cash flow method. In 2015, BRF used its strategic plan as a basis for the test, which considers the future cash flows until 2018 and perpetuity from 2019, based on historical information and market projections of government agencies and associations, such as the International Monetary Fund (IFM), Brazilian Central Bank (BACEN), among others.
In the Management’s opinion, the use of a three-year projection period is adequate as it provides more reliable information.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
Management adopted the WACC (14.3% p.a.) as the discount rate for the development of discounted cash flows and also adopted the assumptions shown in the table below:
|
|
2016 |
|
2017 |
|
2018 |
PIB Brazil-BACEN |
|
-2.00% |
|
1.50% |
|
2.50% |
TJLP |
|
7.87% |
|
8.00% |
|
7.79% |
IPCA |
|
6.50% |
|
6.00% |
|
6.00% |
SELIC |
|
14.25% |
|
12.00% |
|
12.00% |
The rates above do not consider any tax effect (they are before taxes).
Based on Management analyses performed during 2015, no impairment loss was identified.
In addition to the above mentioned recovery analysis, management prepared a sensitivity analysis considering the variations in the EBIT margin and in the nominal WACC as presented below:
|
|
|
Variations |
|
|
Apreciation (devaluation) |
1.0% |
|
0.0% |
|
-1.0% |
WACC |
15.3% |
|
14.3% |
|
13.3% |
EBIT margin |
14.2% |
|
13.2% |
|
12.2% |
Based on the above scenarios, the Company determined that there is no need to recognize an impairment loss to the intangible assets with indefinite useful life.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
20. LOANS AND FINANCING
|
Parent company |
|
Charges (p.a.) |
|
Weighted average interest rate (p.a.) |
|
WAMT (1) |
|
Current |
|
Non-current |
|
12.31.15 |
|
Current |
|
Non-current |
|
12.31.14 |
Local currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital |
7.24% (6.26% on 12.31.14) |
|
7.24% (6.26% on 12.31.14) |
|
0.5 |
|
1,169,635 |
|
- |
|
1,169,635 |
|
1,239,834 |
|
- |
|
1,239,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
|
|
Certificate of agribusiness receivables |
96.90% of CDI |
|
13.67% |
|
2.8 |
|
33,078 |
|
992,165 |
|
1,025,243 |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
|
|
Development bank credit lines |
Fixed rate / Selic / TJLP + 1.00% (Fixed rate / TJLP + 2.50% on 12.31.14) |
|
4.57% (3.89% on 12.31.14) |
|
1.8 |
|
217,426 |
|
508,928 |
|
726,354 |
|
277,909 |
|
485,839 |
|
763,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
|
|
Bonds |
7.75% (7.75% on 12.31.14) |
|
7.75% (7.75% on 12.31.14) |
|
2.4 |
|
4,140 |
|
497,921 |
|
502,061 |
|
4,140 |
|
497,052 |
|
501,192 |
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
|
|
Export credit facility |
0.00% (9.63% on 12.31.14) |
|
0.00% (9.63% on 12.31.14) |
|
- |
|
- |
|
- |
|
- |
|
967,748 |
|
- |
|
967,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
|
|
Special program asset restructuring |
Fixed rate / IGPM + 4.90% (Fixed rate / IGPM + 4.90% on 12.31.14) |
|
15.44% (8.54% on 12.31.14) |
|
4.2 |
|
3,315 |
|
231,488 |
|
234,803 |
|
3,887 |
|
209,564 |
|
213,451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
|
|
Other secured debts |
8.14% (8.14% on 12.31.14) |
|
8.14% (8.14% on 12.31.14) |
|
2.7 |
|
32,580 |
|
127,077 |
|
159,657 |
|
45,951 |
|
248,675 |
|
294,626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
|
|
Fiscal incentives |
2.40% (Fixed rate / 10.00% IGPM + 1.00% on 12.31.14) |
|
2.40% (1.52% on 12.31.14) |
|
0.5 |
|
1,872 |
|
- |
|
1,872 |
|
1,892 |
|
10,653 |
|
12,545 |
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
|
|
|
|
|
|
|
|
|
1,462,046 |
|
2,357,579 |
|
3,819,625 |
|
2,541,361 |
|
1,451,783 |
|
3,993,144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds |
4.08% (4.97% on 12.31.14) + e.r. US$ and EUR |
|
4.08% (4.97% on 12.31.14) + e.r. US$ and EUR |
|
7.5 |
|
61,808 |
|
7,521,727 |
|
7,583,535 |
|
25,900 |
|
5,175,296 |
|
5,201,196 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Export credit facility |
LIBOR + 2.05% (LIBOR + 2.74% on 12.31.14) + e.r. US$ |
|
2.79% (3.07% on 12.31.14) + e.r. US$ and other currencies |
|
1.9 |
|
598,109 |
|
1,163,574 |
|
1,761,683 |
|
6,508 |
|
787,380 |
|
793,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advances for foreign exchange rate contracts |
1.76% + e.r. US$ |
|
1.76% + e.r. US$ |
|
0.8 |
|
391,053 |
|
- |
|
391,053 |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development bank credit lines |
UMBNDES + 2.26% (UMBNDES + 2.22% on 12.31.14) + e.r. US$ and other currencies |
|
6.34% (6.34% on 12.31.14) + e.r. US$ and other currencies |
|
1.2 |
|
12,630 |
|
11,575 |
|
24,205 |
|
27,253 |
|
15,140 |
|
42,393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,063,600 |
|
8,696,876 |
|
9,760,476 |
|
59,661 |
|
5,977,816 |
|
6,037,477 |
|
|
|
|
|
|
|
2,525,646 |
|
11,054,455 |
|
13,580,101 |
|
2,601,022 |
|
7,429,599 |
|
10,030,621 |
(1) Weighted average maturity in years.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
Consolidated |
|
Charges (p.a.) |
|
Weighted average interest rate (p.a.) |
|
WAMT (1) |
|
Current |
|
Non-current |
|
12.31.15 |
|
Current |
|
Non-current |
|
12.31.14 |
Local currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital |
7.24% (6.26% on 12.31.14) |
|
7.24% (6.26% on 12.31.14) |
|
0.5 |
|
1,169,635 |
|
- |
|
1,169,635 |
|
1,239,834 |
|
- |
|
1,239,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificate of agribusiness receivables |
96.90% of CDI |
|
13.67% |
|
2.8 |
|
33,078 |
|
992,165 |
|
1,025,243 |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development bank credit lines |
Fixed rate / Selic / TJLP + 1.00% (Fixed rate / TJLP + 2.50% on 12.31.14) |
|
4.57% (3.89% on 12.31.14) |
|
1.8 |
|
217,426 |
|
508,928 |
|
726,354 |
|
277,909 |
|
485,839 |
|
763,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds |
7.75% (7.75% on 12.31.14) |
|
7.75% (7.75% on 12.31.14) |
|
2.4 |
|
4,140 |
|
497,921 |
|
502,061 |
|
4,140 |
|
497,052 |
|
501,192 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Export credit facility |
0.00% (9.63% on 12.31.14) |
|
0.00% (9.63% on 12.31.14) |
|
- |
|
- |
|
- |
|
- |
|
967,748 |
|
- |
|
967,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special program asset restructuring |
Fixed rate / IGPM + 4.90% (Fixed rate / IGPM + 4.90% on 12.31.14) |
|
15.44% (8.54% on 12.31.14) |
|
4.2 |
|
3,315 |
|
231,488 |
|
234,803 |
|
3,887 |
|
209,564 |
|
213,451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other secured debts |
8.14% (8.14% on 12.31.14) |
|
8.14% (8.14% on 12.31.14) |
|
2.7 |
|
32,580 |
|
127,077 |
|
159,657 |
|
45,951 |
|
248,675 |
|
294,626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal incentives |
2.40% (Fixed rate / 10.00% IGPM + 1.00% on 12.31.14) |
|
2.40% (1.52% on 12.31.14) |
|
0.5 |
|
1,872 |
|
- |
|
1,872 |
|
1,892 |
|
10,653 |
|
12,545 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,462,046 |
|
2,357,579 |
|
3,819,625 |
|
2,541,361 |
|
1,451,783 |
|
3,993,144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds |
5.23% (5.87% on 12.31.14) + e.r. US$, EUR and ARS |
|
5.23% (5.87% on 12.31.14) + e.r. US$, EUR and ARS |
|
6.9 |
|
159,445 |
|
8,628,430 |
|
8,787,875 |
|
89,902 |
|
6,324,090 |
|
6,413,992 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Export credit facility |
LIBOR + 2.15% (LIBOR + 2.71% on 12.31.14) + e.r. US$ |
|
2.85% (3.01% on 12.31.14) + e.r. US$ |
|
2.0 |
|
598,811 |
|
1,553,520 |
|
2,152,331 |
|
6,948 |
|
1,052,485 |
|
1,059,433 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advances for foreign exchange rate contracts |
1.76% + e.r. US$ |
|
1.76% + e.r. US$ |
|
0.8 |
|
391,053 |
|
- |
|
391,053 |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development bank credit lines |
UMBNDES + 2.26% (UMBNDES + 2.22% on 12.31.14) + e.r. US$ and other currencies |
|
6.34% (6.34% on 12.31.14) + e.r. US$ and other currencies |
|
1.2 |
|
12,630 |
|
11,575 |
|
24,205 |
|
27,253 |
|
15,142 |
|
42,395 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other secured debts |
15.09% (15.08% on 12.31.14) + e.r. ARS |
|
15.09% (15.08% on 12.31.14) + e.r. ARS |
|
0.5 |
|
3,535 |
|
- |
|
3,535 |
|
7,965 |
|
3,589 |
|
11,554 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital |
22.00% (Fixed rate + LIBOR + 2.71% on 12.31.14) + e.r. US$ and ARS |
|
22.00% (22.97% on 12.31.14) + e.r. US$ and ARS |
|
- |
|
659 |
|
- |
|
659 |
|
65,474 |
|
3,343 |
|
68,817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,166,133 |
|
10,193,525 |
|
11,359,658 |
|
197,542 |
|
7,398,649 |
|
7,596,191 |
|
|
|
|
|
|
|
2,628,179 |
|
12,551,104 |
|
15,179,283 |
|
2,738,903 |
|
8,850,432 |
|
11,589,335 |
(1) Weighted average maturity in years.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
20.1. Working capital
Rural credit: The Company and its subsidiaries entered into rural credit loans with several commercial banks, under a Brazilian Federal government program that offers an incentive to investments in rural activities.
20.2. CRA
Certificate of Agribusiness Receivables (“CRA”): On September 29, 2015, BRF completed the CRA issuance related to the public distribution offering of the 1st series of the 3rd Issue by Octante Securitizadora S.A. (“Securitization Company”) in the amount of R$1,000,000 net of interest, which will mature on October 01, 2018, and were issued with a coupon of 96.90% p.a. of the DI rate, payable every each 9 months. The CRAs arise from the Company’s exports contracted with BRF Global GmbH and were assigned to the Securitization Company.
20.3. Development bank credit lines
The Company and its subsidiaries have several outstanding obligations with National Bank for Economic and Social Development (“BNDES”). The loans were obtained for the acquisition of equipment and expansion of productive facilities.
FINEM: Credit lines of Financing for Enterprises ("FINEM") which are subject to the variations of UMBNDES, TJLP and SELIC currency basket. The values of principal and interest are paid in monthly installments, with maturities between 2016 and 2020 and are secured by pledge of equipment, facilities and mortgage on properties owned by the Company.
FINEP: Credit lines of Financial of Studies and Projects (“FINEP”) obtained with reduced charges for projects of research, development and innovation, with maturities dates between 2016 and 2019.
20.4. Bonds
Sadia Overseas Bonds 2017: In the total value of US$250,000, such bonds are guaranteed by BRF, with an interest rate of 6.88% p.a. and maturing on May 24, 2017. On June 20, 2013, the amount of US$29,282 of these senior notes was exchanged by Senior Notes BRF 2023 and on May 15, 2014, the amount of US$60,953 was repurchased with part of the proceeds obtained from Senior Notes BRF in 2024. On May 28, 2015, the Company concluded a Tender Offer, in amount of US$47,005, such that the outstanding balance amounted to US $ 112,760 and the premium paid, net of interest, was US$4,701 (equivalent of R$14,584).
BFF Notes 2020: On January 28, 2010, BFF International Limited issued senior notes in the total value of US$750,000, whose notes are guaranteed by BRF, with a nominal interest rate of 7.25% p.a. and effective rate of 7.54% p.a. maturing on January 28,
2020. On June 20, 2013, the amount of US$120,718 of these senior notes was exchanged by Senior Notes BRF 2023 and on May 15, 2014, the amount of US$409,640 was repurchased with part of the proceeds obtained from the Senior Notes BRF 2024. On May 28, 2015, the Company concluded a Tender Offer, in amount of US$101,359, such that the outstanding balance amounted to US$118,283 and the premium paid, net of interest, was US$15,964 (equivalent of R$49,530).
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
Senior Notes BRF2022: On June 6, 2012, BRF issued senior notes of US$500,000, with nominal interest rate of 5.88% p.a. and an effective rate of 6.00% p.a. maturing on June 6, 2022. On June 26, 2012 the Company reopened this transaction for an additional amount of R$ 250,000, with nominal interest rate of 5.88% p.a. and effective rate of 5.50% p.a. On May 28,2015, the Company concluded a Tender Offer, in amount of US$577,130, such that the outstanding balance amounted to US$172,870 and the premium paid, net of interest, was US$79,355 (equivalent of R$246,208).
Senior Notes BRF 2023: On May 15, 2013, BRF completed international offerings of (i) 10 year bonds in the aggregate amount of US$500,000 (the “USD Bonds”), which will mature on May 22, 2023 (“Senior Notes BRF 2023”), issued with a coupon (interest) of 3.95% per year (yield to maturity 4.135%), payable semi-annually beginning on November 2013.
Senior Notes BRF 2018:On May 15, 2013, BRF completed international offering of (i) 5 year bonds in the aggregate amount of R$500,000 (the “BRL Bonds”) which will mature on May 22, 2018 (“Senior Notes BRF 2018”), issued with a coupon (interest) of 7.75% p.a. (yield to maturity 7.75%), payable semi-annually beginning as from November 22, 2013.
Senior Notes BRF 2024: On May 15, 2014, BRF completed international offerings of 10 year bonds in the aggregate amount of US$750,000 (the “USD Bonds”), which will mature on May 22, 2024 (“Senior Notes BRF 2024”), issued with a coupon (interest) of 4.75% p.a. (yield to maturity 4.952%), payable semi-annually beginning on November 22, 2014.
Senior Notes BRF 2022 (“Green Bonds”): On May 29, 2014, BRF concluded a Senior Notes offer of 7 (seven) year in the total amount of EUR500,000, which will mature on May 03, 2022 (“Senior Notes BRF 2022”), issued with a coupon (interest) of 2.75% p.a. (yield to maturity 2.822%), payable annually beginning on June 03, 2016.
20.5. Export credit facilities
Pre-export facilities: Generally are denominated in U.S. Dollars, maturing between 2016 and 2019. Under the terms of each of these credit facilities, the Company entered into loans which must be evidenced subsequently by accounts receivable related to the exports of its products.
Commercial credit lines: Denominated in U.S. Dollars with quarterly payments of interest
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
and principal maturing in 2018 and are utilized for purchases of imported raw materials and other working capital needs.
