management proposal and practical guideir.marfrig.com.br/en/documentos/6895_management proposal -...

MANAGEMENT PROPOSAL AND

PRACTICAL GUIDE

Combined Annual and Extraordinary General

Shareholders’ Meeting

March 30, 2020

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MESSAGE FROM MANAGEMENT

Dear Shareholders,

Marfrig Global Foods S.A., in keeping with its corporate governance policies and its

commitment to transparency in its relations with investors, cordially invites you to attend the

the Combined Annual in first call and Extraordinary in second call General Shareholders

Meeting set to convene on March 30, 2020, at 10 a.m., at our registered office at Avenida

Queiroz Filho, no 1560, Block 5 (Tower Sabiá), 3rd floor, Suite 301, Vila Hamburguesa, City

and State of São Paulo, Postal Code (CEP) 05319-000, in accordance with the Call Notice

published in the newspaper Valor Econômico and in the São Paulo state register Diário Oficial

do Estado de São Paulo.

The effective participation of all shareholders in the Annual Shareholders’ Meeting is

extremely important and will give you an opportunity to discuss and vote on the matters on

the agenda so that you can make an informed decision based on the information available.

As such, with the purpose of facilitating and encouraging the participation of its shareholders

and reiterating its commitment to fostering the best practice of corporate governance, the

Corporation voluntarily adopted the remote voting system established by Instruction

481/2009 amended by 561/15 and 570/15 issued by the Securities and Exchange

Commission of Brazil (CVM), as amended. The instructions for exercising your vote using a

remote voting ballot are detailed over the course of this document.

The matters to be decided in the Meeting are described in this Guide as well as in the Call

Notice and Management Proposal. The pertinent documents are available at the registered

office of the Company, on our Investor Relations website (www.marfrig.com.br/ri) and on the

websites of the Brazilian Stock Exchange (B3 S.A. – Brasil, Bolsa, Balcão) (www.b3.com.br)

and of the Securities and Exchange Commission of Brazil (www.cvm.gov.br). We hope this

Guide contributes to the effective participation of all shareholders.

Cordially,

Marcos Antonio Molina dos Santos

Chairman of the Board

http://www.marfrig.com.br/ri

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TABLE OF CONTENTS

Date, Time, Place and Preliminary Clarifications ................................................................ 04

Management Proposal......................................................................................................... 06

How to Participate in the Annual Shareholders Meeting ..................................................... 16

Documents Made Available…………………………………………………...…………………..21

Appendix I – Proxy Appointment Form without Voting Instructions ..................................... 22

Appendix II – Proxy Appointment Form with Voting Instructions ......................................... 23

Appendix III – Remote Voting Intructions Form ................................................................... 25

Appendix IV – Section 10 of the Reference Form ............................................................... 29

Appendix V – Section 12.5 to 12.10 of the Reference Form ................................................ 81

Appendix VI – Section 13 of the Reference Form .............................................................. 101

Appendix VII – Copy of the Bylaws, highlighting the proposed amendments and a detailed report on the origin and justification of the amendments .................................................. 134

Appendix VIII – Restated Bylaws - Proposal ..................................................................... 137

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ANNUAL AND EXTRAORDINARY SHAREHOLDERS MEETING

• Date, Time and Place:

The Annual and Extraordinary Shareholders’ Meeting was called to convene as follows:

Date: March 30, 2020

Time: 10:00 a.m.

Place: Avenida Queiroz Filho, no 1560, Block 5 (Tower Sabiá), 3rd floor, Suite 301, Vila

Hamburguesa, City and State of São Paulo, Postal Code (CEP) 05319-000.

• Call Notice:

The Call Notice for the Annual and Extraordinary Shareholders Meeting will be published as

follows: Three times, in the issues of February 28 and 29 and March 03, 2020 of the

newspaper Valor Econômico, and of the São Paulo state register Diário Oficial do

Estado de São Paulo.

• Preliminary Clarifications:

Consistent with Article 125 of Brazilian Corporation Law (Federal Law 6,404/76), attendance

by shareholders of record representing at least one quarter (¼) of the capital stock

outstanding constitutes valid quorum for convening the Annual Shareholders Meeting. If

quorum is not achieved, the Company will announce a new date for convening the Meeting

on second call with the attendance of any number of shareholders.

Furthermore, considering that the quorum of two-thirds (2/3) of the capital stock was not met

in first call on December 30, 2019, the Company announces that the Shareholder´s meeting

which intends to reform the Bylaws of the Company to implement the Statutory Audit

Committee, will be held in second call on March 30, 2020, at 10 a.m., with the attendance of

any number of shareholders as per Article 135 of Brazilian Corporation Law (Federal Law

6,404/76, as amended).

Shareholders may attend the Meeting in person or through a duly appointed proxy. To

facilitate participation, the Company is attaching two proxy appointment forms to this

Management Proposal. To facilitate and encourage shareholder participation, the Company

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has also provided an absentee ballot system so that shareholders can submit absentee

ballots through their custody agents or directly to the Company, as per the detailed guidelines

in this Management Proposal.

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PROPOSAL OF THE MANAGEMENT OF MARFRIG GLOBAL FOODS S.A.

TO THE ANNUAL AND EXTRAORDINARY SHAREHOLDERS’ MEETING TO BE HELD

ON MARCH 30, 2020.

In accordance with Brazilian Corporation Law, the Corporation is required to hold an Annual

Shareholders’ Meeting within four months of the end of the fiscal year to consider and vote

on the financial statements, the allocation of net income for the fiscal year, the aggregate

compensation of the managers and, this year, to elect the Members of the Fiscal Council.

As per Brazilian Corporation Law (Federal Law 6,404/76, as amended), the Company must

hold an Extraordinary General Shareholders' Meeting to resolve on any matters that are not

subject to the Annual General Meeting.

We, the Management of Marfrig Global Foods S.A., submit for your consideration at the

Annual and Extraordinary Shareholders’ Meeting called to convene at 10:00 a.m. on March

30, 2020, the following Management Proposal (“Proposal”), as follows.

AT THE ANNUAL MEETING:

1. Receiving the management accounts and reviewing, discussing and voting on

the Financial Statements for the fiscal year ended December 31, 2019.

The Company’s Management Report, Financial Statements and respective Notes, which

were prepared by the Board of Executive Officers and approved by the Board of Directors in

a meeting held on February 18, 2020, accompanied by the independent auditors’ report, and

the report of the Fiscal Council and Audit Committee for the fiscal year ended December 31,

2019, the pertinent documents are available at the registered office of the Company, on our

Investor Relations website (www.marfrig.com.br/ri) and on the websites of the Brazilian Stock

Exchange (B3 S.A. – Brasil, Bolsa, Balcão) (www.b3.com.br) and of the Securities and

Exchange Commission of Brazil (www.cvm.gov.br). The Fiscal Council issued a report to the

effect that said financial states and respective notes present adequate conditions for being

examined by the shareholders of the Company convened in the Annual Shareholders

Meeting.

The Financial Statements are prepared in accordance with the International Financial

Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB),

where were implemented in Brazil through the Accounting Pronouncements Committee

(CPC) and its technical interpretations and guidelines and approved by the Securities and

Exchange Commission of Brazil (CVM). Such Statements comprise the Balance Sheet,


http://www.cvm.gov.br/

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Statement of Income, Statement of Comprehensive Income, Statement of Changes in

Shareholders’ Equity, Statement of Cash Flow and Statement of Value Added. The Financial

Statements are complemented by the respective notes, whose purpose is to support

shareholders in their analysis and understanding of such Statements.

The Financial Statements are also accompanied by the Management Report, which provides

financial information, such as the main lines of the Income Statement for the fiscal year and

non-financial, statistical and operational information, such as information related to the

employees of the Company, the activities of its subsidiaries, its social responsibility practices,

its corporate governance and the capital markets on a comprehensive basis.

The audit firm Grant Thornton Auditores Independentes has audited our financial statements

and issued a report indicating that, in their opinion, the financial statements fairly present, in

all material respects, the financial position and results of operations of the Company and its

subsidiaries.

In compliance with the provisions of Article 189, 190 and 191 of the Brazilian Corporate Law

and considering that the net profit calculated in the end of the fiscal year has been fully

absorbed by the accumulated losses, the information regarding the destination of the result

will not be presented in this Proposal

The following documents related to this item of the agenda are available at the Corporation’s

registered office, on its Investor Relations website (www.marfrig.com.br/ri) and on the

websites of the Brazilian Stock Exchange (B3 S.A. – Brasil, Bolsa, Balcão) (www.b3.com.br)

and of the Securities and Exchange Commission of Brazil (CVM) (www.cvm.gov.br): a)

Management Report; b) Financial Statements for the fiscal year ended December 31, 2019;

c) Independent Auditors’ Report; d) Fiscal Council Report; e) Audit Committee Report; f)

Management’s Comments on the Company’s financial situation in accordance with Item 10

of the Reference Form, as required by Instruction 480 issued by the CVM on December 7,

2009, (“CVM Instruction 480”); e) Standardized Financial Statements (DFP).

Appendix IV to this Proposal presents Management’s Discussion and Analysis of Financial

Condition and Results of Operations required by Section 10 of the Reference Form in

accordance with Instruction 480 issued by the Securities and Exchange Commission of Brazil

(CVM) on December 7, 2009, as amended (“CVM Instruction 480”).

2. Election of the members of the Fiscal Council.



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The current members of the Fiscal Council of Marfrig Global Foods S.A. were elected at the

Annual Shareholders Meeting held on April 26, 2019, for a unified term expiring on the date

of the Annual Shareholders Meeting held in 2020. In accordance with Article 27 of the

Corporation’s Bylaws, the Fiscal Council functions on a permanent basis.

According to the Brazilian Corporate Governance Institute (IBGC), a Fiscal Council is an

independent body that oversees the board of executive officers and board of directors and

that seeks, through the principles of transparency, equitable treatment and accountability, to

contribute to the organization's performance. It can serve as a legal instrument for

implementing an active policy of good corporate governance practices aimed in particular at

improving the transparency and control of a company’s internal acts.

Management proposes to the Corporation’s shareholders the following ticket of nominees to

serve as members of the Fiscal Council.

Nominees to effective members of the Fiscal Council:

Eduardo Augusto Rocha Pocetti

Mr. Eduardo Pocetti, 65, has been an effective member of the Fiscal Council of Marfrig Global

Foods S.A. since April 2014. He holds a B.S. in Accounting Sciences and an MBA from the

Getúlio Vargas Foundation (FGV). He is currently chairman of the board of the Brazilian

Institute of Independent Auditors (IBRACON) and, in February 2016, he was elected to hold

a chair on the Brazilian Academy of Accounting Sciences. He was a partner at KPMG

Auditores Independentes and has 40 years of experience at audit firms. From 2004 to 2011,

he was president of BDO Auditores Independentes, where he represented BDO Brasil at all

member firms of the international BDO network. He has vast experience in finance,

accounting, external audits, economic and financial planning and coordinating the managerial

and executive levels of various large Brazilian and multinational companies in the industrial

and financial sectors. He served as lead partner on various IPO journeys and on special

corporate finance projects for acquisitions and divestments. He also serves as member of

the Board of Directors at the public corporation Mahle Metal Leve S.A. and at Centro de

Integração Empresa Escola (CIEE).

Ricardo Florence dos Santos

Mr. Florence dos Santos, 65, has acted as an independent member of the Board of Directors

of Movida Rental Car, S.A. since 2016 and as a member of the Fiscal Council of CPFL

Energia since 2017. He accumulates in MOVIDA the Audit and Financial committees. He

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served as Vice President of Finance (CFO) of Marfrig Global Foods S.A. between 2013 and

2016 and as Executive Director of Investor Relations between 2007 and 2014. Chemical

engineer graduated from the Polytechnic School of USP and in Business Administration from

Universidade Mackenzie, he has MBA in Strategy and Finance from IBMEC-SP. He

previously worked at Grupo Pão de Açúcar for 16 years (1984-2000) in various positions as

Director of Strategic Planning, Finance and Excetuive Director of Investor Relations. He was

also responsible for the IR areas of UOL Inc. (Grupo Folha de São Paulo - 2000/2001) and

Brasil Telecom (2005-2007). He has participated in several IPO processes, mergers,

acquisitions and sales of assets in the companies where he worked. He served on the Boards

of Directors of Grupo Pão de Açúcar (1995-1999), UOL - Grupo Folha (2001) and IBRI -

Brazilian Institute of Investor Relations (1998-2001 and 2014-2019), where he was also CEO

of 2010 to 2013 and the Dentalcorp S.A. Advisory Board (2002 to 2006).

Tiago Medeiros Garcia

Mr. Tiago Medeiros Garcia, 37, has been a tax manager at Benício Advogados Associados

since 2013, whose main focus is the recovery of taxes. Leads a team of 22 people who

develop the projects for several national and multinational clients, providing all technical

support and tax legislation, as well as the coordination of the area. Graduated in

Administration from the Federal University of Ouro Preto and with a Postgraduate Degree in

Tax Management from FECAP, he also participated in Basic Accounting courses; Fiscal

SPED and EFD Contributions; ICMS - Tax Replacement; Calculation of Income Tax (Real

Profit); PIS / COFINS - Not cumulative and cumulative. He also served as Tax Supervisor

between 2009 and 2013 at Benício Advogados Associados, previously in the period between

2008 and 2009 as a senior tax analyst at Fernando, Nagao, Cardone & Alvarez Jr.

Advogados Associados and from 2003 to 2008 as a tax analyst at Marcondes Advogados

Associados.

Nominees to alternate members of the Fiscal Council:

Ely Carlos Perez

Mr. Ely Carlos Perez, 49, received a B.S. in Accounting from Universidade São Marcos and

an MBA from the Getúlio Vargas Foundation (FGV). His career has focused on the Financial,

Accounting and Process Management areas, with the last 17 years spent as a business and

process consultant for implementing Enterprise Resource Planning (ERP) systems. During

this period, he has specialized in mapping processes, adapting processes to the system,

implementing ERP and training/accompanying post-implementation processes. He worked

for more than 10 years at Datasul S.A.

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José Osvaldo Bozzo

Mr. José Osvaldo Bozzo, 54, has a law degree from the University of Ribeirão Preto, has

worked for more than 30 years as a tax consultant, with a strong specialization in

Agribusiness and participation in projects tax consultancy and audit support for several

Ethanol and Sugar Producing companies in Brazil, becoming one of the responsible

Consultants in major acquisitions. He started his career in 1989 at PriceWaterhouseCoopers,

in Ribeirão Preto, acting as a tax consultant until 1997, becoming in 1998 Manager at former

Trevisan Auditores (current BDO), in the area of TAX, acting as Director and later as Partner

in 2007. He remained as Partner of KPMG, after the purchase of BDO Brasil until December

2012. He served as Partner and tax consultant at MJC Consultores e Auditores de Ribeirão

Preto until December 2018, and currently works at Jbozzo Consultores providing specialized

consulting in the Accounting areas, Tax, Corporate, Labor and Social Security for companies

of various activities. In addition to being a consultant, he was a professor of tax planning at

USP - MBA. He participated in Portugal, in works related to the Tax Services Quality

Assurance Review and in Chile at the XIV Annual Meeting of BDO partners from Latin

American countries. He also has several articles published in magazines, newspapers and

websites addressing tax and legal issues of interest to agribusiness.

Marcílio José da Silva

Mr. Marcílio José da Silva, 56, holds a B.S. in Accounting from the Candido Rondon School

of Economic and Accounting Sciences (FACEC). Previously, he served in various positions

in the accounting departments of meatpackers, including Quatro Marcos Ltda. (1996-2000)

and Frigorífico Tangará Ltda. (2000-2003). He is an accounting consultant and served as

effective member of the Corporation’s Fiscal Council from April 2010 to April 2014.

Detailed information on the nominees proposed by the Management, as required by items

12.5 to 12.10 of the Reference Form in accordance with CVM Instruction 480, are presented

in the Appendix V to the Management Proposal made available to shareholders.

3. Proposal for the Aggregate Compensation of the Directors, Officers and Fiscal

Council Members for fiscal year 2020.

The compensation proposal put forward to the Annual Shareholders Meeting is for the

Corporation to pay the directors, officers and members of the Fiscal Council an aggregate

annual amount of up fifty-nine million, nine hundred third-one thousand and four hundred and

seventy eight reais and thirty five cents (R$ 59,931,478.35), which includes all benefits and

related payroll charges. Said amounts are for the period from January to December 2020.

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Of the proposed aggregate compensation of R$ 59,931,478.35, R$ 52,756,682.03 is

attributable to the Board of Executive Officers, R$ 6,178,871.43 is attributable to the Board

of Directors and the remaining R$ 995,924.89 is attributable to the Fiscal Council. See the

following table:

Nº de membros Remuneração

Fixa

Remuneração

variável

Remuneração

em ações Encargos Benefícios

Total da

Remuneração

Conselho de

Administração 8,00 5.080.070,00 - - 1.016.614,00 82.787,43 6.178.871,43

Diretoria

Estatutária 7,00 13.753.357,53 10.425.536,38 24.326.251,55 3.850.940,11 400.596,46 52.756.682,03

Conselho Fiscal 6,00 823.728,75 - - 164.745,75 7.450,39 995.924,89

Total da

Remuneração 21,00 19.657.156,28 10.425.536,38 24.326.251,55 5.031.699,86 490.834,28 59.931.478,35

Fixed compensation

The fixed compensation of the Statutory Board of Executive Officers is composed of 13

monthly salaries per year and the corresponding vacation pay and payroll charges. The

members of the Board of Directors are entitled to fixed monthly compensation and an

additional fixed monthly compensation for members participating on the advisory committees

of the Board of Directors. The compensation of the members of the Fiscal Council is

composed only of a fixed monthly portion.

Benefits

The package of benefits offered to the Statutory Board of Executive Officers includes a health

plan, life insurance, meal vouchers, fuel vouchers, the use of a corporate mobile phone and

other legal benefits. Members of the Board of Directors and Fiscal Council are entitled to life

insurance.

Short-Term Variable Compensation

Short-term variable compensation is determined based on the following performance

indicators: (i) individual performance reviews; and (ii) the following global performance

indicators of the Corporation, as described below:

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Net Revenue: Corporation’s revenue net of direct taxes, cancellations and discounts.

EBITDA Margin: percentage value obtained by dividing EBITDA by the net revenue of the

Corporation.

Free Cash Flow: the Corporation’s operating cash flow, less capital expenditure and financial

expenses.

CAPEX Deviation: the percentage attainment of the amount invested by the Corporation in

property, plant and equipment, as well as intangible and biological assets in the period.

Said global performance indicators are based on the guidance announced to the market by

the Corporation through the material fact notices dated March 02, 2015.

Long-Term Incentives

The Corporation has a Stock Option Plan approved by the Extraordinary Shareholders'

Meeting held on May 29, 2009, whose beneficiaries are executives and employees in

management positions.

Options are granted based on the Corporation’s global result indicators and individual

performance, and aim to align the interests of managers with the interests of the Corporation

and its shareholders in the long term, as well as to retain key personnel.

The options granted under the terms of the Stock Option Plan will vest over four consecutive

years, at the rate of 25% each year as of the execution of the corresponding Stock Option

Agreement and also observing the terms and conditions stipulated by the Board of Directors

and the respective Grant Agreements.

The Corporation’s stock option plan includes the possibility of granting long-term incentives

to the Board of Directors. However, no variable compensation and/or long-term incentives

were granted to the Board in fiscal year 2018 or will be granted in fiscal year 2019. All

compensation packages offered by the Corporation are aligned with the market standards for

similar functions.

Direct Granting of Shares as Part of the Payment to Managers:

As part of the payment of the remuneration provided for in this Proposal, the Company

proposes to its shareholders that up to 70% of the variable remuneration of its Managers is

paid through the direct granting of shares held in treasury, and the calculation of the share

price, pursuant to the sole paragraph of article 4 of CVM Instruction 567, it will be the average

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of the last 20 trading sessions prior to the date of granting the variable remuneration

scheduled for April 30, 2020. All other conditions for the direct granting of shares such as part

of the compensation will be defined by the Company's Board of Directors.

Consistent with the reporting requirements of Section 13 of the Reference Form provided for

in CVM Instruction 480, the executive compensation information related to this proposal can

be found in the Appendix VII to the Management Proposal made available to shareholders.

AT THE EXTRAORDINARY MEETING:

1. To amend the Bylaws of the Company to provide for the establishment of the

Statutory Audit Committee (CAE) in accordance with CVM Instruction 509 of November

16, 2011, through the inclusion of a new Article 28 establishing the relevant rules,

terms and conditions, as well as the renumbering of subsequent articles.

The Management of the Company, to improve corporate governance practices, proposes

amending the Bylaws to establish an Statutory Audit Committee, which, in accordance with

Instruction 509/11 issued by the Securities and Exchange Commission of Brazil, will be an

advisory body directly linked to the Board of Directors and will function in accordance with

the following terms and conditions, as per new Article 28 of the Bylaws:

STATUTORY AUDIT COMMITTEE ENVISAGED IN THE BYLAWS

Article 28 - The Statutory Audit Committee, established pursuant to the Bylaws as a permanent

advisory committee to the Board of Directors, consists of at least three (3) members, at least one (1)

of whom must be an Independent Director and at least one (1) must have recognized experience in

corporate accounting matters.

Paragraph 1 - The same member of the Statutory Audit Committee may possess both the

characteristics mentioned in the head paragraph.

Paragraph 2 – Statutory Audit Committee members will serve a term of two (2) years, may be

reelected and hold office for a maximum of ten (10) years. Their investiture is conditioned on

signing the Consent of Appointment of Statutory Audit Committee Members, in accordance

with Novo Mercado Regulations, as well as complying with applicable legal requirements.

Paragraph 3 - The Statutory Audit Committee will have the following responsibilities: a) to

provide an opinion on hiring and removing the external independent auditor responsible for

independent external audit or any other service; b) to supervise the activities of: (i)

independent auditors in order to ensure their independence, the quality and adequacy of the

services provided in relation to the needs of the Company; (ii) the internal controls area of the

Company; (iii) the internal audit area of the Company; and (iv) the area responsible for

preparing the financial statements of the Company; c) to monitor the quality and integrity of:

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(i) the internal control mechanisms; (ii) the quarterly financial statements, interim financial

statements and financial statements of the Company; and (ii) the information and

measurements disclosed based on adjusted accounting data and non-accounting data that

add elements not envisaged in the usual reporting framework of the financial statements; d)

to evaluate and monitor the risk exposures of the Company, and even requesting detailed

information on the policies and procedures related to: (i) management compensation; (ii) the

use of Company assets; and (iii) expenses incurred on behalf of the Company; e) to evaluate

and monitor, together with management and internal audit, the adequacy of related-party

transactions conducted by the Company and their respective reporting; f) to prepare a

summarized annual report, to be presented together with the financial statements, describing:

(i) its activities, results, conclusions and recommendations; and (ii) any situations in which

there is a significant divergence between the management of the Company, external

independent auditors and the Audit Committee regarding the financial statements of the

Company.

Paragraph 4 - The charter of the Statutory Audit Committee will be approved by the Board of

Directors and should describe in detail its functions and its operational procedures.

Paragraph 5 - The compensation of Statutory Audit Committee members, apart from the

respective budget allocation, will be fixed by the Board of Directors.

Besides including a new Article 28 in the Bylaws of the Company, the management proposes

renumbering the subsequent articles.

The proposed amendment to the Bylaws is detailed in Appendix VII to this Management

Proposal, which comprises: a) a table with the proposed amendments highlighted and their

comparison with the terms of the Bylaws in force; and b) detailed report of the origin and

justification of the amendments proposed, with a legal and economic analysis. These

documents are presented in compliance with article 11 of CVM Instruction 481 of December

17, 2009.

2. To deliberate on the restatement of the Bylaws to reflect the aforementioned

amendments.

The Management of the Company proposes to its shareholders the restatement of its Bylaws

as a result of the changes proposed above. The restated version of the Bylaws of the

Company, including all the proposed amendments, is in Appendix VIII.

Copies of all the documents related to the deliberates on the agenda, including those required

by CVM Instruction 481/2009, are available to Shareholders at the registered office of the

Company, the Investor Relations website of the Company (ri.marfrig.com.br) and on the

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websites of the São Paulo Stock Exchange (www.b3.com.br) and the Securities and

Exchange Commission of Brazil - CVM (www.cvm.gov.br).

http://www.b3.com.br/


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HOW TO PARTICIPATE IN THE ANNUAL AND EXTRAORDINARY SHAREHOLDERS’

MEETING

To participate in the Combined Annual and Extraordinary Shareholders’ Meeting,

shareholders must deliver the following documents preferably at least two (2) business days

prior to the Meeting (i.e. no later than 6:00 p.m. on March 26, 2020) to the address Avenida

Queiroz Filho, no 1560, Block 5, (Tower Sabiá), 3rd floor, Ofice 301, Vila Hamburguesa, São

Paulo / SP – CEP 05319-000, care of the Investor Relations Department. Shareholders may

attend the Meeting in person, through a duly appointed proxy or by submitting a remote voting

ballot, in accordance with CVM Instruction 481.

For Shareholders that are Natural Persons

• Identity document with photograph;

• Updated statement issued by the transfer agent or custody agent attesting to the

ownership of shares of record.

For Shareholders that are Legal Persons

• Certified copy of the current bylaws or consolidated articles of association and the

corporate documents attesting to the capacity as legal representative (i.e. minutes of

meeting appointing the representative, as applicable);

• Identity document with photograph of the legal representative(s);

• Updated statement issued by the depositary institution or custodian attesting to the

ownership of shares of record.

Note: For investment funds: a copy of the latest consolidated fund regulations, the bylaws or

articles of association of the fund administrator, the corporate documents attesting to the

capacity to act as legal representative and an identity document with a photograph of the

legal representative(s).

For Shareholders Represented by Proxy

• In addition to the aforementioned documents, a valid and authenticated proxy

appointment, which must be granted to a representative who is either a shareholder, a

manager of the Corporation or a lawyer;

• Identity document with a photograph of the proxy.

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In accordance with Paragraph 1, Article 126 of the Brazilian Corporate Law, a shareholder

must be represented by a proxy duly appointed within a maximum of one year, who must be

a shareholder, lawyer, financial institution or manager of the Corporation.

In the case of shareholders who are legal persons, in accordance with the decision of the

Board of Commissioners of the CVM in a meeting held on November 4, 2014 (CVM Process

RJ2014/3578), the Corporation does not require the agent to be a: (i) shareholder, (ii)

attorney, (iii) financial institution or (iv) manager of the Company, and such shareholders may

be represented in accordance with their corporate documents. However, the corporate

documents must attest to the capacity as legal representative of the person appointing the

proxy.

For Foreign Shareholders

Foreign shareholders must present the same documents as Brazilian shareholders, except

that the corporate documents and proxy appointments must be notarized and consularized.

Registration

In the case of the granting of physical proxies, said documents must be delivered to the

Corporation’s headquarters before the start of the Shareholders' Meeting.

However, to facilitate shareholders’ access to the Shareholders’ Meeting, we request that

these documents be submitted as early as possible at any time after February 28, 2020.

The documents must be delivered to the Investor Relations Department at the address

Avenida Queiroz Filho, no 1560, Block 5, Tower Sabiá, 3rd floor, Office 301, Vila

Hamburguesa, São Paulo/SP, CEP 05319-000.

Public Proxy Solicitation

Shareholders holding at least zero point five percent (0.5%) of the capital stock may include

a proxy solicitation, pursuant to Brazilian Corporation Law and CVM Instruction 481.

Public proxy solicitations must be accompanied by a draft of the proxy and the information

and other documents required under CVM 481, in particular its Appendix 23, and be delivered

to the Investor Relations Department at the address Avenida Queiroz Filho, no 1560, Block

5 (Tower Sabiá), 3rd floor, Office 301, Vila Hamburguesa, São Paulo / SP – CEP 05319-000.

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Pursuant to the applicable regulations, the Company shall comply with the public proxy

solicitations made by shareholders within two (2) business days as from the receipt of said

solicitation, giving it the same attention as the other documents made available by the

Corporation pertaining to this Shareholders’ Meeting. The Corporation and its management

undertake no liability for the information contained in public proxy solicitations made by

shareholders.

Participation by Submitting a Remote Voting Ballot

The Corporation voluntarily adopted the remote voting system established in Article 21-A of

CVM Instruction 481, as amended by CVM Instruction 561/2015. In 2017, in addition to CVM

Instruction 481, the Corporation also shall comply with the special procedures established by

CVM Resolution 741/2015 regarding remote voting.

As such, shareholders may submit their voting instructions on the matters of the Meeting: (i)

by completing the instructions submitted to their custody agents who provide this service, in

the case of shareholders whose shares are held at a depositary institution; or (ii) by sending

the remote voting instructions form directly to the Company, in accordance with Appendix III

hereto, in the case of any shareholder. Excluding the exception established in CVM

Instruction 481, if there is any divergence between a remote voting instructions form received

directly by the Corporation and a voting instruction contained in the consolidated voting map

submitted by the depositary institution related to the same CPF or CNPJ number, the voting

instructions contained in the voting map shall prevail, and the voting form received directly

by the Corporation shall be disregarded. During the voting period, shareholders may change

their voting instructions as many times as they deem necessary, and the last voting instruction

submitted shall be the one considered in the Corporation’s voting map. Once the voting period

ends, shareholders will no longer be able to change their previously submitted voting

instructions. If a shareholder deems it necessary to make a change, they must attend the

Shareholders' Meeting bearing the documents required above and request that the voting

instructions submitted via their voting form be disregarded.

Voting via Service Providers – Remote Voting System

Shareholders who opt to exercise their right to vote remotely via a service provider must

submit their voting instructions to the respective custodian agents, in accordance with the

rules established by the latter, which, in turn, must forward the instructions to the Depositary

Institution of the Corporation. To adopt this process, shareholders must contact their custody

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agents and verify the procedures established for issuing voting instructions via a voting form,

as well as the documents and information required for such purpose. In accordance with CVM

Instruction 481, as amended, shareholders must submit the completed voting instruction form

to their custody agents at least 7 days prior to the date of the Meeting, i.e., March 23, 2020

(inclusive), unless a different deadline is established by the custody agents. Note that, in

accordance with CVM Instruction 481, the Corporation’s Depositary Institution, upon

receiving the voting instructions from shareholders through their respective custody agents,

shall disregard any instructions different from those issued by persons with the same CPF or

CNPJ number.

Voting Forms Submitted Directly by Shareholders to the Corporation

Shareholders who opt to exercise their right to vote remotely may alternatively do so directly

at the Company by submitting the following documents to the Investor Relations Department,

at the address Avenida Queiroz Filho, no 1560, Block 5 (Tower Sabiá), 3rd floor, Office 301,

Vila Hamburguesa, São Paulo / SP – CEP 05319-000.

(i) physical copy of Appendix III to this Guide, duly completed, initialed and signed;

and

(ii) authenticated copy of the aforementioned documents, as applicable.

If they prefer, shareholders also may submit digital copies of the documents cited in items (i)

and (ii) above to the e-mail [email protected], in which case they also must submit, by March

26, 2020, a copy of the voting form and an authenticated copy of the other documents

required to Avenida Queiroz Filho, no 1560, Block 5 (Tower Sabiá), 3rd floor, Office 301, Vila

Hamburguesa, São Paulo / SP - CEP 05319-000.

Once the documents cited in items (i) and (ii) above are received, the Corporation shall notify

the shareholder of their receipt and if they were accepted, in accordance with CVM Instruction

481, as amended.

If the voting form is submitted directly to the Company and is not completely filled out or not

accompanied by the supporting documents described in item (ii) above, it will be disregarded

and such information will be submitted to the shareholder via the e-mail informed in item 3 of

the voting form.

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The documents referred to in items (i) and (ii) above must be lodged at the Company at least

7 days prior to the Shareholders’ Meeting, i.e., by March 23, 2020 (inclusive). Any voting

forms received by the Company after said date shall also be disregarded.

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DOCUMENTS MADE AVAILABLE

The following documents related to the matters to be discussed at the Meeting are available

at the Company’s registered office at Avenida Queiroz Filho, no 1560, Block 5 (Tower Sabiá),

3rd floor, Office 301, Vila Hamburguesa, São Paulo / SP - CEP 05319-000, on the Investor

Relations website of Marfrig Global Foods S.A. (www.marfrig.com.br/ri), and on the websites

of the Brazilian Stock Exchange (B3 S.A. – Brasil, Bolsa, Balcão) (www.b3.com.br) and the

Securities and Exchange Commission of Brazil (CVM) (www.cvm.gov.br):

(I) Call Notice;

(II) Management Report;

(III) Financial Statements and accompanying notes for the fiscal year ended December 31,

2019, accompanied by the independent auditors’ report and the reports of the Fiscal Council

and Audit Committee of the Corporation;

(IV) Management Proposal, which comprises: a) Proxy Form without voting instructions -

Appendix I; b) Proxy Form with voting instructions - Appendix II and Remote Voting

Instruction Form – Appendix III; c) Practical Guide to participate in the Annual and

Extraordinary Shareholders’ Meeting; d) Comments from Officers on the Corporation’s

financial situation; e) Information on the nominees to serve on the Fiscal Council; f) Proposal

for the aggregate compensation of Management for fiscal year 2020; g) Copy of the Bylaws

highlighting the proposed amendments; and h) Report detailing the origin and justification of

the proposed changes and analyzing their legal and financial effects.


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APPENDIX I

PROXY FORM WITHOUT VOTING INSTRUCTIONS

Please find below the Proxy Form without voting instructions that you may use to appoint

a delegate to attend the meeting on your behalf.

PROXY APPOINTMENT

[SHAREHOLDER], [IDENTIFICATION INFORMATION] (“Appointor”) hereby grants full

power of substitution to [NAME], [NATIONALITY], [MARITAL STATUS], [OCCUPATION],

bearer of Identity Document (RG) number [●], Taxpayer ID (CPF/MF) number [●], resident

and domiciled in the City of [●], State of [●], at [street address], to represent the Appointor in

the capacity of shareholder of Marfrig Global Foods S.A. (“Company”) at the Company’s

Annual Shareholders’ Meeting called to convene on March 30, 2020, at 10:00 a.m., at

Avenida Queiroz Filho, no 1560, Block 5 (Tower Sabiá), 3rd floor, Office 301, Vila

Hamburguesa, São Paulo / SP – CEP 05319-000, with powers to examine, discuss and vote

on behalf of the Appointor on the matters on the agenda, in short, with powers to practice any

acts required to faithfully execute this proxy appointment.

This proxy appointment is valid for sixty (60) days as from the date hereof.

[City], [Month] [Date], [2020]

_____________________________

Appointor

(authenticated signature)

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APPENDIX II

PROXY FORM WITH VOTING INSTRUCTIONS

Please find below the Proxy Form with voting instructions that you may use to appoint a

delegate to attend the meeting on your behalf.

PROXY APPOINTMENT

[SHAREHOLDER], [IDENTIFICATION INFORMATION] (“Appointor”) hereby grants full

power of substitution to [NAME], [NATIONALITY], [MARITAL STATUS], [OCCUPATION],

bearer of Identity Document (RG) number [●], Taxpayer ID (CPF/MF) number [●], resident

and domiciled in the City of [●], State of [●], at [street address], to represent the Appointor in

the capacity of shareholder of Marfrig Global Foods S.A. (“Company”) at the Company’s

Annual Shareholders’ Meeting called to convene on March 30, 2020, at 10:00 a.m., at

Avenida Queiroz Filho, no 1560, Block 5 (Tower Sabiá), 3rd floor, Office 301, Vila

Hamburguesa, São Paulo / SP – CEP 05319-000, with powers to examine, discuss and vote

on behalf of the Appointor on the matters on the Agenda in strict conformity with the following

voting instructions.

Annual Shareholders Meeting:

1. Approval of the management accounts and examination, discussion and voting

on the Financial Statements for the fiscal year ended December 31, 2019.

For [ ] Against [ ] Abstain [ ]



3. Approval of the Proposal for the Aggregate Compensation of the Directors,

Officers and Fiscal Council Members for fiscal year 2020.


Extraordinary Shareholders Meeting:

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amendments.


For the purposes of this proxy appointment, the powers granted herein are meant only for the

appointed proxies to attend the Annual Shareholders’ Meeting of the Company and to vote

in accordance with the voting instructions herein. This instrument neither includes nor

assumes any right or obligation for any proxy to take any action other than as strictly required

for the faithful performance hereof. The delegates are hereby authorized to abstain from

considering or voting on any matter for which, at their discretion, they have not received

sufficiently specific voting instructions.

This proxy appointment is valid for sixty (60) days as from the date hereof.

[City], [Month] [Date], [2020]

_____________________________

Appointor

(authenticated signature)

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APPENDIX III

REMOTE VOTING INSTRUCTIONS FORM – ANNUAL AND EXTRAORDINARY

SHAREHOLDERS’ MEETING OF MARFRIG GLOBAL FOODS S.A. ON MARCH 30,

2020

1. Shareholder’s name

2. Shareholder’s CNPJ or CPF

3. E-mail for the Corporation to send to the shareholder confirmation of receipt of the

voting form

4. Instructions for completion

This voting form must be completed if the shareholder opts to exercise their right to vote

remotely, in accordance with CVM Instruction 481, as amended.

In this case, the above fields must be completed with the shareholder’s full name (or

corporate name) and corporate taxpayer ID (CNPJ) or individual taxpayer ID (CPF), as well

as an e-mail address for contact.

For this voting form to be considered valid and for the voting instructions to be tallied towards

the quorum of the Shareholders’ Meeting:

- all of the following fields must be duly completed;

- all pages must be initialed;

- at the end, the shareholder or their representative(s), as applicable and in

accordance with the law, must sign the voting form; and

- authentication or consularization of the voting form is not required.

5. Instructions for submitting the voting form

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Shareholders that opt to exercise their right to vote remotely may: (i) complete and submit

this voting form directly to the Corporation, or (ii) transmit the instructions for its completion

to the authorized service providers, as per the following instructions:

5.1 Voting via a service provider – Remote voting system

Shareholders who opt to exercise their right to vote remotely via a service provider must

submit their voting instructions to the respective custodian agents, in accordance with the

rules established by the latter, which, in turn, must forward the instructions to the Depositary

Institution of the Corporation To adopt this process, shareholders must contact their custody

agents and verify the procedures established for issuing voting instructions via a voting form,

as well as the documents and information required for such purpose.

In accordance with CVM Instruction 481, as amended, shareholders must submit the

completed voting instruction form to their custody agents at least 7 days prior to the date of

the Meeting, i.e., March 30, 2020 (inclusive), unless a different deadline is established by the

custody agents.

Note that, in accordance with CVM Instruction 481, the Corporation’s Depositary Institution,

upon receiving the voting instructions from shareholders through their respective custody

agents, shall disregard any instructions different from those issued by persons with the same

CPF or CNPJ number.

5.2. Voting form submitted directly by the shareholder to the Corporation

Shareholders who opt to exercise their right to vote remotely may alternatively do so directly

at the Company by submitting the following documents to the Investor Relations Department,

at the address Avenida Queiroz Filho, no 1560, Block 5 (Tower Sabiá), 3rd floor, Office 301,

Vila Hamburguesa, São Paulo / SP – CEP 05319-000.

(iii) physical copy of this ballot, duly completed, initialed and signed; and

(iv) authenticated copy of the following documents:

(a) for natural persons:

• identity document with a photograph of the shareholder;

(b) for legal persons:

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• the latest consolidated bylaws or articles of organization, which must attest to the

representation powers of the shareholder; and

• an identity document with a photograph of the legal representative.

(c) for investment funds:

• the latest consolidated regulations of the fund;

• the bylaws or articles of organization of the fund administrator or manager, as

applicable, in compliance with the fund’s voting policy and corporate documents

attesting to the powers of representation; and

• an identity document with a photograph of the legal representative.

If they prefer, shareholders also may submit digital copies of the voting form and of the

documents cited to the e-mail [email protected], in which case they also must submit the

original copy of the voting form and an authenticated copy of the other documents required

by March 26, 2020, to Avenida Queiroz Filho, no 1560, Block 5 (Tower Sabiá), 3rd floor, Office

301, Vila Hamburguesa, São Paulo / SP - CEP 05319-000.

The Company does not require a legal translation of documents originally drawn up in

Portuguese, English or Spanish, or that are accompanied by a translation into such

languages. The following identity documents shall be accepted, provided they include a

photo: RG, RNE, CNH, Passport or officially recognized professional cards.

Once the voting form and required documents are received, the Corporation shall notify the

shareholder of their receipt and if they were accepted, in accordance with CVM Instruction

481, as amended.

If this voting form is submitted directly to the Company and is not completely filled out or not

accompanied by the supporting documents described in item (ii) above, it will be disregarded

and the shareholder will be notified of such via the e-mail informed in item 3 above.

The voting form and supporting documents must be lodged at the Company at least 4 days

prior to the Shareholders’ Meeting, i.e., by March 23, 2020 (inclusive). Any voting forms

received by the Company after said date shall also be disregarded.

Decisions / Matters related to the Annual and Extraordinary Shareholders’ Meeting

At Annual Shareholders Meeting:

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1. Approval of the management accounts and examination, discussion and voting

on the Financial Statements for the fiscal year ended December 31, 2019.




3. Approval of the Proposal for the Aggregate Compensation of the Directors,

Officers and Fiscal Council Members for fiscal year 2020.


At Extraordinary Shareholders Meeting:







amendments.


[City], [date]

________________________________________

Shareholders’ Name

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APPENDIX IV

OFFICER’S COMMENTS ON MARFRIG’S GLOBAL FOODS S.A.

FINANCIAL PERFORMANCE

Section 10 of the Reference Form

10.1 - General financial and equity conditions

The accounting information included and analyzed below is derived from the Company’s consolidated financial

statements. For a presentation of the Company’s financial and additional information on the topic, see item 3.9

of this Reference Form.

(a) Officers’ comments on general financial and equity conditions

In the Company’s officers assessment, the evolution of the Company’s main financial indicators reflects the

commitment to the improvement of its capital structure, as well as the search for a better performance of our

activities.

Until December 31, 2019, the Company performed its strategic redirection towards animal and vegetable

protein, with products with higher aggregated value and the achievement of a low leverage capital structure,

thus, we emphasize:

(i) the acquisition of Quickfood, a market leader in the production and trading of hamburgers in Argentina;

(ii) the acquisition of the processing plant of Várzea Grande, in Mato Grosso, with a production capacity of 69

thousand tons of hamburgers and more than 27 thousand tons of other products;

(iii) together with other shareholders of National Beef, the acquisition of Iowa Premium, in Tama - Iowa, USA;

(iv) in August, Marfrig in partnership with the American company Archer Daniels Midland Company (ADM), one

of the largest agricultural processing and suppliers of food ingredients in the world, we started the production

and trading of plant-based products in Brazil. The novelty came with the launch of the Rebel Whopper

hamburger from the fast food chain Burger King, made with vegetable-based burger from Marfrig.

(v) in November, through its subsidiary, NBM US Holdings, Inc, it increased its interest in the capital of the

subsidiary National Beef, with the transfer to NBM and other minority shareholders of 5,395.17 shares

representing 31.17% of National Beef’s voting and total capital, which represents the total shares held by the

shareholder Jefferies Financial Group Inc., that withdraws from the company.

(vi) in December 2019, the Company concluded the capital increase in the amount of BRL 900,901, equivalent

to the issue of 90,090,091 new shares, through the initial public offering. After the primary offer, BNDES

Participações S.A. (“BNDESPAR”) sold all of its common shares issued by the Company and, as a

consequence, the Shareholders’ Agreement of the Company executed between MMS Participações Ltda. and

BNDESPAR on August 5, 2010 was terminated by operation of law for all effects and purposes.

The year 2018 registered the strategic redirection of the Company towards bovine protein and products with

higher aggregated value and the achievement of a low leverage capital structure.

In June, the Company acquired control of the American company National Beef, the 4th largest and most efficient

beef company in the USA, making the Company the 2nd largest beef company in the world.

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In line with the Company’s commitment to financial matter, in November 2018, the Company sold the former

subsidiary Keystone Foods, a company that mainly works with chicken meat processing.

Due to the sale of the Keystone Foods business, the financial statements for the fiscal year ended on December

31, 2017 were restated in the financial statements for the fiscal year ended on December 31, 2018 for

comparison purposes.

However, for the analysis of the information included in the financial statements for the fiscal years ended on

December 31, 2017 and 2016, the Board of Officers believes that the financial statements for the fiscal year

ended on December 31, 2017 should be considered. That is, the comparative data for the fiscal years ended

on December 31, 2017 and 2016 reflect the decision to maintain the Keystone Foods business.

The table below shows the evolution of the Company’s main financial indicators:

(in BRL thousands, except %)

As of December 31,

2019 2018 2017

Net Debt(1)/EBITDA UDM 2.77x 1.16x 5.09x

Net Debt(1)/EBITDA UDM/(carve-out) (2) 2.36x 0.78x 4.50x

Current liquidity ratio (3) 1.36x 1.36x 1.62x

Average debt maturity (in months) 54 49 46

Loans, financing and debentures - non-current portion (%) 78.8% 75.9% 85.1%

Loans, financing and debentures - denominated in BRL (%) 4.0% 1.4% 2.1%

Loans, financing and debentures - denominated in other currencies (%) 96.0% 98.6% 97.9%

___________ (1) Net debt corresponds to the loans, financing and debentures balance (current and non-current portion), less the sum of cash and cash equivalents and financial investments balances. (2) Due to the contractual provisions (carve-out) that allow the exclusion of the effects of exchange rate change in the leverage ratio calculation (net debt/LAJIDA UDM). (3) Current liquidity ratio corresponds to the total current divided by the total current liabilities, disregarding the mandatory instrument.

In the year ended December 31, 2019, the consolidated balance of loans, financing and debentures of the

Company was BRL 21.7 billion. As of December 31, 2018, 2017, the consolidated balance of loans, financing

and debentures of the Company was BRL 15.2 billion and BRL 12.4 billion, respectively.

As of December 31, 2019, the currency composition of the consolidated balance of loans, financing and

debentures was 4.0% denominated in Reais and 96.0% denominated in other foreign currencies. The weighted

average cost of consolidated debt was 6.3% per year. The leverage ratio (net debt/EBITDA for the last 12

months) was 2.77x, while the current liquidity ratio was 1.36x, considering the availability on December 31, 2019

of BRL 8,410.1 billion. For the purposes of bank and market financing operations, the leverage ratio calculation,

which has clauses excluding the effects of exchange rate change, was 2.36x on December 31, 2019. Of the

total gross indebtedness, comprising loans and interest on debentures, only 21.2% represented short-term

maturities, while 78.8% represented long-term maturities. With the purpose to extend and reduce the cost of its

indebtedness, we highlight the thirteenth transaction concluded in July 2019, through the subsidiary NBM US

Holdings., which comprised a 10-year offer of Senior Notes denominated Sustainable Transition Bond, in the

amount of USD 500 million. The funds raised with the issue shall be invested in the purchase of cattle from the

Amazon Biome, more specifically in the states of Mato Grosso, Pará and Rondônia and that meet specific

criteria, aiming at the control of deforestation, non-use of indigenous lands, eradication of slave and child labor,

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through greater control of cattle traceability, with innovations developed by the Company. Until December 31,

2019, the equivalent of BRL 730 million (USD 181 million) of funds was used and the remainder shall be used

based on the criteria described above, which are invested waiting they proper use.

In the fiscal year ended December 31, 2018, of the total loans, financing and debentures, only 24.1%

represented short-term maturities, while 75.9% represented long-term maturities. With the purpose to extend

and reduce the cost of its indebtedness, the Officers highlight in the year the tenth issue concluded in January

2018, through the subsidiary Cledinor S.A., which comprised a 10-year offer of Senior Notes in Uruguay in the

amount USD 60 million, designated to local investors in the country. Expiring on January 2028, the issue

occurred at an interest rate of 5.82% p.a. and received a “BBB+” risk rating by the FixScr Uruguay agency

(affiliated with Fitch Ratings). The Senior Notes are guaranteed by the Company’s subsidiaries in Uruguay:

Frigorífico Tacuarembó S.A., Inaler S.A. and Establecimientos Colonia S.A. The purpose of the issue was to

optimize the Company’s capital structure and finance future investments in Uruguay’s operations.

The eleventh issue, concluded in January 2018, comprised the issue by MARB BondCo PLC of USD 1 billion

of Senior Notes, with a coupon of 6.875% p.a. and semiannual interest payments, with principal maturity in 7

years (Jan/2025), which were assigned a foreign currency risk rating of B+ by Standard & Poors (“S&P”) and

BB- by Fitch Ratings. These Senior Notes are guaranteed by Marfrig Global Foods S.A., Marfrig Overseas

Limited and Marfrig Holdings (Europe) B.V. and its funds were used to reduce the cost and extend the debt.

In January 2018, the Company repurchased the principal amount of approximately USD 277.1 million or 58.01%

of the outstanding notes remainder of the Third Issue and the principal amount of approximately USD 151.9

million or 23.00% of the outstanding banknotes remainder of the Seventh Issue.

In May 2018, the Company paid the principal amount of the remaining and outstanding Senior Notes from the

Third Issue, in the amount of USD 88.6 million, plus the respective interest in the amount of USD 3.7 million,

totaling USD 92.3 million.

As of December 31, 2018, the balance of loans, financing and debentures 1.4% was denominated in Reais and

98.6% was denominated in other currencies. In the same year, 16.1% of the Company’s consolidated revenues

were generated in Reais and 83.9% in foreign currencies. The weighted average cost of consolidated debt was

7.00% per year. The leverage ratio (net debt/EBITDA) was 1.16x, while the current liquidity ratio was 1.36x,

considering the availability on December 31, 2018 in the amount of BRL 7.2 billion. For the purposes of bank

and market financing operations, the leverage ratio calculation, which has clauses that exclude the effects of

exchange rate change, was 0.78x on December 31, 2018.

As of December 31, 2017, the currency composition of loans, financing and debentures was 2.1% denominated

in Reais and 97.9% denominated in other foreign currencies. The weighted average cost of consolidated debt

was 6.4% per year. The leverage ratio (net debt/EBITDA) was 5.09x, while the current liquidity ratio was 1.62x,

considering the availability on December 31, 2017 of BRL 4.4 billion. For the purposes of bank and market

financing operations, the leverage ratio calculation, which has clauses that exclude the effects of the exchange

rate change, was 4.50x on December 31, 2017.

The Officers report that the Company does not perform leveraged operations of derivatives or similar

instruments that do not has as purpose the minimum protection of its exposure to other currencies, with the

conservative policy of not assuming operations that could compromise its financial position.

(b) Officers’ comments on the capital structure

The Company’s Officers present below the composition of the Company’s capital structure for the indicated

periods. In the Officers’ opinion, the Company’s capital structure currently represents an adequate relationship

among shareholders’ equity and third-party capital (current liabilities + non-current liabilities):

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• As of December 31, 2019, the Company’s capital structure was comprised of 11.8% of shareholders’

equity and 88.2% of third-party capital.





The Officers also report that the Company does not have redeemable shares issued.

For the year ended December 31, 2019, the shareholders’ equity and third-party capital structure changed, with

variation generated by the business combinations in the acquisition of Quickfood SA and Iowa Premium, LLC,

acquired by the Company, through its subsidiaries, on January 3, 2019 and June 10, 2019, respectively, in

addition to the acquisition of a 30.73% additional interest in the subsidiary National Beef Packing Company,

LLC, on November 29, 2019. Costs related to business combinations in the amounts of BRL 1.0 million and

BRL 12.7 million, respectively, were recognized as administrative expenses in the income statement.

The shareholders’ equity and third-party capital structure changed for 2018, with variation generated by the

business combination in the acquisition of National Beef Packing Company, LLC, and by the sale of Keystone

Foods’ business, as described in notes 12.2 and 31, respectively, of the Financial Statements of December 31,

2018.

The shareholders’ equity and third-party capital structure was changed for 2017. Due to the final maturity of the

convertible debentures on January 25, 2017, the 214,955 debentures were converted into 99,979,068 common

shares, in the amount of BRL 2,149,550, as described in note 23 of the Financial Statements of December 31,

2017.

The Company manages its capital based on capital structure optimization parameters with a focus on liquidity

and leverage metrics that enable a financial return over the medium term to its shareholders, consistent with

the risks assumed in the operation.

The main indicator for monitoring is the modified immediate liquidity indicator, represented by the relationship

among the balances of cash and cash equivalents and financial investments and the current portion of loans,

financing and debentures:

(In BRL thousands, except %)

As of December 31,

2019 2018 2017

Cash and cash equivalents and financial investments 8,410,113 7,191,706 4,402,353

Loans, financing and debentures - current portion 4,594,444 3,665,455 1,846,164

Modified liquidity indicator 1.83 1.96 2.38

(c) Officers’ comments regarding the ability to pay the assumed financial commitments

The Board of Officers understand that the Company’s ability to pay its financial commitments is considered

comfortable, taking into account its availability, its debt profile and its expected cash generation.

As of December 31, 2019, of the total gross indebtedness, only 21.2% has a short-term maturity, while 78.8%

has a long-term maturity. The balance of cash investments, in the amount of BRL 8,410.1 billion, represented a

short-term liquidity ratio (Cash and Equivalents/Short Term Debt) of 1.83x.

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As of December 31, 2018, of the total gross indebtedness, only 24.1% had a short-term maturity, while 75.9%

had a long-term maturity. The cash level, in the amount of BRL 7.2 billion, represented a short-term liquidity

ratio (Cash and Equivalents/Short-Term Debt) of 1.96x.

As of December 31, 2017, of the total gross indebtedness, only 14.9% had a short-term maturity, while 85.1%

had a long-term maturity. The cash level, in the amount of BRL 4.4 billion, represented a short-term liquidity

ratio (Cash and Equivalents/Short Term Debt) of 2.38x.

In addition, the Officers inform that the Company constantly seeks a debt profile with greater balance in its

maturities, avoiding payments concentrations in a given period.

(d) funding sources for working capital and for investments in non-current assets used

The Officers understand that in the last three years, the main funding sources for the Company were: (i) cash

flow generated by its operating activities; (ii) short and long-term bank debt; (iii) divestment of assets; (iv) debt

issuance (bonds and debentures); (v) follow-on.

These financings are used by the Company mainly to cover costs, expenses and investments related to (i)

business transactions, (ii) capital disbursements, including investments in new plants, expansion and/or

modernization of existing plants, and (iii) debt reduction and interest rates connected to them.

The Officers believe that these funding sources are adequate to the Company’s debt profile, meeting the needs

for working capital and investments, always preserving the long-term debt profile and, consequently, the

Company’s ability to pay.

(d) funding sources for working capital and for investments in non-current assets to cover liquidity

deficiencies

As of December 31, 2019, the Company had BRL 8,410.1 billion in cash and cash equivalents and financial

investments, compared to BRL 4,594.4 billion in short-term debt. Considering the Company’s debt profile and

its historical ability to fundraise and generate cash in US dollars and reais, the Company expects to be able to

pay its debts, using a combination of different capital resources, such as the revenues generated from

Company’s operating activities, debt and equity issuance and payment terms extended to its suppliers.

The Company believes that the focus on its main business, together with the investments it plans to make in

the coming years, will allow an increase in cash generation. This, in turn, may gradually increase the Company’s

ability to pay its financial obligations.

Item 10.1(f) of this Reference Form describes the main financing lines contracted by the Company and the

characteristics of each one.

(f) indebtedness levels and the characteristics of such debts

(I) relevant loan and financing agreements

The following table shows the Company’s consolidated debt on December 31, 2019, 2018 and 2017, described

by type, with weighted average rates and weighted average maturity:

Credit facility Charges (%p.a.)

Weighted

average

interest

rate (p.a.)

Weighted

average

maturity

(years)

As of December 31,

2019 2018 2017

(BRL thousand) (BRL

thousand)

(BRL

thousand)

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NATIONAL CURRENCY:

FINAME/FINEP TJLP + Flat Rate 4.02% 0.14 1,001 6,942 12,881

NCE Flat rate+%CDI 6.13% 2.96 618,476 203,496 243,651

Agribusiness Receivables

Certificates (CRA) 104% CDI 5.00% 3.2 247,751 _ _

Total national currency 5.80% – 867,228 210,438 256,532

FOREIGN CURRENCY:

Pre-payment/NCE/ACC (USD) Flat rate + V.C 5.43% 0.52 1,909,018 1,386,003 531,364

Bonds (USD) Flat rate + V.C 7.01% 5.81 15,039,625 12,829,328 8,582,051

Bank Loan (USD) (1) Flat rate + V.C.+

Libor 4.05% 0.48 2,267,132 291,757 1,726,173

Revolving Credit Facility - Revolving Flat Rate + Libor 3.64% 2.44 1,633,277 515,824 1,331,078

Total foreign currency 6.28% – 20,849,052 15,022,912 12,170,666

Total loans, financing and debentures 6.26% – 21,716,280 15,233,350 12,427,198

Current liabilities 4,594,444 3,665,455 1,846,164

Non-Current liabilities 17,121,836 11,567,895 10,581,034

(1) Bank Loan (USD), for the year 2017, includes the PAE modality for presentation purposes.

Among the loans and financing presented above, the table below indicates, individually, the Senior Notes

contracts on the consolidated balance, with an outstanding balance, as of December 31, 2019, and debts that

individually exceed BRL 100,0 million:

Type of Contract Principal amount

(in million) Date of issue

Annual

cost

Balance on

12/31/2019

(in million)

Export Credit Note BRL 200.0 08/30/2018 7.16% BRL 153.5

Senior Export Prepayment Finance Agreement USD 35.0 03/25/2019 6.08% BRL 142.6

Debentures - CRA BRL 250.0 09/13/2019 5.64% BRL 247.8

Senior Notes due 2023 USD 1,000.0 06/08/2016 8.00% BRL 1,642.5

Senior Notes due 2024 USD 750.0 03/15/2017 7.00% BRL 3,042.9

Senior Notes due 2025 USD 1,000.0 01/19/2018 6.87% BRL 4,087.6

Senior Notes due 2028 USD 60.0 01/03/2018 5.82% BRL 223.5

Senior Notes due 2026 USD 1,000.0 05/14/2019 7.00% BRL 3.,989.3

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Senior Notes due 2029 USD 500.0 08/06/2019 6.63% BRL 2,053.8

Revolving USD 375.0 05/06/2018 3.91% BRL 1,632.8

Securitization USD 100.0 01/03/2017 2.10% BRL 403.1

Bridge Loan Facility USD 500.0 11/29/2019 2.12% BRL 2,000.7

The Company’s Officers understand that the modalities below express the most relevant loans and financing,

which we may be describe as follows:

These are long-term debt borrowings, made in international currencies, through the issue of bonds abroad

intended exclusively for qualified institutional investors and in accordance with exemptions from registration

under the US Securities Act of 1933 (Rule 144A/Reg S).

The Company, through its subsidiaries, has performed thirteen loans of this nature since 2006, seven of which

(from the first to the seventh issue) have been fully paid.

The following is a brief description of the agreements executed with our main creditors and in effect on

December 31, 2019.

Export credit note with Banco do Brasil

In August 2018, the Company issued an export credit note with Banco do Brasil, in the principal amount of BRL

200 million, expiring on February 2021. This type of note is issued to strengthen the Company’s working capital,

in order to support production for export. The note accrues interest at an annual rate of 130% of CDI. As of

December 31, 2019, the outstanding balance of this agreement was BRL 153.5.

Pre-Export Finance Agreement with HSBC

In March 2019, the Company executed a Pre-Export Financing Agreement with HSBC México SA, in the

principal amount of USD 50 million, and in September 2019 an amendment to the Pre-Export Financing

Agreement was executed, to reduce the principal amount to USD 35 million. This type of agreement is executed

to strengthen the Company’s working capital, in order to support production for export. The note accrues interest

at an annual rate of LIBOR + 4.5%. As of December 31, 2019, the outstanding balance of this agreement was

BRL 142.6.

Non-Convertible Debentures - CRA

On September 13, 2019, we issued 250,000 unsecured non-convertible debentures, in a single series issued

by the Company, with a unit pair value of BRL 1,000, in the total amount of BRL 250,000,000, with interest rate

of 5.6% p.a., issued for private placement, with final maturity in September 2023. The Debentures were

subscribed and paid up by RB Capital Companhia de Securitização with the funds of a public offering of

agribusiness receivables certificates (“CRA”). The CRAs are guaranteed by the Company’s agribusiness credit

rights.