20.6. Special Program Asset Recovery (“PESA”)
The Company has a loan facility obtained through the Special Program for Asset Recovery (“Programa Especial de Saneamento de Ativos”) promoted by the federal government and securitized by commercial financial institutions. Such loan facility is subject to the variations of the General Market Price Index (“IGPM”) plus interest of 4.90% p.a. The principal is payable in a single installment and the maturity date is 2020, being secured by endorsements and pledges of public debt securities (see note 16).
20.7. Other secured debts
Industrial credit notes: The Company issue industrial credit notes, receiving from official funds, such as Fund for Worker Support (“FAT”), Constitutional Fund for Financing the Midwest (“FCO”) and Constitutional Fund for Financing the Northwest (“FNE”). The notes are paid on a monthly basis and have maturity dates between 2016 and 2021. These notes are secured by a pledge of machinery and equipment and real estate mortgages.
20.8. Rotative credit line (“Revolver Credit Facility”)
With the purpose of improving its financial liquidity, the Company and its wholly-owned subsidiary BRF Global GmbH obtained a credit line Revolver Credit Facility ("Revolver Credit Facility") in the amount of US$1,000,000, with a maturity date in May 2019, from a syndicate comprised of 28 banks. The transaction was structured to allow the Company to utilize the credit line at any time, during the contracted period. Until December 31, 2015, the Company did not use this credit facility.
20.9. Loans and financing maturity schedule
The maturity schedule of the loans and financing balances is as follow:
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.15 |
2016 |
2,525,646 |
|
2,628,175 |
2017 |
633,766 |
|
1,132,491 |
2018 |
2,337,826 |
|
2,761,960 |
2019 |
267,635 |
|
291,275 |
2020 onwards |
7,815,228 |
|
8,365,382 |
|
13,580,101 |
|
15,179,283 |
|
|
|
|
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
20.10. Guarantees
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Total of loans and financing |
13,580,101 |
|
10,030,621 |
|
15,179,283 |
|
11,589,335 |
Mortgage guarantees |
911,996 |
|
1,102,742 |
|
911,996 |
|
1,102,742 |
Related to FINEM-BNDES |
583,411 |
|
594,915 |
|
583,411 |
|
594,915 |
Related to FNE-BNB |
159,564 |
|
293,529 |
|
159,564 |
|
293,529 |
Related to tax incentives and other |
169,021 |
|
214,298 |
|
169,021 |
|
214,298 |
|
|
|
|
|
|
|
|
Statutory lien on assets acquired with financing |
93 |
|
1,045 |
|
93 |
|
1,045 |
Related to FINEM-BNDES |
93 |
|
648 |
|
93 |
|
648 |
Related to financial lease |
- |
|
397 |
|
- |
|
397 |
The Company is the guarantor of a loan obtained by Instituto Sadia de Sustentabilidade from the BNDES. The loan was obtained with the purpose of allowing the implementation of biodigesters in the farms of the outgrowers which take part in the Company´s integration system, targeting the reduction of the emission of Greenhouse Gases. The value of these guarantees on December 31, 2015 totaled R$39,098 (R$53,305 as of December 31, 2014).
The Company is the guarantor of loans related to a special program, which aimed the local development of outgrowers in the central region of Brazil. The proceeds of such loans are utilized by the outgrowers to improve farm conditions and will be paid by them in 10 years, taking as collateral the land and equipment acquired by the outgrowers through this program. The guarantee as of December 31, 2015 totaled R$208,774 (R$280,136 as of December 31, 2014).
On December 31, 2015, the Company contracted bank guarantees in the amount of R$2,086,589 (R$2,048,340 as of December 31, 2014). The variation occurred in this period is related to bank guarantees offered mainly in litigations involving the Company´s use of tax credits. These guarantees have an average cost of 0.91% p.a. (0.90% p.a. as of December 31, 2014).
20.11. Commitments
In the normal course of the business, the Company enters into agreements with third parties which are mainly related to the purchase of raw materials, such as corn and soymeal, in which the agreed prices can be predetermined or post determined. The Company enters into other agreements, such as electricity, packaging supplies and manufacturing activities.
The amounts of the agreements on the date of these financial statements are set forth below:
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
|
|
Parent company and
Consolidated |
|
12.31.15 |
2016 |
4,560,939 |
2017 |
1,274,316 |
2018 |
236,994 |
2019 |
229,052 |
2020 onwards |
452,222 |
|
6,753,523 |
21. TRADE ACCOUNTS PAYABLE
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Domestic suppliers |
|
|
|
|
|
|
|
Third parties |
3,263,197 |
|
2,736,646 |
|
3,263,201 |
|
2,736,963 |
Related parties |
23,375 |
|
18,795 |
|
23,375 |
|
18,795 |
|
3,286,572 |
|
2,755,441 |
|
3,286,576 |
|
2,755,758 |
|
|
|
|
|
|
|
|
Foreign suppliers |
|
|
|
|
|
|
|
Third parties |
774,106 |
|
409,194 |
|
1,496,833 |
|
794,832 |
Related parties |
2,463 |
|
608 |
|
- |
|
- |
|
776,569 |
|
409,802 |
|
1,496,833 |
|
794,832 |
|
|
|
|
|
|
|
|
(-) Adjustment to present value |
(38,416) |
|
(28,383) |
|
(38,416) |
|
(28,383) |
|
4,024,725 |
|
3,136,860 |
|
4,744,993 |
|
3,522,207 |
In the year ended on December 31, 2015, the average payment period is 96 days (70 days on December 31, 2014).
On the suppliers balance as of December 31, 2015, R$1,070,583 in the parent company and consolidated (R$659,942 in the parent company and consolidated as of December 31, 2014) corresponds to the supply chain finance transactions on which there were no changes in the payment terms and prices negotiated with the suppliers.
The information on accounts payable involving related parties is presented in note 30. The trade accounts payable to related parties refer to transactions with associates UP! and K&S in Brazil.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
22. OTHER FINANCIAL ASSETS AND LIABILITIES
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
|
|
|
|
|
|
|
Derivatives designated as cash flow hedges |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
Non-deliverable forward (NDF) |
2,253 |
|
9,749 |
|
2,253 |
|
9,749 |
Currency option contracts |
96,153 |
|
3,160 |
|
96,153 |
|
3,160 |
Deliverable forwards contracts |
- |
|
933 |
|
- |
|
933 |
|
98,406 |
|
13,842 |
|
98,406 |
|
13,842 |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
Non-deliverable forward of currency (NDF) |
(66,703) |
|
(77,122) |
|
(66,703) |
|
(77,122) |
Currency option contracts |
(217,122) |
|
(7,155) |
|
(217,122) |
|
(7,155) |
Deliverable forwards contracts |
(33,765) |
|
(3,482) |
|
(33,765) |
|
(3,482) |
Non-deliverable forward of commodities (NDF) |
(11,729) |
|
- |
|
(11,729) |
|
- |
Exchange rate contracts currency (Swap) |
(280,285) |
|
(119,388) |
|
(326,650) |
|
(157,975) |
|
(609,604) |
|
(207,147) |
|
(655,969) |
|
(245,734) |
|
|
|
|
|
|
|
|
Non derivatives designated as cash flow hedges |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
Non-deliverable forward of currency (NDF) |
- |
|
1,125 |
|
10,707 |
|
1,304 |
Live cattle forward contracts (note 13) |
- |
|
27,955 |
|
- |
|
27,955 |
Non-deliverable forward of commodities (NDF) |
2,183 |
|
- |
|
2,183 |
|
- |
Exchange rate contracts currency (Swap) |
3,450 |
|
- |
|
3,450 |
|
- |
Dollar future contracts - BM&F Bovespa |
14,641 |
|
- |
|
14,641 |
|
- |
|
20,274 |
|
29,080 |
|
30,981 |
|
29,259 |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
Non-deliverable forward of currency (NDF) |
(3,502) |
|
- |
|
(3,865) |
|
(2,794) |
Exchange rate contracts currency (Swap) |
(6,768) |
|
(3,216) |
|
(6,768) |
|
(3,216) |
Dollar future contracts - BM&FBovespa |
- |
|
(5,694) |
|
- |
|
(5,694) |
|
(10,270) |
|
(8,910) |
|
(10,633) |
|
(11,704) |
|
|
|
|
|
|
|
|
Current assets |
118,680 |
|
42,922 |
|
129,387 |
|
43,101 |
Current liabilities |
(619,874) |
|
(216,057) |
|
(666,602) |
|
(257,438) |
The collateral given in the transactions presented above are disclosed in note 8.
23. LEASES
The Company is lessee in several contracts, which can be classified as operating or finance lease.
23.1. Operating lease
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
The minimum future payments of non-cancellable operating lease are presented below:
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.15 |
2016 |
461,475 |
|
463,641 |
2017 |
99,430 |
|
101,596 |
2018 |
35,408 |
|
37,574 |
2019 |
16,893 |
|
19,175 |
2020 onwards |
74,063 |
|
76,345 |
|
687,269 |
|
698,331 |
The payments of operating lease agreements recognized as expense in the year ended December 31, 2015 amounted to R$211,657 in the parent company and R$295,971 in the consolidated (R$194,078 in the parent company and R$247,699 in the consolidated as of December 31, 2014).
23.2. Finance lease
The Company enters into finance leases mainly for the acquisitions of machinery, equipment, vehicles, software and buildings, presented below:
|
|
|
Parent company |
|
Consolidated |
|
Weighted average interest rate (p.a.) (1) |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Cost |
|
|
|
|
|
|
|
|
|
Machinery and equipment |
|
|
29,160 |
|
23,666 |
|
37,096 |
|
32,010 |
Software |
|
|
72,972 |
|
72,961 |
|
72,972 |
|
72,961 |
Vehicles |
|
|
- |
|
28,204 |
|
- |
|
28,204 |
Buildings |
|
|
128,938 |
|
128,659 |
|
128,938 |
|
128,659 |
|
|
|
231,070 |
|
253,490 |
|
239,006 |
|
261,834 |
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation |
|
|
|
|
|
|
|
|
|
Machinery and equipment |
14.79% |
|
(5,311) |
|
(8,306) |
|
(13,247) |
|
(16,613) |
Software |
50.00% |
|
(50,988) |
|
(48,298) |
|
(50,988) |
|
(48,298) |
Vehicles |
- |
|
- |
|
(8,831) |
|
- |
|
(8,831) |
Buildings |
6.94% |
|
(32,091) |
|
(20,248) |
|
(32,091) |
|
(20,248) |
|
|
|
(88,390) |
|
(85,683) |
|
(96,326) |
|
(93,990) |
|
|
|
142,680 |
|
167,807 |
|
142,680 |
|
167,844 |
(1) The period of depreciation of leased assets corresponds to the lowest of term of the contract and the useful life of the asset, as determined by CVM Deliberation Nº 645/10.
The minimum future payments required for these finance leases are segregated as follows, and were recorded in current and non-current liabilities:
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
Parent company and Consolidated |
|
12.31.15 |
|
|
|
|
|
Present value of
minimum payments |
|
Interest |
|
Minimum future
payments |
2016 |
45,579 |
|
13,530 |
|
59,109 |
2017 |
25,079 |
|
10,743 |
|
35,822 |
2018 |
19,123 |
|
8,090 |
|
27,213 |
2019 |
16,734 |
|
7,211 |
|
23,945 |
2020 onwards |
80,103 |
|
48,906 |
|
129,009 |
|
186,618 |
|
88,480 |
|
275,098 |
The contract terms for both modalities, with respect to renewal, adjustment and purchase option, are according to market practices. In addition, there are no clauses of contingent payments or restrictions on dividends distribution, payments of interest on shareholders’ equity or obtaining debt.
The Company also has commitments regarding financial leases, related to a “built to suit” agreement for the construction of office facilities will be build by third parties. The agreements terms will be 15 years from the signing date as well as the charge of rent expenses. If the Company defaults on its obligations, it will be subject to fines and/or acceleration of rent outstanding installments falling due, according to the term of each contract.
The estimated schedule of future payments related to these this agreement is set forth below:
|
|
Parent company and Consolidated |
|
|
12.31.15 |
2016 |
|
7,886 |
2017 |
|
8,359 |
2018 |
|
8,861 |
2019 |
|
9,393 |
2020 onwards |
|
149,062 |
|
|
183,561 |
24. SHARE BASED PAYMENT
The Company grants stock options to its employees eligible by the Board of Directors, which are determined in stock options plans that were approved by a Ordinary and a Special Meeting of Shareholders on March 31, 2010 (Plan I) and April 08, 2015 (Plan II).
Plan I comprises two instruments: (i) annual stock option grant, and (ii) an additional stock option grant, which the employee might adhere using part of its profit sharing bonus. Plan II comprises only the annual grant.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
The vesting conditions are based on attainment of results and in the value of the Company businesses.
The plans include shares issued by the Company up to the limit of 2% of the total stock, and its purpose is to: (i) attract, retain and motivate the beneficiaries, (ii) add value for shareholders, and (iii) encourage the view of entrepreneur of the business.
The plan is managed by the Board of Directors, within the limits established by the general guidelines of the plan and applicable legislation.
The quantity of granted options is determined by the Board of Directors, with an exercise price equivalent to the average amount of the closing price of the share at the last twenty trading sessions of the BM&FBOVESPA, prior to the grant date. The exercise price is updated monthly by the variation of the Amplified Consumer Price Index (“IPCA”) between the grant date and the month prior to the option exercise notice by the beneficiary.
The vesting period ranges from 1 to 4 years (according to the plan) and will observe the following deadlines from the grant date of the option:
|
|
Plan I |
|
|
|
Plan II |
Quantity |
|
Deadline |
|
Quantity |
|
Deadline |
|
|
|
|
|
|
|
1/3 |
|
1 year |
|
1/4 |
|
1 year |
2/3 |
|
2 years |
|
2/4 |
|
2 years |
3/3 |
|
3 years |
|
3/4 |
|
3 years |
- |
|
- |
|
4/4 |
|
4 years |
After the vesting period and within no more than five years for Plan I and six years for Plan II from the grant date, the beneficiary is no longer entitled to the right to the unexercised options. To satisfy the exercise of the options, the Company may issue new shares or use shares held in treasury.