Securitization of Weston receivables

In March 2017, Weston Importers Ltd., a wholly owned subsidiary of the Company, structured a program to sell

receivables with a leading financial institution in Europe. The program’s main purpose is to convert credit sales

involving exports originating from the Company’s beef business unit into cash. The securitization program may

sell, on a rotating basis, up to USD 100.0 million over a three-year contractual period. Under the program, the

Company received up to 100% of the total balance of eligible receivables sold, in accordance with the program

rules and limited to contractual capacity. As of December 31, 2019, USD 100 million (BRL 403.1 million) had

been negotiated under the program.

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2023 Notes

The eighth transaction, was concluded in June 2016 and comprised the issue by Marfrig Holdings (Europe) B.V.

of USD 750 million of Senior Notes, with a coupon of 8.00% p.a. and yield of 8.25% p.a., with semiannual

interest payment starting in December 2016 and principal maturity in 7 years (Jun/2023), which were assigned

by Moody’s a foreign currency risk rating of B2 and a B+ by Standard & Poors (“S&P”). This transaction was

guaranteed by Marfrig Global Foods S.A. and Marfrig Overseas Ltd. and its funds were used to reduce costs

and extend the debt profile (“Eighth Issue”).

On June 29, 2016, Marfrig Global Foods S.A. announced an additional issue of Senior Notes connected to the

Eighth Issue, in the total amount of USD 250 million. The Additional Notes, expiring on June 8, 2023, were

issued with a yield of 7.625% p.a. and received a foreign currency risk rating of B2 by Moody’s and “B+” by

“S&P” and Fitch Ratings, both with positive outlook. The transaction performed at the end of June was settled

in July 2016.

2024 Notes

The ninth transaction was concluded in March 2017 and comprised the issue by MARB BondCo PLC of USD

750 million of Senior Notes, with a coupon of 7.0% p.a. and semiannual interest payments, starting in September

2017 and principal maturity in 7 years (Mar/2024), which were assigned a foreign currency risk rating of B+ by

Standard & Poors (“S&P”) and BB- by Fitch Ratings. This transaction was guaranteed by Marfrig Global Foods

S.A., Marfrig Overseas Limited and Marfrig Holdings (Europe) B.V. and its funds were used to reduce the cost

and extend the debt.

2025 Notes

The eleventh transaction was concluded in January 2018 and comprised the issue by MARB BondCo PLC of

USD 1 billion of Senior Notes, with a coupon of 6.875% p.a. and semiannual interest payments, with principal

maturity in 7 years (Jan/2025), which were assigned a foreign currency risk rating of B+ by Standard & Poors

(“S&P”) and BB- by Fitch Ratings. This transaction was guaranteed by Marfrig Global Foods S.A., Marfrig

Overseas Limited and Marfrig Holdings (Europe) B.V. and its funds were used to reduce the cost and extend

the debt.

2026 Notes

The twelfth transaction was concluded on May 14, 2019, and comprised the issue by NBM US Holdings, Inc. of

USD 1.0 billion in principal aggregated value of Senior Notes expiring on May 14, 2026 (“2026 Notes”). The

notes were issued to fund auction offers for the Senior Notes of 2021 and 2023 and to pay fees and expenses

associated with these transactions, with the remaining net proceeds to pay other outstanding debts (including,

among others, open market repurchases of some of the Company’s outstanding debts). The notes were offered

to QIBs in the United States, based on the exemption from registration provided by Rule 144-A and to certain

non-U.S. person in offshore transactions, based on Regulation S. The notes bear interest at 7% per year with

semiannual fees due on May 14 and November 14 of each year, beginning on November 14, 2019. The notes

are unconditionally and irrevocably guaranteed by Marfrig, MARB, Marfrig Holdings and Marfrig Overseas.

2028 Notes

The tenth transaction was concluded on January 3, 2018 through the subsidiary Cledinor S.A., which comprised

the 10-year offer of Senior Notes in Uruguay in the amount of USD 60 million. The issue was designated to local

investors in the country. Expiring on January 3, 2028, the issue occurred at an interest rate of 5.82% with

payment of quarterly interest to be paid in April, July, October and January of each year, beginning in April 2018.

It received a “BBB+” risk rating by the FixScr Uruguay agency (affiliated with Fitch Ratings). The transaction is

guaranteed by subsidiaries owned by the Company in Uruguay: Frigorífico Tacuarembó S.A., Inaler S.A. and

Establecimientos Colonia S.A. The purpose of the issue was to optimize the Company’s capital structure and

finance future investments in Uruguay’s operations.

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2029 Notes

The thirteenth transaction, denominated Sustainable Transition Bond, was concluded in July 2019 and

comprised the issue by NBM US Holdings, Inc., of USD 500 million of Senior Notes, with a coupon of 6.625%

p.a. and semiannual interest payments, with principal maturity in 10 years (August/2029), which was assigned

a foreign currency risk rating of BB- by Standard & Poors (“S&P”) and BB- by Fitch Ratings. This transaction

was guaranteed by Marfrig Global Foods S.A., Marb Bondco PLC, Marfrig Overseas Limited and Marfrig

Holdings (Europe) B.V. The funds raised with the issue shall be invested in the purchase of cattle from the

Amazon Biome, more specifically in the states of Mato Grosso, Pará and Rondônia and that meet specific

criteria, aiming at the control of deforestation, non-use of indigenous lands, eradication of slave and child labor,

through greater control of cattle traceability, with innovations developed by the Company. Until December 31,

2019, the equivalent of BRL 730 million (USD 181 million) of funds was used and the remainder shall be used

based on the criteria described above, which are invested awaiting its proper use.

National Beef Credit Facility

On September 2013, National Beef executed a facility agreement with Cooperative Rabobank U.A., as a Facility

Agent, and Cobank ACB, as a Mandatory Leader Bank, for the granting of a revolving credit facility reduced by

a principal aggregated value of USD 456 million, due on June 9, 2022. On December 31, 2019, BRL 1,632.8

were used.

Bridge Loan Facility

In November 2019, NBM US Holdings executed a finance agreement with Cooperative Rabobank U.A., in the

amount of USD 500.0 million, remunerated at the Libor rate of + 2.125% per annum with maturity in 180 days

from the contracting date. The purpose of this borrowing was to enable the acquisition of a 30.73% additional

interest in the subsidiary National Beef Packing Company, LLC.

Finance agreements executed with buyers or their affiliates

On the date of this reference form, and except for the working capital facilities executed in the ordinary course

of the Company’s business and as disclosed above, the Company has no other finance agreements executed

with the initial buyers or their affiliates.

Consolidated debt maturity schedule in all currencies:

(in BRL thousand)

As of December 31,

2019 2018 2017

2018 - - 1,846,165

2019 - 3,665,463 2,344,274

2020 4,594,444 201,361 1,251,204

2021 259,549 178,344 95,601

2022 1,851,941 650,475 1,231,983

2023 1,917,393 3,815,450 3,220,541

2024 3,002,949 2,838,455 2,437,430

2025 to 2029 10,090,004 3,883,802 -

Total 21,716,280 15,233,350 12,427,198

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(ii) other long-term relationships with financial institutions

The Officers confirm that the Company has no other long-term relationships with financial institutions other

than as a result of the financing, loans and guarantees described above.

(iii) degree of subordination between the Company’s debts

The officers clarify that the Company’s debts have no degree of subordination between them and, therefore,

have equal payment rights.

It should be noted, however, that the FINAME credit facilities contracted by the Company with the National

Economic and Social Development Bank - BNDES rely on the provision of security interest on the assets

acquired with the credit granted and on some credit facilities such as export prepayments, with the assignment

of receivables.

The Company also clarifies that, in the last three fiscal years, there was no degree of subordination between

the Company’s unsecured debts. Debts with security interest have the preferences and prerogatives provided

by law.

(iv) restrictions imposed on the Company, especially regarding debt limits and contracting of

new debts, the distribution of dividends, the sale of assets, the issue of new securities and the

disposal of controlling interest, as well as whether the issuer has been complying with these

restrictions

The Officers understand that the main restrictions imposed on the Company regarding the debt limits and

contracting of new debts, the sale of assets, the issue of new securities and the disposal of controlling interest,

are as follows:

The Company is subject to restrictive clauses in debt agreements that evidence or rule its outstanding debt,

such as limitations on new debts assumption, encumbrances, payments and restricted investments, among

other restrictive clauses that are standard in the types of debt instruments executed, including the following:

• Do not incur any new indebtedness (as defined in such agreements) which, on the date of such

occurrence, considering its pro forma effect, would lead the net debt/EBITDA ratio (as defined in such

agreements) to be greater than 4.75 to 1.00 or, in the case of bank financing, maintain a net financial

debt/EBITDA ratio (as defined in such agreements), which does not exceed 4.75 to 1.00.

• Do not restrict the ability of the Company and its subsidiaries to: (i) pay dividends/other distributions

between groups, (ii) incur or pay debts/advances between companies, or (iii) transfer properties or

assets between them.

• Do not sell any assets, unless: (i) the sale of the asset is at fair market value; (ii) at least 75% of the

consideration consists of cash or assets/properties related to the Company’s business; and (iii) within

360 days after receiving such funds, they are used to pay debts or acquire additional assets in

businesses related to the Company’s business.

• Do not issue, sell or transfer subsidiaries’ common shares, except for the Company or its subsidiaries

or in accordance with the clauses that provided for limitations on the sale of assets or limitations on

restricted payments.

In addition, certain agreements contain cross default clauses in the event of default by the Company or its

subsidiaries. The Company continues to pay its debts and make scheduled payments of principal and interest.

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Debt limits

Loan and financing agreements are based, in their most restrictive form, regarding the level of consolidated

debt, by the covenant of 4.75x, as the maximum ratio of the division between Net Debt and EBITDA UDM (last

twelve months).

The penalty for non-compliance with this covenant is the same as that applied in the financial market in general,

that is, if this limit is not respected, the maturity of debt is now advanced and should be reclassified to current

liabilities.

The leverage indicator is calculated as shown below:

(in BRL thousand)

As of December 31,

2019

Consolidated gross debt 21,716,280

(-) Consolidated availability 8,410,113

Consolidated net debt 13,306,167

EBITDA (UDM) for the year ended December 31, 2019 4,811,924

EBITDA ratio 2.77

Consolidated net debt 13,306,167

(-) Effect of exchange rate change (carve-out) 1,930,599

Adjusted consolidated net debt 11,375,568

Leverage indicator for financial covenants 2.36

Due to the contractual provisions (carve-out) that allow the exclusion of the effects of exchange rate change in

the calculation of the leverage ratio (net debt/ EBITDA UDM), the Company clarifies that by such methodology

the current leverage ratio (net debt/ EBITDA UDM), was 0.78x on December 31, 2018.

Restriction to the sale of assets

There are restrictions to the sale of assets that may lead to breach of the obligations provided for within the

scope of certain Advance payments to Foreign Exchange Contracts - ACC.

Regarding BNDES’ FINAMES, there is a restriction as to the encumbrance of the permanent asset of the credit

facility’s beneficiary, after contracting the transaction, without prior and express authorization from BNDES,

pursuant to subitem XII of article 34 of the Provisions Applicable to the Agreements with BNDES.

Restriction to issue securities

In the agreements executed through the BNDES FINAMES’ credit facilities, there is a restriction as to the issue

of debentures by the credit facility’s beneficiary, after contracting the transaction, without prior and express

authorization from BNDES, pursuant to subitem IX of article 34 of the Provisions Applicable to the Agreements

with BNDES.

Restriction to the disposal of Control

In the agreements executed through the BNDES FINAMES’ credit facilities, there is a restriction to the

modification of effective control, whether direct or indirect, of the credit facility’s beneficiary, after contracting the

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transaction, without prior and express authorization from BNDES, pursuant to subitem III of article 39 of the

Provisions Applicable to the Agreements with BNDES.

There is also a restriction to the disposal of control of the credit’s beneficiary in financings resulting from NCEs,

Finame, NPRs, CCBs and some ACCs.

(G) Officers’ comments to the limits of use of already contracted financings

The Officers inform that all financing agreements have been fully released after the respective approval and

formalization with the creditor counterparty.

(H) Officers’ comments with respect to significant changes in each item of the financial statements

In the tables below, “HA” and “VA” in the columns mean “Horizontal Analysis” and “Vertical Analysis”,

respectively.

The tables below present a summary of the Company’s financial and operating information for the indicated

periods. The information below shall be read and analyzed jointly with Company’s consolidated financial

statements, and with the respective explanatory notes, available at the Company’s website

(www.marfrig.com.br/ri) and CVM’s website (www.cvm.gov.br).

CONSOLIDATED BALANCE SHEETS

The consolidated balance sheets relating to the fiscal years ended on December 31, 2019, 2018 and 2017 are

presented below.

COMPARATIVE ANALYSIS OF THE BALANCE SHEETS OF DECEMBER 31, 2019 AND DECEMBER 31,

2028

The table below presents the main changes to the equity accounts of December 31, 2019 compared to

December 31, 2018.

ASSET Dec-31-19 VA Dec-31-18 VA Var(%)

(in thousands of BRL, except percentage)

CURRENT ASSET

Cash and cash equivalents 1,774,902 5.62% 2,459,202 9.28% (27.83)%

Financial investments 6,635,211 21.02% 4,732,504 17.86% 40.21%

Receivables - National clients 1,442,725 4.57% 1,068,553 4.03% 35.02%

Receivables - International clients 577,791 1.83% 175,287 0.66% 229.63%

Inventory of products and goods 2,383,486 7.55% 1,822,280 6.88% 30.80%

Biological assets 29,139 0.09% 16,570 0.06% 75.85%

Recoverable taxes 1,176,530 3.73% 1,144,888 4.32% 2.76%

Expenses of the following year 61,823 0.20% 53,833 0.20% 14.84%

Accounts receivable 82,318 0.26% 118,307 0.45% (30.42)%

Advance payments to suppliers 110,044 0.35% 58,628 0.22% 87.70%

Other receivables 146,135 0.46% 112,905 0.43% 29.43%

Total Current Asset 14,420,104 45.67% 11,762,957 44.38% 22.59%

NON-CURRENT ASSET

Deposits in court 62,055 0.20% 47,526 0.18% 30.57%

Accounts receivable - 0.00% 220 0.00% (100.00)%

Deferred income tax and social contribution 1,413,253 4.48% 999,844 3.77% 41.35%



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Investments 45,694 0.14% 42,545 0.16% 7.40%

Fixed asset 6,441,055 20.40% 5,231,216 19.74% 23.13%

Intangible 6,734,090 21.33% 6,557,055 24.74% 36.57%

Total Non-Current Asset 17,151,917 54.33% 14,741,315 55.62% 31.42%

TOTAL ASSET 33,793,164 100.00% 26,504,272 100.00% 27.50%

LIABILITIES AND SHAREHOLDERS’ EQUITY Dec-31-19 %RL Dec-31-18 %RL Var(%)

CURRENT LIABILITIES

Suppliers 2,670,322 8.46% 2,148,983 8.11%

24.81%

Suppliers debtor risk 176,881 0.56% 182,635 0.69%

-9.60%

Personnel, social charges and benefits 757,699 2.40% 564,391 2.13%

34.25%

Taxes, Fees and Contributions 407,817 1.29% 345,438 1.30%

18.06%

Loans, financing and debentures 4,594,444 14.55% 3,665,455 13.83%

25.34%

Accounts payable 108,483 0.34% 185,522 0.70%

(41.53)%

Leases payable 131,093 0.42% 3,209 0.01%

3,985.17%

Advance payments of clients 1,322,910 4.19% 1,093,168 4.12%

21.02%

Other obligations 445,399 1.41% 457,589 1.73%

(2.66)%

Total Current Liability 10,615,048 33.62% 8,646,390 32.62%

22.77%

NON-CURRENT LIABILITIES

Loans, financing and debentures 17,121,836 54.23% 11,567,895 43.65%

48.01%

Taxes, Fees and Contributions 768,129 2.43% 833,591 3.15%

(7.85)%

Deferred income tax and social contribution 136,275 0.43% 118,911 0.45%

14.60%

Provision for contingencies 361,884 1.15% 301,667 1.14%

19.96%

Leases payable 392,740 1.24% 2,102 0.01%

18,584.11%

Accounts payable 233,094 0.74% 301,945 1.14%

(22.80)%

Advance payments of clients - 0.00% 387,480 1.46%

(100.00)%

Other obligations 166,674 0.53% 332,734 1.26%

(49.91)%

Total Non-Current Liability 19,180,632 60.75% 13,846,325 52.24%

38.53%

TOTAL LIABILITIES 29,795,680 94.37% 22,492,715 84.86%

32.47%

SHAREHOLDERS’ EQUITY

Share Capital 8,204,391 25.99% 7,427,677 28.02%

10.46%

Capital reserves, granted options and treasury shares (1,271,370) -4.03% 47,614 0.18%

2,118.45%

Retained earnings 51,824 0.16% 51,824 0.20%

0.00%

Other comprehensive income (3,271,650) -10.36% (3,535,777) (13.34)%

(4.46)%

Retained Losses (3,094,630) -9.80% (3,317,874) (12.52)%

(6.73)%

Controlling companies’ shareholders' equity 618,565 1.96% 673,464 2.54%

321.66%

Non-controlling interests 1,157,776 3.67% 3,338,093 12.59%

(65.32)%

Total Shareholders' Equity 1,776,341 5.63% 4,011,557 15.14%

(0.35)%

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 31,572,021 100.00% 26,504,272 100.00%

27.50%

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Current Asset

The current asset was BRL 14,520.1 million on December 31, 2019, compared to BRL 11,763.0 million on

December 31, 2018, which represents an increase of 22.6%. As a percentage of the total asset, the current

asset represented 45.7% and 44.4% on December 31, 2019 and 2018, respectively.

Availabilities: The Company’s availabilities made up BRL 8,410.1 million on December 31, 2019, representing

a raise of 16.9% in relation to the amount of BRL 7,191.7 million on December 31, 2018. As a percentage of the

total asset, the availabilities made up 26.6% on December 31, 2019, compared to 27.1% on December 31,

2018. The Company’s Officers understand that this increase of availabilities is highlighted by the cash

“investment” of the funds received after the issue of the Sustainable Transition Bond, because until December

31, 2019, the amount equivalent to BRL 730 million (USD 181 million) was used from the funds and the

remaining amount shall be used based on the specific criteria for the use thereof, that is, for the process of

purchasing cattle coming from the Amazon Biome, more specifically in the states of Mato Grosso, Pará and

Rondônia and that meet specific criteria, aiming the control over deforestation, non-use of indigenous lands,

extinction of child and slave labor, through a greater control of cattle traceability.

Receivables from Clients: The Company’s receivables from clients made up BRL 2,020.5 million on December

31, 2019, representing a raise of 62.4% in relation to the amount of BRL 1,243.8 million on December 31, 2018.

As a percentage of the total asset, the receivables from clients made up 6.4% on December 31, 2019, compared

to 4.7% on December 31, 2018. The Company’s officers understand that this increase of 62.4% in the

Receivables from Clients line was driven by a better performance in the business transactions jointly with the

foreign exchange variation of the clients attached to currencies other than reais.

Inventories and Biological Asset: The Company’s Inventories and biological assets made up BRL 2,412.6 million

on December 31, 2019, compared to BRL 1,838.9 million on December 31, 2018, which represents an increase

of 31.2%. As a percentage of the total asset, the inventories and biological assets represented 7.6% and 6.9%

on December 31, 2019 and 2018, respectively. With the acquisition of Quickfood S.A. And Iowa Premium, there

was an increase in this item together with the foreign exchange variation bound to currencies other than reais.

Non-Current Asset

The non-current asset made up BRL 17,151.9 million on December 31, 2019, representing a raise of 16.3% in

relation to the amount of BRL 14,741.3 million on December 31, 2018. As a percentage of the total asset, the

non-current asset made up 54.3% on December 31, 2019, compared to 55.6% on December 31, 2018.

The Fixed asset made up BRL 6,441.1 million on December 31, 2019, compared to BRL 5,231.2 million on

December 31, 2018, which represents an increase of 23.1%. As a percentage of the total asset, the fixed asset

represented 20.4% and 19.7% on December 31, 2019 and 2018, respectively. The Company’s Officers

understand that this increase of 23.1% in the Fixed asset line is explained mostly by the Fixed asset in the

acquisition of control of Quickfood S.A. And Iowa Premium LLC, and the acquisition of the processed goods

plant in Várzea Grande, in Mato Grosso.

The Company’s intangible asset was BRL 6,734.1 million on December 31, 2019, compared to BRL 6,557.1

million on December 31, 2018, which represents an increase of 2.7%. As a percentage of the total asset, the

intangible asset represented 21.3% and 24.7% on December 31, 2019 and 2018, respectively. The Company’s

officers understand that this increase of 2.7% in the Intangible asset line was driven by the premium generated

and acquired in the acquisition of equity interest in Iowa Premium LLC, and assets acquired in the acquisition

of Quickfood S.A., which are expressed in the business unit’s functional currency and converted at a closing

rate, according to the standards described in NBC TG 02/R3 (Resolution CVM 540/10), effects of the changes

in the foreign exchange and conversion rates of the accounting statements.

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Current liabilities

The current liabilities present a raise of 22.77%, to BRL 10,615.1 million on December 31, 2019, compared to

BRL 6,646.4 million on December 31, 2018. In percentage terms, the current liabilities represented 33.6% of

the total liabilities on December 31, 2019, compared to 32.6% on December 31, 2018.

Suppliers: On December 31, 2019, the accounts payable to suppliers made up BRL 2,847.2 million, representing

a raise of 22.1% in relation to the amount of BRL 2,331.6 million on December 31, 2018. As a percentage of the

total liabilities, the accounts payable to suppliers made up 9.0% on December 31, 2019, compared to 8.8% on

December 31, 2018. The Company’s officers understand that this increase of 22.1% in the suppliers’ line is

linked to the acquisition of Quickfood S.A. and Iowa Premium jointly with the foreign exchange variation attached

to currencies other than reais.

Loans, financing and Debentures: On December 31, 2019, loans, financing and debentures amount made up

BRL 4,594.4 million, representing a raise of 25.3% in relation to the amount of BRL 3,665.5 million on December

31, 2018. From the total liabilities, the loans, financing and debentures line made up 14.6% on December 31,

2019, and 13.8% on December 31, 2018. The Officers attribute this increase to the fundraising abroad in the

amount of USD 500 million, which is intended to enable the acquisition of 30.73% of additional interest in the

indirect subsidiary National Beef Packing Company, LLC.

Non-Current Liabilities

The non-current liabilities made up BRL 19,180.6 million on December 31, 2019, representing a raise of 38.5%

in relation to the amount of BRL 13,846.3 million on December 31, 2018. In percentage terms, the non-current

liabilities represented 60.8% of the total liabilities on December 31, 2019, compared to 52.2% on December 31,

2018.

Loans, financing and Debentures: On December 31, 2019, the loans made up BRL 17,121.8 million,

representing a raise of 48.0% in relation to the amount of BRL 11,567.9 million on December 31, 2018. As a

percentage of the total liabilities, the loans and financings made up 54.2% on December 31, 2019, compared

to 43.7% on December 31, 2018. The Officers attribute this raise to the twelfth issue of senior notes transaction

(bonds) expiring on 2026, the funds of which have been used mostly to settle bonds with short-term maturity,

with a cost higher than the issue cost.

Shareholders' Equity

The Company shareholders’ equity had a 55.7% decrease, from BRL 4,011.6 million on December 31, 2018 to

BRL 1,776.3 million on December 31, 2019. The Officers attribute the decrease to the reflexes of the acquisition

of 30.73% of interest in the indirect subsidiary National Beef Packing Company, LLC, partially setoff by the

capital increase in the amount of BRL 900,901, equivalent to the issue of 90,090,091 new shares, through the

initial public offer.

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COMPARATIVE ANALYSIS OF THE BALANCE SHEETS OF DECEMBER 31, 2018 AND DECEMBER 31,

2017

The table below presents the main changes to the equity accounts of December 31, 2018 compared to the

consolidated equity accounts of December 31, 2017:

ASSET Dec-31-18 VA Dec-31-17 VA Var(%)

(in thousands of BRL, except percentage)

CURRENT ASSET

Cash and cash equivalents 2,459,202 9.28% 1,213,572 5.70% 102.64%

Financial investments 4,732,504 17.86% 3,188,781 14.97% 48.41%

Receivables - National clients 1,068,553 4.03% 600,556 2.82% 77.93%

Receivables - International clients 175,287 0.66% 324,442 1.52% -45.97%

Inventory of products and goods 1,822,280 6.88% 1,759,871 8.26% 3.55%

Biological assets 16,570 0.06% 119,621 0.56% -86.15%

Recoverable taxes 1,144,888 4.32% 2,089,129 9.81% -45.20%

Expenses of the following year 53,833 0.20% 111,913 0.53% -51.90%

Accounts receivable 118,307 0.45% 24,108 0.11% 390.74%

Advance payments to suppliers 58,628 0.22% 50,012 0.23% 17.23%

Assets maintained for sale - 0.00% 161,860 0.76% -100.00%


Total Current Asset 11,762,957 44.38% 9,738,648 45.72% 20.79%

NON-CURRENT ASSET

Deposits in court 47,526 0.18% 72,922 0.34% -34.83%

Accounts receivable 220 0.00% 93,899 0.44% -99.77%

Deferred income tax and social contribution 999,844 3.77% 2,227,316 10.46% -55.11%



Investments 42,545 0.16% 21,064 0.10% 101.98%

Fixed asset 5,231,216 19.74% 4,435,194 20.82% 17.95%

Biological assets - 0.00% 54,758 0.26% -100.00%

Intangible 6,557,055 24.74% 2,843,389 13.35% 130.61%

Total Non-Current Asset 14,741,315 55.62% 11,563,151 54.28% 27.49%

TOTAL ASSET 26,504,272 100.00% 21,301,799 100.00% 24.42%

LIABILITIES AND SHAREHOLDERS’ EQUITY Dec-31-18 VA Dec-31-17 VA Var(%)

CURRENT LIABILITIES

Suppliers 2,148,983 8.11% 2,159,031 10.14% -0.47%

Suppliers debtor risk 182,635 0.69% 195,041 0.92% -6.36%

Personnel, social charges and benefits 564,391 2.13% 251,071 1.18% 124.79%

Taxes, Fees and Contributions 345,438 1.30% 312,131 1.47% 10.67%

Loans, financing and debentures 3,665,455 13.83% 1,846,164 8.67% 98.54%

Accounts payable 185,522 0.70% 165,550 0.78% 12.06%

Leases payable 3,209 0.01% 11,963 0.06% -73.18%

Advance payments of clients 1,093,168 4.12% 795,783 3.74% 37.37%

Liabilities related to assets maintained for sale - 0.00% 82,232 0.39% -100.00%

Other obligations 457,589 1.73% 202,203 0.95% 126.30%

Total Current Liability 8,646,390 32.62% 6,021,169 28.27% 43.60%

NON-CURRENT LIABILITIES

Loans, financing and debentures 11,567,895 43.65% 10,581,034 49.67% 9.33%

Taxes, Fees and Contributions 833,591 3.15% 948,442 4.45% -12.11%

Deferred income tax and social contribution 118,911 0.45% 251,088 1.18% -52.64%

Tax, labor and civil provisions 301,667 1.14% 88,828 0.42% 239.61%

Leases payable 2,102 0.01% 19,819 0.09% -89.39%

Accounts payable 301,945 1.14% 378,085 1.77% -20.14%

Advance payments of clients 387,480 1.46% 330,800 1.55% 17.13%

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Other obligations 332,734 1.26% 47,824 0.22% 595.75%

Total Non-Current Liability 13,846,325 52.24% 12,645,920 59.37% 9.49%

TOTAL LIABILITIES 22,492,715 84.86% 18,667,089 87.63% 20.49%

SHAREHOLDERS’ EQUITY

Share Capital 7,427,677 28.02% 7,427,677 34.87% 0.00%

Capital reserves, granted options and treasury shares 47,614 0.18% 59,552 0.28% -20.05%

Retained earnings 51,824 0.20% 51,824 0.24% 0.00%

Other comprehensive income (3,535,777) -13.34% (425,222) -2.00% 731.51%

Retained Losses (3,317,874) -12.52% (4,721,299) -22.16% -29.73%

Controlling companies’ shareholders' equity 673,464 2.54% 2,392,532 11.23% -71.85%

Non-controlling interests 3,338,093 12.59% 242,178 1.14% 1278.36%

Total Shareholders' Equity 4,011,557 15.14% 2,634,710 12.37% 52.26%

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 26,504,272 100.00% 21,301,799 100.00% 24.42%

Current Asset

The current asset was BRL 11,763.0 million on December 31, 2018, compared to BRL 9,738.7 million on

December 31, 2017, which represents an increase of 20.8%. As a percentage of the total asset, the current

asset represented 44.4% and 45.7% on December 31, 2018 and 2017, respectively.

Availabilities: The Company’s availabilities made up BRL 7,191.7 million on 31 December, 2018, representing

a raise of 63.4% in relation to the amount of BRL 4,402.4 million on 31 December, 2017. As a percentage of the

total asset, the availabilities made up 27.1% on December 31, 2018, compared to 20.7% on December 31,

2017. The Company’s Officers understand that this increase of availabilities is highlighted by the cash “surplus”

of funds received after completing the sale of Keystone and paying the bridge loan for the acquisition of National

Beef’s control.

Receivables from Clients: The Company’s receivables from clients made up BRL 1,243.8 million on 31

December, 2018, representing a raise of 34.5% in relation to the amount of BRL 925.0 million on 31 December,

2017. As a percentage of the total asset, the receivables from clients made up 4.7% on December 31, 2018,

compared to 4.3% on December 31, 2017. The Company’s officers understand that this increase of 34.5% in

the line Receivables from Clients was driven by a better management and negotiation with the client, resulting

in the reduction of the receivables’ term and optimization of the Company’s cash cycle, jointly with the client’s

foreign exchange variation of the clients attached to currencies other than reais.

Inventories and Biological Asset: The Company’s Inventories and biological assets made up BRL 1,838.9 million

on 31 December, 2018, compared to BRL 1,879.5 million on 31 December, 2017, which represents a decrease

of 2.2%. As a percentage of the total asset, the inventories and biological assets represented 6.9% and 8.8%

on December 31, 2018 and 2017, respectively. With the disposal of Keystone’s business, there was a reduction

of the total biological assets.

Non-Current Asset

The non-current asset made up BRL 14,741.3 million on 31 December, 2018, representing a raise of 27.5% in

relation to the amount of BRL 11,563.2 million on December 31, 2017. As a percentage of the total asset, the

non-current asset made up 55.6% on December 31, 2018, compared to 54.3% on December 31, 2017.

Fixed and Biological Assets: The Company’s fixed and biological assets made up BRL 5,231.2 million on 31

December, 2018, compared to BRL 4,490.0 million on 31 December, 2017, which represents an increase of

16.5%. As a percentage of the total asset, the fixed and biological assets represented 19.7% and 21.1% on 31

December, 2018 and December 31, 2017, respectively. The Company’s officers understand that this raise of

16.5% in the Fixed and Biological Assets line is mostly explained by the fixed assets in the acquisition of National

Beef’s control; the remaining balance of which was used to restore the growth capacity and projects with

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expansion of the industrialized products portfolio in Brazil and expansion of the storage space in Dodge City,

KS and expansion of portioned items capacity in Moultrie, GA, in North America.

Intangible: The Company’s intangible asset was BRL 6,557.1 million on 31 December, 2018, compared to BRL

2,843.4 million on 31 December, 2017, which represents an increase of 130.6%. As a percentage of the total

asset, the intangible asset represented 24.7% and 13.3% on 31 December, 2018 and December 31, 2017,

respectively. The Company’s officers understand that this increase of 130.6% in the Intangible asset line was

driven by the premium generated and acquired in the acquisition of equity interest in National Beef, which are

expressed in the business unit’s functional currency and converted at a closing rate, according to the standards

described in NBC TG 02/R3 (Resolution CVM 540/10) - effects of the changes in the foreign exchange and

conversion rates of the accounting statements.

Current liabilities

The current liabilities present a raise of 43.6%, to BRL 8,646.4 million on 31 December, 2018, compared to BRL

6,021.2 million on 31 December, 2017. In percentage terms, the current liabilities represented 32.6% of the total

liabilities on December 31, 2018, compared to 28.3% on December 31, 2017.

Suppliers: On 31 December, 2018, the accounts payable to suppliers made up BRL 2,331.6 million, representing

a decrease of 1.0% in relation to the amount of BRL 2,354.1 million on 31 December, 2017. As a percentage of

the total liabilities, the accounts payable to suppliers made up 8.8% on December 31, 2018, compared to 11.1%

on December 31, 2017. The Company’s officers understand that this decrease of 1.0% in the Suppliers line was

driven by the better management and negotiation of payment deadlines with the suppliers, resulting in the

optimization of the Company’s cash cycle, practice which the Company shall keep in in the continuous search

for optimization of its cash cycle.

Loans, financing and Debentures: On 31 December, 2018, loans, financing and debentures amount made up

BRL 3,665.5 million, representing a raise of 98.5% in relation to the amount of BRL 1,846.2 million on December

31, 2018. From the total liabilities, the loans, financing and debentures line made up 13.8% on December 31,

2018, and 8.7% on December 31, 2017. The Officers attribute this raise to the reclassification from non-current

to current of the payable balance of the senior notes (bonds) with maturity in 2018.

Non-Current Liabilities

The non-current liabilities made up BRL 13,846.3 million on 31 December, 2018, representing a raise of 9.5%

in relation to the amount of BRL 12,645.9 million on 31 December, 2017. In percentage terms, the non-current

liabilities represented 52.2% of the total liabilities on December 31, 2018, compared to 59.4% on December

31, 2017.

Loans, financing and Debentures: On 31 December, 2018, the loans made up BRL 11,567.9 million,

representing a raise of 9.3% in relation to the amount of BRL 10,581.0 million on 31 December, 2017. As a

percentage of the total liabilities, the loans and financings made up 43.6% on , December 31, 2018, compared

to 49.7% on December 31, 2017. The Officers attribute this raise to the tenth issue of senior notes transaction

(bonds) expiring on 2025, the funds of which have been used mostly to settle bonds with short-term maturity,

with a cost higher than the issue cost.

Shareholders' Equity

The Company shareholders’ equity had a 52.3% increase, from BRL 2,634.7 million on 31 December, 2017 to

BRL 4,011.5 million on 31 December, 2018. The Officers attribute this raise to the increase of the non-controlling

shareholders’ interests due to the combination of businesses carried out for the acquisition of National Beef, as

described in the

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CASH FLOW STATEMENTS

The Company’s cash flows relating to the fiscal years ended on December 31, 2019, 2018 and 2017 are

presented below.

COMPARISON BETWEEN CASH FLOWS FOR THE YEARS ENDED ON DECEMBER 31, 2019 AND

DECEMBER 31, 2018


Year ended December 31, HA(%)

2019 2018

Net cash resulting from operating activities 2,600,090 1,518,753 71.20%

Net cash applied in investment activities (1,391,051) (4,344,095) (67.98)%

Net cash resulting from financing activities (5,623) 204,095 (102.76)%

Operating activities

The net cash generated in the operating activities presented a raise of 71.20% in the year ended on December

31, 2019, compared to the same period of 2018, going from BRL 1,518,753 in the year ended on December 31,

2018 to BRL 2,600,090 in the year ended on December 31, 2019.

This variation occurred mainly by the enhancement of National Beef’s operations, comprising 12 months in

2019, compared to 2018, which comprised only 7 months of operating income.

Investment activities

The net cash used in the investment activities presented a reduction of 67.98% in the year ended on December

31, 2019, compared to the same period of 2018, going from BRL 4,344,095 in the year ended on December 31,

2018 to BRL 1,391,051 in the year ended on December 31, 2019.

This variation occurred mainly by the smaller volume of M&A activities, when compared to 2018, in which the

National Beef’s control was acquired.

Financing activities

The net cash generated in the financing activities presented a reduction of 102.76% in the year ended on

December 31, 2019, compared to the same period of 2018, going from BRL 204,095 million in the year ended

on December 31, 2018 to BRL 5,623 million in the year ended on December 31, 2019.

This variation occurred mainly as a result from the payment of dividends to third parties and the indebtedness

reduction, motivated by the settlement of the “Bridge Loan” used to acquire National Beef, as well as the reflexes

of the acquisition of 30.73% of interest in National Beef.

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COMPARISON BETWEEN CASH FLOWS FOR THE YEARS ENDED ON 31 DECEMBER, 2018 AND 31

DECEMBER, 2017


Year ended on

December 31, HA(%)

2018 2017

Net cash resulting from operating activities 1,518,753 220,266 589.51%

Net cash applied in investment activities (4,344,095) (456,224) 852.18%

Net cash resulting from (applied in) financing activities 204,095 (960,293) (121.25)%

Operating activities

The net cash generated in the operating activities presented a raise of 589.51% in the year ended on 31

December, 2018, compared to the fiscal year ended on December 31, 2017, going from BRL 220,266 million in

the fiscal year ended on 31 December, 2017 to BRL 1,518,753 in the fiscal year ended on 31 December, 2018.

This variation occurred mainly as a result from including 7 months of operation of National Beef in 2018, as well

as from the impact of discontinuing the cash flows of the Keystone business in 2017.

Investment activities

The net cash used in the investment activities presented a raise of 852.18% in the fiscal year ended on 31

December, 2018, compared to the fiscal year ended on December 31, 2017, going from BRL 456,224 million in

the fiscal year ended on 31 December, 2017 to BRL 4,344,095 in the fiscal year ended on 31 December, 2018.

This variation occurred mainly as a result from the acquisition of National Beef’s control in 2018.

Financing activities

The net cash generated from (used in) the financing activities presented a reduction of 121.25% in the fiscal

year ended on 31 December, 2018, compared to the fiscal year ended on December 31, 2017, going from BRL

960,293 million in the fiscal year ended on 31 December, 2017 to BRL 204,095 million in the fiscal year ended

on 31 December, 2018.

This variation occurred mainly as result from the greater volume of loans obtained in 2018, in order to extend

the Company’s debt profile.

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10.2 - Operating and financial income

As described in item 3.9 of this Reference Form, the consolidated audited income and cash flow financial

statements for the fiscal years ended on December 31, 2019, 2018 and 2017 (i) include the National Beef’s

business income only as of the date of acquisition, on June 5, 2018; and (ii) exclude the Keystone business

transactions income, reflecting its income as discontinued operations (“Discontinued Operations”); (iii)

December 31, 2017 does not reflect the business of National Beef.

Therefore, the consolidated audited financial statements for the fiscal years ended on December 31, 2019, 2018

and 2017, respectively, are not comparable due to the consolidation of National Beef’s business as of the date

of acquisition thereof, on June 5, 2018.

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Comparative analysis of the years ended on December 31, 2019 and 2018

The table below presents the amounts related to the consolidated income statements of the years ended on

December 31, 2019 and December 31, 2028.

CONSOLIDATED INCOME STATEMENT (in BRL Million) 2019 %RL 2018 %RL Var(%) Var(BRL)

Sales net revenue 48,761.1 100.0 29,715.2 100.0 64.1 19,045.9

Cost of products and goods sold (42,377.1) (86.9) (25,872.9) (87.1) 63.8 (16,504.2)

Gross Profit 6,383.9 13.1 3,842.3 12.9 66.1 2,541.7

Operating revenue (expenses) (2,971.6) (6.1) (3,420.2) (11.5) (13.1) 448.6

Commercial (2,054.2) (4.2) (1,475.0) (5.0) 39.3 (579.3)

Administrative and general (756.6) (1.6) (419.9) (1.4) 80.2 (336.7)

Income using the equity method - - - - - -

Other operating revenues (expenses) (160.8) (0.3) (1,525.3) (5.1) (89.5) 1,364.6

Income before financial revenues and expenses 3,412.4 7.0 422.1 1.4 708.5 2,990.3

Financial income (2,059.7) (4.2) (2,309.0) (7.8) (10.8) 249.2

Financial Revenue 403.7 0.8 447.3 1.5 (9.7) (43.6)

Active exchange rate variation 1,709.5 3.5 1,544.5 5.2 10.7 165.0

Financial Expense (2,065.4) (4.2) (2,373.7) (8.0) (13.0) 308.3

Passive exchange rate variations (2,107.5) (4.3) (1,927.0) (6.5) 9.4 (180.5)

Profit (loss) before tax effects 1,352.6 2.8 (1,886,9) (6.3) (171.7) 3,239.5

Income tax and social contribution 229.6 0.5 397.5 1.3 (42.2) (167.9)

Current and deferred income tax 178.8 0.4 243.8 0.8 (26.6) (65.0)

Current and deferred social contribution 50.8 0.1 153.7 0.5 (67.0) (103.0)

Net income from continued operations in the year 1,582.2 3.2 (1,489.3) (5.0) (206.2) 3,071.6

Net income from discontinued operations in the year - - 3,643.3 12.3 (100.0) (3,643.3)

Net income before interests 1,582.2 3.2 2,154.0 7.2 (26.5) (571.7)

Net income attributed to:

Interest of the controlling shareholder - continued operation 218.1 0.4 (2,212.9) (7.4) (109.) 2,431.0

Interest of the controlling shareholder - discontinued operation - - 3,608.2 12.1 (100.) (3,608.2)

Interest of the controlling shareholder - Total 218.1 0.4 1,395.3 4.7 (84.4) (1,177.2)


Interest of the non-controlling shareholder - continued operation 1,364.2 2.8 723.6 2.4 88.5 640.6

Interest of the non-controlling shareholder - discontinued operation - - 35.2 0.1 (100.0) (35.2)

Interest of the non-controlling shareholder - Total 1,364.2 2.8 758.7 2.6 79.8 605.4

Base loss and diluted per share - common continued operation 0.4 (3.6) (109) 3.9

Base profit (loss) and diluted per share - common discontinued operation - - - -

Base profit (loss) and diluted per share - common Total 0.4 (3.6) (109) 3.9

Profit (loss) current and deferred Income tax and Social Contribution 229.6 0.5 397.5 1.3 (42.2) (167.9)

Sales net revenue

The sales net revenue increased 64.1%, from BRL 29,715.2 million in the year ended on December 31, 2018,

to BRL 48,761.1 million in the same period in 2019. In the year ended on December 31, 2019, the average sale

prices increased 19.5%, mainly as a result from (i) the acquisition of National Beef’s shareholding control, the

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acquisition of Ohio and Iowa Premium in the North America Operation, which together generated BRL 34.0

billion in revenue; (ii) the acquisition of Quickfood in Argentina; and (iii) devaluation of the real in 8.0% against

the dollar.

The table below shows the net sales for the business units:

(In BRL Million) Year ended on

December 31,

2019 2018

North America

Domestic market 29,565.3 14,472.2

Export 4,385.6 2,491.6

Total North America 33,951.0 16,963.8

South America


Export 7,887.8 6,731.9

Total South America 14,810.1 12,751.4

Consolidated Marfrig


Export 12,273.4 9,223.5

Total Consolidated Marfrig 48,761.1 29,715.2

We present below information on the changes in the Company’s sales net revenue per business unit, as

demonstrated in the table above.

North America

The sales net revenue in North America increased to BRL 33,951.0 million in the year ended on December 31,

2019, when compared to the sales net revenue in the same period in 2018, which was equal to BRL 16,963.8.

This raise is due to (i) the acquisition of National Beef’s shareholding control carried out in June 2018; (ii) the

acquisition of Ohio Beef, carried out in December 2018; (iii) the acquisition of Iowa Premium carried out in June

2019; (iv) the devaluation of the real against the dollar.

• Domestic market. The sales net revenue of the domestic market in North America increased to BRL

29,565.3 million in the year ended on December 31, 2019. This raise was mainly due to (i) the acquisition

of National Beef’s shareholding control carried out in June 2018; (ii) the acquisition of Ohio Beef, carried

out in December 2018; (iii) the acquisition of Iowa Premium carried out in June 2019; (iv) greater demand

in the domestic market motivated by an economic improvement and greater availability of animals.

• Export market. The sales net revenue of the export market in North America operations increased to

BRL 4,385.6 million in the year ended on December 31, 2019. This raise was mainly due to (i) the

acquisition of National Beef’s shareholding control carried out in June 2018; (ii) the acquisition of Ohio

Beef, carried out in December 2018; (iii) the acquisition of Iowa Premium carried out in June 2019

against the dollar.

South America

The sales net revenue in South America increased 16.1%, from BRL 12,751.4 million in the fiscal year ended

on December 31, 2018, to BRL 14,810.1 million in the same period in 2019. This raise was mainly due to (i) the

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acquisition of Quickfood carried out in January 2019 and (ii) the increase in exports, which is powered by the

devaluation of real against the dollar.

• Domestic market. The sales net revenue of the domestic market in the sector of South America

increased 15.0%, from BRL 6,019.5 million in the fiscal year ended on December 31, 2018, to BRL

7,887.8 in the same period in 2019. This increase was mainly due to the acquisition of assets throughout

the first semester.

• Export market. The export sales net revenue in South America’s operation increased 17.2%, from BRL

6,731.9 million in the fiscal year ended on December 31, 2018, to BRL 7,887.8 million in the same period

in 2019. This increase was mainly due to (i) the acquisition of assets throughout the first semester, (ii)

the greater export volume, given the new protein global scenario and (iii) the devaluation of real against

the dollar.

Cost of products and goods sold

The cost of products and goods sold increased 63.8%, from BRL 25,872.9 million in the year ended on

December 31, 2018, to BRL 42,377.1 million in the same period in 2019. This raise is mostly explained by (i)

the acquisition of National Beef’s shareholding control, acquisition of Ohio and Iowa Premium in the North

America Operation; (ii) increase of the cattle’s cost in the South America Operation due to a greater export

demand, mainly to China, and lower availability of cattle in Uruguay; (iii) acquisition of Quickfood in Argentina;

and (iv) devaluation of the real against the dollar.

The table below shows the composition of the sold products’ cost:

(in BRL million, except %) Year ended on

December 31,

2019 % 2018 %

Direct and indirect labor force 3,700.9 8.7% 2,291.9 8.9%

Raw materials 34,197.8 80.7% 21,556.4 83.3%

Production costs 4,478.5 10.6% 2,024.6 7.8%

Total 42,377.1 100.0% 25,872.9 100.0%

The raw materials, which include animals, shall keep to be the main component of the cost of products sold,

representing 80.7% of the total cost of products sold in the year ended on December 31, 2019, compared to

83.8% in the period in 2018. The cattle cost, that consists in the greatest expense within the raw materials,

represented 97.6% of the cost of raw materials in the year ended on December 31, 2019, compared to 98.7%

in the same period in 2018.

Gross Profit

The gross profit was BRL 6.4 billion in the year ended on December 31, 2019, an increase of 66.1% in relation

to the same period in 2018, reflecting the acquisition of National Beef’s shareholding control. The gross margin

hit 13.1% in the year ended on December 31, 2019, an increase of 16 bps when compared to the previous year,

mostly affected (i) by the increase in the prices and lower cost of cattle purchase price, given the greater

availability of animals in the North America Operation, (ii) enhancement in the average prices and increase in

export volumes in the South America Operation.

Sales, general and administrative expenses

The SG&A expenses made up BRL 2,810.8 million in the fiscal year ended on December 31, 2019, an increase

of 48.3% in relation to the BLR 1,894.9 million registered in the same period in 2018. In the year ended on

December 31, 2019, the SG&A expenses corresponded to 5.8% of the total sales net revenue compared to

6.4% in the same period in 2018.

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The commercial expenses increased 39.3%, from BRL 1,475.0 million in the year ended on December 31, 2018,

to BRL 2,054.2 million in the same period in 2019. The increase was mainly due to (i) the acquisition of National

Beef’s shareholding control, acquisition of Ohio and Iowa Premium in the North America Operation; (ii) the

acquisition of Quickfood in Argentina; and (iii) devaluation of the real against the dollar.

The general and administrative expenses increased 80.2%, from BRL 419.9 million in the year ended on

December 31, 2018, to BRL 756.6 million in the same period in 2018. The increase was mainly due to (i) the

acquisition of National Beef’s shareholding control, acquisition of Ohio and Iowa Premium in the North America

Operation; (ii) the acquisition of Quickfood in Argentina; and (iii) devaluation of the real against the dollar. In the

year ended on December 31, 2019, the general and administrative expenses corresponded to 1.6% of the net

revenue compared to 1.4% in the same period in 2018.

Adjusted EBITDA

In the fiscal year ended on December 31, 2019, the consolidated adjusted EBITDA hit BRL 4.8 billion, an

increase of 83.4% when compared to the same period in 2018. Yet, the adjusted EBITDA margin was 9.8%, an

expansion of 103 bps in relation to the 8.8% margin in the same period in 2018. The main factors that led to this

performance were (i) the acquisition of National Beef’s shareholding control, acquisition of Ohio and Iowa

Premium in the North America Operation; (ii) better prices in the domestic market in South America Operation;

(iii) better mix of export, with more products destined to China; and (iv) the acquisition of Quickfood together

with the turn-around in Argentina’s operation, recovering profitability and operating efficiency.

Other Operating Revenues (Expenses)

Other net operating revenues (expenses) were reduced in BLR 1,364.6 million, going from a net expense of

BRL 1,525.3 million in the year ended on December 31, 2018 to a net expense of BRL 160.8 million in the same

period in 2019. This reduction was mainly due to the Company’s acknowledgement of a single net expense of

BRL 16 million in 2018 as a result from its adhesion to the Special Rural Tax Regularization Program - PRR in

relation to the withholding obligations in the rural social security system of Brazil.

Financial Revenues (Expenses)

The net expense in the fiscal year ended on December 31, 2019 was BRL 5,059.7 million, compared to a net

expense of BRL 2,309.0 million in the same period in 2018. This reduction is mainly explained by the effect of

hyperinflation in Argentina’s unit.

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The table below includes details of the financial income:

(in BRL million, except %)

Fiscal Year ended on December 31,

2019 2018 %

Financial Revenue

Derivatives 14.9 276.2 (94.6)%

Negotiable instruments 186.7 123.4 51.3%

Discounts (other) 202.1 47.6 324.2% Total financial revenue 403.7 447.3 (9.7)% Assets exchange rate variation 1,709.5 1,544.5 10.7% Financial Expenses

Interests, debentures and leases (1,189.6) (1,115.3) 6.7% Derivatives (13.8) (281.1) (95.1)% Banking expenses, commissions, fees and others (861.9) (977.3) (11.8)% Total financial expenses (2,065.4) (2,373.7) (13.0)% Liabilities’ exchange rate variations (2,107.5) (1,927.0) 9.4% Net Financial Expense (2,059.7) (2,309.0) (10.8)%

The Company does not perform leveraged transactions involving derivatives or similar instruments. The

derivative transactions are designed to provide a minimum protection against its exposure to other currencies,

and the Company keeps a conservative policy of not taking positions that may compromise its financial status.

Income Tax and Social Contribution

In the fiscal year ended on December 31, 2019, the Company registered tax liabilities of income tax and social

contribution in the amount of BRL 229.6 million, due to the acknowledgement of deferred tax assets.

In the year ended on December 31, 2018, the Company registered tax liabilities of income tax and social


Net Gain (Loss) of continued transactions

The net gain of the continued transactions in the fiscal year ended on December 31, 2019 was BLR 1,582.2

million, compared to a net loss attributable to the continued transactions of BRL 1,489.3 million in the same

period in 2018.

The net margin in the year ended on December 31, 2019 was 3.2% positive when compared to 5.0% negative

in the same period in 2018. The main factor was the record results of the Company’s business in North America.

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Comparative analysis of the fiscal years ended on 31 December, 2018 and 2017

The table below presents the amounts related to the consolidated income statements of the fiscal years ended

on 31 December, 2018 and December 31, 2017.

CONSOLIDATED INCOME STATEMENT (in BRL Million) 2018 %RL 2017 %RL Var(%) Var(BRL)

Sales net revenue 29,715.2 100.0 10,127.7 100.0 193.4 19,587.5

Cost of products and goods sold (25,872.9) -87.1 (8,760.0) -86.5 195.4 (17,112.9)

Gross Profit 3,842.3 12.9 1,367.7 13.5 180.9 2,474.6

Operating revenue (expenses) (3,420.2) -11.5 (943.3) -9.3 262.6 (2,476.9)

Commercial (1,475.0) -5.0 (587.7) -5.8 151.0 (887.3)

Administrative and general (419.9) -1.4 (233.4) -2.3 79.9 (186.5)

Income using the equity method 0.0 0.0 0.0 0.0 -100.0 (0.0)

Other operating revenues (expenses) (1,525.3) -5.1 (122.2) -1.2 1,148.1 (1,403.1)

Income before financial revenues and expenses 422.1 1.4 424.4 4.2 -0.5 (2.3)

Financial income (2,309.0) -7.8 (1,889.0) -18.7 22.2 (420.0)

Financial Revenue 447.3 1.5 233.5 2.3 91.6 213.8

Active exchange rate variation 1,544.5 5.2 1,324.2 13.1 16.6 220.3

Financial Expenses (2,373.7) -8.0 (1,926.1) -19.0 23.2 (447.6)

Passive exchange rate variations (1,927.0) -6.5 (1,520.5) -15.0 26.7 (406.5)

Profit (loss) before tax effects (1,886.9) -6.3 (1,464.6) -14.5 28.8 (422.3)

Income tax and social contribution 397.5 1.3 473.9 4.7 -16.1 (76.4)

Current and deferred income tax 243.8 0.8 397.8 3.9 -38.7 (154.0)

Current and deferred social contribution 153.7 0.5 76.2 0.8 101.8 77.5

Net income from continued operations in the year (1,489.3) -5.0 (990.6) -9.8 50.3 (498.7)

Net income from discontinued operations in the year 3,643.3 12.3 545.4 5.4 568.0 3,097.9

Net income before interests 2,154.0 7.2 (445.2) -4.4 -583.8 2,599.2


Interest of the controlling shareholder - continued operation (2,212.9) -7.4 (990.7) -9.8 123.4 (1,222.2)

Interest of the controlling shareholder - discontinued operation 3,608.2 12.1 507.3 5.0 611.3 3,100.9

Interest of the controlling shareholder - Total 1,395.3 4.7 (483.5) -4.8 -388.6 1,878.8


Interest of the non-controlling shareholder - continued operation 723.6 2.4 0.1 0.0 > 100 723.5

Interest of the non-controlling shareholder - discontinued operation 35.2 0.1 38.1 0.4 -7.8 (3.0)

Interest of the non-controlling shareholder - Total 758.7 2.6 38.2 0.4 1,884.3 720.5

Base loss and diluted per share - common continued operation (3.5630) (1.5954) 123.3 (2.0)

Base profit (loss) and diluted per share - common discontinued operation

5.8096 0.8169 611.2 5.0

Base profit (loss) and diluted per share - common Total 2.2466 (0.7785) -388.6 3.0

Profit (loss) current and Deferred Income tax and Social Contribution 397.5 1.3 473.9 4.7 -16.1 (76.4)

Sales net revenue

The sales net revenue increased 193.4%, from BRL 10,127.7 million in the fiscal year ended on 31 December,

2017, to BRL 29,715.2 million in the same period on December 31, 2018. In the fiscal year ended on 31

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December, 2018, the sales average prices increased 44.4%, mainly as result from (i) the acquisition of National

Beef in 2018, due to the higher sales average prices of National Beef and (ii) the devaluation of the real.

The table below shows the net sales for the business units:

(In BRL Million)

Year ended on December 31,

2018 2017

North America

Domestic market 14,472.2 -

Export 2,491.6 -

Total North America 16,963.8 -

South America


Export 6,711.6 4,822.6

Total South America 12,751.4 10,127.7

Consolidated Marfrig


Export 9,203.2 4,822.6

Total Consolidated Marfrig 29,715.2 10,127.7

We present below information on the changes in the Company’s sales net revenue per business unit, as

demonstrated in the table above.

North America

The sales net revenue in North America increased to BRL 16,963.8 million in the fiscal year ended on 31

December, 2018, when compared to the sales net revenue in the fiscal year ended on December 31, 2017. This

increase was due to the acquisition of National Beef in June, 2018. In 2017, the Company did not have a North

America division.

• Domestic market. The sales net revenue of the domestic market in North America increased to BRL

16,868.5 million in the fiscal year ended on 31 December, 2018. This increase was mainly due to the

acquisition of National Beef in 2018.

• Export market. The export sales net revenue in North America transactions was equal to BRL 2,496.6

million in the fiscal year ended on 31 December, 2018. This increase was mainly due to the acquisition

of National Beef in 2018.

South America

The sales net revenue South America increased 25.9%, from BRL 10,127.7 million in the fiscal year ended on

31 December, 2017, to BRL 12,751.4 million in the fiscal year ended on December 31, 2018. This increase was

mainly due to a raise of 19.9% in the sales volume and devaluation of the real against the dollar, partially set off

by the negative impact of the lower average prices.

• Domestic market. The sales net revenue in of the domestic market in the sector of South America

increased 13.8%, from BRL 5,305.1 million in the fiscal year ended on 31 December, 2017, to BRL

6,039.8 in the fiscal year ended on December 31, 2018. This increase was mainly due to a raise of

16.3% in the sales volume.

The growth in the sales volume, reached despite of the truck drivers’ strike in Brazil and the non-

scheduled stoppage in the Mineiro’s factory in the last quarter of the year, reflects Marfrig’s strategy to

expand the production capacity of its operations in Brazil to take advantage of the best cattle cycle in

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the country, as well as the greatest offer of cattle in Argentina. In Uruguay, the focus was the increase

of the market share in relation to 2017. Additionally, the strong continuous performance of the

Company’s Chilean operation also contributed to this growth.

• Export market. The export sales net revenue in the South America transactions increased 39.2%, from

BRL 4,822.6 million in the fiscal year ended on 31 December, 2017, to BRL 6,711.6 million in the fiscal

year ended on December 31, 2018. This increase was mainly due to a raise in the sales volume of

28.6% and the devaluation of the real in relation to the dollar.

The increase of the sales volume was driven by the greater slaughter volume in Brazil, reflecting the

acceleration period of the export certification of the factories reopened in Brazil throughout 2017 and

2018, partially set off by a fall in the sales average prices, in line with the market tendencies and by the

greater participation of the sales mix directed to the countries with lesser aggregate value.

Cost of products and goods sold

The cost of products and goods sold increased 195.4%, from BRL 8,760.0 million in the fiscal year ended on

31 December, 2017, to BRL 25,872.9 million in the fiscal year ended on December 31, 2018. This increase was

due mainly to (i) the acquisition of National Beef; (ii) the increase of products cost in Brazil due to a raise in the

slaughter capacity; (iii) devaluation of the real against the dollar; and (iv) increase of the cattle cost in the South

America transactions.

The table below shows the composition of the sold products’ cost:

(in BRL million, except %) As of December 31,

2018 % 2017 %

Direct and indirect labor 2,291.9 8.9% 857.0 9.8%

Raw materials 21,556.4 83.3% 7,489.8 85.5%

Production costs 2,024.6 7.8% 413.2 4.7%

Total 25,872.9 100.0% 8,760.0 100.0%

The raw materials, which include animals, continued to be the main component of the cost of products sold,

representing 83.3% of the total cost of products sold in the fiscal year ended on 31 December, 2018, compared

to 85.5% in the fiscal year ended on December 31, 2017. The cattle cost, that consists in the greatest expense

within the raw materials, represented 98.7% of the cost of raw materials in the fiscal year ended on 31

December, 2018, compared to 98.9% in the in the fiscal year ended on December 31, 2017.

Gross Profit

As a result, from the foregoing factors, the Company’s gross profit increase 180.9%, from BRL 1,367.7 million

in the fiscal year ended on 31 December, 2017 to BRL 3,842.3 million in the fiscal year ended on 31 December,

2018.