The breakdown of the outstanding granted options is presented as follows:
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
Date |
|
Quantity |
|
Grant (1) |
|
Price of converted share (1) |
Grant date |
|
Beginning
of the year |
|
End of the
year |
|
Options
granted |
|
Outstanding
options |
|
Fair value of
the option |
|
Granting date |
|
Updated IPCA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan I |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05.02.11 |
|
05.01.12 |
|
05.01.16 |
|
2,463,525 |
|
158,990 |
|
11.36 |
|
30.85 |
|
41.62 |
05.02.12 |
|
05.01.13 |
|
05.01.17 |
|
3,708,071 |
|
331,198 |
|
7.82 |
|
34.95 |
|
44.86 |
05.02.13 |
|
05.01.14 |
|
05.01.18 |
|
3,490,201 |
|
822,333 |
|
11.88 |
|
46.86 |
|
56.48 |
04.04.14 |
|
04.03.15 |
|
04.03.19 |
|
1,552,564 |
|
841,644 |
|
12.56 |
|
44.48 |
|
50.44 |
05.02.14 |
|
05.01.15 |
|
05.01.19 |
|
1,610,450 |
|
1,001,528 |
|
14.11 |
|
47.98 |
|
54.41 |
12.18.14 |
|
12.17.15 |
|
12.17.19 |
|
5,702,714 |
|
5,447,954 |
|
14.58 |
|
63.49 |
|
68.51 |
|
|
|
|
|
|
18,527,525 |
|
8,603,647 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan II |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.01.15 |
|
10.01.16 |
|
10.01.21 |
|
37,570 |
|
32,490 |
|
20.64 |
|
70.09 |
|
71.38 |
12.07.15 |
|
12.06.16 |
|
12.06.21 |
|
8,724,733 |
|
8,724,733 |
|
17.31 |
|
56.00 |
|
56.00 |
|
|
|
|
|
|
8,762,303 |
|
8,757,223 |
|
|
|
|
|
|
|
|
|
|
|
|
27,289,828 |
|
17,360,870 |
|
|
|
|
|
|
(1) Values expressed in Brazilian Reais
The rollforward of the outstanding granted options for the year ended December 31, 2015 is presented as follows:
|
|
Consolidated |
|
|
|
Outstanding options as of December 31, 2014 |
|
11,390,846 |
Issued - grant of 2015 |
|
8,762,303 |
Exercised: |
|
|
Grant of 2014 |
|
(531,930) |
Grant of 2013 |
|
(497,212) |
Grant of 2012 |
|
(582,370) |
Grant of 2011 |
|
(242,951) |
Grant of 2010 |
|
(80,833) |
Cancelled: |
|
|
Grant of 2015 |
|
(5,080) |
Grant of 2014 |
|
(638,092) |
Grant of 2013 |
|
(168,320) |
Grant of 2012 |
|
(45,491) |
Outstanding options as of December 31, 2015 |
|
17,360,870 |
The weighted average exercise prices of the outstanding options conditioned to services is R$59.27 (fifty nine Brazilian Reais and twenty seven cents), and the weighted average of the remaining contractual term is 58 months.
The Company records as capital reserve in shareholders’ equity the fair value of the options in the amount of R$160,323 (R$92,898 as of December 31, 2014). In the statement of income in the year ended December 31, 2015 the amount recognized as expense was R$67,425 (R$20,673 as of December 31, 2014).
During the year ended December 31, 2015 the Company’s executives exercised
1,935,296 (2,596,610 as of December 31, 2014) shares, with an average price of R$42.60 (forty two Brazilian Reais and sixty cents) (R$38.42 as of December 31, 2014) totaling R$82,437 (R$99,765 as of December 31, 2104). In order to comply with this commitment, the Company utilized treasury shares with an acquisition cost of R$63.40 (sixty three Brazilian Reais and forty cents) (R$47.54 as of December 31, 2014), totaling R$122,694 (R$123,447 as of December 2014), recording a loss in the amount of R$40,257 (R$23,682 as of December 31, 2014) as capital reserve.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
24.1. Fair Value Measurement
The weighted average fair value of options outstanding as of December 31, 2015 was R$15.55 (fifteen Brazilian Reais and fifty five cents) (R$13.20 as of December 31, 2014). The fair value of the stock options was measured using the Black-Scholes pricing model, based on the following assumptions:
|
|
12.31.15 |
|
|
Plan I |
|
Plan II |
Expected maturity of the option: |
|
|
|
|
Exercise in the 1st year |
|
3.0 years |
|
3.0 years |
Exercise in the 2nd year |
|
3.5 years |
|
3.5 years |
Exercise in the 3rd year |
|
4.0 years |
|
4.0 years |
Exercise in the 4th year |
|
- |
|
5.0 years |
Risk-free interest rate |
|
5.06% |
|
7.34% |
Volatility |
|
28.48% |
|
25.97% |
Expected dividends over shares |
|
1.27% |
|
1.42% |
Expected inflation rate |
|
6.70% |
|
5.32% |
24.2. Expected period
The expected period is that in which it is believed that the options will be exercised and was determined under the assumption that the beneficiaries will exercise their options at the limit of the maturity period.
24.3. Risk-free interest rate
The Company uses as risk-free interest rate the National Treasury Bond (“NTN-B”) available on the date of calculation and with maturity equivalent to the terms of the option.
24.4. Volatility
The estimated volatility took into account the weighting of the trading history of the Company’s shares.
24.5. Expected dividends
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
The percentage of dividends used is based on the average payment of dividends per share in relation to the market value of the shares for the past four years.
24.6. Expected inflation rate
The expected average inflation rate is based on estimated IPCA by Central Bank of Brazil, considering the remaining average terms of the option.
25. PENSION AND OTHER POST-EMPLOYMENT PLANS
25.1. Pension plans
The Company sponsors pension plans for its employees and executives as presented below:
Plan |
|
Modality |
|
Adhesions |
|
|
|
|
|
Plan I |
|
Variable Contribution |
|
Closed |
Plan II |
|
Variable Contribution |
|
Closed |
Plan III |
|
Defined Contribution |
|
Open |
FAF |
|
Defined Benefit |
|
Closed |
These plans are managed by BRF Previdência a pension fund entity of non-economic nature and non-profit, through its Deliberative Board which is responsible for defining pension premises and policies, as well as establishing fundamentals guidelines and organization, operation and management rules. The Deliberative Board is composed of representatives from the sponsor and participants, the proportion of 2/3 and 1/3 respectively.
a. Defined benefit plans
Plan I and II are variable contribution plans, structured as defined contribution during the accumulation of mathematics provisions with option to change the account balance to be applicable in lifetime monthly income on the grant date benefit. The main actuarial risks are (i) survival time over the ones set out in the mortality tables and (ii) actual return on equity below the actual discount rate.
The main purpose of FAF plan is to supplement the benefit paid by the Brazilian Social Security (“INSS – Instituto Nacional de Securidade Social”), calculated proportionally according to the length of service performed and in line with the type of retirement. The main actuarial risks are (i) survival time over the ones set out in the mortality tables (ii) turnover lower than expected, (iii) salary growth higher than expected, (iv) actual return on assets below the actual discount rate, (v) amendment of the rules of social security and actual family composition of the retired employee or executive different from the established assumption.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
In plans I and II, the contributions are made on a 1 to 1 basis (the contributions of the sponsor are equal to the basic contributions of the participants). In the Plan FAF, the contribution is made through a percentage actuarially defined for the participant and the sponsor. The actuarial calculations of the plans managed by BRF Previdência are made by independent actuaries, on an annual basis, according to the rules in force.
In case of a deficit result in plans, it must be supported by the sponsor, participants and beneficiaries, in the proportion of their contributions.
b. Defined contribution plan
Plan III is a defined contribution plan, where contributions are known and the benefit amount depends directly on the contributions made by participants and sponsors, time of contribution and of the result obtained through investment of contributions. The contributions are made on a 1 to 1 basis (the contributions of the sponsor are equal to the basic contributions of the participants) and that may vary from 0.7% to 7.0% according to the salary range of the participant. The contributions made by the Company in the years ended December 31, 2015 and December 31, 2014 are amounted R$7,487 and R$5,087 respectively. On December 31, 2015, the plans has 24,981 participants (13,362 participants as of December 31, 2014).
If participants of the plans I, II and III end the employment relationship with the sponsor, the balance formed by the contributions of the sponsor not used for the payment of benefits, will form a fund of overage of contributions that may be used to compensate the future contributions of the sponsor.
c. Rollforward of defined benefit plans
The assets and actuarial liabilities are presented below:
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
Consolidated |
|
FAF |
|
Plano I e II |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Assets and liabilities composition |
|
|
|
|
|
|
|
Present value of actuarial liabilities |
1,675,374 |
|
1,644,567 |
|
12,853 |
|
13,283 |
Fair value of assets |
(2,418,996) |
|
(2,385,220) |
|
(21,916) |
|
(21,971) |
(Surplus) Deficit |
(743,622) |
|
(740,653) |
|
(9,063) |
|
(8,688) |
Irrecoverable (surplus) deficit - impact on asset limit |
743,622 |
|
740,653 |
|
4,407 |
|
3,164 |
Net (Assets) Liabilities |
- |
|
- |
|
(4,656) |
|
(5,524) |
|
|
|
|
|
|
|
|
Rollforward of irrecoverable surplus |
|
|
|
|
|
|
|
Beginning balance of irrecoverable surplus |
740,653 |
|
811,355 |
|
3,164 |
|
2,959 |
Interest on irrecoverable surplus |
84,805 |
|
101,338 |
|
361 |
|
369 |
Changes in irrecoverable surplus during the period |
(81,836) |
|
(172,040) |
|
882 |
|
(164) |
Ending balance of irrecoverable surplus |
743,622 |
|
740,653 |
|
4,407 |
|
3,164 |
|
|
|
|
|
|
|
|
Changes in actuarial obligation |
|
|
|
|
|
|
|
Beginning balance of the present value of the actuarial obligation |
1,644,567 |
|
1,407,960 |
|
13,283 |
|
11,046 |
Interest on actuarial obligations |
183,195 |
|
169,862 |
|
1,459 |
|
1,320 |
Current service cost |
27,850 |
|
16,782 |
|
- |
|
- |
Benefit paid |
(90,444) |
|
(80,399) |
|
(1,069) |
|
(1,077) |
Contributions of the sponsor |
890 |
|
- |
|
- |
|
- |
Actuarial gains - experience |
107,841 |
|
11,334 |
|
755 |
|
1,073 |
Actuarial gains (losses) - hypothesis |
(198,525) |
|
119,028 |
|
(1,575) |
|
921 |
Ending balance of actuarial obligation |
1,675,374 |
|
1,644,567 |
|
12,853 |
|
13,283 |
|
|
|
|
|
|
|
|
Rollforward of assets fair value |
|
|
|
|
|
|
|
Beginning balance of the fair value of plan assets |
(2,385,220) |
|
(2,219,315) |
|
(21,971) |
|
(18,477) |
Interest income on assets plan |
(268,023) |
|
(271,200) |
|
(2,453) |
|
(2,245) |
Benefit paid |
90,444 |
|
80,399 |
|
1,069 |
|
1,077 |
Contributions paid by the Company |
(404) |
|
(407) |
|
- |
|
- |
Contributions paid by the employee |
(890) |
|
- |
|
- |
|
- |
Return on assets higher (lower) than projection |
145,097 |
|
25,303 |
|
1,439 |
|
(2,326) |
Ending balance of assets fair value |
(2,418,996) |
|
(2,385,220) |
|
(21,916) |
|
(21,971) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rollforward of comprehensive income |
|
|
|
|
|
|
|
Beginning balance |
16,375 |
|
42,560 |
|
496 |
|
7,688 |
Reversion to statement of income |
(16,375) |
|
(42,560) |
|
(496) |
|
(7,688) |
Actuarial gains (losses) |
90,684 |
|
(130,362) |
|
820 |
|
(1,994) |
Return on assets higher (lower) than projection |
(145,097) |
|
(25,303) |
|
(1,439) |
|
2,326 |
Changes on irrecoverable surplus |
81,836 |
|
172,040 |
|
(882) |
|
164 |
Ending balance of comprehensive income |
27,423 |
|
16,375 |
|
(1,501) |
|
496 |
|
|
|
|
|
|
|
|
Costs recognized in statement of income |
|
|
|
|
|
|
|
Current service costs |
(27,850) |
|
(16,782) |
|
- |
|
- |
Interest on actuarial obligations |
(183,195) |
|
(169,862) |
|
(1,459) |
|
(1,320) |
Projected return on assets |
268,023 |
|
271,200 |
|
2,453 |
|
2,245 |
Interest on irrecoverable surplus |
(84,805) |
|
(101,338) |
|
(361) |
|
(369) |
Costs recognized in statement of income |
(27,827) |
|
(16,782) |
|
633 |
|
556 |
|
|
|
|
|
|
|
|
Estimated costs for the next period |
|
|
|
|
|
|
|
Costs of defined benefit |
(23,396) |
|
(27,827) |
|
569 |
|
633 |
Estimated costs for the next period |
(23,396) |
|
(27,827) |
|
569 |
|
633 |
|
|
|
|
|
|
|
|
d. Actuarial assumptions and demographic data
The main actuarial assumptions and demographic data used in the actuarial calculations are summarized below:
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
Consolidated |
|
FAF |
|
Plan I e II |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Actuarial assumptions |
|
|
|
|
|
|
|
Economic hypothesis |
|
|
|
|
|
|
|
Discount rate |
12.14% |
|
11.45% |
|
12.22% |
|
11.45% |
Projected return on assets |
12.14% |
|
11.45% |
|
12.22% |
|
11.45% |
Inflation rate |
5.00% |
|
5.20% |
|
5.20% |
|
5.20% |
Wage growth rate |
5.68% |
|
6.25% |
|
N/A |
|
N/A |
|
|
|
|
|
|
|
|
Demographic hypothesis |
|
|
|
|
|
|
|
Schedule of mortality |
AT-2000 |
|
AT-2000 |
|
AT-2000 |
|
AT-2000 |
Schedule of disabled mortality |
IAPC |
|
IAPC |
|
IAPC |
|
IAPC |
|
|
|
|
|
|
|
|
Demographic data |
|
|
|
|
|
|
|
Number of active participants |
8,838 |
|
9,431 |
|
- |
|
- |
Number of participants in direct proportional benefit |
- |
|
22 |
|
- |
|
- |
Number of assisted beneficiary participants |
5,707 |
|
5,502 |
|
52 |
|
53 |
e. The composition of the investment portfolios
The composition of the investment portfolios are presented below:
|
|
FAF |
|
Plans I and II |
|
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Composition of the fund's portfolio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed income |
|
1,782,800 |
|
73.7% |
|
1,717,359 |
|
72.0% |
|
19,014 |
|
86.8% |
|
18,676 |
|
85.0% |
Variable income |
|
331,402 |
|
13.7% |
|
360,168 |
|
15.1% |
|
2,547 |
|
11.6% |
|
3,066 |
|
14.0% |
Real estate |
|
176,587 |
|
7.3% |
|
179,369 |
|
7.5% |
|
- |
|
- |
|
- |
|
- |
Structured investments |
|
113,693 |
|
4.7% |
|
113,536 |
|
4.8% |
|
337 |
|
1.6% |
|
229 |
|
1.0% |
Transactions with participants |
|
14,514 |
|
0.6% |
|
14,788 |
|
0.6% |
|
18 |
|
- |
|
- |
|
- |
|
|
2,418,996 |
|
100.0% |
|
2,385,220 |
|
100.0% |
|
21,916 |
|
100.0% |
|
21,971 |
|
100.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of nominal return on assets |
|
11.63% |
|
|
|
11.63% |
|
|
|
11.66% |
|
|
|
11.66% |
|
|
f. Forecast and average term of payments of obligations
The following amounts represent the expected benefit payments for future years (10 years) and the average duration of the plan obligations:
|
FAF |
|
Plans I and II |
Payments in: |
|
|
|
|
|
|
|
2016 |
104,245 |
|
1,114 |
2017 |
111,079 |
|
1,165 |
2018 |
119,419 |
|
1,219 |
2019 |
129,498 |
|
1,274 |
2020 |
139,248 |
|
1,330 |
2021 to 2025 |
881,363 |
|
7,513 |
|
|
|
|
Weighted average duration - in years |
15.10 |
|
11.40 |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
g. Sensitivity analysis of defined benefit plan - FAF
The quantitative sensitivity analysis regarding the relevant assumptions of defined benefit plan – FAF on December 31, 2015 is presented below:
|
|
Assumptions |
|
Variation of 1% |
|
Variation of actuarial liabilities |
Significant hypothesis |
|
utilized |
|
Increase |
Decrease |
|
Increase |
Decrease |
|
|
|
|
|
|
|
|
|
Benefit plan - FAF |
|
|
|
|
|
|
|
|
Discount rate |
|
12.14% |
|
13.19% |
11.09% |
|
(171,095) |
207,540 |
Wage growth rate |
|
5.68% |
|
6.73% |
5.00% |
|
62,583 |
(31,608) |
25.2. Post-employment plans: description and characteristics of benefits and associated risks
|
Parent company and
Consolidated |
|
Liabilities |
|
|
|
12.31.15 |
|
12.31.14 |
Medical assistance |
130,028 |
|
115,666 |
F.G.T.S. Penalty (1) |
105,139 |
|
124,461 |
Award for length of service |
41,462 |
|
48,288 |
Other |
22,415 |
|
25,655 |
|
299,044 |
|
314,070 |
|
|
|
|
Current |
67,264 |
|
56,096 |
Non-current |
231,780 |
|
257,974 |
(1) FGTS – Government Severance Indemnity Fund for Employees
The Company offers the following post-employment plans in addition to the pension plans, which are measured by actuarial calculation and recognized in the financial statement.
a. F.G.T.S. penalty
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. The benefit paid is equivalent to 50% of F.G.T.S being 40% corresponding to a penalty and 10% of social contribution. Main actuarial risks related are (i) survival time over the ones set out in the mortality tables (ii) turnover lower than expected and (iii) salary growth higher than expected.
b. Medical Plan
The Company offers to the retired employee according to the Law No. 9,656/98 a medical plan with fixed contribution, which guarantees to the retired employee that contributed to the health plan by reason of employment relationship, for at least 10 years, the right of maintenance as beneficiary, on the same conditions of coverage
enjoyed when the employment contract was in force. Main actuarial risks related are (i) survival time over the ones set out in the mortality tables (ii) turnover lower than expected and (iii) medical costs growth higher than expected.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
c. Award for length of service
The Company usually rewards employees that attain at least 10 years of services rendered and subsequently every 5 years, with an additional remuneration ranges from 1 to 5 current salaries at the date of the event. Main actuarial risks related are (i) survival time over the ones set out in the mortality tables (ii) turnover lower than expected and (iii) salary growth higher than expected.
d. Retirement compensation
On retirement, employees with over 10 years of service to the Company are eligible for additional compensation of 1 to 2 current wages in force at the time of retirement. Main actuarial risks related are (i) survival time higher than the ones set out in the mortality tables (ii) turnover lower than expected and (iii) salary growth higher than expected.
e. Life insurance
The Company offers life insurance benefit to the employees who, at the time of their termination, are retired and during the employment contract opted for the insurance. For the employees with 10-20 years of service, the maintenance period of insurance is 2 years, from 21 years of service, the period is 3 years. Main actuarial risks related are (i) survival time higher than the ones set out in the mortality tables (ii) turnover lower than expected and (iii) salary growth higher than expected.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
f. Rollforward of post-employment plans
The rollforward of actuarial liabilities related to other benefits, prepared based on an actuarial report, are as follow:
|
|
Consolidated |
|
|
Medical plan |
|
F.G.T.S. penalty |
|
Award for length of service |
|
Others (1) |
|
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Composition of actuarial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present value of actuarial liabilities |
|
130,028 |
|
115,666 |
|
105,139 |
|
124,461 |
|
41,462 |
|
48,288 |
|
22,415 |
|
25,655 |
Net liabilities |
|
130,028 |
|
115,666 |
|
105,139 |
|
124,461 |
|
41,462 |
|
48,288 |
|
22,415 |
|
25,655 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rollforward of present value of actuarial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance of net liabilities |
|
115,666 |
|
115,478 |
|
124,461 |
|
112,023 |
|
48,288 |
|
41,421 |
|
25,655 |
|
22,341 |
Interest on actuarial liabilities |
|
11,582 |
|
14,128 |
|
12,244 |
|
11,760 |
|
4,698 |
|
4,497 |
|
2,636 |
|
2,481 |
Early settlement of obligations |
|
(271) |
|
- |
|
(8,000) |
|
- |
|
(2,090) |
|
- |
|
(1,325) |
|
- |
Current service costs |
|
281 |
|
505 |
|
6,268 |
|
6,023 |
|
1,941 |
|
1,931 |
|
1,021 |
|
1,040 |
Past service costs - changes in plan |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(37) |
Past service costs - decrease of plan |
|
- |
|
- |
|
- |
|
(1,009) |
|
- |
|
(66) |
|
- |
|
(127) |
Benefits paid directly by the Company |
|
(1,253) |
|
(4,062) |
|
(8,782) |
|
(7,579) |
|
(9,682) |
|
(10,079) |
|
(4,583) |
|
(3,747) |
Actuarial (gains) losses |
|
20,908 |
|
(22,406) |
|
9,451 |
|
1,931 |
|
8,318 |
|
10,952 |
|
4,839 |
|
3,157 |
Actuarial losses - demographic hypotesis |
|
- |
|
(103) |
|
(23,291) |
|
(3,108) |
|
(6,763) |
|
(1,333) |
|
(3,818) |
|
(547) |
Actuarial (gains) losses - economic hypothesis |
|
(16,885) |
|
12,126 |
|
(7,212) |
|
4,420 |
|
(3,248) |
|
965 |
|
(2,010) |
|
1,094 |
Ending balance of net liabilities |
|
130,028 |
|
115,666 |
|
105,139 |
|
124,461 |
|
41,462 |
|
48,288 |
|
22,415 |
|
25,655 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rollforward of assets plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits paid directly by the Company |
|
1,253 |
|
4,062 |
|
8,782 |
|
7,579 |
|
9,682 |
|
10,079 |
|
4,583 |
|
3,747 |
Contributions of the sponsor |
|
(1,253) |
|
(4,062) |
|
(8,782) |
|
(7,579) |
|
(9,682) |
|
(10,079) |
|
(4,583) |
|
(3,747) |
Ending balance of fair value of assets plan |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rollforward of comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
(55,015) |
|
(65,398) |
|
68,782 |
|
72,025 |
|
(24,361) |
|
(13,777) |
|
(7,933) |
|
(4,229) |
Actuarial gains (losses) |
|
(4,023) |
|
10,383 |
|
21,052 |
|
(3,243) |
|
1,693 |
|
(10,584) |
|
989 |
|
(3,704) |
Ending balance of comprehensive income |
|
(59,038) |
|
(55,015) |
|
89,834 |
|
68,782 |
|
(22,668) |
|
(24,361) |
|
(6,944) |
|
(7,933) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs recognized in statement of income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on actuarial liabilities |
|
(11,582) |
|
(14,128) |
|
(12,244) |
|
(11,760) |
|
(4,698) |
|
(4,497) |
|
(2,636) |
|
(2,481) |
Current service costs |
|
(281) |
|
(505) |
|
(6,268) |
|
(6,023) |
|
(1,941) |
|
(1,931) |
|
(1,021) |
|
(1,040) |
Past service costs |
|
- |
|
- |
|
- |
|
1,009 |
|
- |
|
66 |
|
- |
|
164 |
Gains on early settlement |
|
271 |
|
- |
|
8,000 |
|
- |
|
2,090 |
|
- |
|
1,325 |
|
- |
Cost recognizzed in statement of income |
|
(11,592) |
|
(14,633) |
|
(10,512) |
|
(16,774) |
|
(4,549) |
|
(6,362) |
|
(2,332) |
|
(3,357) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated costs for the next period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current service costs |
|
(182) |
|
(320) |
|
(4,272) |
|
(6,424) |
|
(1,434) |
|
(1,991) |
|
(635) |
|
(1,055) |
Interest on actuarial liabilities |
|
(15,417) |
|
(13,027) |
|
(10,683) |
|
(12,121) |
|
(4,239) |
|
(4,722) |
|
(2,408) |
|
(2,629) |
Estimated costs for the next period |
|
(15,599) |
|
(13,347) |
|
(14,955) |
|
(18,545) |
|
(5,673) |
|
(6,713) |
|
(3,043) |
|
(3,684) |
(1) Considers the sums of the retirement compensation and life insurance benefits.
g. Actuarial assumptions and demographic data
The main actuarial assumptions and demographic data used in the actuarial calculations are summarized below:
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
|
Consolidated |
|
|
Medical plan |
|
F.G.T.S. penalty |
|
Award for length of service |
|
Others (1) |
Actuarial premises |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Economic hypothesis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate |
|
12.14% |
|
11.49% |
|
12.56% |
|
11.27% |
|
12.49% |
|
11.27% |
|
12.48% |
|
11.44% |
Inflation rate |
|
5.00% |
|
5.20% |
|
5.00% |
|
5.20% |
|
5.00% |
|
5.20% |
|
5.00% |
|
5.20% |
Medical inflation |
|
8.15% |
|
8.36% |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
Wage growth rate |
|
N/A |
|
N/A |
|
6.05% |
|
6.78% |
|
6.05% |
|
6.78% |
|
6.05% |
|
6.78% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical plan |
|
Other benefits |
|
|
|
|
|
|
|
|
Actuarial premises |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demographic hypothesis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule of mortality |
|
AT-2000 |
|
AT-2000 |
|
AT-2000 |
|
AT-2000 |
|
|
|
|
|
|
|
|
Schedule of disabled |
|
RRB-1944 |
|
RRB-1944 |
|
RRB-1944 |
|
RRB-1944 |
|
|
|
|
|
|
|
|
Schedule of disabled mortality |
|
IAPC |
|
IAPC |
|
IAPC |
|
IAPC |
|
|
|
|
|
|
|
|
Schedule of turnover - BRF's historical |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
Demoraphic data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of active participants |
|
1,423 |
|
1,558 |
|
95,460 |
|
102,534 |
|
|
|
|
|
|
|
|
Number of assisted beneficiary participants |
|
963 |
|
847 |
|
- |
|
- |
|
|
|
|
|
|
|
|
(1) Includes retirement compensation and life insurance benefits.
h. Forecast and average duration of payments 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 |
|
Others |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
2016 |
|
6,079 |
|
40,171 |
|
15,052 |
|
5,962 |
|
67,264 |
2017 |
|
6,341 |
|
10,517 |
|
7,102 |
|
2,386 |
|
26,346 |
2018 |
|
6,839 |
|
13,353 |
|
4,755 |
|
2,983 |
|
27,930 |
2019 |
|
7,539 |
|
12,475 |
|
4,851 |
|
2,348 |
|
27,213 |
2020 |
|
8,249 |
|
14,404 |
|
6,189 |
|
2,687 |
|
31,529 |
2021 to 2025 |
|
53,927 |
|
70,608 |
|
23,360 |
|
14,162 |
|
162,057 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average duration - in years |
|
16.94 |
|
5.83 |
|
5.03 |
|
7.30 |
|
8.71 |
i. Sensitivity analysis of post-employment plans
The Company made the sensitivity analysis regarding the relevant assumptions of the plans on December 31, 2015, is presented below:
|
|
Assumptions |
|
Variation of 1% |
|
Variation of actuarial liabilities |
Significant hypothesis |
|
utilized |
|
Increase |
|
Decrease |
|
Increase |
|
% |
|
Decrease |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate |
|
12.14% |
|
13.14% |
|
11.14% |
|
(16,750) |
|
-12.90% |
|
21,765 |
|
16.70% |
Medical inflation |
|
8.15% |
|
9.15% |
|
7.15% |
|
21,605 |
|
16.60% |
|
(17,163) |
|
-13.20% |
Turnover |
|
Historical |
|
+3,00% |
|
-3,00% |
|
(190) |
|
0.10% |
|
689 |
|
0.50% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F.G.T.S. penalty |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate |
|
12.56% |
|
13.56% |
|
11.56% |
|
(2,931) |
|
-2.30% |
|
3,181 |
|
2.40% |
Wage growth rate |
|
6.05% |
|
7.05% |
|
5.05% |
|
482 |
|
0.40% |
|
(454) |
|
-0.30% |
Turnover |
|
Historical |
|
+3,00% |
|
-3,00% |
|
(10,725) |
|
-8.20% |
|
13,927 |
|
10.70% |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
26. PROVISION FOR TAX, CIVIL AND LABOR RISKS
The Company and its subsidiaries are involved in certain legal proceedings arising from the normal course of business, which include civil, administrative, tax, social security and labor claims.
The Company classifies the risk of unfavorable decisions in the legal proceedings as “probable”, “possible” or “remote”. The provisions recorded relating to such proceedings is determined by the Company’s management, based on legal advice and reasonably reflect the estimated probable losses.
The Company’s management believes that its provision for tax, civil and labor risks, accounted for according to CVM Deliberation Nº 594/09 is sufficient to cover estimated losses related to its legal proceedings, as presented below:
26.1. Contingencies for probable losses
The rollforward of the provisions for tax, civil and labor risks is summarized below:
|
Parent company |
|
|
|
Tax |
|
|
|
Labor |
|
Civil, commercial
and other |
|
Contingent
liabilities |
|
|
|
Total |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Beginning balance |
244,383 |
|
137,098 |
|
315,257 |
|
261,784 |
|
57,336 |
|
45,980 |
|
536,106 |
|
543,205 |
|
1,153,082 |
|
988,067 |
Additions |
21,662 |
|
124,586 |
|
211,323 |
|
267,866 |
|
33,695 |
|
77,164 |
|
- |
|
- |
|
266,680 |
|
469,616 |
Reversals |
(28,172) |
|
(36,509) |
|
(93,166) |
|
(99,211) |
|
(20,156) |
|
(24,781) |
|
(19,164) |
|
(7,099) |
|
(160,658) |
|
(167,600) |
Payments |
(31,648) |
|
(48,272) |
|
(145,067) |
|
(161,871) |
|
(17,635) |
|
(49,302) |
|
- |
|
- |
|
(194,350) |
|
(259,445) |
Exchange rate variation |
32,606 |
|
67,480 |
|
71,121 |
|
46,689 |
|
12,434 |
|
8,275 |
|
- |
|
- |
|
116,161 |
|
122,444 |
Ending balance |
238,831 |
|
244,383 |
|
359,468 |
|
315,257 |
|
65,674 |
|
57,336 |
|
516,942 |
|
536,106 |
|
1,180,915 |
|
1,153,082 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
223,766 |
|
233,636 |
Non-current |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
957,149 |
|
919,446 |
|
Consolidated |
|
Tax |
|
Labor |
|
Civil, commercial
and other |
|
Contingent
liabilities |
|
Total |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Beginning balance |
252,377 |
|
141,478 |
|
330,424 |
|
276,128 |
|
57,359 |
|
48,257 |
|
545,573 |
|
553,435 |
|
1,185,733 |
|
1,019,298 |
Additions |
24,471 |
|
130,169 |
|
217,813 |
|
272,257 |
|
33,695 |
|
77,164 |
|
- |
|
- |
|
275,979 |
|
479,590 |
Reversals |
(37,823) |
|
(37,978) |
|
(96,134) |
|
(101,198) |
|
(20,156) |
|
(26,683) |
|
(22,919) |
|
(7,099) |
|
(177,032) |
|
(172,958) |
Payments |
(31,648) |
|
(48,272) |
|
(145,067) |
|
(161,871) |
|
(17,635) |
|
(49,302) |
|
- |
|
- |
|
(194,350) |
|
(259,445) |
Price index update |
32,606 |
|
67,480 |
|
71,125 |
|
46,692 |
|
12,438 |
|
8,278 |
|
- |
|
- |
|
116,169 |
|
122,450 |
Exchange rate variation |
513 |
|
(500) |
|
(1,138) |
|
(1,584) |
|
- |
|
(355) |
|
(25) |
|
(763) |
|
(650) |
|
(3,202) |
Ending balance |
240,496 |
|
252,377 |
|
377,023 |
|
330,424 |
|
65,701 |
|
57,359 |
|
522,629 |
|
545,573 |
|
1,205,849 |
|
1,185,733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
231,389 |
|
242,974 |
Non-current |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
974,460 |
|
942,759 |
26.1.1. Tax
The tax contingencies consolidated and classified as probable losses relate to the following main legal proceedings:
ICMS: The Company is involved in administrative and judicial tax disputes associated to the register and/or maintenance of ICMS tax credits on certain transactions, such as
exports, acquisition of consumption materials and monetary correction. The provision amounts to R$107.709 (R$96,326 as of December 31, 2014).