Sales, general and administrative expenses

The SG&A expenses made up BRL 1,894.9 million in the fiscal year ended on 31 December, 2018, an increase

of 130.8% in relation to the BLR 821.1 million registered in the fiscal year ended on December 31, 2017. In the

fiscal year ended on 31 December, 2018, the SG&A expenses corresponded to 6.38% of the total sales net

revenue compared to 8.11% in the fiscal year ended on 31 December 31, 2017.

The commercial expenses increased 151.0%, from BRL 587.7 million in the fiscal year ended on 31 December,

2017, to BRL 1,475.0 million in the fiscal year on December 31, 2018. The increase was mainly due to (i) the

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devaluation of the real against the dollar; (ii) the raise of commercial and logistics expenses due to the greater

sales volume; (iii) higher expenses with marketing and publicity; and (iv) the acquisition of National Beef. In the

fiscal year ended on 31 December, 2018, the commercial expenses corresponded to 4.9% of sales net revenue

compared to 5.8% in the fiscal year ended on 31 December 31, 2017.

The general and administrative expenses increased 79.9%, from BRL 233.4 million in the fiscal year ended on

31 December, 2017, to BRL 419.9 million in the fiscal year ended on December 31, 2018. The raise was mainly

due to the devaluation of the real against the dollar and to the greater amortization of intangible assets resulting

from the allocation of the purchase price regarding the acquisition of National Beef. In the fiscal year ended on

31 December, 2018, the general and administrative expenses corresponded to 1.4% of the net revenue

compared to 2.3% in the fiscal year ended on 31 December 31, 2017.

Other Operating Revenues (Expenses)

Other net operating revenues (expenses) increased 1,148.1%, going from a net expense of BRL 122.2 million

in the fiscal year ended on 31 December, 2017, to BRL 1,525.3 million in the fiscal year on December 31, 2018.

This increase was mainly attributed to (i) the Company’s acknowledgement of a single net expense of BRL 616

million as a result from its adhesion to the Special Rural Tax Regularization Program - PRR in relation to the

withholding obligations in the rural social security system of Brazil; and (ii) a reserve of BRL 727.4 million

resulting from the Company’s reassessment of the Brazilian social security tax liabilities (PIS/COFINS), partially

due to a change in the regulation in August 2018 and in line with the changes in its tax strategy.

Financial Revenues (Expenses)

The net expense in the fiscal year on 31 December, 2018 was BRL 2,309.0 million, compared to a net expense

of BRL 1,889.0 million in the fiscal year ended on December 31, 2017. This increase was mainly due to (i) the

devaluation of the real; and (ii) the bridge loan incurred in connection with the acquisition of National Beef.

The table below includes details of the financial income:

(in BRL million, except %) As of December 31,

2018 2017 %

Financial Revenue

Derivatives 276.2 137.6 100.8%

Negotiable instruments 123.4 91.8 34.3%

Discounts (other) 47.7 4.1 1,069.5%

Total financial revenue 447.3 233.5 91.6%

Assets exchange rate variation 1,544.5 1,324.2 16.6%

Financial Expenses

Interests, debentures and leases (1,115.3) (775.8) 43.8%

Derivatives (281.1) (142.8) 96.8%

Banking expenses, commissions, fees and others (977.3) (1,007.4) (3.0)%

Total financial expenses (2,373.7) (1,926.1) 23.2%

Liabilities’ exchange rate variations (1,927.0) (1,520.5) 26.7%

Net Financial Expense (2,309.0) (1,889.0) 22.2%

The Company does not perform leveraged transactions involving derivatives or similar instruments. The

derivative transactions are designed to provide a minimum protection against its exposure to other currencies,

and the Company keeps a conservative policy of not taking positions that may compromise its financial status,

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Income Tax and Social Contribution

The Company registered tax liabilities of income tax and social contribution in the amount of BRL 397.5 million

in the fiscal year ended on 31 December, 2018 due to the acknowledgement of deferred tax assets.

In the fiscal year ended on 31 December, 2017, the Company registered tax liabilities of income tax and social


Net Loss of continued transactions

The net loss of the continued transactions in the fiscal year ended on 31 December, 2018 was BLR 2,212.9

million, compared to a net loss attributable to the continued transactions of BRL 990.7 million in the fiscal year

ended December 31, 2017.

The net margin in the fiscal year ended on 31 December, 2018 was 7.4% negative when compared to 9.8%

negative in the fiscal year ended on December 31, 2017. The main factor was the record results of the

Company’s business in North America.

(a) income of the Company’s transactions

(i) description of any relevant components of the revenue

The transactions described in item (ii) below in “Effects of acquisition and disposal”, plus the cancellation of the

Company’s decision to make available for sale the freezer unit of Villa Mercedes, in Argentina, has caused the

2017 financial statements to be presented again in 2018 for comparison purposes. So, comparing 2018 and

2017, the financial data of the subsidiary Keystone Foods were excluded and the financial data of the transaction

in Argentina were included.

Marfrig has 33 production units, distribution centers and offices, located in South America, North America,

Europe and Asia. Therefore, the Company’s revenues come both from domestic markets where it operates and

from exports to different countries accessed by the Company through its distribution network.

The main factors that affected the Company’s revenue were the following:

(a) Acquisition of the shareholding control of National Beef as of June 2018 and sale of the subsidiary

Keystone Foods in November 2018, acquisition of Quickfood in January 2019, acquisition of assets of

Várzea Grande in April 2019, Iowa Premium in June 2019 and finally the acquisition of 30.73% of an

additional interest in National Beef in November 2019;

(b) exchange rate variation, inflation and fluctuation of the interest rates;

(c) Variations in the sales average prices in the domestic and international markets, mostly resulting from

changes in the supply x demand relation and from the use of opportunities in each market where the

Company operates;

(d) Variation in the prices of the main inputs;

(e) Efficiency of the production process and manufacturing capacity use rate; and

(f) Performance of the world economy and of countries in which the Company operates.

Below, we comment a little more on the aforementioned topics.

Supply and demand of our products

Regarding the supply, we may cite the availability and prices of cattle. The low or high availability of raw material

may increase or reduce the acquisition costs, directly affecting the margins depending on the demand’s answer

and the pass-through of prices to the final products.

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Regarding the demand, we may cite, for instance, a global economic crisis, causing a retraction of employment

levels and, accordingly, the impact on the available income and consumption of the families; these factors may

significantly affect the Company’s operations. On the other hand, the opening of new markets to the products

sold by the Company may influence its income in a positive manner.

The Officers state that outbreaks of diseases in animals may result in commercial and sanitary barriers by the

other countries and, this way, impact the access to the international markets and, accordingly, the Company’s

sales.

Growth of Global GPD and of countries where we operate and have demand for our products

The Officers understand that the growth in the consumption of animal food and protein is directly linked to the

populational growth and the population’s income. The GPD’s performance in the countries where the Company

sells its products may affect the operating income.

Effects of the raw material price fluctuation

The Officers inform that the main component of the Company’s production costs is the purchase of raw

materials, which includes the purchase of cattle. The fluctuations in cattle prices in the domestic and foreign

markets significantly affect net operating revenue and costs of goods sold. The Company has no control over

these prices, which vary according to the dynamics of supply and demand.

Sales prices in domestic and foreign markets

According to the Officers, the prices of the Company’s products in the domestic and foreign markets are

generally established by the market conditions, over which the Company has no control. The prices in domestic

market are also affected by the prices that the Company is able to charge the various wholesale and retail

customers that resell their products.

Effects of exchange rate volatility and monetary policy

In the Officers’ opinion, the Company’s operating income and financial situation have been and will continue to

be affected by the volatility of the currencies with which the Company operates. Considerable part of the

Company’s revenues is originated in currencies other than the real. Additionally, part of the debt is denominated

in US dollars, which requires the Company to make payments of principal and interest in that currency.

The Officers inform that Brazilian exports and relevant international transactions, which enable the Company to

generate accounts receivable in foreign currency, tend to have approximately the participation of indebtedness

in foreign currencies, which provides what we call “cash flow hedge or natural hedge” in relation to the significant

portion of US dollar debt obligations.

In the Officers’ opinion, the inflation and the measures adopted by the government of the countries where we

operate to fight it may have considerable effects on the economy of those countries and, consequently, on the

Company’s business. Inflationary pressures may lead to government intervention on the economy, including the

implementation of government policies that may have an adverse effect on the Company and its customers.

Moreover, in the event that the Company experiences high rates of inflation in the countries where it operates,

the Company may not be able to readjust its product prices sufficiently to offset the effects of inflation on the

cost structure, which may have an adverse effect in its income.

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(iii) factors which materially affect the operating income

Effects of acquisitions and disposals

Year ended on 31 December, 2019

On January 3, 2019, the Company acquired 91.89% of the total voting capital of QuickFood S.A. for USD 54.9

million. Quickfood holds the most known hamburger brand in Argentina and also has a slaughter plant with a

processing capacity of 620 heads/day.

On January 24, 2019, the Company completed the acquisition of Várzea Grande in the State of Mato Grosso

for BRL 100 million, and the assets were purchased from BRF. At the same time, a partnership was entered into

for the supply of processed products, such as hamburgers, meat balls and kibbeh for BRF. The partnership shall

enable the Company to further expand its supplier relationships to global food service companies in Brazil.

On February 28, 2019, the issuer sold all its Ohio Beef USA LLC’s equity interests to National Beef for USD 60

million. After the closing of this transaction, Ohio Beef USA LLC changed its corporate name to National Beef

Ohio, LLC.

On March 11, 2019, the Company, through its indirect subsidiary NBM US Holdings, Inc (“NBM”), jointly with

Jefferies Financial Group, Inc (through its subsidiary JIAC LLC) (“Jefferies”), U.S. Premium Beef, LLC

(“USPB”), TMK Holdings, LLC (“TMK”) and NBPCo Holdings, LLC (“NBPCo”), taking advantage of the good

moment of the North American industry, decided to increase their operations and exposure in the United States,

by the joint acquisition of Iowa Premium, LLC (“Iowa Premium”) and subsequent payment of capital in National

Beef Packing Company, LLC (“National Beef”). The transaction was completed on June 2019.

On November 29, 2019, the Company through its wholly-owned subsidiary, NBM US Holdings, Inc (“NBM”),

completed the acquisition of 30.73% of the share capital of National Beef Packing Company, LLC (“National

Beef”), previously held by Jefferies Financial Group Inc. With this, the total interest held in the North American

subsidiary is now 81.73%.

2018 Fiscal Year

On June 5, 2018, the Company acquired 51% of the controlling interest of National Beef from Jefferies and

other shareholders for BRL 3.7 billion. This acquisition represented a new strategic direction for the Company,

focusing on the beef sector and a more simplified structure that creates value in a sustainable manner.

On November 30, 2018, the Company sold its interest in Keystone Foods to Tyson. The total amount received

for the sale was USD 2.4 billion, and the amount received by Marfrig after contractual adjustments, such as the

exclusion of Keystone’s net debt, was USD 1.4 billion, which remains subject to purchase price adjustments.

With the sale of Keystone’s business, mainly focused on poultry, the Company continues to concentrate its

operations in the beef sector and significantly reduced its leverage.

GPD growth and product demand

The sales in the domestic markets in each country in which the Company operates represented 74.8% of its

total net sales in the year ended on December 31, 2019. In the year ended on December 31, 2018, the sales in

the domestic markets represented 69.0% of the total net sales. So, the Company is significantly affected by the

economic conditions in its main domestic markets. The Company’s and sales’ financial situation were and will

continue to be affected by the GPD growth and demand for the Company’s products in its main domestic

markets.

Effects of fluctuation in the prices of raw materials (bovine cattle)

The fluctuations in cattle prices in the domestic and foreign markets in which the Company operates significantly

affect its net sales and the cost of products sold.

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Effects on net sales

The domestic and foreign prices of the Company’s products are generally determined by market conditions

beyond its control. These prices are also affected by the additional mark-up that the retailers charge the end

consumers, some of which the Company negotiates on a case-by-case basis. Among the main factors that

influence the prices of its products are the cattle prices, outbreaks of diseases and sanitary, commercial and

customs restrictions imposed in Brazil, United States and abroad.

Effects on the cost of products sold

Cattle is the Company’s main raw material. The purchases of raw materials represented 80.7% and 83.8% of

its total cost of goods sold in the years ended on December 31, 2019 and 2018, respectively. Among other costs

of materials are the direct and indirect labor, direct and indirect industrial costs, packing materials and electric

power.

The Company does not control the cattle prices. The cattle cost varies according to the domestic market and

export prices, which vary depending on supply and demand. Generally, the Company purchases cattle to be

delivered every 30 days, in average, and the price paid is based on the market prices at the time of purchase.

As a consequence, fluctuations in the market price affect directly the cost of products sold.

Effect of export levels on the financial performance

In South America transactions, the Company usually obtains higher prices and margins in the export markets

for its products than those obtained in the domestic markets. The prices and margins difference between the

domestic markets and export markets partially results in a generally higher demand for products with higher

aggregate value in the export markets, mostly with respect to cuts of premium and processed products, and to

the greater purchasing power in the most developed countries.

The South America export sales represented 53.3% and 52.6% of its net sales in the fiscal years ended on

December 31, 2019 and 2018, respectively. The external sales net amount rose 17.2%m going from BRL

6,731.9 million in the fiscal year ended on 31 December, 2018, to BRL 7,887.8 million in the fiscal year ended

on 31 December, 2019.

Effects of the exchange rate variations

The operating income and financial condition were and will continue to be affected by the devaluation or

valuation rate of the real in relation to the dollar.

A substantial part of the Company’s net revenue is linked to the dollar. All income obtained by subsidiaries

abroad and the export revenue is dollarized. Any devaluation or valuation of the real against foreign currencies

may affect the Company’s revenue, causing a monetary increase or decrease, provided that the other variables

remain unchanged.

Additionally, a substantial part of the Company’s loans and financings is made in foreign currencies, mainly in

dollars. For this reason, any devaluation of the real in relation to foreign currencies may significantly increase

the current and non-current financial expenses and loans and financings denominated in reais. On the other

hand, any valuation of the real in relation to foreign currencies may significantly decrease the current and non-

current financial expenses and loans and financings denominated in reais.

With 89.6% and 83.5% of the net sales being made in currencies other than real in the years ended on

December 31, 2019 and 2018, respectively, the Company believes that it has a natural hedge against the

maturity of its future obligations in foreign currencies. Additionally, the Company keeps a solid financial policy,

maintaining high cash balances and short-term negotiable instruments with first ranking institutions.

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The Company does not perform leveraged transactions with derivatives or similar instruments. Except as

described in relation to the structure of this offer, the Company uses only derivatives or similar instrumentos to

protect is exposure to debts in foreign currencies and the Company has a conservative policy of not entering

into derivative instruments or transactions or similar instruments that may compromise its financial status.

Effect of the debt level

On December 31, 2019, the Company’s total debt was BRL 21,716.3 million, being 4.0% (or BRL 867.2 million)

in reais and 96.0% (or BRL 20,849.1 million) in other currencies. The Company had BRL 4,594.7 million in short-

term debts (which include the current portion of loans and financings, interest on debentures and debentures

payable) and BRL 17,121.9 million in long-term debts (which incline the non-current portion of loans and

financings and debentures payable) on December 31, 2019. The Company’s debt level results in substantial

financial expenses, which consist in interest expenses, exchange rate variations of debts in foreign currency

and other items.

In the fiscal year ended on December 31, 2019, the Company registered total financial expenses of BRL 2,059.7

million, consisting in BRL 2,065.4 million in financial expenses and BRL 2,107.5 million in foreign exchange

loss, which was partially set off with BRL 1,709.5 million in foreign exchange gains and BRL 403.7 million in

financial revenues.

(b) variation of revenues attributable to modifications of prices, foreign exchange rates, inflation,

volume changes and introduction of new products and services

As mentioned above, the Officers believe that several factors have influenced Marfrig’s revenue.

In the fiscal year ended on December 31, 2019, the Officers understand that the Company’s consolidated

revenue was influenced mainly by (i) the acquisition of National Beef’s shareholding control as of June 2018

and the sale of the subsidiary Keystone Foods in November 2018, the acquisition of Quickfood in January 2019,

acquisition of Várzea Grande’s assets in April, 2019 and, at last, Iowa Premium in June 2019; and (ii) the foreign

exchange volatility, once that a reasonable part of the total revenue of Marfrig is denominated in foreign

currency.

In the fiscal year ended on 31 December, 2019, the performance of the following divisions is highlighted:

(i) acquisition of National Beef’s shareholding control, which increase the Company’s total net revenue

in BRL 34.0 billion; and

(ii) South America’s net operating revenue, which made up BRL 14.8 billion, an increase of 16.1% in

comparison with the fiscal year ended on 31 December, 2018, representing 30.4% of the

Company’s consolidated revenue.

Marfrig’s consolidated net revenue was BRL 48.8 billion in the fiscal year ended on 31 December, 2019, an

increase of 64.1% in relation to the previous year. The main factors were (i) the acquisition of National Beef’s

shareholding control, the acquisition of Ohio and Iowa Premium in the North America Operation, which together

generated BRL 34.0 billion in revenue; (ii) the acquisition of Quickfood in Argentina; and (iii) devaluation of the

real in 8.0% against the dollar.

On December 31, 2018, Marfrig’s consolidated net revenue was BRL 29.7 billion, an increase of 193.4% in

relation to the previous year, mostly due to (i) the acquisition of National Beef’s shareholding control, which

generated BRL 17.0 billion in revenue; (ii) devaluation of the real in 14.5% against the dollar; and (iii) expansion

of the sales volume of the South America Transaction.

Marfrig is an international company and a great part of its revenue comes from currencies other than Real. In

the fiscal year ended on 31 December, 2019, the percentage linked to other currencies was of 89.6 and 83.5%

in the fiscal year ended on December 31, 2018.

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On December 31, 2017, Marfrig’s consolidated net revenue hit BLR 19 billion, slightly smaller (-1.3%) than in

the previous year. The main factors were the 8.5% depreciation of the dollar and the lower Brazilian domestic

market price of the Beef division, which followed the downward trend in the cost of cattle; partially offset by the

expansion of sales volume in both divisions: Keystone and Beef.

(c) impact of inflation, price variation of the main inputs and products, foreign exchange and interest

rate on the operating income and financial income of the Company, where applicable

The Officers inform that the income of our operations is influenced by several factors, as the raw materials’ price

variation and labor costs.

Consideration of the impact of exchange rates on the financial income

On December 31, 2019, 96.0% of the debt was linked to currencies other than Real (mainly the U.S. Dollar).

On the other hand, revenues from international operations, including Brazilian exports, totalized 89.6% of the

Company’s sales.

On December 31, 2018, 98.6% of the debt was linked to currencies other than Real (mainly the U.S. Dollar).

On the other hand, revenues from international operations, including Brazilian exports, totaled 84% of the

Company’s sales.

At the end of 2017, 97.9% of the Company’s debt was linked to currencies other than Real (mainly the U.S.

Dollar). On the other hand, revenues from international operations, including Brazilian exports, totaled 77% of

the Company’s sales. In 2017, the Keystone division, which reports its income in dollars, accounted for more

than half of the Company’s consolidated adjusted EBITDA.

Considerations on the impact of inflation and interest rates on financial income

On December 31, 2019, the weighted average interest rate of the debt was 6.26%, a reduction of 0.74% when

compared to the debt position contracted in the same period in 2018, reflecting our financial soundness

combined with Liability Management process in order to lengthen the debt profile and reduce the cost of our

capital structure.

Comparative analysis of the fiscal year ended on December 31, 2019 and 2018

In the fiscal year ended on December 31, 2019, the cost of goods sold totaled BRL 42.4 billion, an increase of

63.8% in comparison with the previous year, mainly explained by (i) the acquisition of National Beef’s

shareholding control, acquisition of Ohio and Iowa Premium in the North America Operation; (ii) increase of the

cattle’s cost in the South America Transaction due to a greater export demand, mainly to China, and lower

availability of cattle in Uruguay; (iii) acquisition of Quickfood in Argentina; and (iv) devaluation of the real against

the dollar.

The raw material item continued to be the main component of COGS representing 80.7% in the fiscal year

ended on December 31, 2019, compared to 83.3% in the fiscal year ended on December 31, 2018. Expenditure

on labor represented 8.7% of the total cost in the fiscal year ended on December 31, 2019, compared to 8.9%

in the fiscal year ended on December 31, 2018.

The gross profit was BRL 6.4 billion in the fiscal year ended on December 31, 2019, an increase of 66.1%

regarding the fiscal year ended on December 31, 2018, reflecting the acquisition of National Beef’s shareholding

control. The gross margin hit 13.1% in the year ended on December 31, 2019, an increase of 16 bps when

compared to the previous year, mostly affected by (i) the increase in the prices and the lower cost of cattle

purchase price, given greater availability of animals in the North American Transaction, (ii) enhancement in

average prices and increase in the export volume in the South American Transaction.

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Sell, general and administrative expenses (DVGA) totaled BRL 2,810.8 million in the fiscal year ended on

December 31, 2019, an increase of 48.3% regarding the BRL 1,894.9 million recorded in the fiscal year ended

on December 31, 2018 explained by (i) the acquisition of controlling interest in National Beef, the acquisition of

Ohio and Iowa Premium in the North America Transaction; (ii) acquisition of Quickfood in Argentina; and (iii)

devaluation of the real against the dollar.


increase of 83.4% in comparison with the fiscal year ended on December 31, 2018. The adjusted EBITDA

margin was 9.8%, an expansion of 103 bps regarding the 8.8% margin in the fiscal year ended on December

31, 2018. The main factors that led to this performance were (i) the acquisition of the controlling interest in

National Beef, the acquisition of Ohio and Iowa Premium in the North American Transaction; (ii) better prices in

the domestic market in North America and South America transaction; (iii) better export mix, with more products

going to China; and (iv) Acquisition of Quickfood together with the turn-around in the Argentina transaction,

resuming profitability and operational efficiency.

Comparative analysis of the fiscal year ended on December 31, 2018 and 2017

In the fiscal year ended on December 31, 2018, the cost of goods sold totaled BRL 26.0 billion, an increase of

195% compared to the previous fiscal year, explained (i) by the acquisition of control of National Beef (BRL14.0

billion); (ii) the average devaluation of the real against the dollar; and (iii) the increase in the average price of

live cattle in Brazil, which was 4.4% higher than the fiscal year ended on December 31, 2017 according to

ESALQ index.

The raw material item continued to be the main component of COGS representing 83% in the fiscal year ended

on December 31, 2018, compared to 85% in the previous fiscal year. Expenditure on labor represented 9% of

the total cost in the fiscal year ended on December 31, 2018, compared to 10% in 2017.

The gross profit was BRL 3.8 billion in the fiscal year ended December 31, 2018, an increase of 181% over the

same period in 2017, reflecting the acquisition of National Beef and the continuous and solid growth of South

America transaction, which grew 5% compared to the 2017. Gross margin hit 13.0% on December 31, 2018, a

decrease of 60 bps compared to the previous year, mainly impacted by the truck drivers’ strike in the second

quarter of 2018 and the unplanned shutdown of Mineiros plant in the last quarter of the year.

Selling, general and administrative expenses (SG&A) totaled BRL 1.9 billion (6.4% of net revenue) in the fiscal

year ended on December 31, 2018, an increase of 131% regarding the amount recorded in the same period in

2017, explained (i) by the acquisition of National Beef (ii) by the exchange rate effect on the conversion of

international units values into the real (iii) by the increase in commercial and logistical expenses, due to the

increasing sales volume and (iv) increased spending on marketing and advertising.


increase of 229% in comparison with the previous year. The adjusted EBITDA margin was 8.8%, an expansion

of 100 bps compared to the 7.8% margin in 2017. The main factors that led to this performance were (i) the

record result of the North America transaction, reflecting the positive moment of the sector in the USA; (ii) the

better profitability of the South America transaction, positively influenced by the recovery of the sector in

Argentina and gains in market share in Uruguay; and (iii) the devaluation of the real that offset the exogenous

effects that adversely affected the Brazilian transaction, including the truck drivers’ strike and incident with the

Mineiros plant in the last quarter of the year.

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10.3 - Events with relevant effects, occurred and expected, in the financial statements

(a) introduction or disposal of operating segment

On June 5, 2018, the Company, through its subsidiary, NBM US Holdings, Inc, entered into an agreement with

Jefferies Financial Group Inc and other shareholders, in which it was agreed the terms and conditions for the

acquisition, by the Company, of 51% of the voting shares of National Beef Packing Company, LLC (“National

Beef”), where it acquired 51% of the voting shares, as described in note 12.2 to the Financial Statements of

December 31, 2018.

The acquisition of National Beef represented a strategic redirection for the Company, focusing on the beef

protein industry, in which National Beef is considered the 2nd largest company in the world by installed capacity.

This strategic movement is in line with Marfrig’s guidelines: Simple, focused and with sustainable value creation.

(b) formation, acquisition or disposal of equity interest

On June 5, 2018, the Company acquired 51% of the controlling interest of National Beef from Jefferies and

other shareholders for BRL 3.7 billion. This acquisition represented a new strategic direction for the Company,

focusing on the beef sector and a more simplified structure that creates value in a sustainable manner. National

Beef is the 4th largest and most efficient beef company in the USA, making the Company the 2nd largest beef

company in the world.

On November 30, 2018, the Company sold to Tyson its entire interest in certain Marfrig subsidiaries that own

and operate the Keystone business unit. The total consideration for the sale was USD 2.4 billion, and the amount

received by Marfrig after contractual adjustments, such as the exclusion of Keystone’s net debt, was USD 1.4

billion, which remains subject to purchase price adjustments. With the sale of Keystone’s business, mainly

focused on poultry, the Company continues to concentrate its operations in the beef sector and significantly

reduced its leverage.

On January 3, 2019, the Company acquired 91.89% of the total voting capital of QuickFood S.A. for USD 54.9

million. Quickfood is the main beef producer in Argentina, leader in the local hamburger market and has a

processing capacity of 620 head/day.

On January 24, 2019, the Company completed the acquisition of Várzea Grande in the State of Mato Grosso

and entered into a supplier partnership with BRF S.A. for BRL 100 million. The partnership shall enable the

Company to further expand its supplier relationships to global food service companies in Brazil.

These assets shall complement the product portfolio of the South America transaction.

On February 28, 2019, the Company sold all Ohio Beef USA LLC’s equity interests to National Beef for USD 60

million. After the closing of this transaction, Ohio Beef USA LLC changed its corporate name to National Beef

Ohio, LLC.

On June 10, 2019, the Company, through its subsidiary NBM US Holdings, LLC, together with Jefferies Financial

Group, Inc (through its subsidiary JIAC LLC), U.S. Premium Beef, LLC, TMK Holdings, LLC and NBPCo

Holdings, LLC, entered into an agreement with Sysco Holdings, LLC (“Sysco”), in which they acquired 100.00%

of the voting and total capital of Iowa Premium, LLC (“Iowa”), which was subsequently as paid-in capital in

National Beef Packing Company, LLC (“National Beef”).

Iowa Premium is a company headquartered in the United States, has a slaughtering capacity of 1,100 head/day

and has hit sales of USD 644 million in 2018. In addition, it works only with high quality animals (Black Angus),

and specializes in USDA Choice and USDA Prime graded meat.

The transaction is fully in line with National Beef’s strategy, increasing its ability to serve markets that seek high

quality meat, in addition to representing an opportunity to generate synergies and range improvements in its

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operation. In addition, it demonstrates the long-term partnership between Marfrig, Jefferies, USPB, TMK and

NBPCo, as well as the commitment of all shareholders to National Beef.

On November 29, 2019, again, through its subsidiary, NBM US Holdings, Inc, increased its interest in the capital

of the subsidiary National Beef, through the additional acquisition of 30.73% of the voting and total capital of

National Beef by amount of BRL 3,255 million. With the transaction, NBM now holds an 81.73% interest in the

North American subsidiary.

In the Officers’ opinion, these strategic transactions consolidated Marfrig’s position in the Americas, with a

diversified production platform in North and South America, with the ability to serve the main and most profitable

consumer markets in the world.

(c) unusual events or operations

The Company’s Officers inform that in the past three fiscal years there have been no unusual events or

operations related to the Company that have caused or is reasonably expect that may cause a material effect

in the Company’s financial statements or income.

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10.4 - Significant changes in accounting practices - Qualifications and emphases in the

auditor’s report

(a) significant changes in accounting practices

The Officers inform that there have been no significant changes in the Company’s accounting practices in the

last three fiscal years.

The publications and amendments to rules issued by the Federal Accounting Council that are effective for the

year initiated in 2018 had no significant impact on the individual and consolidated financial statements. The

Company describes the main points of the revision of the following new rules:

On January 1st, 2019, the Company applied the CPC 06 (R2)/IFRS 16 - Lease Operations, using the modified

retrospective method, which does not require restatement of the corresponding amounts, does not impact

shareholders’ equity, nor does it change the calculation of dividends and allows the adoption of practical

strategies. Therefore, the comparative information presented for 2018 has not been restated - that is, it is

presented as previously reported in accordance with CPC 06/IAS 17 and related interpretations.

The Company initially adopted CPC 48/IFRS 9 - Financial Instruments and CPC 47/IFRS 15 - Revenue from

Agreements with Clients, using the cumulative effect method (without practical strategies), with initial adoption

of the rule recognized on the date of initial application (i.e. January 1st, 2018). Consequently, the information

presented for 2017 has not been restated and, therefore, has been presented as previously reported in

accordance with the rules previously in force.

Additionally, the Company shall recognize and measure its current or deferred tax assets or liabilities, applying

the requirements of NBC TG 32/R4 based on taxable profit (tax loss), tax bases, unused tax losses, unused tax

credits and tax rates determined in accordance with ITG 22, which clarifies how to apply the recognition and

measurement requirements of NBC TG 32/R4 (IAS 12) - Taxes on profit, when there is uncertainty about the

tax treatment on profit.

(b) Significant effects of changes in accounting practices

CPC 06 (R2)/IFRS 16 – Lease Operations

In the transition, for leases classified as lease operating according to CPC 06(R1)/IAS 17, lease liabilities were

measured at the present value of the remaining payments, discounted at the Company’s incremental loan rate

on January 1st, 2019. Right-of-use assets were measured at an amount equivalent to the lease liability on the

initial adoption date.

The Company opted to use the exemptions proposed by the rule for lease agreements whose term ends in 12

months from the initial adoption date, and lease agreements whose underlying asset are of low value.

The impact of the initial application on the individual and consolidated accounting statements for right-of-use

assets and lease liabilities to be paid was BRL 145,784 and BRL 458,859, respectively. In the income for the

year, the net impact was positive in the amount of BRL 7,443 and BRL 18,010, respectively on the Company

and consolidated. The shareholders’ equity was not impacted by the initial adoption due to the choice by the

simplified retrospective method model.

As of January 1, 2019, the previous balance of the leased fixed asset (financial leasing) was reclassified to the

right-of-use asset and the lease liability was incorporated into the payable lease balance.

Additionally, the Officers inform that, in the fiscal years ended on December 31, 2019, 2018 and 2017, there

were no significant effects on accounting practices with respect to the Company that have caused or are

expected to have an effect on the Company’s financial statements or income.

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(c) qualifications and emphases present in the auditor’s opinion

The independent auditors’ report on the Company’s individual and consolidated financial statements for the

fiscal years ended on December 31, 2019 and 2018 was issued without qualifications or emphases.

In the independent auditor’s report on the financial statements for the fiscal year ended on December 31, 2017,

there is an emphasis paragraph considering, regarding the Cui Bono operation, the Company informed that the

investigations were still in the investigation phase, that there was no accusation and/or indictment against any

of its managers, who was helping the appropriate authorities and developing monitoring through its Compliance

department.

On May 22, 2018, Marfrig Global Foods informed its shareholders and the market in general that Mr. Marcos

Antonio Molina dos Santos informed the Company that he had made an affirmation with the Prosecution Office

to repair any damages regarding the Cui Bono operation. It is worth mentioning that it was not a plea bargain,

and it did not constitute an admission of guilt, so that its business activities were not impacted. Marfrig clarified

that this affirmation exempts the Company from any type of payment and future equity impact.

Additionally, the Company clarified that it discloses and monitors the application of its Code of Ethics and

Conduct, where it expresses its guidelines on corporate conduct and makes it clear that it does not admit the

committing of crimes, illegal and unlawful acts, of any nature, by its executives, board members, employees,

suppliers and partners.

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10.5 - Critical accounting policies

The Officers understand that for the preparation of the financial statements in accordance with accounting

practices adopted in Brazil, the Brazilian corporate law, the Brazilian Accounting Standards (NBCs) and

resolutions and instructions issued by the Brazilian Securities Commission (CVM) shall be included.

In the Officers’ opinion, in addition to the standard and usual accounting practices, considering the agribusiness

sector to which the Company is inserted, and the Company’s diversity characteristics, the following policies are

of critical importance for the preparation of the consolidated financial statements

Revenue

The revenue from product sales is recognized in accordance with NBC TG 47 (IFRS 15) - Revenue from

agreements with clients, adopted by the Company on January 1, 2018, establishing a five-step model to

determine the measurement of revenue and when and how it shall be recognized. Therefore, the Company

recognizes revenue when products are delivered and duly accepted by its clients, where the risks and benefits

related to ownership are transferred. The transfer of risks and benefits of ownership occurs when the products

are shipped, accompanied by the respective sales invoice, taking into account the incoterms. These criteria are

considered to be met when the goods are transferred to the buyer, subject to the main freight modalities

practiced by the Company.

Revenue is net of applicable taxes, returns, allowances and discounts, and in the case of consolidated financial

statements, they are also net of sales eliminations and unrealized profits on inventories, between the Parent

Company and its Subsidiaries. The Company did not identify any impacts regarding the practices previously

used in its individual and consolidated financial statements as of December 31, 2018.

Accounting estimates

The preparation of the individual and consolidated financial statements, in accordance with accounting practices

adopted in Brazil and IFRS, requires that Management uses its judgment in determining and recording

accounting estimates. Significant assets and liabilities subject to these estimates and assumptions include,

when applicable, the residual value of fixed assets, estimated loss for bad debts, estimated loss for inventory,

deferred income tax and social contribution assets and provisions for tax, labor and civil risks. The settlement

of transactions involving these estimates may result in amounts different from those estimated, due to

inaccuracies related to the process of its determination. The Company and its Subsidiaries perform at least a

quarterly review of estimates and assumptions.

The following subjects are the ones estimated by the Company:

(a) Useful life of fixed and intangible assets with defined useful life;

(b) Determination of the fair value of biological assets;

(c) Impairment loss of taxes;

(d) Impairment loss of intangible assets with indefinite useful life, including goodwill;

(e) Measurement at fair value of items related to a business combination;

(f) Fair value of financial and derivative instruments;

(g) Estimated loss for bad debts;

(h) Estimated loss for inventory obsolescence;

(i) Deferred Income Tax and Social Contribution assets;

(j) Provisions (legal, tax, labor and civil lawsuits);

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(k) Stock option plan;

Impairment

Impairment tests on goodwill and other intangible assets with an indefinite economic life are performed annually

at the end of the year. Other non-financial assets, such as fixed and intangible assets, are tested for impairment

whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

When the carrying amount of an asset exceeds its recoverable amount (that is, the higher of the use value and

the fair value less costs of sale), a loss is recognized to bring the carrying amount to its recoverable amount.

When it is not possible to estimate the recoverable amount of an individual asset, the impairment test is

performed in its cash-generating unit (CGU): the smallest group of assets to which the asset belongs and for

which there are separately identifiable cash flows. The Company adopts the segmentation by business unit as

the CGU for its valuations of the recoverable amount of an asset.

The goodwill recorded on the initial recognition of an acquisition is allocated to each of the Company’s BUs that

are expected to benefit from the synergies of the combination that caused the same, for impairment test

purposes.

Impairment losses are included in the income. An impairment loss recognized for goodwill is not reversed.

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10.6 - Relevant items not included in the financial statements

(a) the assets and liabilities held, directly or indirectly, by the Company that do not appear in its balance

sheet (off-balance sheet items)

(I) operating leases, assets and liabilities

As mentioned in item 10.4 of this Reference Form, on January 1st, 2019, the Company adopted CPC 06 (R2)/

IFRS 16 - Lease Operations, recording in its balance a right-of-use asset and a lease liability related to the lease

agreements held on that date. As permitted in the transition rule, the Company has not restated the financial

statements for the comparative periods. Thus, the balance sheets of December 31, 2018 and 2017 do not

included operating lease agreements, but the right-of-use asset and the lease liability in the balance sheet for

the fiscal year ended on December 31, 2019.

The operating lease contracted by the Company are not part of the disclosed financial statements, they are only

presented in a note. Such agreements do not present any restrictions or contingencies, and, in the Officers’

opinion, were entered into in accordance with conventional market practices, and in some cases, there were

readjustment clauses during the term of the agreement.

The amounts of leased assets are calculated at total final cost, including transportation costs, taxes and

documentation. The consideration amount is calculated on the total final cost, applying a predefined percentage

for each agreement.

In the event of termination, the lessor shall have the option of cumulatively: (i) unilaterally terminate the lease

agreement; (ii) claim the return of the leased assets; and (iii) declare the acceleration of the lease agreement.

In this case, the lessee undertakes to pay the amount of the debit balance of unpaid installments, including due

and overdue, in addition to any open expenses, taxes and charges, plus a 10% fine on the debit balance. The

lessee, without prejudice to the lessor, may claim damages.

The Officers inform that regarding the renewal option, the lessee shall previously express its intention, remaining

in silence the renewal shall automatically be extended, whose conditions shall be adjusted between the parties.

If there is no adjustment between the parties, the lessee shall choose to purchase at market value or return the

goods.

Additionally, the Company does not have assets or liabilities, directly or indirectly, that are not included in its

financial statements for the fiscal years of 2019, 2018 and 2017 and the respective notes.

(ii) written-off receivables portfolios over which the entity maintains risks and

responsibilities, indicating the respective liabilities

The Company’s Officers clarify that there were no written-off receivables portfolios on which the Company

maintained risks and responsibilities not included in the Company’s balance sheets as of December 31, 2019,

2018 and 2017.

(iii) future purchase agreement for products or services

The Company’s Officers clarify that there was no future purchase agreement for products or services, which

may cause a material effect, not included in the Company’s balance sheets as of December 31, 2019, 2018 and

2017.

(iv) unfinished construction agreements

The Company’s Officers clarify that there were no unfinished construction agreements not included in the

Company’s balance sheets as of December 31, 2019, 2018 and 2017.

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(v) future financing receipt agreements

The Company’s Officers clarify that there were no future financing receipt agreements not included in the

Company’s balance sheets as of December 31, 2019, 2018 and 2017.

(b) other items not included in the financial statements

The Officers inform that there are no other relevant items that are not included in our financial statements.

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10.7 - Items not included in the financial statements

(a) how such items change or may change revenues, expenses, operating income, financial expenses or

other items in the issuer’s financial statements

In Officers’ opinion, as mentioned in item 10.6 of this Reference Form, the Company, with the exception of

operating leases, did not have assets or liabilities, directly or indirectly, that were not included in its financial

statements for the years ended on December 31 2019, December 31, 2018 and December 31, 2017 and the

respective notes.

The Officers inform that the operating leases impact the Company’s operating income on a monthly basis, in

view of the accounting records of the lease expense (installment payable).

(b) nature and purpose of the operation

The Officers inform that the operating leases refer to agreements of a similar nature to a lease agreement, not

complying with the criteria for classification as finance lease, provided for in Accounting Technical

Pronouncement CPC 06 (R2) - Lease Operations.

The Company has operating lease agreements for computer equipment, machinery and equipment, aircraft and

refrigeration plants, to be used in the Company’s operating activities during the term of the agreement, which

may or may not be renewed, as well as whether or not any call options are exercised.

(c) nature and amount of obligations undertaken and rights generated in favor of the issuer as a result

of the operation

The operating lease statement as of December 31, 2019 (assumed obligations) and as of December 31, 2018

and the main contractual data are shown below:

Lease Weighted average interest rate (p.a.)

Weighted average maturity (years.)

As of December 31, As of December 31,

Fixed assets 6.35% 5.6 2019 2018

Fixed assets 6.15% 5.3 176,623 -

Software License 13.24% 0.6 1,553 3,984

Machines and Equipment 3.77% 4 407,122 479

Others 9.61% 1.3 2,916 2,071

Interest to be incurred (64,381) (1,223)

Total 523,833 5,311

Current liabilities 131,093 3,209

Non-Current liabilities 392,740 2,102

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10.8 - Business plan

(a) investments

(i) quantitative and qualitative description of investments in progress and planned investments

In the Officers’ opinion, the investments reflect Marfrig’s strategic view, focusing on beef protein and products

with higher added value.

In addition to strategic investments, the constant search for efficiency gains, scale gains, cost reduction and

operational improvements, the Company’s activities require regular investments.

Additionally, the Officers understand that Marfrig shall continue to invest in projects that reinforce its

performance in the market of products with higher added value, in line with the best practices related to

corporate sustainability, with social responsibility, especially in the communities, and environmental

preservation.

In the fiscal year ended on December 31, 2019, investments totaled BRL 1,454 million, including the acquisitions

of Quickfood and Várzea Grande. From the remaining balance, 41% was allocated to the maintenance of its

assets, 16% was allocated to the remaining expenses and 44% to M&A activities.

We should also highlight the effect of the exchange rate on the conversion of international units’ values into the

Real, which is the Company’s functional currency.

(In BRL Million) Year ended on

December 31, 2019

Growth 224

Maintenance 590

Total 814

Investments (NB Acquisition) 635

Intangible 5

Total with Acquisition 1,454

(ii) investment financing sources

The Company’s investments are mainly supported by (i) cash flow generated by its operating activities; (ii) short

and long-term bank debt, (iii) capital market transactions in general.

(iii) relevant divestments in progress and expected divestments Keystone Sale

On November 30, 2018, the Company sold to Tyson its entire interest in certain subsidiaries that own and

operate the Keystone business unit. The total consideration for the sale was USD 2.4 billion, and the amount

received by Marfrig after contractual adjustments, such as the exclusion of Keystone’s net debt, was USD 1.4

billion, which remains subject to purchase price adjustments. The table below presents adjustments applicable

to the sales price and transaction profit.

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(in BRL thousand)

Sales price 9,088,080

(-) Adjustment sales price* (5,007,802)

(-) Expenses with legal advisors and external consultants (57,681)

(=) Adjusted sales price 4,022,597

(+) Write-off of assets and Other comprehensive income 1,197,409

(=) Income from sales before taxes 5,220,006

(-) Income Tax and Social Contribution (1,774,802)

(=) Operation income 3,445,204 (*) The adjustment in the sale price is substantially due to the exclusion of the net debt of the traded companies, minority interest, working

capital and others, as provided for in the agreement.

Income of the discontinued operations

The Keystone business unit described above was classified as a discontinued operation in the Financial

Statements for the years ended on December 31, 2018 and 2017.

The tables below present certain information selected from the income statement and cash flows regarding the

Company’s Discontinued Operations for the years ended on December 31, 2019 and December 31, 2018.

Operations income (in BRL million) Year ended on

12/31/2019 12/31/2018

Net Revenue - 9,427,415

Cost of products sold - (8,746,462)

Gross Profit - 680,953

Operating and financial income (expenses) - 4,818,520

Operating income - 5,499,473

Income Tax and Social Contribution - (1,856,154)

Income of discontinued operations - 3,643,319

Interest of the non-controlling shareholders - (35,159)

Net income from discontinued operations - 3,608,160

Cash flows from operations (in BRL million) Year ended on

12/31/2019 12/31/2018

Income for the fiscal year - 3,608,160

Items that do not affect cash - (3,553,070)

From changes in equity (49,364) 573,744

Used in investment activities - 4,732,842

Used in finance activities - 390,181

Exchange rate variation without cash and cash equivalent - 70,353

Flow of discontinued operations (49,364) 5,822,210

Operations cash - (1,154,425)

Cash flow from discontinued operations net of cash (49,364) 4,667,785

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(b) provided that already disclosed, indicate the acquisition of plants, equipment, patents or other

assets that must materially influence the Company’s production capacity

Focusing on products with a higher aggregate value, the Company reported in December 2018 the decision of

acquiring the control of QuickFood, a company leader in production of beef by-products in Argentina, owner of

the band Paty, a leader in the local hamburger market.

Still in December 2018, the acquisition of a processed items plant in Várzea Grande, Mato Grosso, was

announced in Brazil, which includes the production of hamburgers, meat balls and kibbeh, from BRF, with which

a long-term hamburger supply agreement was entered into, among others. These assets shall complement the

product portfolio of the South America transaction. These moves were completed in the 1st quarter of 2019 and

will materially influence the Company’s transactions vis-à-vis its industrial portfolio in 2018.

In the Officers’ opinion, these strategic transactions consolidated Marfrig’s position in the Americas, with a

diversified production platform in North and South America, with the ability to serve the main and most profitable

consumer markets in the world.

The production of beef by-products, specially hamburgers, increased the portfolio with greatest aggregate value

of Marfrig. Additionally, it is worth highlighting the entire line of processed foods, such as canned goods, meat

with sauces, among others, which will be explored in the Company’s operations in South America and North

America.

(c) new products and services;

(i) description of researches in progress already disclosed

Not applicable, provided the Company does not have new products and services.

(ii) total amounts spent in researches to develop new products and services


(iii) projects under development already disclosed


(ii) total amounts spent to develop new products and services


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10.9 - Other facts with relevant influence

Description of the transactions and base for the preparation of proforma consolidated financial

information

The non-audited proforma information includes Marfrig’s audited consolidated historical income for the fiscal

year ended on 31 December, 2019 and 2018 and reflects the transactions detailed below:

• Acquisition of National Beef, as if it had occured on January 1, 2018, with a voting and total capital of

81.73%;

• Acquisition of Iowa Premium, LLC as if it had occured on January 1, 2018;

• Acquisition of Quickfood S.A., as if it had occured on January 1, 2018; and

• Financial charges related to the indebtednesses contracted to finance the acquisitions as if they had

occurred on January 1, 2018.

The non-audited proforma adjustments are based on estimates, information available and certain assumptions

that the Company believes to be reasonable, factually bearable and directly attributable to the acquisition of the

businesses. The non-audited proforma information is being furnished only for illustrative purposes and is not

intended to represent which would be the operating income if the acquisitions had occurred on January 2018

and is not intended to project the Company’s operating income pro any future period. Any of the factors

underlying to the estimates and premises may change or be proven to be materially different.

CONSOLIDATED PRO FORMA INCOME STATEMENT (in BRL Million) 2019 %RL 2,018 %RL Var(%)

Sales net revenue 49,872.0 100.0% 44,834.8 100.0% 11.2%

Cost of products and goods sold (43,425.0) 87.1% (39,563.8) 88.2% 9.8%

Gross Profit 6,447.0 12.9% 5,271.0 11.8% 22.3%

Operating revenue (expenses) (3,000.0) 6.0% (4,110.7) 9.2% (27.0)%

Income before financial revenues and expenses 3,447.0 6.9% 1,160.3 2.6% 197.1%

Financial income (2,176.0) 4.4% (2,583.6) 5.8% (15.8)%

Profit (loss) before tax effects 1,271.0 2.5% (1,423.3) 3.2% (189.3)%

Income tax and social contribution 28.0 0.1% 289.8 0.6% (90.3)%

Net income from continued operations in the year 1,299.0 2.6% (1,133.5) 2.5% (214.6)%

Net income from discontinued operations in the year - 0.0% 3,643.4 8.1% (100.0)%

Net income before interests 1,299.0 2.6% 2,509.9 5.6% (48.2)%

Net income attributed to: Interest of the controlling shareholder - continued operation 762.0 1.5% (1,523.4) 3.4% (150.0)%

Interest of the controlling shareholder - discontinued operation - 0.0% 3,608.2 8.0% (100.0)%

Interest of the controlling shareholder - Total 762.0 1.5% 2,084.7 4.6% (63.4)%

Net income attributed to: Interest of the non-controlling shareholder - continued operation 538.0 1.1% 390.0 0.9% 37.9%

Interest of the non-controlling shareholder - discontinued operation - 0.0% 35.2 0.1% (100.0)%

Interest of the non-controlling shareholder - Total 538.0 1.1% 425.2 0.9% 26.5%

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The Company presents below the proforma amounts of EBITDA, Adjusted EBITDA, EBITDA margin and

Adjusted EBITDA margin for the years ended on 31 December, 2019 and 2018:

(in BRL million, except %) Years ended on December 31,

2019 2018

Net Profit (Loss) 1,299.0 (1,133.5)

Net financial income 2,176.0 2,583.6

Income tax and social contribution (28.0) (289.8)

Depreciation and amortization 1,203.0 917.8

Continued EBITDA 4,650.0 2,078.1

EBITDA Margin (Continued) 9.3% 4.6%

Adjusted EBITDA (Continued) 4,812.0 3,599.9

Adjusted EBITDA Margin (Continued) 9.6% 8.0%

Recurring CAPEX

Below we present the recurring CAPEX used by the Company, intended exclusively for maintenance:

(1) The CAPEX presented does not consider the discontinued transactions and acquisitions carried out by the Company.

(2) Considers from January to December for transactions in South America and from July to December for transactions in North

America.

173

355

590

2017 2018 (2) 2019

RECURRING CAPEX(1)

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APPENDIX V

INFORMATION ON THE NOMINEES TO THE FISCAL COUNCIL ON THE SLATE PROPOSED BY

MANAGEMENT

PER SUBSECTIONS 12.5 to 12.10 OF THE REFERENCE FORM

ITEM 12.5 - For each director, officer and Fiscal Council member of the issuer, indicate, in the form of a table:

FISCAL COUNCIL MEMBERS:

Name Age Profession

Taxpayer ID

(CPF)

/ Passport No.

Position Election

date

Investiture

date Term of office

Other

positions

Elected by

controlling

shareholder

Consecutive

tenures

Eduardo Augusto Rocha

Pocetti 8/6/1954 Accountant 837.465.368-04

Effective Fiscal

Council member March

30,2020

March

30,2020

Until the date

of the 2021 annual

meeting

---- Yes 05

Ricardo Florence dos

Santos

26/02/1955 Engenheiro

Químico

812.578.998-72 Effective Fiscal

Council

member

March

30,2020

March

30,2020

Until the date

---- Yes 0

Tiago Medeiros Garcia 31/01/1983 Administrad

or de

Empresas

301.511.158-26 Effective Fiscal


30,2020

March

30,2020

of the 2021 annual

meeting ---- Yes 0

Ely Carlos Perez 01/06/1970 Contador 140.264.678-05 Alternate Fiscal


30,2020

March

30,2020

Until the date

---- Yes 05

José Osvaldo Bozzo 12/10/1965 Advogado 052.238.968-66 Alternate Fiscal


30,2020

March

30,2020

of the 2021 annual

meeting ---- Yes 0

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Name Age Profession

Taxpayer ID

(CPF)

/ Passport No.

Position Election

date

Investiture

date Term of office

Other

positions

Elected by

controlling

shareholder

Consecutive

tenures

Marcílio José da Silva 30/12/1963 Contador 329.564.871-91 Alternate Fiscal


30,2020

March

30,2020

Until the date

---- Yes 04

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ITEM 12.5 - For each director, officer and Fiscal Council member of the issuer, indicate, in the form of a table:

FISCAL COUNCIL

Eduardo Augusto Rocha Pocetti - Taxpayer ID 837.465.368-04

a. Mr. Pocetti, 65, has been a member of the Fiscal Council of Marfrig Global Foods S.A. since April 2014. He holds a bachelor’s degree in Accoun ting

Sciences and an MBA from the Getúlio Vargas Foundation (FGV). He is currently Chairman of the Board of the Brazilian Institute of Independent Auditors

(IBRACON) and in February 2016 he was elected to hold a chair in the Brazilian Academy of Accounting Sciences. He is a partner at KPMG Auditores

Independentes and has 40 years of experience at audit firms. From 2004 to 2011, he was president of BDO Auditores Independentes, where he represented

BDO Brasil at all member firms of the international BDO network. He has vast experience in finance, accounting, external audits, economic and financial

planning and has coordinated the managerial and executive levels of various large Brazilian and multinational companies in the manufacturing and financial

industries. He served as lead partner on various IPO journeys as well as on special corporate finance projects for acquisitions and divestments. He is also a

member of the Fiscal Council of the publicly traded company Mahle Metal Leve S.A. and a member of the Fiscal Council of Centro de Integração Empresa

Escola (CIEE).

b. In the last five (5) years, Mr. Pocetti has not been subject to the effects of (i) any criminal conviction, (ii) any administrative proceeding at the Securities

and Exchange Commission of Brazil (CVM) or (iii) any unappealable judicial or administrative ruling that suspended or prohibited him from practicing any

professional or commercial activity.

Ricardo Florence dos Santos - Taxpayer ID 812.578.998-72

a. Mr. Florence dos Santos, 65, has acted as an independent member of the Board of Directors of Movida Rental Car, S.A. since 2016 and as a member

of the Fiscal Council of CPFL Energia since 2017. He accumulates in MOVIDA the Audit and Financial committees. He served as Vice President of Finance

(CFO) of Marfrig Global Foods S.A. between 2013 and 2016 and as Executive Director of Investor Relations between 2007 and 2014. Chemical engineer

graduated from the Polytechnic School of USP and in Business Administration from Universidade Mackenzie, he has MBA in Strategy and Finance from

IBMEC-SP. He previously worked at Grupo Pão de Açúcar for 16 years (1984-2000) in various positions as Director of Strategic Planning, Finance and

Excetuive Director of Investor Relations. He was also responsible for the IR areas of UOL Inc. (Grupo Folha de São Paulo - 2000/2001) and Brasil Telecom

(2005-2007). He has participated in several IPO processes, mergers, acquisitions and sales of assets in the companies where he worked. He served on the

Boards of Directors of Grupo Pão de Açúcar (1995-1999), UOL - Grupo Folha (2001) and IBRI - Brazilian Institute of Investor Relations (1998-2001 and 2014-

2019), where he was also CEO of 2010 to 2013 and the Dentalcorp S.A. Advisory Board (2002 to 2006).

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b. In the last five (5) years, Mr. Florence has not been subject to the effects of (i) any criminal conviction, (ii) any administrative proceeding at the

Securities and Exchange Commission of Brazil (CVM) or (iii) any unappealable judicial or administrative ruling that suspended or prohibited him from practicing

any professional or commercial activity.

Tiago Medeiros Garcia - Taxpayer ID 301.511.158-26

a. Mr. Tiago Medeiros Garcia, 37, has been a tax manager at Benício Advogados Associados since 2013, whose main focus is the recovery of taxes.

Leads a team of 22 people who develop the projects for several national and multinational clients, providing all technical support and tax legislation, as well

as the coordination of the area. Graduated in Administration from the Federal University of Ouro Preto and with a Postgraduate Degree in Tax Management

from FECAP, he also participated in Basic Accounting courses; Fiscal SPED and EFD Contributions; ICMS - Tax Replacement; Calculation of Income Tax

(Real Profit); PIS / COFINS - Not cumulative and cumulative. He also served as Tax Supervisor between 2009 and 2013 at Benício Advogados Associados,

previously in the period between 2008 and 2009 as a senior tax analyst at Fernando, Nagao, Cardone & Alvarez Jr. Advogados Associados and from 2003 to

2008 as a tax analyst at Marcondes Advogados Associados.

b. In the last five (5) years, Mr. Garcia has not been subject to the effects of (i) any criminal conviction, (ii) any administrative proceeding at the Securities



Nominees to alternate members of the Fiscal Council:

Ely Carlos Perez – Taxpayer ID: 140.264.678-05

a. Mr. Perez, 49, received a B.S. in Accounting from Universidade São Marcos and an MBA from the Getúlio Vargas Foundation (FGV). His career has focused

on the Financial, Accounting and Process Management areas, with the last 17 years spent as a business and process consultant for implementing Enterprise

Resource Planning (ERP) systems. During this period, he has specialized in mapping processes, adapting processes to the system, implementing ERP and

training/accompanying post-implementation processes. He worked for more than 10 years at Datasul S.A.

b. In the last five years, Mr. Perez has not been subject to the effects of (i) any criminal conviction, (ii) any administrative process at the Securities and

Exchange Commission of Brazil (CVM) or (iii) any unappealable judicial or administrative ruling that suspended or prohibited him from practicing any


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José Osvaldo Bozzo – Taxpayer ID: 052.238.968-66

a. Mr. José Osvaldo Bozzo, 54, has a law degree from the University of Ribeirão Preto, has worked for more than 30 years as a tax consultant, with a

strong specialization in Agribusiness and participation in projects tax consultancy and audit support for several Ethanol and Sugar Producing companies in

Brazil, becoming one of the responsible Consultants in major acquisitions. He started his career in 1989 at PriceWaterhouseCoopers, in Ribeirão Preto, acting

as a tax consultant until 1997, becoming in 1998 Manager at former Trevisan Auditores (current BDO), in the area of TAX, acting as Director and later as

Partner in 2007. He remained as Partner of KPMG, after the purchase of BDO Brasil until December 2012. He served as Partner and tax consultant at MJC

Consultores e Auditores de Ribeirão Preto until December 2018, and currently works at Jbozzo Consultores providing specialized consulting in the Accounting

areas, Tax, Corporate, Labor and Social Security for companies of various activities. In addition to being a consultant, he was a professor of tax planning at

USP - MBA. He participated in Portugal, in works related to the Tax Services Quality Assurance Review and in Chile at the XIV Annual Meeting of BDO

partners from Latin American countries. He also has several articles published in magazines, newspapers and websites addressing tax and legal issues of

interest to agribusiness.

b. In the last five (5) years, Mr. Bozzo has not been subject to the effects of (i) any criminal conviction, (ii) any administrative proceeding at the Securities



Marcílio José da Silva – Taxpayer ID: 329.564.871-91

a. Mr. Marcílio José da Silva, 56, holds a B.S. in Accounting from the Candido Rondon School of Economic and Accounting Sciences (FACEC). Previously,

he served in various positions in the accounting departments of meatpackers, including Quatro Marcos Ltda. (1996-2000) and Frigorífico Tangará Ltda. (2000-

2003). He is an accounting consultant and served as effective member of the Corporation’s Fiscal Council from April 2010 to April 2014.

b. In the last five (5) years, Mr. Silva has not been subject to the effects of (i) any criminal conviction, (ii) any administrative proceeding at the Securities and



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ITEM 12.6 - For each person who served as director, officer and Fiscal Council member in the last fiscal year, indicate, in the form of a table, their

percentage participation in the meetings held by the respective body in said period after their investiture:

Fiscal Council Member

Number of Fiscal Council

meetings since investiture in

April 26, 2019

% participation in meetings held

after investiture

Eduardo Augusto Rocha Pocetti Six (6) meetings held

through March 28, 2018 100%

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ITEM 12.7. Provide the information mentioned in Subsection 12.5 for the members of the statutory committees and of the audit, risk,

financial and compensation committees, even if said committees or structures are not statutory:

- Name - Taxpayer ID (CPF) / Passport

- Work performed for the issuer in any other capacity

- Committee type

- Description of other Committees

- Position held

- Description of other positions held

- Career background; Liability statement, if any

- Profession or

occupation

- Birth

- Election date - Investiture date

- Term of office

Elected by controlling

shareholder

- Committee

type

- Description of other

Committees

Marcia Aparecida Pascoal Marçal dos Santos

Audit Committee Membro do Conselho de Administração Businesswoman May 06, 2019 May 06, 2019

2021 Annual

Meeting Yes 04

182.070.698-21 03/28/1973 Non-Independent Director See iten 12.5.

Tang David 213.882.168-41 Executive Board

Audit Committee Member of Executive Board

See iten 12.5.

Business Administration

04/16/1969

May 06, 2019 2021 Annual

Meeting

Yes

0

Antonio dos Santos Maciel Neto Compensation, Corporate Governance

and Human Resources Committee

President of Compensation, Corporate Governance and Human Resources

Committee

Mechanical Engineer May 06, 2019 2021 Annual

Meeting

Yes

06 532.774.067-68

Audit Committee

10/11/1957 May 06, 2019

See iten 12.5.

José Eduardo de Oliveira Miron Finance and

Risk Management Committee Member of Finance and

Risk Management Committee Accountant

May 06, 2019 2021 Annual

Meeting

May 06, 2019

Yes

02 042.332.028-90 03/14/1963

May 06, 2019

Executive Board See iten 12.5.