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
PIS and COFINS: The Company discusses the use of certain tax credits arising from the acquisition of raw materials to offset federal taxes, which amount is R$77,538 (R$78,894 as of December 31, 2014).
Other tax contingencies: The Company recorded other provisions for tax claims related to payment of social security contributions (SAT, INCRA, FUNRURAL, Education Salary), as well as tax debts arising from differences of accessory obligations, duties, including legal fees and others, totaling a provision of R$52,028 (R$54,290 as of December 31, 2014).
26.1.2. Labor
The Company is defendant in several labor claims individual or with the Public Minister, mainly related to overtime, time spent by the workers for changing uniforms, in-commuting hours, rest breaks, occupational accidents, among others. None of these labor claims is individually significant. The Company recorded a provision based on past history of payments and loss prognosis.
26.1.3. Civil, commercial and others
Civil contingencies are mainly related to claims relating to traffic accidents, moral and property damage, physical casualties, consumer relations, contractual breaches, and other.
26.2. Contingencies classified as a risk of possible loss
The Company is involved in other tax, civil, labor and social security contingencies, for which losses have been assessed as possible by management with the support from legal counsel and therefore no provision was recorded. On December 31, 2015 the total amount of the possible contingencies was R$11,707,258 (R$9,268,519 as of December 31, 2014), of which R$522,629 (R$545,573 as of December 31, 2014) was recorded at fair value as a result of business combinations with Sadia, Avex and Dánica group, according to the requirements of paragraph 23 of CVM Deliberation Nº 665/11.
25.2.
26.2.1. Tax
Tax contingencies amounted to R$10,569,885 (R$8,514,288 as of December 31, 2014), from which R$511,359 (R$530,106 as of December 31, 2014) was recorded at fair value as a result of business combination with Sadia, Avex and Dánica group, according to the requirements of paragraph 23 of CVM Deliberation Nº 665/11.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
The most relevant tax cases are set forth below:
Profits earned abroad: The Company was assessed by the Brazilian Internal Revenue Service for alleged underpayment of income tax and social contribution on profits earned by its subsidiaries located abroad, in a total amount of R$636,525 (R$588,105 as of December 31, 2014). 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. The total profits earned abroad are disclosed in note 14.3.
Income Tax and Social Contribution: The Company is involved in administrative disputes associated to the use of tax losses, refunds and offset of income and social contribution tax credits against other federal tax debts, including credits arising from the Plano Verão legal dispute. Also, on February 05, 2015 BRF received a tax assessment notice, related to the compensation of tax loss carryforwards and negative calculation basis up to limit of 30% when it have incorporated one of the groups entity during calendar year 2012, which sum up the amount of R$574,699 as of December 31, 2015. The contingent liabilities relative to the subjects discussed totaled R$1,127,724 (R$482,873 as of December 31, 2014).
ICMS: The Company is involved in the following disputes associated to the ICMS tax: (i) alleged undue ICMS tax credits generated by tax incentives granted by certain States local rules (“guerra fiscal”) in a total amount of R$2,267,732 (R$1,963,122 as of December 31, 2014). On December 14, 2015 BRF received a tax assessment notice from the State of Paraná, demanding a partial rebate of ICMS credits in a total amount of R$ 339,573 (“guerra fiscal”, undue credit related to materials consumed in production and undue credits over imports); (ii) maintenance of ICMS tax credits on the acquisition of certain products with a reduced tax burden (“cesta básica”) in a total amount of R$547,641 (R$522,000 as of December 31, 2014); (iii) absence of evidence to prove the balances of exports in the amount of R$324,791 (R$45,577 as of December 31, 2014); and (iv) R$1,416,921 (R$1,007,465 as of December 31, 2014) related to other ICMS claims.
Related to the “ICMS cesta básica” (item ii above), in a meeting held on October 16, 2014 the Federal Supreme Court ("STF") was favorable to Tax Authority of State of Rio Grande do Sul, in the judgment of the extraordinary appeal No.635,688 submitted by company Santa Lúcia, understanding as improper the integral maintenance of ICMS tax credits on the reduced tax basis of food products that composes the basic food basket.
The decision has a wide reflection effect (applicable to all taxpayers). However there is still a claim for clarification waiting to be judged, requesting more details related to the timing of such decision (previously or only after), which suggests the need to wait for this final decision to recognize the effects on our financial statements.
IPI: The Company discusses administratively the non-ratification of compensation of IPI credits resulting from purchases of exempted goods, sales to Manaus Free Zone and
purchases of supplies of non-taxpayers with PIS and COFINS in the amount of R$453,196 (R$546,225 as of December, 2014).
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
IPI Premium Credits: The Company is involved in a judicial dispute related to the alleged undue offsetting of IPI Premium Credits against other federal taxes in a total amount of R$464,686 (R$420,548 as of December 31, 2014). The Company recorded and used the credits based on a final judicial decision.
PIS and COFINS: The Company is involved in administrative proceedings regarding the offsetting of credits against other federal tax debts, Decrees 2.445 and 2.449 (“semestralidade”) and others in the amount of R$3,097,214 (R$2,572,291 as of December 31, 2014).
Social Security Taxes: The Company is involved in disputes related to social security taxes allegedly due on payments to service providers as well as joint responsibility with civil construction service providers and others in a total amount of R$194,419 (R$113,307 as of December 31, 2014).
Other Contingencies: The Company is involved in other tax contingencies including rural activity, transfer price, social contribution tax and others, totaling R$39,035 (R$197,991 as of December 31, 2014).
Additionally, the Company’s management judged disclose information about the processes below:
HUAINE: the Company was included as co-responsible in a debt from Huaine Participações Ltda (former holding of Perdigão). In this lawsuit it is being discussed the inclusion of the Company in the liability from the tax execution in the amount of R$625,474 (R$609,329 as of December 31, 2014). BRF presented a guarantee to the debt, which was duly accepted by the judge and filed a motion to stay execution, which is awaiting judgment. The Company’s legal advisors classified the risk of losses as remote.
Normative Instruction 86: The Company discusses administratively the imposition of separate fine due to absence of delivery magnetic file to the Brazilian Internal Revenue Service for the periods 2003 to 2005, for a total amount of R$237,398 (R$219,355 as of December 31, 2014). In the year ended December 31, 2014, the Company obtained a favorable decision issued by CARF, such legal proceedings was reclassified by our legal advices as remote risk of loss. The Company is waiting for the judgement of the final appeal in the administrative court.
26.2.2. Labor
On December 31, 2015 the contingencies assessed as possible loss totaled R$ 39,220 (R$40,063 as of December 31, 2014).
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
IPCA-E: On August 2015, the Superior Labor Court (“TST”) declared unconstitutional the monetary adjustment of the labor debts by the Referential Rate (“TR”), which was substituted by the IPCA-E (National Index of Price to the Ample Consumer - Special), which will be applicable to all litigations in progress as of June 30, 2009 and from that date on
On October 14, 2015, the Federal Supreme Court (“STF”) granted an injunction to suspend the decision from TST. The Company estimates that the result of the monetary adjustment derived from this decision on the Financial Statements, in the case the injunction is suspended, would be approximately of R$44,500.
26.2.3. Civil
The civil contingencies for which losses were assessed as possible totaled R$1,098,153 (R$714,168 as of December 31, 2014) and were mainly related to indemnification for material and moral damages.
27. SHAREHOLDERS’ EQUITY
27.1. Capital stock
On December 31, 2015, the capital subscribed and paid by the Company is R$12,553,418, which is composed of 872,473,246 book-entry shares of common stock without par value. The value of the capital stock is net of the public offering expenses of R$92,947.
The Company is authorized to increase the capital stock, irrespective of amendment to the bylaws, up to the limit of 1,000,000,000 common shares, in book-entry form without par value.
27.2. Interest on shareholders’ equity and dividends
On February 13, 2015 the payment of R$463,254 was made related to the interest on shareholders’ equity approved by the Management on December 18, 2014 and ratified in the Shareholders Ordinary Meeting on April 8, 2015.
On June 18, 2015, the Board of Directors approved the payment of R$425,859 related to interest on shareholder’s equity settled on August 14, 2015.
On December 17, 2015, the Board of Directors approved the payment of R$473,398 related to interest on shareholder’s equity and R$91,443 related to dividends, settled on February 12, 2016.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
27.3. Breakdown of capital stock by nature
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
Common shares |
872,473,246 |
|
872,473,246 |
Treasury shares |
(62,501,001) |
|
(5,188,897) |
Outstanding shares |
809,972,245 |
|
867,284,349 |
27.4. Rollforward of outstanding shares
|
|
Consolidated |
|
|
Quantity of outstanding of shares |
|
|
12.31.15 |
|
12.31.14 |
Shares at the beggining of the period |
|
867,284,349 |
|
870,687,739 |
Purchase of treasury shares |
|
(59,247,400) |
|
(6,000,000) |
Sale of treasury shares |
|
1,935,296 |
|
2,596,610 |
Shares at the end of the period |
|
809,972,245 |
|
867,284,349 |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
27.5. Shareholders’ remuneration
|
Parent company |
|
12.31.15 |
|
12.31.14 |
Net profit |
3,111,170 |
|
2,225,036 |
Legal reserve (5.00%) |
(155,558) |
|
(111,252) |
Dividends calculation base |
2,955,612 |
|
2,113,784 |
Minimum mandatory dividend (25.00%) |
738,903 |
|
528,446 |
Remuneration of shareholders' exceeding the mandatory minimum |
251,797 |
|
295,808 |
Total remuneration of shareholders' in the year, as interest on shareholders' equity and dividends (R$91,443 in 2015) and (R$86,489 in 2014) |
990,700 |
|
824,254 |
Withholding income tax on interest on shareholders' equity |
(88,861) |
|
(64,176) |
Remuneration of shareholders', net of withholding income tax |
901,839 |
|
760,078 |
|
|
|
|
Percentage of calculation base |
33.52% |
|
38.99% |
Earnings paid per share |
1.19979 |
|
0.94836 |
|
|
|
|
|
|
|
|
Payment of interest on shareholders' equity, paid in the year - gross of withholding income tax of R$40,543 in 2015 (R$30,272 in 2014) |
(425,859) |
|
(361,000) |
Paid in the previous period - interest on shareholders' equity - gross withholding income tax of R$33,934 in 2014 (R$30,019 in 2013) |
(376,765) |
|
(365,013) |
Paid in the previous period - Dividends |
(86,489) |
|
- |
Payments maid during in the year |
(889,113) |
|
(726,013) |
|
|
|
|
|
|
|
|
Total remuneration of shareholders' outstanding |
564,841 |
|
463,254 |
Withholding income tax on interest on shareholders' equity |
(48,318) |
|
(33,904) |
Remaining amounts outstanding |
1,927 |
|
1,559 |
Interest on shareholders' equity outstanding |
518,450 |
|
430,909 |
27.6. Profit distribution
|
|
|
|
Income appropriation |
|
Reserve balances |
|
|
Limit on |
|
|
|
|
|
|
|
|
|
|
capital % |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Actuarial gain FAF |
|
- |
|
(10,480) |
|
(33,163) |
|
- |
|
- |
Dividends |
|
- |
|
91,443 |
|
86,489 |
|
- |
|
- |
Interest on shareholdes' equity |
|
- |
|
899,257 |
|
737,765 |
|
- |
|
- |
Legal reserve |
|
20 |
|
155,558 |
|
111,252 |
|
540,177 |
|
384,619 |
Capital increase reserve |
|
20 |
|
624,330 |
|
451,640 |
|
1,898,581 |
|
1,274,251 |
Reserve for expansion |
|
80 |
|
1,219,394 |
|
730,684 |
|
3,120,827 |
|
1,901,433 |
Reserve for tax incentives |
|
- |
|
131,668 |
|
140,369 |
|
517,190 |
|
385,522 |
|
|
|
|
3,111,170 |
|
2,225,036 |
|
6,076,775 |
|
3,945,825 |
Legal reserve: It is computed based on five percent (5%) of net profit of each fiscal year as specified in article 193 of Law No. 6,404/76, modified by Law No. 11,638/07, which shall not exceed twenty percent (20%) of the capital stock. On December 31, 2015, this reserve corresponds to 4.34% of capital stock (3.09% as of December 31, 2014).
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
Reserve for capital increase: it is calculated based on twenty percent (20%) towards the establishment of reserves for capital increase, which shall not exceed twenty percent (20%) of the capital stock. On December 31, 2015 this reserve corresponds to 15.24% of capital stock (10.23% as of December 31, 2014).
Reserve for expansion: Up to 50% (fifty per cent) for the constitution of the reserve for expansion. This reserve should not exceed 80% (eighty per cent) of the capital stock. On December 31, 2015 the balance of this reserve correspond to 25.05% of the capital stock (15.26% as of December 31, 2014).
Reserve for tax incentives: Constituted as specified in article 195-A of the Law No. 6,404/1976, modified by Law No. 11,638/07, based on the amounts of government grants for investment.
27.7. Capital reserve
27.7.1. Capital reserve
|
|
Capital Reserves |
|
|
12.31.15 |
|
12.31.14 |
Gain on disposal of shares |
|
(39,059) |
|
1,198 |
Goodwill on the shares issuance |
|
174,014 |
|
62,767 |
Granted options |
|
160,323 |
|
92,898 |
Goodwill on acquisition of non-controlling entities |
|
(47,417) |
|
(47,417) |
Acquisition of non-controlling entities |
|
(240,883) |
|
- |
|
|
6,978 |
|
109,446 |
27.7.2. Treasury shares
The Company has 62,501,001 shares in treasury, with an average cost of R$63.17 (sixty three Brazilian Reais and seventeen cents) per share, with a market value corresponding to R$3,455,680.
During the year ended December 31, 2015, the Company sold 1,935,296 treasury shares due the exercise of stock options by the Company’s executives.
During the year ended December 31, 2015, as authorized by the Board of Directors, the Company acquired 59,247,400 shares of its own shares at a cost of R$3,765,753, with the objective of maintenance of treasury shares for possible compliance with the provisions in the plans of options and additional stock option, both approved by the special meeting of Board of Directors held on April 28, August 27, October 29, 2015 and a special meeting of the Board of Directors on November 09, 2015.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
27.8. Breakdown of the capital by owner
The shareholding position of the largest shareholders, management and members of the Board of Directors is presented below (unaudited):
|
|
12.31.15 |
|
12.31.14 |
Shareholders |
|
Quantity |
|
% |
|
Quantity |
|
% |
Major shareholders |
|
|
|
|
|
|
|
|
Fundação Petrobras de Seguridade Social - Petros (1) |
|
94,549,299 |
|
10.84 |
|
108,933,497 |
|
12.49 |
Tarpon |
|
91,529,085 |
|
10.49 |
|
91,529,085 |
|
10.49 |
Caixa de Previd. dos Func. Do Banco do Brasil (1) |
|
87,573,052 |
|
10.04 |
|
100,282,352 |
|
11.49 |
Management |
|
|
|
|
|
|
|
|
Board of Directors |
|
35,818,939 |
|
4.11 |
|
35,117,782 |
|
4.03 |
Executives |
|
73,297 |
|
0.01 |
|
85,221 |
|
0.01 |
Treasury shares |
|
62,501,001 |
|
7.16 |
|
5,188,897 |
|
0.59 |
Other |
|
500,428,573 |
|
57.35 |
|
531,336,412 |
|
60.90 |
|
|
872,473,246 |
|
100.00 |
|
872,473,246 |
|
100.00 |
(1) The pension funds are controlled by employees that participate in the respective entities.
The shareholding position of the shareholders holding more than 5% of the voting capital is presented below (unaudited):
|
|
12.31.15 |
|
12.31.14 |
Shareholders |
|
Quantity |
|
% |
|
Quantity |
|
% |
Fundação Petrobras de Seguridade Social - Petros (1) |
|
94,549,299 |
|
10.84 |
|
108,933,497 |
|
12.49 |
Tarpon |
|
91,529,085 |
|
10.49 |
|
91,529,085 |
|
10.49 |
Caixa de Previd. dos Func. Do Banco do Brasil (1) |
|
87,573,052 |
|
10.04 |
|
100,282,352 |
|
11.49 |
|
|
273,651,436 |
|
31.37 |
|
300,744,934 |
|
34.47 |
Other |
|
598,821,810 |
|
68.63 |
|
571,728,312 |
|
65.53 |
|
|
872,473,246 |
|
100.00 |
|
872,473,246 |
|
100.00 |
(1) The pension funds are controlled by employees that participate in the respective entities.
The Company is bound to arbitration in the Market Arbitration Chamber, as established by the arbitration clause in its bylaws.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
28. EARNINGS PER SHARE
|
Parent company |
|
12.31.15 |
|
12.31.14 |
Basic numerator |
|
|
|
Net profit for the period attributable to controlling shareholders |
3,111,170 |
|
2,225,036 |
|
|
|
|
Basic denominator |
|
|
|
Common shares |
872,473,246 |
|
872,473,246 |
Weighted average number of outstanding shares - basic (except treasury shares) |
842,000,012 |
|
870,412,068 |
Net earnings per share basic - R$ |
3.69498 |
|
2.55630 |
|
|
|
|
|
|
|
|
Diluted numerator |
|
|
|
Net profit for the period attributable to controlling shareholders |
3,111,170 |
|
2,225,036 |
|
|
|
|
Diluted denominator |
|
|
|
Weighted average number of outstanding shares - basic (except treasury shares) |
842,000,012 |
|
870,412,068 |
Number of potential shares (stock options) |
401,809 |
|
411,708 |
Weighted average number of outstanding shares - diluted |
842,401,821 |
|
870,823,776 |
Net earnings per share diluted - R$ |
3.69321 |
|
2.55509 |
|
Parent company |
Continued operations |
12.31.15 |
|
12.31.14 |
Basic numerator |
|
|
|
Net profit for the period from continued operations attributable to controlling shareholders |
2,928,082 |
|
2,135,214 |
|
|
|
|
Basic denominator |
|
|
|
Common shares |
872,473,246 |
|
872,473,246 |
Weighted average number of outstanding shares - basic (except treasury shares) |
842,000,012 |
|
870,412,068 |
Net earnings per share basic - R$ |
3.47753 |
|
2.45311 |
|
|
|
|
|
|
|
|
Diluted numerator |
|
|
|
Net profit for the period from continued operations attributable to controlling shareholders |
2,928,082 |
|
2,135,214 |
|
|
|
|
Diluted denominator |
|
|
|
Weighted average number of outstanding shares - basic (except treasury shares) |
842,000,012 |
|
870,412,068 |
Number of potential shares (stock options) |
401,809 |
|
411,708 |
Weighted average number of outstanding shares - diluted |
842,401,821 |
|
870,823,776 |
Net earnings per share diluted - R$ |
3.47587 |
|
2.45195 |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
Parent company |
Discontinued operations |
12.31.15 |
|
12.31.14 |
Basic numerator |
|
|
|
Net profit for the period from discontinued operations attributable to controlling shareholders |
183,088 |
|
89,822 |
|
|
|
|
Basic denominator |
|
|
|
Common shares |
872,473,246 |
|
872,473,246 |
Weighted average number of outstanding shares - basic (except treasury shares) |
842,000,012 |
|
870,412,068 |
Net earnings per share basic - R$ |
0.21744 |
|
0.10319 |
|
|
|
|
|
|
|
|
Diluted numerator |
|
|
|
Net profit for the period from discontinued operations attributable to controlling shareholders |
183,088 |
|
89,822 |
|
|
|
|
Diluted denominator |
|
|
|
Weighted average number of outstanding shares - basic (except treasury shares) |
842,000,012 |
|
870,412,068 |
Number of potential shares (stock options) |
401,809 |
|
411,708 |
Weighted average number of outstanding shares - diluted |
842,401,821 |
|
870,823,776 |
Net earnings per share diluted - R$ |
0.21734 |
|
0.10315 |
On December 31, 2015, from the total of 17,360,870 stock options outstanding (11,390,864 as of December 31, 2014) granted to executives of the Company, 14,205,177 options (8,616,900 as of December 31, 2014) were not considered in the calculation of the diluted earnings per share due to the fact that the exercise price until the vesting period was higher than the average market price of the common shares during the period, so that they did not cause any dilution effect.
29. GOVERNMENT GRANTS
The Company has tax benefits related to ICMS for investments granted by the governments of states of Goiás, Pernambuco, Mato Grosso and Bahia. Such incentives are directly associated to the manufacturing facilities operations, job generation and to the economic and social development in the respective states.
On December 31, 2015, this incentive totaled R$131,668 (R$140,369 as of December 31, 2014) composing so, the Reserve for Tax Incentives.
30. RELATED PARTIES – PARENT COMPANY
As part of the Company’s operations, rights and obligations arise between related parties, resulting from transactions of purchase and sale of products, loans agreed on normal conditions of market for similar transactions, based on contracts.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
All the relationships between the Company and its subsidiaries were disclosed irrespective of the existence or not of transactions between these parties.
All the transactions and balances among the companies were eliminated in the consolidation and refer to commercial and/or financial transactions.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
30.1. Transactions and balances
The balances of the transactions with the related parties are as follow:
|
Accounts receivable |
|
Dividends and interest on the shareholders' equity receivable |
|
Loan contracts |
|
Trade accounts
payable |
|
Advance for future capital increase |
|
Other rights |
|
Other obligations |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Al-Wafi Food Products Factory LLC |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
89 |
|
- |
|
- |
|
- |
Avex S.A. |
19,485 |
|
9,269 |
|
- |
|
- |
|
- |
|
- |
|
(134) |
|
(608) |
|
- |
|
- |
|
25,468 |
|
25,468 |
|
- |
|
- |
Avipal Centro Oeste S.A. |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(38) |
|
(38) |
BFF International Ltd. |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
2,129 |
|
1,448 |
|
- |
|
- |
BRF Foods LLC |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
487 |
|
323 |
|
- |
|
- |
BRF Foods GmbH |
119,280 |
|
8,484 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
418 |
|
- |
|
- |
|
- |
BRF Global GmbH |
2,780,457 |
|
2,773,388 |
|
- |
|
- |
|
- |
|
- |
|
(1,596) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
BRF GmbH |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(16) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(1,471) |
|
(571) |
Highline International Ltd. |
- |
|
- |
|
- |
|
- |
|
(7,121) |
|
(4,844) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
K&S Alimentos S.A. |
- |
|
- |
|
1,365 |
|
1,221 |
|
- |
|
- |
|
(8,148) |
|
(4,011) |
|
- |
|
- |
|
2,954 |
|
2,643 |
|
(29) |
|
- |
Minerva S.A. |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(5,413) |
Nutrifont Alimentos S.A. |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
428 |
|
- |
|
- |
Perdigão Europe Ltd. |
- |
|
38,475 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Perdigão International Ltd. |
- |
|
- |
|
- |
|
- |
|
(29,446) |
|
(14,894) |
|
- |
|
- |
|
- |
|
- |
|
4,551 |
|
9,735 |
|
(1,186,841) |
(1) |
(806,660) |
PSA Laboratório Veterinário Ltda. |
- |
|
- |
|
550 |
|
630 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
100 |
|
- |
|
- |
|
- |
|
- |
Quickfood S.A. |
47,446 |
|
20,226 |
|
- |
|
- |
|
- |
|
- |
|
(717) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(553) |
|
(581) |
Sadia Alimentos S.A. |
12,366 |
|
12,366 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Sadia Chile S.A. |
42,467 |
|
22,550 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Sadia Uruguay S.A. |
8,720 |
|
4,728 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
UP! Alimentos Ltda. |
645 |
|
1,622 |
|
19,820 |
|
9,027 |
|
- |
|
- |
|
(15,227) |
|
(14,784) |
|
- |
|
- |
|
3,757 |
|
4,328 |
|
- |
|
- |
VIP S.A. Empreendimentos e Partic. Imob. |
- |
|
- |
|
1,403 |
|
2,491 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Wellax Foods Logistics C.P.A.S.U. Lda. |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
344 |
|
225 |
|
- |
|
- |
Instituto de Desenvolvimento Gerencial S.A. |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
2,088 |
|
406 |
Total |
3,030,866 |
|
2,891,108 |
|
23,138 |
|
13,369 |
|
(36,567) |
|
(19,738) |
|
(25,838) |
|
(19,403) |
|
- |
|
100 |
|
40,197 |
|
44,598 |
|
(1,186,844) |
|
(812,857) |
(1) The amount corresponds to advances for export pre-payment.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
Revenue |
|
Financial results, net |
|
Purchases |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
|
|
|
|
|
|
|
|
|
|
|
|
Avex S.A. |
10,456 |
|
5,220 |
|
- |
|
- |
|
(6,439) |
|
(9,022) |
BRF Foods GmbH |
63,057 |
|
8,018 |
|
- |
|
- |
|
- |
|
- |
BRF Global GmbH |
10,028,360 |
|
9,280,147 |
|
(893) |
|
(19,841) |
|
- |
|
- |
Establecimiento Levino Zaccardi y Cia. S.A. |
- |
|
- |
|
- |
|
- |
|
- |
|
(1,517) |
K&S Alimentos Ltda. |
- |
|
- |
|
- |
|
- |
|
(134,916) |
|
(117,174) |
Nutrifont Alimentos S.A. |
- |
|
- |
|
- |
|
484 |
|
- |
|
- |
Perdigão International Ltd. |
- |
|
18,046 |
|
(58,402) |
|
(50,304) |
|
- |
|
- |
Quickfood S.A. |
27,394 |
|
16,985 |
|
- |
|
- |
|
(7,186) |
|
(12,905) |
Sadia Alimentos S.A. |
- |
|
2,339 |
|
- |
|
- |
|
- |
|
- |
Sadia Chile S.A. |
116,416 |
|
50,810 |
|
- |
|
- |
|
- |
|
- |
Al-Wafi Foods |
47,020 |
|
- |
|
- |
|
- |
|
- |
|
- |
Sadia Uruguay S.A. |
20,442 |
|
12,185 |
|
- |
|
- |
|
- |
|
(181) |
UP! Alimentos Ltda. |
13,858 |
|
14,735 |
|
- |
|
- |
|
(197,818) |
|
(191,750) |
Wellax Foods Logistics C.P.A.S.U. Lda. |
- |
|
- |
|
- |
|
(5,305) |
|
- |
|
- |
Galeazzi e Associados Consult Serv Ltda. |
- |
|
- |
|
- |
|
- |
|
- |
|
(11,565) |
Instituto de Desenvolvimento Gerencial S.A. (1) |
- |
|
- |
|
- |
|
- |
|
(11,273) |
|
(2,912) |
Elebat S.A. |
11,556 |
|
- |
|
38 |
|
- |
|
(38,246) |
|
- |
Total |
10,338,559 |
|
9,408,485 |
|
(59,257) |
|
(74,966) |
|
(395,878) |
|
(347,026) |
(1) Entity on which BRF has no equity interest, but has relationship with the Board of Directors, which has provided advisory services related to strategic management and organizational restructure.
All companies presented in note 1.1 are controlled by BRF, except for UP! Alimentos, K&S, PP-BIO, PR-SAD, AKF and SATS BRF which are associates or joint ventures.
The Company also recorded a liability in the amount of 8,470 (R$10,833 as of December 31, 2014) related to the fair value of the guarantees offered to BNDES concerning a loan made by Instituto Sadia de Sustentabilidade.
Due to the acquisition of biodigesters from Instituto Sadia de Sustentabilidade, as of December 31, 2015 the Company recorded a payable to this entity of R$30,628 included in other liabilities (R$39,173 as of December 31, 2014).
The Company entered into loans agreement with its subsidiaries. Below is a summary of the balances and rates charged for the transactions at the balance sheet date:
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
Counterparty |
|
|
|
Balance |
|
Interest rate (p.a.) |
Creditor |
|
Debtor |
|
Currency |
|
12.31.15 |
|
|
|
|
|
|
|
|
|
|
|
Sadia Overseas Ltd. |
|
BRF Global GmbH |
|
US$ |
|
341,237 |
|
7.0% |
BRF Global GmbH |
|
BFF International Ltd. |
|
US$ |
|
275,686 |
|
1.5% |
BRF GmbH |
|
BRF Foods GmbH |
|
US$ |
|
232,671 |
|
1.2% |
Sadia International Ltd. |
|
Wellax Food Logistics |
|
US$ |
|
221,644 |
|
1.5% |
Perdigão International Ltd. |
|
BRF Global GmbH |
|
US$ |
|
146,956 |
|
0.9% |
BRF GmbH |
|
BRF Holland B.V. |
|
EUR |
|
96,813 |
|
3.0% |
BRF GmbH |
|
BRF Foods LLC |
|
US$ |
|
74,655 |
|
2.5% |
BRF Holland B.V. |
|
BRF B.V. (NL) |
|
EUR |
|
49,637 |
|
3.0% |
Wellax Food Logistics |
|
BRF GmbH |
|
EUR |
|
34,531 |
|
1.5% |
Perdigão International Ltd. |
|
BRF S.A |
|
US$ |
|
29,446 |
|
0.8% |
BRF Holland B.V. |
|
BRF GmbH |
|
EUR |
|
17,247 |
|
1.5% |
BRF GmbH |
|
AL Wafi |
|
US$ |
|
11,430 |
|
1.2% |
BRF GmbH |
|
BRF Global GmbH |
|
EUR |
|
9,186 |
|
1.5% |
BRF GmbH |
|
BRF Singapore |
|
SGD |
|
5,558 |
|
1.5% |
Perdigão International Ltd. |
|
BRF Foods LLC |
|
US$ |
|
4,736 |
|
1.0% |
BRF Holland B.V. |
|
BRF Wrexam |
|
GBP |
|
3,188 |
|
3.0% |
BRF GmbH |
|
BRF Foods LLC |
|
US$ |
|
2,739 |
|
1.6% |
Wellax Food Logistics |
|
BRF Foods LLC |
|
US$ |
|
2,307 |
|
7.0% |
BRF Holland B.V. |
|
BRF Iberia |
|
EUR |
|
1,921 |
|
3.0% |
30.2. Other Related Parties
The Company leased properties owned by FAF. For the year ended December 31, 2015, the total amount paid as rent was R$10,118 (R$6,166 as of December 31, 2014). The rent value was set based on market conditions.