Herculano Aníbal Alves 463.463.178-49 Non-Independent Director

Finance and Risk Management Committee

Non-Independent Director See iten 12.5.

Economist and Rural Business

Administration 02/15/1953

May 06, 2019 2021 Annual

Meeting

Yes

0

Carlos Geraldo Langoni 110.847.077-72

Finance and Risk Management Committee

Independent Director of Souza Cruz Economista 07/23/1944

May 06, 2019 2021 Annual

Meeting

Yes 04

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Roberto Faldini Compensation, Corporate Governance

and Human Resources Committee

Member of Compensation, Corporate Governance and Human Resources

Committee


May 06, 2019 2021 Annual

Meeting

Yes

02 070.206.438-68 06/09/1948

May 06, 2019

Non-Independent Director See iten 12.5. May 06, 2019 May 06, 2019

Heraldo Geres 119.691.688-89 Executive Board

Compensation, Corporate Governance and Human Resources Committee

Member of Executive Board

See iten 12.5.

Lawyer 10/16/1968

May 06, 2019 2021 Annual

Meeting

Yes

0

Roberto Silva Waack 029.327.158-52 Non-Independent Director

Sustainability Committee Non-Independent Director

See iten 12.5.

Biologist and Business Administration

03/28/1960

May 06, 2019 2021 Annual

Meeting

Yes

0

Paulo Pianez Junior 083.886.738-31

Sustainability Committee Sustainability Officer Economist

08/24/1966

May 06, 2019 2021 Annual

Meeting

Yes 0

Daniela Mariuzzo 168.359.918-79

Sustainability Committee Sustainability Consultant and Finance Engineer

05/27/1971

May 06, 2019 2021 Annual

Meeting

Yes 0

Alain Emile Henri Martinet 233.887.318-10 Non-Independent Director

Sustainability Committee Non-Independent Director

See iten 12.5.


01/23/1943

May 06, 2019 2021 Annual

Meeting

Yes

0

Marcia Aparecida Pascoal Marçal dos Santos - Taxpayer ID 182.070.698-21

a. Ms. Marçal dos Santos, 47, has been a member of the Board of Directors of Marfrig Global Foods S.A since March 2007. With long experience in the

food industry, she has been serving the Company for many years first as a management member and since 2007 as director. From 2000 to 2006, she served

as chief financial officer and chief audit executive. In addition, Ms. Marçal dos Santos is an active participant and Executive President of the Instituto Marfrig

Fazer and Ser Feliz de Responsabilidade Social, Marfrig’s social investing institute, and a shareholder and deputy chief executive of MMS Participações S.A.,

the controlling shareholder of the Company.

b. No judgment of guilty (final or otherwise) has been entered in the last five years against Ms. Marçal dos Santos in any criminal proceedings or any

disciplinary proceedings processed before the CVM, or in any other court or administrative proceedings, whose effect could be that of having her banned or

89/154

barred from practicing or performing, or disqualified to practice or perform professional or business activities of any kind.

Tang David – Taxpayer ID 213.882.168-41

a. Mr. Tang David, 50, is the Companya Internal Audit Officer and is one of our Executive Officers. Beginning in 1991, he worked for 11 years in the

treasury department at Asea Brown Boveri – ABB Brasil, where his last position was Executive Officer of Banco ABB S.A., which is the financial arm of

ABB Brasil. From 2002 to 2006 he worked for 4 years in the treasury department at JBS Friboi, where his last position was as Controller of the In-

Natura department.

b. In the last five (5) years, Mr. Tang has not been subject to the effects of (i) any criminal conviction, (ii) any administrative proceeding at the Securities

and Exchange Commission of Brazil (CVM) or (iii) any unappealable judicial or administrative ruling that suspended or prohibi ted him from practicing


Antonio dos Santos Maciel Neto - Taxpayer ID 532.774.067-68

a. Mr. Maciel Neto, 62, has been an independent member of the Board of Directors of Marfrig Global Foods S.A since May 2007. Additionally, he

currently serves as Chief Executive Officer of the CAOA Group and as a member of the board of directors of Archer Daniels Midland Company, a U.S. -

based global food processing and commodities trading corporation. Previously, he served as chief executive officer of Suzano Papel e Celulose S/A

(pulp and paper producer). In addition, from 1999 to May 2006, Mr. Maciel Neto held various executive positions with the For d conglomerate, including

as corporate vice president of the Ford Motor Company (2004), President of Ford’s South America Operations (2003 – 2006) and chief executive officer

of Ford Brazil (1999 – 2003). He is a former Chairman of the Itamarati Group (sugarcane, renewable energy; from 1997 to 1999) and of CECRISA -

Revestimentos Cerâmicos (ceramic tiles, from 1993 to 1997). Between 1990 and 1993, he held various positions in the federal government of Brazil,

including as Adjunct Director of the Manufacturing and Commerce Department of the Ministry of Development Manufacturing and T rade, and National

Adjunct Secretary of Economics of the Ministry of Finance, and Vice Minister of the Ministry of Industry, Commerce and Touris m. In the same period

he was technical coordinator of the Brazilian Quality and Productivity Program (Programa Brasileiro de Qualidade e Produtividade) or PBQP. He began

his professional career at Petrobras in 1980, where he worked for ten years. Mr. Maciel Neto holds a graduate degree in Mech anical Engineering

(1979) from the Federal University of Rio de Janeiro.

b. No judgment of guilty (final or otherwise) has been entered in the last five years against Mr. Maciel Neto in any criminal proceedings or any disciplinary

proceedings processed before the CVM, or in any other court or administrative proceedings, whose effect could be that of having him banned or barred from

practicing or performing, or disqualified to practice or perform professional or business activities of any kind.

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José Eduardo de Oliveira Miron - Taxpayer ID 042.332.028-90

a. Mr. Miron, 56, has been our Chief Executive Officer since September 3, 2018. He has over 30 years of experience working in the financial sec tor

and has previously held management positions in the agribusiness and financial sectors. Prior to his appointment as Chief Exe cutive Officer, Mr. Miron

was our Chief Financial and Administrative Officer and the Executive Vice President of Finance at Keystone. Prior to joining us in 2010, Mr. Miron

worked at the Cargill Group in various subsidiaries, including Cargill Bank, Black R iver Asset Management and Seara Alimentos Ltda., a Brazilian food

producer, among others. Earlier in his career, Mr. Miron spent 10 years with Safra Bank. Mr. Miron studied accounting at the University of San Francisco

and earned post-graduate degrees in finance from the E.C. Alvares Penteado Foundation (Fundação E.C. Alvares Penteado) and a master’s degree in

Business Administration from Business School São Paulo/University of Toronto.

b. In the last five (5) years, Mr. Miron has not been subject to the effects of (i) any criminal conviction, (ii) any administrative proceeding at the Securities

and Exchange Commission of Brazil (CVM) or (iii) any unappealable judicial or administrative ruling that suspended or prohibi ted him from practicing


Herculano Aníbal Alves – Taxpayer ID 463.463.178-49

a. Mr. Herculano Aníbal Alves, 67, holds Master in Finance and Investments and Post-graduation in Financial Administration from Fundação Getúlio

Vargas and Economist from PUCHe also completed an executive education program in Risk, Compliance and Governance at the Risk University of

KPMG. He also completed an executive education program in Risk, Compliance and Governance at the Risk University of KPMG. He is cert ified as a

Portfolio Manager by the Securities and Exchange Commission of 69/126 Brazil (CVM) and a Certified Professional by the B razilian Financial and

Capital Markets Association (Anbima-CGA) Previously he worked in the financial industry as investment director, stock manager and credit analyst at

BRAM - Bradesco Asset Management, ABN AMRO, Unibanco and Banco Bozzano Simonsen, and in the administrative and financial areas of Empresa

de Onibus Vila Carrão. At the former three companies, he was a member of the Credit and Investment committees and on the BRAM monthly committee

at Banco Bradesco. Director at Tim Brasil (2015 to present) and at Marfrig Brasil Foods (2015 to Nov/16). Member of the Audit Board at Cielo (2015 to

present), Grendene (2015 to present), Grupo Fleury and Ecorodovias (2018 to present), Gerdau (2017 -18), Fundo de Private Equity de Tecnologia da

GP (2001-05), Fundo de Valor e Liquidez da Bradesco Templeton (1998-01) and alternate member at Fundo de Private Equity da 2Bcapital (2013 to

Jan/19). Partner at Araxá Investimentos (2015-16) and Barigui Gestão de Recursos (Nov/16 to present). Member of the Bylaws Audit Commi ttee at

Tim Brasil, Chairman of the Risk and Financial Specialist Committee. Participation in various associations, including member of the Mergers &

Acquisition Committee (2015-18), Analyst Supervisory Board (2016 to present) and Association of Capital Markets Investors - AMEC (2011-16),

Chairman of the Stock Funds Committee of Brazilian Financial and Capital Markets Association - Anbima (2012-16) and Board Member and Technical

Director at Abamec, currently the Capital Market Professionals and Investors Association - Apimec (1988-92). He has participated as a lecturer at

events hosted by APIMEC, Investidor Profissional and Info Money. He has given interviews to Bloomberg TV and to the newspaper s: Valor, Estadão,

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Folha de São Paulo and O Globo, and to the periodicals: Exame and Istoé Dinheiro, and to various websites.

b. In the last five (5) years, Mr. Herculano has not been subject to the effects of (i) any criminal conviction, (ii) any admini strative proceeding at the

Securities and Exchange Commission of Brazil (CVM) or (iii) any unappealable judicial or administrative ruling that suspended or prohibited him from

practicing any professional or commercial activity.

Carlos Geraldo Langoni - Taxpayer ID 110.847.077-72

a. Mr. Langoni, 75, has been an independent member of the Board of Directors of Marfrig Global Foods S.A since May 2007. He currently serves as

a member of the board of directors of Souza Cruz (a subsidiary of British American Tobacco), member of the Advisory Board of the Guardian Industries

group, President of Projeta Consultoria Economica Ltda. and Senior Adviser to Companhia Vale do Rio Doce. He also served as Chairman of the Board

of Governors of the Central Bank of Brazil between 1980 and 1983. Mr. Langoni holds a graduate degree in Economics (1968) from the Federal University

of Rio de Janeiro, Brazil, and a PhD degree in Economics (1970) from the University of Chicago, United States.

b. No judgment of guilty (final or otherwise) has been entered in the last five years against Mr. Langoni in any criminal proceedings or any disciplinary

proceedings processed before the CVM, or in any other court or administrative proceedings, whose effect could be that of having him banned or barred from

practicing or performing, or disqualified to practice or perform professional or business activities of any kind.

Roberto Faldini – Taxpayer ID 070.206.438-68

a. Mr. Roberto Faldini, 71, born on September 6, 1948, holds a bachelor’s degree in Business Administration from the School of Economics and

Business Administration at the Getúlio Vargas Foundation (EAESP-FGV) and completed a non-degree program in Advanced Management at the Dom

Cabral Foundation and at INSEAD – Fontainebleau, a non-degree program in Entrepreneurship at Babson College – Boston and a non-degree program

in Corporate Governance Board Leadership – TOT (Training of Trainers) at the IFC and Brazilian Corporate Governance Institute (IBGC). He is the co-

founder of the IBGC, an organization dedicated to promoting corporate governance in the country, and is an associate member o f the Brazilian Institute

of Financial Executives (IBEF), an autarchy that promotes professional and social relationships among professionals in the financial industry. He is an

executive director, shareholder and board member at Metal Leve S.A., a producer of automotive components, where he served chi ef financial officer

and investor relations officer from 1980 to 1992 and as a board member from 1993 to 1996. He served as president of the Securities and Exchange

Commission of Brazil (CVM) in 1992. He also served as the director in São Paulo of the Family Business Center (PDA) at the Do m Cabral Foundation

(FDC). Over the course of his career, he has served on the board of directors or advisory boards of various companies, which include: a) Bovespa –

Bolsa de Valores de São Paulo; b) CPFL – Companhia Paulista de Força e Luz S.A.; c) KlickNet S.A.; d) Inpar S.A.; and e) Sadia S.A./ BRF S.A. He

is an arbiter on the Market Arbitration Chamber of the Brazilian Stock Exchange (BM&FBOVESPA), a member of the Content Develo pment Board of

FBN – Family Business Network in Brazil and a member of the Corporate Governance and Business committees of Amcham - SP. He is currently a

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statutory board member of the following companies: a) VULCABRAS|AZALEIA S.A. (since 2011); b) Banco BMG S.A. (since 2013); c) Grupo Everest

de Hotéis (since 2013); d) Metalúrgica Golin SA since April 2016; and e) non-statutory board member of EMIBRA Indústria de Embalagens Gráficas

Ltda. (since 2008).

b. In the last five (5) years, Mr. Faldini has not been subject to (i) any criminal conviction, (ii) any administrative proceedi ng at the Securities and



Heraldo Geres - Taxpayer ID 119.691.688-89

a. Mr. Geres, 51, is the Company General Counsel and Vice President of Human Resources. He holds a law degree and has been a member of the

Brazilian Bar Association since 1994. He also holds a postgraduate degree in tax law from the Pontifical Catholic University of São Paulo (PUC-SP).

Additionally, he holds a bachelor’s degree in business administration from PUC -SP, a master’s degree in political and economic law from Universidade

Presbiteriana Mackenzie and a certificate in global business administration from the Thunderb ird School of Business. Mr. Geres was recognized as a

leading legal practitioner by Legal 500 (GC Powerlist) in 2018.

b. In the last five (5) years, Mr. Geres has not been subject to (i) any criminal conviction, (ii) any administrative proceeding at the Securities and



Roberto Silva Waack – Taxpayer ID 029.327.158-52

a. Mr. Roberto Silva Waack, 59, is founder, shareholder and former CEO and subsequently Chairman of the Board of Amata S.A.

(www.amatabrasil.com.br), a forestry company engaged in the stewardship and cultivation of native and exotic species. He has long experience as an

executive of Brazilian and multinational companies in the pharmaceutical and forestry industries, as general 70/126 director and in the technology,

marketing and planning areas. As an entrepreneur, he is engaged directly in the private placement and creation of management and governance structures.

He participates actively on the board of directors of organizations such as Wisewood (recycled plastics), CHS Agroindustrial (grain trading), Global

Reporting Initiative (GRI), Forest Stewardship Council (FSC), Brazilian Corporate Governance Institute (IBGC), Instituto Ethos, Fundo Brasileiro de

Biodiversidade (Funbio), ISE-Bovespa and WWF. He has been engaged directly in environmental and social movements since the 1980s, always acting

at the interface between the private sector and NGOs. He holds a B.Sc. in Biology from IB-USP and an MBA from FEA-USP. Previously he served at the

following organizations: Amata S.A. (Chairman of the Board, 2013-2015); CHS Agronegócio Ltda. (Advisory Board, 2014- 2016); Brazilian Corporate

Governance Institute - IBGC (Director, 2014-2016); Global Reporting Initiative – GRI (Director, 2010- 2016); Instituto Ethos (Director, 2013-2016); WWF

Brasil (Director and Chairman of the Board, 2014-2016); Instituto Ipê (Director, 2012-2016); BOVESPA Corporate Sustainability Index - ISE (Advisory

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Board, 2014-2106); Enterprises for Climate Initiative - EPC/FGV (Advisory Board, 2011-2016); Rede Amigos da Amazônia - RAM (Advisory Board, 2008-

2014); Fundo Brasileiro para a Biodiversidade - FUNBIO (Director, 2009-14); Forest Stewardship Council – FSC (Director, 2006-12; Chairman of the

Board, 2008- 10); Steering Committee of the Amazon Alternative – IDH The Sustainable Trade Initiative – Holland (2011-14); Instituto para a Agricultura

Sustentável - ARES (Chairman of the Board, 2007-11); Global Campaign for Climate Action - Brazilian Section (Advisory Board, 2009-10); Grupo Orsa

Holding (Advisory Board, 2005-06); Centro de Referencia para Informação Ambiental - CRIA (Director, 2005-11); Forest Stewardship Council Brazilian

Initiative (Director, 2005-07); Ybios, a joint venture of Orsa, Natura and Centroflora for R&D in products from biodiversity (Founder and Director, 2004 -06);

Plantations Review Group at Forest Stewardship Council (2004-05); Foundation Institute of the Business and Economics School of the University of São

Paulo (FIA/USP) ; PENSA Agribusiness Program at FEA-USP (Advisory Board, 2001-06). His appointment as member is subject to formal confirmation by

the shareholder BNDES Participações S.A. under the Shareholders’ Agreement.

b. In the last five (5) years, Mr. Roberto has not been subject to the effects of (i) any criminal conviction, (ii) any administ rative proceeding at the Securities



Paulo Pianez Junior – Taxpayer ID 083.886.738-31

a. Paulo, 53, graduated in Economics from UNICAMP, with postgraduate degree in Quality and specialized in Retail Management from Youngstown State

University (USA), Paulo served more than 10 years as Director of Sustainability and Social Responsibility at the Carrefour Brasil Group and was previously

Quality Director at BankBoston and Superintendent of Customer Relations at Banco Santander.

b. In the last five (5) years, Mr. Pianez has not been subject to the effects of (i) any criminal conviction, (ii) any administrative proceeding at the Securities

and Exchange Commission of Brazil (CVM) or (iii) any unappealable judicial or administrative ruling that suspended or prohibi ted him from practicing any


Daniela Mariuzzo – Taxpayer ID 168.359.918-79

a. Daniela, 48, has more than 20 years of experience in Sustainability and Responsible Finance. Extensive experience and relationships with g overnment

agencies, NGOs, financial institutions, development banks, manufacturing companies and farmers. National and international reference in structuring

responsible financial operations. International representation and transit in global forums and initiatives. Expertise in man aging multicultural teams.

Experience in the segments of finance, consulting, food, biotechnology, agriculture and academic. Deep knowledge of management systems to optimize

processes and certifications. Rich academic experience, with master's and doctorate in Biotechnology. Fluent English and Span ish and international

experience.

b. In the last five (5) years, Mr. Mariuzzo has not been subject to the effects of (i) any criminal conviction, (ii) any adminis trative proceeding at the Securities

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Alain Emilie Henry Martinet – Taxpayer ID 233.887.318-10

a. Mr. Alain, 77, has been an independent director of the Corporation since December 2009. He is a French-Argentine who has worked in the animal

protein industry for over 30 years, having managed the international team of the meats department at Louis Dreyfus Corporatio n USA (1978 to 1984). He

was general manager (1985 to 1991) and commercial director (1991 to 1992) at the meatpacker Frigorífico Rio - Platense. He served as executive officer

at SWIFT Argentina for five years, starting in 2001. Mr. Martinet joined the Corporation in October 2006 and has served as the executive officer responsible

for the Argentina operations, for the trading houses and for the U.S. operations of the Marfrig Group.

b. In the last five (5) years, Mr. Alain has not been subject to the effects of (i) any criminal conviction, (ii) any administrative proceeding at the Securities

and Exchange Commission of Brazil (CVM) or (iii) any unappealable judicial or administrative ruling that suspended or prohibi ted him from practicing any


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ITEM 12.8 - For each person who served as a member of the statutory committees and of the audit, risk, financial and compensation

committees, even if said committees or structures are not statutory, indicate, in the form of a table, their percentage participation in

the meetings held by the respective body in said period after their investiture:

Audit Committee Member Number of meetings held by the Commiittee since investiture date on May 06, 2019

% of member in meeting held after investiture

Marcia Ap. Pascoal Marçal dos Santos Three (3) meetings Held until February 28, 2020

100%

Antonio dos Santos Maciel Neto Three (3) meetings Held until February 28, 2020

100%

Tang David Three (3) meetings Held until February 28, 2020

100%

Financial and Risk Management Committee Member

Number of meetings held by the Commiittee since investiture date on May 06, 2019


Herculano Aníbal Alves Three (3) meetings Held until February 28, 2020

100%

José Eduardo de Oliveira Miron Three (3) meetings Held until February 28, 2020

100%

Carlos Geraldo Langoni Three (3) meetings Held until February 28, 2020

100%

Compensation, Corporate Governance and Human Resources Committee Member

Number of meetings held by the Commiittee since investiture date on May 06, 2019


Antonio dos Santos Maciel Neto One (1) meetings Held until February 28, 2020

100%

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Heraldo Geres One (1) meetings Held until February 28, 2020

100%

Roberto Faldini One (1) meetings Held until February 28, 2020

100%

Susteinability Committee Member Number of meetings held by the Commiittee since investiture date on May 06, 2019


Roberto Silva Waack Two (2) meetings Held until February 28, 2020

100%

Paulo Pianez Junior Two (2) meetings Held until February 28, 2020

100%

Daniela Mariuzzo Two (2) meetings Held until February 28, 2020

100%

Alain Emile Henri Martinet Two (2) meetings Held until February 28, 2020

0%

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12.9. Inform the existence of any marital, steady union or family relationship to the second degree between: a) the directors, officers of Fiscal

Council members of the issuer; b) i. the directors, officers of Fiscal Council members of the issuer and ii. the directors, officers of Fiscal Council

members of the direct or indirect subsidiaries of the issuer; c) i. the directors, officers of Fiscal Council members of the issuer or of its direct or

indirect subsidiaries and ii. the direct or indirect controlling shareholders of the issuer; d) i. the directors, officers of Fiscal Council members of

the issuer and ii. the directors, officers of Fiscal Council members of the direct or indirect parent company of the issuer.

Name Position

Taxpayer ID

(CPF)

Corporate name of the issuer,

or parent or subsidiary company Taxpayer ID (CNPJ)

Type of relationship with the director /

officer of the issuer or parent or subsidiary

company

Director/officer of the issuer or parent or subsidiary company

Marcos Antonio Molina dos Santos 102.174.668-18 Marfrig Global Foods S.A.

Chairman of the Board 03.853.896/0001-40 Spouse (1st degree relative)

Related person

Marcia Aparecida Pascoal Marçal dos Santos 182.070.698-21 Marfrig Global Foods S.A. 03.853.896/0001-40

Non-independent director

Note

Nihil

Director/officer of the issuer or parent or subsidiary company

Marcos Antonio Molina dos Santos 102.174.668-18 Marfrig Global Foods S.A. 03.853.896/0001-40 Sibling-in-law (2nd degree relative)

Chairman of the Board

Related person

Rodrigo Marçal Filho 184.346.398-90 Marfrig Global Foods S.A. 03.853.896/0001-40

Non-independent director Executive Officer (Board of Executive Officers)

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Note Mr. Rodrigo Marçal Filho is the brother of Ms. Marcia Aparecida Pascoal Marçal dos Santos, who in turn is married to Mr. Marcos Antonio Molina dos Santos, the Chairman of our Board of Directors.

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12.10. Inform the existence of any relationships of subordination, provision of services or controls in the last three fiscal years

between the directors, officers of Fiscal Council members of the issuer and: a) the direct or indirect subsidiary of the issuer, with the

exception of those in which the issuer directly or indirectly holds all of its capital; b) the direct or indirect controlling shareholder; c)

if relevant, the suppliers, clients, debtors or creditors of the issuer, of its subsidiaries or of the controlling shareholders or subsidiaries

of any of these persons.

Identification

Position or function

Taxpayer ID

(CPF or CNPJ) Type of Relationship Type of related person

Year ended December 31, 2019

Director of the Issuer

Marcos Antonio Molina dos Santos 102.174.668-18 Controlling interest Direct controlling shareholder

Chairman of the Board of Directors

Related Person

MMS PARTICIPAÇÕES LTDA. 08.542.030/0001-31


Marcia Aparecida Pascoal Marçal dos Santos 182.070.698-21 Controlling interest Direct controlling shareholder

Director

Related Person

MMS PARTICIPAÇÕES LTDA. 08.542.030/0001-31

Note

MMS Participações is the controlling shareholder of Marfrig Global Foods S.A. Its only shareholders are Mr. Marcos Antonio Molina dos Santos and Ms. Marcia

Aparecida Pascoal Marçal dos Santos.




Chairman of the Board of Directors

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Related Person

MMS PARTICIPAÇÕES LTDA 08.542.030/0001-31



Director

Related Person

MMS PARTICIPAÇÕES LTDA 08.542.030/0001-31

Note

MMS Participações Ltda is the controlling shareholder of Marfrig Global Foods S.A. Its only partners are Mr. Marcos Antonio Molina dos Santos and Ms. Marcia





Chairman of the Board of Directors and Chief Executive Officer

Related Person

MMS PARTICIPAÇÕES S.A. 08.542.030/0001-31



Director

Related Person

MMS PARTICIPAÇÕES S.A. 08.542.030/0001-31

Note

MMS Participações is the controlling shareholder of Marfrig Global Foods S.A. Its only shareholders are Mr. Marcos Antonio Molina dos Santos and Ms. Marcia


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APPENDIX VI

EXECUTIVE COMPENSATION

13.1 Description of the compensation policy or practice adopted for the board of directors, board of statutory and non-statutary executive officers, fiscal council, statutory committees, as well as audit, risk, finance and compensation committees (a) Objectives of the compensation policy or practice The compensation policy of the Corporation attracts, retains and establishes the criteria, responsibilities and definitions for the compensation of its managers. The policy also aims to motivate executives of the Corporation to grow and develop to reach their maximum potential, to align their performance with the business objectives of the Corporation, recognizing their performance through the payment of incentives (short- and long-term). The Compensation, Corporate Governance and Human Resources Committee is the deliberative body charged with evaluating the managers of the Corporation and subsequent compensation owed to each one of them pursuant to the compensation policy. The committee is formed by members of the Board of Directors. The parameters used to determine the compensation of the managers are based on market practices. The Management compensation policy was approved by the board of directors at a meeting held on October 31, 2018, and establishes the operating procedures and controls to be applied to the process of defining the Company’s management compensation. The management compensation policy is

available on the Company’s Investor Relations website (www.marfrig.com.br/ri) and the Empresas.Net

system of the Securities and Exchange Commission of Brazil (CVM). (b) composition of the compensation (i) description of compensation elements and their individual purposes

Board of Directors

The compensation of the members of the Board of Directors of the Corporation in 2019 is composed of a monthly fixed compensation that is set annually for each of the members and specific benefits, seeking to reward monetarily the members of the Board of Directors in accordance with their responsibilities and professional experience with the Corporation. The members of the Board of Directors of the Company receive different remuneration, since they are remunerated according to the level of participation of each one. And for the same reason, there are members of the Company's Board of Directors who receive higher remunerations than Executive Officers Statutory. The Corporation’s stock option plan also provides variable compensation for the Board of Directors. However, long-term incentives were not granted for the Board of Directors for fiscal year 2019 and will not be granted for fiscal year 2020.

Executive Officers

The compensation of the Executive Officers Statutory and Non-Statutory of the Corporation is

composed of:

• a fixed portion, which includes a monthly salary that is set annually for each of the members

and various benefits, seeking to reward monetarily the Executive Officers in accordance with

their responsibilities and professional experience with the Corporation; and

• a variable portion, which includes (i) a share in the profits of the Corporation; and

(ii) compensation based on the stock option plan of the Corporation. As part of the payment of

the compensation forecast in this Proposal, the Corporation proposes to its shareholders that


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up to [70%] of the variable compensation of its Executive Officers is paid through the direct

granting of shares held in treasury, and the calculation of the share price, pursuant to the sole

paragraph of article 4 of CVM Instruction 567, it will be the average of the last 20 trading

sessions prior to the date of granting the variable remuneration scheduled for April 30, 2020.

All other conditions for the direct granting of shares such as part of the compensation will be

defined by the Company's Board of Directors.

Fiscal Council

The compensation of the members of the Fiscal Council is composed of a fixed portion, which includes one monthly compensation established annually for each of its members and benefits, aiming to reward monetarily the members of the Fiscal Council in accordance with their responsibilities and professional experience with the Corporation. Committees All participants in the various advisory committees to the Board of Directors, such as the Financial and Risk Management Committee, Audit Committee, Compensation, Corporate Governance and Human Resources Committee and Sustainability Committee, may be remunerated for their participation in said committees. (ii) the proportion of each element in the total compensation

Fiscal year ended 12/31/2019

Fixed Portion - % Variable Portion- %

Board of Directors 100% -

Board of Executive Officers 59.1% 40.9%

Fiscal Council 100% -











(iii) the calculation and adjustment methodology used for each compensation element

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The composition of the compensation of Managers is determined based on a salary survey conducted at least every 2 years with a select group of companies (peer group) in the food segment and of Brazilian publicly traded companies with a presence abroad, which analyzes the competitiveness of various components of the aggregate compensation of executives (base salary, short and long-term incentives and benefits).

Based on the results of the salary survey, a revision is made to the Marfrig Group’ Salary Table, which forms the structure of the Corporation's positions and salaries (fixed portion).

Meanwhile, the variable portion consists of short and long-term compensation calculated based on the achievement of financial and individual targets.

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(iv) the reasons justifying the composition of the compensation The reasons justifying the composition of the compensation are: (i) to attract and retain the professionals of the Corporation and to recognize their performance; (ii) to align the compensation with market practices and governing law and regulations; (iii) to be economically viable; (iv) to recognize the performance of individuals and that of the organization; and (v) to encourage commitment to the results and alignment with the Corporation's objectives. (v) existence of unsalaried members by the issuer and the reasons for this fact The compensation of the Board of Directors is made up of the compensation of six members. The other two members opted for not receiving compensation as Board members, one of whom is also a member of the Executive Officers Board and receives compensation from that body. (c) Key performance indicators considered to determine each compensation element

Board of Directors

The Corporation’s stock option plan provides variable compensation for the Board of Directors.

However, long-term incentives were not granted for the Board of Directors for fiscal year 2019 and will

not be granted for fiscal year 2020.

Executive Officers The monthly compensation of each Executive Officer is associated to his program evaluation, as well

as his individual performance.

The short and long-term incentives, in turn, are conditioned to achievement of internal targets and

Corporation’s performance.

The indicators considered in determining the short-term variable compensation and long-term

incentives are:

• Net revenue: Corporation’s revenue net of direct taxes, cancellations and discounts

• EBITDA Margin: Percentage value obtained by dividing EBITDA by the net revenue of the

Corporation.

• Free Cash Flow: The Corporation’s operating cash flow, less capex and financial expenses.