30.3. Granted guarantees
All granted guarantees on behalf of related parties were disclosed in note 20.10.
30.4. Management remuneration
The management key personnel include the directors and officers, members of the executive committee and the head of internal audit. On December 31, 2015, there were 27 professionals (24 professionals as of December 31, 2014).
The total remuneration and benefits paid to these professionals are demonstrated below:
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
Salary and profit sharing |
41,948 |
|
48,093 |
Short term benefits |
692 |
|
917 |
Private pension |
720 |
|
387 |
Post-employment benefits |
163 |
|
168 |
Termination benefits |
23,634 |
|
28,411 |
Share based payment |
13,195 |
|
8,665 |
|
80,352 |
|
86,641 |
(1) Comprises: Medical assistance, educational expenses and others.
31. SUPPLY CHAIN FINANCE
Parent Company and Consolidated |
|
12.31.15 |
|
12.31.14 |
Supply chain finance - Domestic market |
685,597 |
|
292,751 |
Supply chain finance - Foreign market |
488,997 |
|
162,369 |
|
1,174,594 |
|
455,120 |
The Company entered into supply chain finance transactions with first-class financial institutions in order to extend the payment period in purchases of raw material, machinery and equipment, and other inputs with internal and external market suppliers. As such, these transactions are presented in the operational cash flows for the year ended 2015.
On December 31, 2015, the discount rates applied to the supply chain finance transactions agreed between our suppliers and the financial institutions in the internal market were set between 1.10% to 1.34% p.m. (1.00% to 1.09% p.m. on December 31, 2014).
On December 31, 2015, 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 1.5% to 2.51% p.a. (1.01% to 1.96% p.a. on December 31, 2014).
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
32. NET SALES
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Gross sales |
|
|
|
|
|
|
|
Brazil |
19,880,282 |
|
18,751,037 |
|
19,866,958 |
|
18,742,038 |
Europe |
2,420,791 |
|
2,431,835 |
|
3,853,299 |
|
3,307,527 |
MEA |
5,414,414 |
|
4,778,412 |
|
7,643,089 |
|
5,909,163 |
Asia |
2,537,034 |
|
2,812,221 |
|
3,432,379 |
|
3,109,676 |
LATAM |
429,983 |
|
590,894 |
|
2,438,814 |
|
1,878,233 |
|
30,682,504 |
|
29,364,399 |
|
37,234,539 |
|
32,946,637 |
|
|
|
|
|
|
|
|
Sales deductions |
|
|
|
|
|
|
|
Brazil |
(3,831,913) |
|
(3,320,079) |
|
(3,829,451) |
|
(3,317,591) |
Europe |
(36,184) |
|
(42,249) |
|
(213,684) |
|
(214,891) |
MEA |
(40,454) |
|
(34,287) |
|
(545,616) |
|
(199,343) |
Asia |
(44,548) |
|
(19,713) |
|
(142,785) |
|
(36,732) |
LATAM |
(3,614) |
|
(13,936) |
|
(306,402) |
|
(171,237) |
|
(3,956,713) |
|
(3,430,264) |
|
(5,037,938) |
|
(3,939,794) |
|
|
|
|
|
|
|
|
Net sales |
|
|
|
|
|
|
|
Brazil |
16,048,369 |
|
15,430,958 |
|
16,037,507 |
|
15,424,447 |
Europe |
2,384,607 |
|
2,389,586 |
|
3,639,615 |
|
3,092,636 |
MEA |
5,373,960 |
|
4,744,125 |
|
7,097,473 |
|
5,709,820 |
Asia |
2,492,486 |
|
2,792,508 |
|
3,289,594 |
|
3,072,944 |
LATAM |
426,369 |
|
576,958 |
|
2,132,412 |
|
1,706,996 |
|
26,725,791 |
|
25,934,135 |
|
32,196,601 |
|
29,006,843 |
33. RESEARCH AND DEVELOPMENT COSTS
Consist of expenditures on internal research and development of new products which are recognized when incurred. The expenditures amounted to R$227,280 for year ended December 31, 2015 in the parent company and the consolidated (R$192,786 as of December 31, 2014 in the parent company and the consolidated).
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
34. OTHER OPERATING INCOME (EXPENSES), NET
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Income |
|
|
|
|
|
|
|
Recovery of expenses (1) |
228,945 |
|
44,364 |
|
241,140 |
|
63,773 |
Provision reversal (2) |
141,684 |
|
6,317 |
|
141,684 |
|
6,317 |
Net income on exchange of Minerva stock (3) |
125,671 |
|
179,268 |
|
125,671 |
|
179,268 |
Net income from the disposal of property, plant and equipment |
- |
|
103,291 |
|
- |
|
111,410 |
Gain on business combination |
- |
|
- |
|
- |
|
24,963 |
Other |
40,870 |
|
76,395 |
|
58,198 |
|
96,613 |
|
537,170 |
|
409,635 |
|
566,693 |
|
482,344 |
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
Employees profit sharing |
(246,255) |
|
(324,002) |
|
(302,795) |
|
(356,495) |
Allowance for doubtful accounts (4) |
(196,697) |
|
(12,377) |
|
(196,731) |
|
(12,410) |
Restructuring charges |
(82,932) |
|
(119,735) |
|
(93,074) |
|
(214,737) |
Idleness costs (5) |
(52,878) |
|
(31,883) |
|
(86,110) |
|
(54,116) |
Stock options plan |
(58,946) |
|
(20,673) |
|
(58,946) |
|
(20,673) |
Other employees benefits |
(52,485) |
|
(33,439) |
|
(52,485) |
|
(33,439) |
Provision for civil, labor and tax risks |
(43,508) |
|
(162,763) |
|
(44,811) |
|
(163,573) |
Management profit sharing |
(20,072) |
|
(13,863) |
|
(24,857) |
|
(14,159) |
Net loss on the disposals of property, plant and equipment |
(19,795) |
|
- |
|
(16,402) |
|
- |
Insurance claims costs |
(14,924) |
|
- |
|
(15,053) |
|
- |
Other (6) |
(110,173) |
|
(29,643) |
|
(120,096) |
|
(50,852) |
|
(898,665) |
|
(748,378) |
|
(1,011,360) |
|
(920,454) |
|
(361,495) |
|
(338,743) |
|
(444,667) |
|
(438,110) |
(1) The accumulated balance in 2015 refers mainly to extemporaneous tax credits in the amount of R$136,873 and success in a lawsuit regarding the Eletrobras compulsory loan in the amount of R$62,163.
(2) The accumulated balance in 2015 refers mainly to reversal of allowance for losses with the ICMS tax in amount of R$111,419.
(3) The accumulated balance in 2015 refers to the gain recognized in the change of accounting treatment of the investments in Minerva, which is being accounted as marketable securities available for sale, based on the fair value of the Minerva stocks as of the transfer date (note 17.3).
(4) Refers mainly to doubtful accounts in foreign markets.
(5) Idleness cost includes depreciation expense in the amount of R$17,622 (R$22,734 as of December 31, 2014) in the parent company and R$18,331(R$23,431 as of December 31, 2014) in the consolidated balances.
(6) Includes tax notification regarding ICMS in the state of Amazonas in the amount of R$27,157.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
35. FINANCIAL INCOME (EXPENSES), NET
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Financial income |
|
|
|
|
|
|
|
Exchange rate variation of foreign on net assets (1) |
- |
|
- |
|
1,353,528 |
|
126,726 |
Exchange rate variation on other assets |
928,102 |
|
369,733 |
|
1,081,022 |
|
694,353 |
Exchange rate variation on marketable securities |
57,862 |
|
25,358 |
|
381,275 |
|
287,232 |
Interest on assets |
227,323 |
|
243,862 |
|
235,027 |
|
251,015 |
Interest on cash and cash equivalents |
112,221 |
|
76,686 |
|
164,229 |
|
97,280 |
Interests on financial assets classified as |
|
|
|
|
|
|
|
Held to maturity |
53,943 |
|
22,069 |
|
55,077 |
|
22,069 |
Held for trading |
29,985 |
|
27,802 |
|
47,392 |
|
27,902 |
Available for sale |
7,250 |
|
391 |
|
16,584 |
|
10,314 |
Gains from derivative transactions, net (2) |
- |
|
- |
|
14,782 |
|
46,260 |
Others |
3,480 |
|
14,465 |
|
6,397 |
|
17,605 |
|
1,420,166 |
|
780,366 |
|
3,355,313 |
|
1,580,756 |
|
|
|
|
|
|
|
|
Financial expenses |
|
|
|
|
|
|
|
Exchange rate variation on loans and financing |
(2,085,747) |
|
(645,879) |
|
(2,085,761) |
|
(648,022) |
Exchange rate variation on other liabilities |
(673,872) |
|
(123,869) |
|
(1,080,482) |
|
(582,844) |
Interest on loans and financing |
(645,512) |
|
(482,266) |
|
(819,172) |
|
(645,052) |
Premium paid for the repurchase of bonds (Tender Offer) |
(246,208) |
|
- |
|
(310,322) |
|
(198,514) |
Adjustment to present value |
(242,030) |
|
(157,918) |
|
(240,075) |
|
(154,359) |
Interest on liabilities |
(161,388) |
|
(172,626) |
|
(165,423) |
|
(179,863) |
Financial expenses on accounts payable |
(45,507) |
|
(24,655) |
|
(45,507) |
|
(24,655) |
Interest expenses on loans to related parties |
(59,257) |
|
(74,694) |
|
- |
|
- |
Losses on derivative transactions, net (2) |
(36,041) |
|
(8,046) |
|
- |
|
- |
Others |
(209,602) |
|
(65,054) |
|
(278,713) |
|
(138,145) |
|
(4,405,164) |
|
(1,755,007) |
|
(5,025,455) |
|
(2,571,454) |
|
(2,984,998) |
|
(974,641) |
|
(1,670,142) |
|
(990,698) |
(1) Refers to investments in subsidiaries whose functional currency is Real.
(2) Includes a gain of R$166,196 (R$ 27,955 in 2014) in the fair value of the embedded derivative in the sale of the discontinued operation of dairy segment.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
36. STATEMENT OF INCOME BY NATURE
The Company has chosen to disclose its statement of income by function and thus presents below the details by nature:
|
Parent company |
|
Consolidated |
|
12.31.15 |
|
12.31.14 |
|
12.31.15 |
|
12.31.14 |
Costs of sales |
|
|
|
|
|
|
|
Costs of goods |
13,588,537 |
|
13,400,201 |
|
15,338,966 |
|
14,632,935 |
Depreciation |
1,040,871 |
|
999,659 |
|
1,080,910 |
|
1,019,374 |
Amortization |
3,472 |
|
2,517 |
|
4,520 |
|
2,721 |
Salaries and employees benefits |
3,056,979 |
|
2,624,640 |
|
3,394,443 |
|
2,844,547 |
Others |
2,050,491 |
|
1,874,422 |
|
2,288,853 |
|
1,997,853 |
|
19,740,350 |
|
18,901,439 |
|
22,107,692 |
|
20,497,430 |
|
|
|
|
|
|
|
|
Sales expenses |
|
|
|
|
|
|
|
Depreciation |
52,011 |
|
54,881 |
|
55,260 |
|
58,438 |
Amortization |
5,935 |
|
4,883 |
|
12,909 |
|
5,964 |
Salaries and employees benefits |
849,414 |
|
840,980 |
|
1,081,766 |
|
985,574 |
Indirect and direct logistics expenses |
1,908,793 |
|
1,912,657 |
|
2,211,011 |
|
2,127,448 |
Others |
1,096,136 |
|
841,296 |
|
1,444,985 |
|
1,039,076 |
|
3,912,289 |
|
3,654,697 |
|
4,805,931 |
|
4,216,500 |
|
|
|
|
|
|
|
|
Administrative expenses |
|
|
|
|
|
|
|
Depreciation |
9,433 |
|
7,111 |
|
20,026 |
|
15,731 |
Amortization |
82,795 |
|
86,339 |
|
124,724 |
|
104,759 |
Salaries and employees benefits |
204,708 |
|
187,938 |
|
301,289 |
|
245,358 |
Fees |
25,933 |
|
25,874 |
|
26,186 |
|
26,124 |
Others |
(9,764) |
|
(17,874) |
|
33,872 |
|
10,082 |
|
313,105 |
|
289,388 |
|
506,097 |
|
402,054 |
|
|
|
|
|
|
|
|
Other operating expenses (1) |
|
|
|
|
|
|
|
Depreciation |
17,622 |
|
22,734 |
|
18,331 |
|
23,431 |
Others |
881,043 |
|
725,644 |
|
993,029 |
|
897,023 |
|
898,665 |
|
748,378 |
|
1,011,360 |
|
920,454 |
(1) The composition of other operating expenses is disclosed in note 34.
37. INSURANCE COVERAGE
The Company´s insurance policy considers the concentration and relevance of the risks identified in its risk management program. Thus, the contracted insurance coverage are adequate to the entity´s size, activities and for amounts considered reasonable for Management to cover any damages. The Company also follows the orientations provided by its advisors.
|
|
|
|
12.31.15 |
Assets covered |
|
Coverage |
|
Amount of coverage |
|
|
|
|
|
Operational risks |
|
Coverage against damage to buildings, facilities, inventory, machinery and equipment, loss of profits |
|
2,812,323 |
Carriage of goods |
|
Coverage of goods in transit and in inventories |
|
128,858 |
Civil responsability |
|
Third party complaints |
|
241,649 |
Each entity has its own coverages, which are not complimentary.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
38. NEW ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED
IAS 32 – Offsetting Financial Assets and Financial Liabilities – Amendment
In December 2011, IASB issued an amendment to clarify the meaning of “currently has a legally enforceable right to offset the recognized amounts" and the criteria that would cause the not simultaneous settlement mechanisms of clearing houses to qualify for offsetting. The Company analyzed the content of this standard and there was no impact on its financial statements for the year ended December 31, 2015.
IFRS 10, IFRS 12 and IAS 27 – Investment Entities – Amendment
In October 2012, IASB issued an amendment to introduce a definition for “Investment Entity” and an exception to consolidation, specific for Investment Entity, which requires that such entity measures its investment in a subsidiary at fair value through profit or loss in accordance with Technical Pronouncement CPC 38 – Financial Instruments: Recognition and Measurement in its consolidated and separated financial statements. On December 12, 2014, CVM issued the Deliberation No. 733/14, correspondent to these IFRS/IAS. The Company analyzed the content of this standard and there was no impact on its financial statements for the year ended December 31, 2015.
IFRIC 21 – Levies
In May 2013, the IASB issued IFRIC 21, which provides guidance on when an entity should recognize a liability for a levy in accordance with laws and/or regulations, except for income taxes, in its financial statements. The obligation should only be recognized when the event that triggers such obligation occurs. IFRIC 21 is an interpretation of IAS 37 – Provisions, Contingent Liabilities and Contingent Assets. IAS 37 establishes criteria for the recognition of a liability, one of which is the requirement that the Company has a present obligation as a result of a past event, known as the obligating event. On November 27, 2014, CVM issued the Deliberation No. 730/14, correspondent to this IFRIC. The Company analyzed the content of this standard and there was no impact on its financial statements for the year ended December 31, 2014.
IAS 36 – Recoverable Amount Disclosures for Non-Financial Assets – Amendment
On May 2013, IASB issued an amendment to introduce the disclosure of fair value hierarchy level for each impairment loss or reversal recognized during the period for individual asset, including goodwill or cash generate unit, as well as improvement of wording, aiming a better application of standard in accordance with international accounting practices and do not change the meaning of the original text issued. On August 14, 2014, CVM issued the Deliberation No. 724/14, correspondent to this IAS. The Company analyzed the content of this standard and there was no impact on its financial statements for the year ended December 31, 2015.
IAS 39 – Novation of Derivatives and Continuation of Hedge Accounting – Amendment
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
On June 2013, IASB issued an amendment to eases the discontinuation of hedge accounting when the novation of a derivative designated as a hedge meets certain criteria and retrospective application is mandatory. On August 14, 2014, CVM issued CVM Deliberation No. 724/14, correspondent to this IAS. The Company analyzed the content of this standard and there was no impact on its financial statements for the year ended December 31, 2015.
39. NEW ACCOUNTING PRONOUNCEMENTS NOT ADOPTED
IFRS 9 – Financial Instruments
On July 2014, IASB issued the final version of IFRS 9 – Financial Instruments, which reflects all phases of financial instruments project and replaces IAS 39 – Financial Instruments: Recognizing and Measurement and all previous versions of IFRS 9. The standard introduces new guidance about classification and measurement, impairment loss and hedge accounting. Early adoption is not permitted and is effective from periods beginning on January 1, 2018. Retrospective adoption is mandatory, however, is not required the presentation of comparative information. Early adoption of previous versions of IFRS 9, issued in 2009, 2010 and 2013, is permitted if the initial adoption date is prior to February 1, 2015. The effects related to the adoption of this standard affects only the classification and measurement of financial assets, financial liabilities are exempt. The Company is evaluating the impact of adopting this standard in its consolidated financial statements.
IFRS 15 – Revenue from Contracts with Customers
On May 2014, IASB issued IFRS 15 that establishing a 5 steps model that will be applied to revenue obtained from a contract with customer. In accordance with this standard, revenues are recognized based on an amount that reflects the consideration which an entity expects to be entitled for the transfer of goods or services to a customer. The guidelines of IFRS 15 consider a more structured approach to measure and recognize revenue.
This standard is applicable to all entities and will replace all current requirements related to revenue recognition. Retrospective adoption, total or modified, is mandatory to periods beginning on January 1, 2017 or after. Earlier adoption is permitted, but it is under analysis for regulatory entities in Brazil. The Company is evaluating the impact of adopting this standard in its consolidated financial statements.
IFRS 11 – Accounting for Acquisition of Interests in Joint Operations – Amendment
On May 2014, IASB issued amendments to IFRS 11, which demands that a joint operator that is accounting an acquisition of equity interest in which the joint operation activity constitutes a business, applied the guidelines according to IFRS 3 for business combination accounting. The amendments also clarify that an equity interest previously
held in a joint operation is not remeasured on an additional acquisition of interest in the same joint operation while the joint control is held. Additionally, the amendments are not applied when the parties sharing the control, including the reporting entity, are under common control of the parent company.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
|
The amendments are applicable to both the acquisition of the final equity interest in a joint operation and on the acquisition of any additional equity interest in the same joint operation. This standard will be in force prospectively to periods beginning on January 1, 2017 or after. Early adoption in Brazil is not permitted by regulatory entities. The Company is evaluating the impact of adopting this standard in its consolidated financial statements.
IAS 16 and IAS 38 – Clarification of Accountable Methods of Depreciation and Amortization – Amendment
On May 2014, IASB issued amendments to clarify guidelines of IAS 16 and IAS 38, that revenue reflects a model of economic benefits generated from operation of business (of which the asset is a part), instead of economic benefits generated from the use of the asset. As a result, a method based on revenue cannot be used for property, plant and equipment depreciation purposes and may be used only under very limited circumstances to amortize intangible assets. The amendments will be in force prospectively to amortize intangible assets fiscal years beginning on January 01, 2016 or after. The Company does not expect impact on its consolidated financial statements, since the Company does not use a method based on revenue to depreciate non-current assets.
IFRS 16 - Leases
On January 2016, the IASB issued the final verison of IFRS 16 – Leases, which superseds IAS 17 – Leases, wich will be applicable to periods beggining on January 01, 2019. Early adoption will be permited for entities which also apply IFRS 15 – Revenue from Contracts with Customers. The adoption of this standard will affect mainly property, plant and equipment and financial liabilities, as the treatment between financial and operational lease will no longer exists, being the leases treated in a similar way of the financial lease as per IAS 17. The Company is evaluating the impact of adopting this standard in its consolidated financial statements
40. SUBSEQUENT EVENTS
40.1. Acquisition of the frozen distribution business of Qatar National Import and Export Co. (“QNIE”)
On October 05, 2015, BRF announced to the market that it has signed a MOU with QNIE for the acquisition of a part of QNIE’s frozen distribution business in the State of Qatar (the “Business”), which is one of BRF products distributor in Qatar for more than
40 years.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
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The transaction totaled US$146,162 (equivalent to R$589,135) paid in cash. This amount was subjected to certain conditions precedent related to the business, which were satisfied and the business is controlled by BRF since January 01, 2016.
The transaction consists in the acquisition of certain assets from QNIE by Federal Foods Qatar Ltd., which is an indirectly subsidiary controlled by BRF. The acquired assets comprises mainly the client relationship, finished goods, non-compete agreement and other agreements, which constitute the acquisition of the frozen distribution business in the State of Qatar.
In order to attend the requirements of CVM Deliberation 665/11, BRF will prepare a fair value report of the acquired assets and assumed liabilities in order to allocate the purchase price. Management expects to complete this report in 2016, when the final purchase price allocation will be determined as well as its accounting impacts.
40.2. Renegotiation of the joint venture with Mondelez Lacta e Mondelez
On January 18, 2016, BRF announced to the Market that it has renewed its agreement for the joint venture with Mondelez Lacta Alimentos Ltda. and Mondelez Brasil Ltda. (together “Mondelez”), which were subjected to the approval of the competent regulatory authorities (obtained on February 02, 2016) and provides that: i) Mondelez will be the entity reponsible for producing the Philadelphia cream cheese; ii) BRF will continue to distribute and sell the Philadelphia cream cheese; and iii) BRF will be the only shareholder of K&S Alimentos S.A).
40.3. Business combination with Golden Foods Siam (“GFS”)
On December 01, 2015, BRF announced to the market that, through its fully-owned subsidiary BRF Gmbh, has signed an agreement to acquire control of GFS (“transaction”). The transaction comprised the acquisition of 100% of equity interest in Golden Foods Sales Ltd. and Golden Foods Siam Europa, both located in the United Kingdom, 48,2% of equity interest in Golden Foods Poultry Ltd. and 73,31% of indirect equity interest in Golden Poultry Siam Ltd., both located in Thailand.
On January 26, 2016 the conditions precedent were satisfied and BRF concluded the transaction in the amount of US$348,704 (equivalent to R$1,411,828), which should be further adjusted according to certain conditions set out in the agreement.
GFS is one of the production poultry Market leader in Thailand, with an integrated operation and present in more than 15 global markets.
In order to attend the requirements of CVM Deliberation 665/11, BRF will prepare a fair value report of the acquired assets and assumed liabilities in order to allocate the
purchase price. Management expects to complete this report in 2016, when the final purchase price allocation will be determined as well as its accounting impacts.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
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40.4. Business combination with Universal Meats (UK) Ltd. (“Universal”)
On December 01, 2015, BRF announced to the Market that, through its subsidiary BRF Invicta Limited (“BRF Invicta”), it has signed a binding Memorandum of Understanding (“MOU”) to the acquisition of the total shares issued by Universal (“transaction”). Universal is a food distributor in the United Kingdom with focus in the food service segment.
On February 01, 2016 the conditions precedent set out in the MOU were satisfied and BRF concluded the transaction in the amount of GBP31,802 (equivalent to R$182,284), which should be further adjusted according to certain conditions set out in the agreement.
In order to attend the requirements of CVM Deliberation 665/11, BRF will prepare a fair value report of the acquired assets and assumed liabilities in order to allocate the purchase price. Management expects to complete this report in 2016, when the final purchase price allocation will be determined as well as its accounting impacts.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
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41. APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements were approved by the Board of Directors on February 25, 2016.
BOARD OF DIRECTORS |
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Chairman (Independent) |
Abilio dos Santos Diniz |
Vice-Chairman (Independent) |
Renato Proença Lopes |
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Independent Member |
Henri Philippe Rechstul |
Board Member |
José Carlos Reis de Magalhães Neto |
Independent Member |
Luiz Fernando Furlan |
Independent Member |
Manoel Cordeiro Silva Filho |
Independent Member |
Paulo Guilherme Farah Correa |
Independent Member |
Walter Fontana Filho |
Board Member |
Vicente Falconi Campos |
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FISCAL COUNCIL |
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Independent Member |
Attilio Guaspari |
Members |
Marcus Vinicius Dias Severini |
Independent Members |
Reginaldo Ferreira Alexandre
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AUDIT COMITTEE |
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Comittee Coordinator |
Sérgio Ricardo Silva Rosa |
Independent Members |
Walter Fontana Filho |
External Member and Financial Specialist |
Fernando Maida Dall Acqua |
Independent Members |
Paulo Guilherme Farah Correa |
BOARD OF EXECUTIVE OFFICERS |
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Chief Executive Officer Global |
Pedro de Andrade Faria |
Vice President of Finance, and Investor Relations |
Augusto Ribeiro Junior |
Vice President of Quality and Management |
Gilberto Antônio Orsato |
Vice President of Supply Chain |
Hélio Rubens Mendes dos Santos |
Vice President of Legal and Relationships |
José Roberto Pernomian Rodrigues |
Vice President of People |
Rodrigo Reghini Vieira |
Vice President of Business (General Manager Brazil) |
Flavia Moyses Faugeres |
Vice President of Business (General Manager LATAM) |
José Alexandre Carneiro Borges |
Vice President of Business (General Manager Middle East and Africa) |
Patricio Santiago Rohner |
Vice President of Business (General Manager Europe) |
Roberto Banfi |
Vice President of Business (General Manager Asia) |
Simon Cheng |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014 (Amounts expressed in thousands of Brazilian Reais, unless otherwise stated) |
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Marcos Roberto Badollato
Controller |
Joloir Nieblas Cavichini Accountant – CRC 1SP257406/O-5 |
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014
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OPINION OF THE FISCAL COUNCIL
The Fiscal Council of BRF S.A., in fulfilling its statutory and legal duties, reviewed:
(i) the financial statements (parent company and consolidated) for the fiscal year ended on December 31, 2015.
(ii) the Management Report; and
(iii) the report issued without qualification by Ernst&Young Auditores Independentes S.S.on February 25, 2016;
Based on the documents reviewed and on the explanations provided, the members of the Fiscal Council, undersigned, issued an opinion that the financial statements and the management report appropriately are presented in a position to be considered by the Annual General Meeting.
São Paulo, February 25, 2016.
Attílio Guaspari
Independent Member
Marcus Vinicius Dias Severini
Fiscal Council Member
Reginaldo Ferreira Alexandre
Fiscal Council Member
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014
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Summarized Annual Report of the Audit Committee
Activities of the Audit Committee
The committee was elected on April 3, 2014, pursuant to the meeting of the Board of Directors, subsequently meeting ordinarily on a monthly basis as well as holding a further nine extraordinary meetings. The principal topics of discussion are described in the following paragraph. The Audit Committee also met privately on two occasions with the independent auditors and discusses the principal issues monitored during the year on a monthly basis with the Board of Directors.
Issues discussed by the Audit Committee
The Audit Committee met with the vice chairman, directors of the company, the area for prevention of fraud, the internal and independent auditors in order to gain an understanding of the processes, internal controls, possible deficiencies and eventual plans for improvement as well as issuing its recommendations to the Board of Directors and Executive Board. The principal issues discussed at these meetings were: Discussion and approval of the annual internal audit plan; Monitoring the points identified by the auditors during the course of their work, justification and eventual action plans of those responsible in the more important cases in onsite meetings; Decision on the schedule for the Internal Audit Work Plan; Analysis of the Related Parties Policy; Evaluation and discussion of the internal audit’s performance; Understanding the planning of the outside audit and principal conclusions in the reports which review the quarterly and annual information; Discussion of the recommendations listed in the internal controls letter; Discussion and recommendations for approval of the quarterly and annual financial statements; Monitoring of the conditions of independence of the external audit in executing the work; Approval for contracting the work of the External Auditor for auditing the subsidiary companies and due diligence in the Company’s M&A and New Businesses processes; Recommendations and achieving consensus on the constitution of the Company’s Area for Prevention of Fraud; Monitoring the investigative processes and recommendation of Action Plans; Discussion of internal controls processes; Analysis and recommendation for mapping the Company’s risks; Recommendation for improvements in the Whistle Blowing Channel process; Verification of the policy and compliance with the anticorruption law in the Company; Analysis of BRF’s quarterly and annual financial statements and respective information for disclosure to the market: Analysis and discussion of the provisions, contingent liabilities and assets in accordance with the pertinent regulation.
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014
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Audit Committee’s Opinion
In the exercising of its legal and statutory duties, BRF’s Audit Committee has examined the financial statements (parent company and consolidated) for the fiscal year ending December 31, 2015; the Management Report; and the report issued without qualification by Ernst & Young Auditores Independentes S.S.
There were no instances of significant divergences between the Company’s management, the independent auditors and the Audit Committee with respect to the Company’s Financial Statements.
Based on the examined documents and the clarifications rendered, the undersigned members of the Audit Committee are of the opinion that the financial statements in all material respects are fairly presented and should be approved.
São Paulo, February 25, 2016.
Sérgio Ricardo Silva Rosa
Audit Committee Coordinator
Walter Fontana Filho
Independent Member
Fernando Maida Dall Acqua
External Member and Financial Specialist
Paulo Guilherme Farah Correa
Independent Member
(A FREE TRANSLATION INTO ENGLISH OF THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
FINANCIAL STATEMENTS
Year ended December 31, 2015 and 2014
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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 article 25 of CVM Instruction No. 480/09, the executive board of BRF S.A., states:
(i) reviewed, discussed and agreed with the Company's consolidated financial statements for the fiscal year ended on December 31, 2015; and
(ii) reviewed, discussed and agreed with opinions expressed in the Ernst&Young Auditores Independentes S.S. reported on the Company's consolidated financial statements for the fiscal year ended on December 31, 2015.
São Paulo, February 25, 2016.
Pedro de Andrade Faria
Chief Executive Officer Global
Augusto Ribeiro Junior
Vice President of Finance, and Investor Relations
Gilberto Antônio Orsatto
Vice President of Administration and Human Resources
Hélio Rubens Mendes dos Santos
Vice President of Supply Chain
José Roerto Pernomian Rodrigues
Vice President of Legal and Corporate Relationships
Flávia Moyses Faugeres
Vice President of Business (General Manager Brazil)
José Alexandre Carneiro Borges
Vice President of Business (General Manager LATAM)
Patrício Santiago Rohner
Vice President of Business (General Manager Middle East and Africa)
Roberto Banfi
Vice President of Business (General Manager Europe)
Rodrigo Reghini Vieira
Vice President of People
Simon Cheng
Vice President of Business (General Manager Asia)