• Capex deviation: It is the percentage attainment of the amount invested by the Corporation in

property, plant and equipment, as well as intangible and biological assets in the period.

• Individual: up to five targets are proposed for the management of the executive’s area, which

focus on results that are aligned with the guidelines defined by the immediate leader, taking

into account, among other things, the budget, sales, revenue and productivity.

The indicators and targets of the Board of Executive Officers are in line with the Guidances announced

to the market in the materials facts notice of March 2, 2015 and February 29, 2016, and management

contracts are drafted that include function-specific factors and the indicators of the overall performance

of the Corporation.

Fiscal Council

Not applicable. (d) How the compensation is structured to reflect the evolution in performance indicators

Board of Directors

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Not applicable for fiscal year 2019 and 2020.

Executive Officers

The compensation is determined by the individual performance and by the achievement of established targets, as identified in item (c), which are compared at the end of the fiscal year to the proposed target.

Fiscal Council

Not applicable. (e) How the compensation policy or practice is aligned with the short-, medium- and long-term interests of the issuer Since the Corporation adopts market practices to determine its compensation policy (both fixed and variable), the practices motivate and recognize the executives’ efforts towards achieving the business objectives, which further aligns the relationship between the Corporation and the manager. The sum of the compensations (fixed, variable and indirect/benefits) should be compatible with the peer group. The fixed remuneration (or base salary) aims to reward executives in accordance with the level of contribution of their positions within the position and wage structure of the Corporation. The wage table of the Corporation is reviewed at least every 2 years in accordance with the salary survey conducted of the peer group, as mentioned above. The short-term variable compensation aims to recognize the results obtained by the Corporation in the financial, operational and human dimensions, in accordance with the mix of annual corporate objectives, as indicated in item (c). The long-term incentive aims to retain executives and provide a deferred long-term reward through the annual assessment of targets, as indicated in item (c), and is granted on an annual basis through the specific stock option plan with 25% deferred each year. (f) existence of compensation borne by the subsidiaries or direct or indirect controlling shareholders

Board of Directors

Not applicable.

Executive Officers

Not applicable.

Fiscal Council

Not applicable.

(g) existence of any compensation or benefits linked to the occurrence of certain corporate events, such as the transfer of control of the issuer Not applicable, since no component of the compensation of the managers of the Corporation is linked to ownership events. (h) Practices and procedures adopted by the board of directors to define the individual compensation of the board of directors and board of executive officers (i) the bodies and committees of the issuer that participate in the decision-making process, indicating how such participation takes place

The compensation of the board of directors and the statutory board of executive officers is evaluated

at the start of each year and the recommended compensation is submitted to the Compensation,

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Corporate Governance and Human Resources Committee, which then proposes the overall

compensation amount to the Board of Directors and, then, to the Annual Shareholders Meeting.

(ii) criteria and methodology used to establish the individual compensation, indicating whether any studies are used to verify market practices and comparison criteria, as well as the scope of such studies

The breakdown of management compensation is defined based on a salary survey that analyzes the

competitiveness of diverse components of the total compensation of executives (base salary, short-

and long-term incentives and benefits).

The results of the salary survey are used to revise the Marfrig Group’s Salary Table, which makes up

the structure of the Corporation's positions and salaries (fixed portion).

The variable portion consists of short- and long-term compensation, which is calculated based on the

achievement of financial and individual targets.

(iii) how frequently and how does the board of directors evaluate the adequacy of the issuer’s compensation policy

The management compensation policy and the amounts to be paid are discussed at least once a year

at the board of directors and at the Compensation, Corporate Governance and Human Resources

Committee.

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13.2 Total compensation attributable to members of the board of directors, board of executive officers established by the bylaws and Fiscal Council

Total compensation estimated for the current fiscal year ending 12/31/2020 – Annual Amounts

Board of Directors Board of Executive

Officers

Fiscal Council Total

Number of members 8.00 7.00 6.00 21.00

Number of remunerated

members 6.00 7.00 6.00 19.00

Annual fixed compensation

Regular remuneration 4,600,070.00 13,753,357.53 823,728.75 19,177,156.28

Direct and indirect benefits 82,787.43 400,596.46 7,450.39 490,834.28

Participation in committees 480,000.00 - - 480,000.00

Other 1,016,014.00 3,850,940.11 164,745.75 5,031,699.86

Description of other fixed

compensation Charges (INSS) Charges (INSS and FGTS) Charges (INSS) -

Variable compensation

Bonuses - - - -

Profit sharing - 10,425,536.38 - 10,425,536.38

Attendance to meetings - - - -

Commissions - - - -

Other - - - -

Description of other variable

compensation - - - -

Post-employment benefits - - - -

Severance benefits - - - -

Share-based payments - 24,326,251.55 - 24,326,251.55

Notes - - - -

Total compensation 6,178,871.43 52,756,682.03 995,924.89 59,931,478.35

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Total compensation for the fiscal year ending 12/31/2019 – Annual Amounts


Officers




members 6.50 6.00 6.00 18.5




Participation in committees 440,000.00 - - 440,000.00

Other 942,493.34 2,630,979.99 136,935.65 3,710,408.98




Bonuses - - - -

Profit sharing - 7,069,803.14 - 7,069,803.14


Commissions - - - -

Other - - - -





Share-based payments - 1,555,649.05 - 1,555,649.05

Notes

Number of members calculated pursuant to the criteria in Circular Letter CVM/SEP/Nº03/2012.



-


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Officers




members 8.00 5.33 6.00 19.33




Participation in committees 440,000.00 0.00 0.00 440,000.00

Other 1,063,232.78 2,230,674.61 124,282.80 3,418,190.19




Bonuses 0.00 0.00 0.00 0.00

Profit sharing 0.00 5,600,051.00 0.00 5,600,051.00

Attendance to meetings 0.00 0.00 0.00 0.00

Commissions 0.00 0.00 0.00 0.00

Other 0.00 0.00 0.00 0.00


compensation

Post-employment benefits 0.00 0.00 0.00 0.00

Severance benefits 0.00 6,982,021.18 0.00 6,982,021.18

Share-based payments 0.00 1,237,461.11 0.00 1,237,461.11

Notes




-


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Officers




members

7.50 5.00 6.00 18.50




Participation in committees 1,320,000.00 - - 1,320,000.00

Other 1,126,631.65 1,702,566.12 124,282.80 2,953,480.57




Bonuses - - - -

Profit sharing - 5,854,223.28 - 5,854,223.28


Commissions - - - -

Other - - - -





Share-based payments - 321,645.41 - 321,645.41

Notes




-


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13.3 Variable compensation of the members of the board of directors, board of executive officers established by the bylaws and Fiscal Council

Variable compensation estimated for fiscal year ended December 31, 2020

Board of Directors

Board of Executive Officers

Fiscal Council

Total


Number of remunerated members - 7.00 - 7.00

Bonuses

Lowest amount foreseen in the compensation plan - - - -

Highest amount foreseen in the compensation plan - - - -

Amount foreseen in the compensation plan for goals attained

- - - -

Profit sharing

Lowest amount foreseen in the compensation plan - 7,297,875.47 - 7,297,875.47

Highest amount foreseen in the compensation plan - 20,851,072.76 - 20,851,072.76


- 10,425,536.38 - 10,425,536.38

Variable compensation for fiscal year ended December 31, 2019

Board of Directors


Fiscal Council

Total



Bonuses




- - - -

Amount effectively recognized as profit or loss in the fiscal year

- - - -

Profit sharing




- 6,605,795.84 - 6,605,795.84


- 7,069,803.14 - 7,069,803.14


Board of Directors


Fiscal Council

Total



Bonuses




- - - -


- - - -

Profit sharing




- 3,543,563.96 - 3,543,563.96


- 5,600,051.00 - 5,600,051.00

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Board of Directors


Fiscal Council

Total



Bonuses




- - - -


- - - -

Profit sharing




- 3,562,547.75 - 3,562,547.75


- 5,854,223.28 - 5,854,223.28

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13.4 Share-based compensation plan attributable to directors and statutory officers, in force in the last fiscal year and estimated for the current fiscal year

Board of Directors

Not applicable. Executive Officers

a) General terms and conditions

On May 29, 2009, the shareholders convened in an Extraordinary Shareholders' Meeting approved the general guidelines of the stock option plan of the Corporation ("Stock Option Plan"). The specific terms of the Stock Option Plan are as follows:

Administration of the Stock Option Plan

The Stock Option Plan targets the managers, employees in leadership positions and outsourced service providers of the Corporation or its subsidiaries (“Beneficiaries”). The Plan is managed by the Board of Directors of the Corporation, which may delegate its functions, observing the restrictions provided for by law, to a committee especially created for such purpose (“Committee”).

If a Committee is created, it must be formed by at least three (3) members, one of whom must be a Director at the Corporation, while the other members must be elected by the Board of Directors. The members of the Board of Directors and of the Committee are not eligible to become beneficiaries of the Stock Option Plan.

If the general conditions of the Stock Option Plan and the guidelines established by the Shareholders’ Meeting of the Corporation have been fulfilled, the Board of Directors shall have broad powers to take all the necessary and appropriate measures to manage the Stock Option Plan, including:

(i) granting options under the terms of the Stock Option Plan, as well as drafting and applying the

specific rules for each grant;

(ii) defining goals for the performance of the managers, employees and service providers of the

Corporation or other legal entities under its control, with the aim of establishing objective criteria

for selecting the Beneficiaries;

(iii) selecting the Beneficiaries of the Stock Option Plan and authorizing the granting of stock

options to them, establishing all the conditions for the options to be granted and modifying such

conditions when required to align the options with governing law and regulations;

(iv) issuing new shares in the Corporation within the authorized capital limit in order to meet the

needs for exercising the options granted under the terms of the Stock Option Plan;

(v) creating Specific Programs (defined below) for granting the stock options.

In the exercise of its powers, the Board of Directors shall be subject only to the limits established by law and in the Stock Option Plan, with it clear that the Board of Directors may adopt different treatments for the managers, employees and service providers of the Corporation or the other legal entities under its control in similar situations, and that it is not obliged by any equal-treatment rule to extend to everyone conditions that it deems applicable only to certain individuals or groups of individuals.

Creation of Specific Programs

Periodically, the Board of Directors or Committee may create stock option grant programs with specific conditions concerning the members, the number of options granted, the performance goals to be met, the option exercise price and other conditions (“Specific Programs”), which may not have any relationship to the general conditions established by the Stock Option Plan.

As of the date hereof, thirteen Specific Programs have been created.

The Board of Directors of the Corporation will determine the Beneficiaries to whom stock options will be granted pursuant to the Stock Option Plan, the number of shares that may be acquired through the

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exercise of each option, the strike price of each option and payment conditions, the vesting period and conditions for exercise of each option and any other conditions related to such options.

The granting of stock options pursuant to the Stock Option Plan is effected by executing the stock option agreement between the Corporation and the Beneficiaries, which must specify, without harming the other conditions determined by the Board of Directors: (a) the number of shares being granted; (b) the vesting conditions; (c) the expiration of the stock options; and (d) the strike price and payment conditions (“Option Agreement”).

The Option Agreements will be individually prepared for each Beneficiary and the Board of Directors may establish specific terms and conditions for each Option Agreement, without the need to apply any rule of isonomy or analogy among Beneficiaries, regardless of the event of similar or identical conditions.

Duration of the Stock Option Plan

The Stock Option Plan shall be in force from the date of its approval by the Shareholder’s Meeting of the Corporation and may be terminated at any time by decision of the Shareholders’ Meeting. The termination of the Stock Option Plan does not affect the validity of the options still in force granted under the plan.

General Provisions

To satisfy the exercise of stock options granted under the terms of the Stock Option Plan, the Corporation may, at the discretion of the Board of Directors: (a) issue new shares within the limit of the capital authorized; or (b) sell shares held in treasury.

Shareholders will not be entitled to preemptive rights in the grant or exercise of stock options under the Stock Option Plan, in accordance with Article 171, Paragraph 3 of Brazilian Corporations Law.

The Shares acquired due to the exercise of options under the terms of the Stock Option Plan shall maintain all rights inherent to their type, except in the case of item 7.2.1. of the Stock Option Plan, as well as any provision to the contrary established by the Board of Directors.

No provision of the Stock Option Plan or option granted under the terms of the Stock Option Plan should entitle any Beneficiary to remain an manager and/or employee of the Corporation and should not interfere in any way in the right of the Corporation to, at any time and subject to the legal and contractual conditions, terminate the employment agreement of the employee and/or suspend their mandate as manager.

Each Beneficiary must explicitly comply with the terms of the Stock Option Plan and sign a written declaration without any qualifications and in accordance with the terms of the Stock Trading Policy of the Corporation.

In the interest of the Corporation and its shareholders, the Board of Directors may review the conditions of the Stock Option Plan, provided it does not change its basic principles.

As part of the payment of the compensation forecast in this Proposal, the Corporation proposes to its shareholders that up to [70%] of the variable compensation of its Executive Officers is paid through the direct granting of shares held in treasury, and the calculation of the share price, pursuant to the sole paragraph of article 4 of CVM Instruction 567, it will be the average of the last 20 trading sessions prior to the date of granting the variable remuneration scheduled for April 30, 2020. All other conditions for the direct granting of shares such as part of the compensation will be defined by the Company's Board of Directors.

(b) Main objectives of the plan

The objective of the Stock Option Plan is to allow the managers, employees and service providers of the Corporation and other legal entities under its control, subject to certain conditions, to acquire stock in the Corporation, in order to: (a) promote the expansion, success and execution of the corporate objectives; (b) align the interests of the Corporation’s shareholders with those of its directors, officers, employees and service provides or other companies under its control; and (c) enable the Corporation or its subsidiaries to contract and retain directors, officers, employees and service providers.

(c) How the plan contributes to these objectives

As mentioned in the previous item, the objectives of the Stock Option Plan are: (a) to promote the expansion, success and execution of the corporate objectives; (b) to align the interests of the

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Corporation’s shareholders with those of its directors, officers, employees and service provides; and (c) to enable the Corporation or its subsidiaries to contract and retain directors, officers, employees and service providers.

Therefore, by establishing the guidelines and rules, the Stock Option Plan motivates the executives of the Corporation to grow and develop in order to reach their maximum potential, consistent with the business objectives, and to recognize this performance through the payment of Incentives.

(d) How the plan contributes as an element of the issuer’s compensation policy

The Stock Option Plan is aligned with the compensation policy of the Corporation, which aims to promote the professional growth of its managers, employees and service providers by valuing individual merit. In this sense, the options are granted in accordance with the achievement of pre-established targets, enabling the managers, employees and service providers of the Corporation to determine their variable compensation portion based on their individual performance.

(e) How the plan aligns the short-, medium- and long-term interests of the directors and officers and those of the issuer

The Stock Option Plan aligns the interest of managers, the Corporation and shareholders though benefits that are aligned with the performance of the stock of the Corporation traded on the Brazilian Stock Exchange (BM&FBOVESPA). Therefore, in order for executives to maintain their total compensation competitive and aligned with the market, they must generate results and ensure that the value of the Corporation continues to increase.

In addition, through a vesting period, the Beneficiaries of the Stock Option Plan commit to their individual performance and to the performance of the Corporation over the long term, effectively contributing to the creation of an environment marked by consistent growth and talent retention.

(f) Maximum number of shares involved

The Stock Option Plan that was approved by the Extraordinary Shareholders' Meeting on May 29, 2009 (“Stock Option Plan”) provides for, in its Item 6.1, an overall maximum limit on the granting of stock options corresponding to 5% of the total number of shares issued by the Corporation.

Meanwhile, Item 4 of the Stock Option Plan establishes that the Board of Directors has powers to establish Specific Programs ("Programs") to grant stock options at special conditions, including with regard to the exercise price. Under the scope of said Programs, the overall limit for granting stock options is 2%, with a grant limit for each individual Program of 0.5% of the total number of shares issued. Accordingly, the sum of the Specific Programs (limited to 0.5% each) may not exceed the overall limit of 2% of the total number of shares issued.

In short, of the 5% of shares issued by the Company allocated to the Stock Option Plan, only 2% may be used under the scope of the Specific Programs, with a maximum grant limit for each Program of 0.5%.

Direct granting of shares: will be defined by the Company's Board of Directors.

(g) Maximum number of options to be granted

As informed in item (f) above, stock options may be granted pursuant to the Stock Option Plan that assign subscription and/or acquisition rights over a number of shares that may not exceed 5% of all shares issued by the Corporation.


(h) conditions for acquiring shares

Beneficiaries wishing to exercise their stock options shall inform the Corporation in writing of their intent, in accordance with communication template to be disclosed by the Board of Directors.

The Corporation shall inform the Beneficiary, within three business days of the receipt of the abovementioned notice, the exercise price to be paid based on the number of shares informed by the Beneficiary, with the Corporation responsible for taking all measures necessary to formalize the acquisition of the underlying shares.

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The stock options granted under the terms of the Plan may confer rights for the acquisition of a number of Shares that does not exceed five percent (5%) of the shares issued by the Corporation, provided that the total number of shares issued or to be issued under the terms of the Plan always remains within the limit of the authorized capital of the Corporation.

The Corporation may request the temporary suspension of the right to exercise an option in any situation that, pursuant to the law and to the regulations in force, restricts or prevents the trading of shares by the beneficiary. The exercise price of the option will be paid in cash by the beneficiary. No share will be delivered to the beneficiary as a result of the exercise of the option unless he/she has complied with all legal and regulatory requirements.


i) Criteria for determining the acquisition or exercise price

The Board of Directors may create stock option programs with specific conditions and rules regarding the participants, the number of options to be granted, the performance targets to be achieved, the exercise price and other conditions.

The Board of Directors shall be responsible for setting the exercise price of the options granted under the terms of the Stock Option Plan, based on the average price weighted by volume of the Corporation’s stock observed in the last 20 trading sessions on the Brazilian Stock Exchange (BM&FBOVESPA) immediately prior to the option grant date, with a discount of up to 20% on the amount calculated. The exercise price of the Specific Programs is based on the last 20 trading sessions on the BM&FBOVESPA prior to the first business day of March of each year, with a discount of up to 50% on the amount calculated.

The exercise price shall be paid by the Beneficiaries in cash, in accordance with the methods and periods determined by the Board of Directors.

Until the exercise price is fully paid, the shares acquired through the exercise of options under the terms of the Stock Option Plan may not be sold to third parties, except with the prior authorization of the Board of Directors, in which case the proceeds from the sale will first be used to settle the debits of the Beneficiary owed to the Corporation.

Direct granting of shares: no cost to Beneficiaries .

j) Criteria for setting the vesting period

The options granted under the terms of the Stock Option Plan may be exercised: (i) 25% at the end of the first year; (ii) 25% at the end of the second year; (iii) 25% at the end of the third year; and (iv) 25% at the end of the fourth year; as of the execution of the corresponding Stock Option Agreement and also observing the terms and conditions stipulated by the Board of Directors and the terms and conditions provided for in the respective Grant Agreements.

The Beneficiary shall have 6 months to exercise the options as of the dates described above.

The portions of the option not exercised within the stipulated periods and conditions shall be considered automatically terminated, with no right to indemnification.


k) Payment method

The exercise of the option must be settled in cash, using the Beneficiary’s own funds, upon deposit in

an account provided by the Company. Within 7 business days after receipt of proof of payment and

required documentation, the company will send to the depositary bank the request for transfer of the

shares issued by the Corporation, to be transferred on the records to the name of the beneficiary.


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l) Restrictions on transferring the shares

The Board of Directors may impose precedent terms and/or conditions for the exercise of the options, observing the minimum clauses defined in the Stock Option Plan, impose restrictions on the transfer of the shares acquired from the exercise of the options and reserve for the Corporation the option to buy back the shares or preemptive rights in the event of the sale by the Beneficiary of these shares, until the expiration of the period and/or the fulfillment of the conditions established.

There are currently no restrictions by the Board of Directors on the transfer of shares acquired through the exercise of stock options.


m) Criteria and events that if verified cause the suspension, modification or termination of the plan

The granting of options under the terms of the Stock Option Plan does not prevent the Corporation from being involved in ownership reorganizations, such as conversions, mergers, consolidations and spin-offs. The Board of Directors of the Corporation and the legal entities involved in such operations may, at their discretion, decide, without prejudice to the other measures they decide based on fair treatment: (a) to substitute the shares that are the object of the option with shares in the Corporation’s successor company; (b) to move forward the acquisition of the right to exercise the stock option in order to ensure the inclusion of corresponding shares in the operation in question; and/or (c) to effect a payment in cash of the amount that the Beneficiary would be entitled to under the terms of the Stock Option Plan.

If the number, type and class of existing shares on the Stock Option Plan approval date are changed as a result of bonuses, stock splits, stock groupings or the conversion of shares from one type or class to another or the conversion into shares of other securities issued by the Corporation, the Board of Directors will be responsible for adjusting the corresponding number, type and class of shares that are the object of the options granted and their respective exercise price in order to prevent any distortions in the application of the Stock Option Plan.

Furthermore, the Board of Directors may determine the suspension of the right to exercise the options whenever situations are verified that, subject to governing law and regulations, restrict or prevent stock trading by the Beneficiaries.


n) Effects of the termination of the director and officer from the issuer’s entities on their rights under the share-based compensation plan

In the event of the termination of a Beneficiary due to voluntary or involuntary termination of the service agreement, with or without just cause, resignation or abandonment, retirement, permanent disability or death, the rights granted to them under the Stock Option Plan may be terminated or modified.

Moreover, if at any time during the validity of the Stock Option Plan the Beneficiary:

• terminates their relationship with the Corporation on their own initiative, voluntarily terminating their relationship, or resigning their function as manager: (i) the rights not yet exercised under respective Option Agreement, on the date of their termination, shall automatically and lawfully expire, regardless of prior notice or indemnification; and (ii) the rights that may already be exercised on the date of their termination, may be exercised within 30 days from said date, after which such rights will automatically and lawfully expire, regardless of prior notice or indemnification. The Board of Directors of the Corporation is responsible, upon analysis of each specific case, for providing a different solution to the Beneficiary, if applicable;

• if the termination is caused by the Corporation upon involuntary termination, with or without just cause, or the removal from office for violating his or her duties and attributions, all rights that may not yet be exercised under the respective Option Agreement, on the date of their termination, will become automatically and lawfully expire, regardless of prior notice or indemnification. The Board of Directors of the Corporation is responsible, upon analysis of each specific case, for providing a different solution to the Beneficiary, if applicable;

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• in the event of termination from the Corporation due to retirement or permanent disability: (i) the rights not yet exercised on the date of their termination, will automatically become exercisable for a period of up to six months after said termination, by moving forward the grace period; and (ii) the rights that may already be exercised on the date of their termination shall remain unchanged and may be exercised normally under the terms of each specific Program; and

• in the event of death: (i) the rights that may not yet be exercised on the date of their death, will automatically become exercisable by anticipating the grace period, and the heirs and legal successors of the Beneficiary will be entitled to exercise the respective stock option, provided they do so within six (6) months from the date of death, after which period said rights automatically and lawfully expire, regardless of any prior notice or compensation or over the rightful extinction of said rights; and (ii) the rights that may already be exercised on the date of their death, may be exercised by the heirs and legal successors of the Beneficiary provided they do so within six months from the date of death, after which such rights will automatically and lawfully expire, regardless of prior notice or indemnification.


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13.5 Share-based compensation recognized in the results of the last 3 fiscal years and the estimated for the current fiscal year attributable to directors and executive officers

Share-based compensation estimated for fiscal year ended December 31, 2020 Board of Directors Board of Executive Officers

Number of members 8.00 7.00

Number of remunerated members - 7.00

Grant of stock options

Grant date - -

Number of options granted - 550,882 1,694,417

Vesting period - 1 year None

End of exercise period (Expiration) - 4 years None

Holding period - None None

Price-weighted average : -

a) for options outstanding at start of year - 3.03 3.03

b) for options forfeited over the period - - -

c) for options exercised over the period - - -

d) for options expired over the period - - -

Fair value as of the grant date - 4.81 9.96

Potential dilution upon exercise of all outstanding stock option grants

- 0.08% 0.24%

Share-based compensation for fiscal year ended December 31, 2019

Board of Directors





Grant date - 08/14/2019

Number of options granted - 534,411

Vesting period - 1 year

End of exercise period (Expiration) - 4 years

Holding period - None


a) for options outstanding at start of year - 3.00

b) for options forfeited over the period - -

c) for options exercised over the period - 2.92

d) for options expired over the period - -

Fair value as of the grant date - 7.37


- 0.08%


Board of Directors





Grant date - 9/25/2018









d) for options expired over the period - 1.95



- 0.06%

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Board of Directors





Grant date - 12/20/2017









d) for options expired over the period - 2.08



- 0.02%

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13.6 Information on unexercised options held by the board of directors and by the officers established in the bylaws at the end of the last fiscal year

Unexercised options at the end of the fiscal year ended December 31, 2010

Board of Directors Board of Executive Officers



Options not yet vested

Number - 938,392

Vesting date - 3/3/2020, 3/3/2021, 3/3/2022 and 3/3/2023

End of exercise period (expiration) - 9/2/2020, 9/2/2021, 9/2/2022 and 9/2/2023


Price-weighted average - 3.03

Fair value of the options on the last day of the

fiscal year - 7.15

Vested options

Number - -

End of exercise period (expiration) - -

Holding period - -

Price-weighted average - -

Fair value of the options on the last day of the

fiscal year - -

Fair value of all options on the last day of the

fiscal year - -

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13.7 Options exercised and shares delivered relative to the share-based compensation of directors and executive officers, in the last 3 fiscal years

Exercised Options - fiscal year ended 12/31/2019




Exercised options

Number of shares - 264,465

Average weighted acquisition price - 2.92

Difference between the acquisition price and price of the acquired shares

- 7.04

Delivered shares

Number of shares - -

Average weighted acquisition price - -

Difference between the acquisition price and price of the acquired shares - -





Exercised options




- 2.97

Delivered shares








Exercised options




- 4.77

Delivered shares




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13.8 Information for an understanding of data disclosed under items 13.5 through 13.7 – Method adopted for the pricing of shares and options (a) Pricing model:

Stock Option Plan: Black Scholes model.


(b) Data and assumptions used in the pricing model, including the average weighted share price,

exercise price, expected volatility, option lifetime, expected dividends and risk-free interest rate

Stock Option Plan: The fair value of the stock options was measured directly, based on the Black-

Scholes pricing model and the following premises:

• Risk-free interest rate: 5.57% p.a. The Corporation uses as risk-free interest rate the Long Term Interest Rate (TJLP) annualized on the calculation date and available at the federal revenue service website - www.receita.fazenda.gov.br/pessoajuridica/refis/tjlp.htm.

• Standard Deviation: 37.55%. Volatility is measured taking into consideration the daily prices of Corporation shares traded on The Brazilian Stock Exchange under the ticker MRFG3, from 7/1/2019 to 12/31/2019;

• The fair value of the shares on 12/31/2019 was established from the minimum of R$6.63 to the maximum of R$7.54 per share for the SPECIAL plans.

The following criteria were adopted to date for the granting of stock options to executives at Marfrig:

In 2016:

• Specific Plan X - Long Term 2015/2016: Average weighted price in the 20 trading sessions

prior to March 1, 2016: R$6.056249 per share

In 2017:

• Specific Plan XI – Long Term 2016/2017: Average weighted price in the 20 trading sessions

prior to March 1, 2017: R$ 6.718442 per share

In 2018:

• Specific Plan XII – Long Term 2017/2018: Average weighted price in the 20 trading sessions


In 2019:

• Specific Plan XIII – Long Term 2018/2019: Average weighted price in the 20 trading sessions


The exercise prices will be:

a) R$1.03823 per share for ESP CP 08-09

b) R$0.67783 per share for ESP LP 08-09

http://www.receita.fazenda.gov.br/pessoajuridica/refis/tjlp.htm

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c) R$11.02605 per share for ESP LP 09-10

d) R$7.0251 per share for ESP LP 10-11

e) R$ 4.767952 per share for ESP LP 11-12

f) R$ 5.008273 per share for ESP LP 12-13

g) R$ 1.9470 per share for ESP LP 13-14

h) R$ 2.371987 per share for ESP LP 14-15

i) R$ 3.028124 per share for ESP LP 15-16

j) R$ 3.359221 per share for ESP LP 16-17

k) R$ 3.178854 per share for ESP LP 17-18

l) R$ 2.910960 per share for ESP LP 18-19

Option lifetime: four years (for each Specific Plan)

All dividends and distributions, or their equivalent (whether in cash, stock or other form), on Restricted

Shares not exercised are rights to which participants are entitled and are credited by the Corporation in

their account and released on the expiration of the restrictions.

The Corporation has the option to pay such credits in accumulated dividends or distributions or their

cash equivalent, in stock in the Corporation in lieu of cash or by any other means. For payments made

in shares, the conversion is made by the average price in the last 20 trading sessions on the Brazilian

Stock Exchange prior to the payment date, adjusted for the net value of income tax levied on the credit

made.


(c) Method and assumptions used to incorporate the expected effects from the anticipated

accounting period

Stock Option Plan: The options granted under the terms of the Plan may be exercised: (i) 25% at the

end of the first year; (ii) 25% at the end of the second year; (iii) 25% at the end of the third year; and

(iv) 25% at the end of the fourth year; as of the execution of the corresponding Stock Option Agreement

and also observing the terms and conditions stipulated by the Board of Directors and the terms and

conditions provided for in the respective Stock Option Grant Agreements.

For each of the Plans mentioned above, the Corporation has stipulated a time interval in which the

beneficiary may exercise the option. This period is six months, from March 3 to September 2 of each

year. Beneficiaries may not exercise their options prior to this period.


(d) How to determine the expected volatility

Stock Option Plan: Calculated using the standard deviation, taking into consideration the daily prices of

the Corporation’s shares traded on the Brazilian stock exchange (BM&FBOVESPA) under the ticker

MRFG3 in the six-month period.


(e) If any other characteristic of the option was incorporated when measuring its fair value

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All characteristics of the option were mentioned in the previous items of this Reference Form.

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13.9 Interest held by the directors, statutory officers and members of the Fiscal Council, by body

Corporation Shares %

Board of Directors 100,153 0.01%

Statutory Officers 55,784 0.01%

Fiscal Council 0 0.0%

MMS Participações S.A. Shares %

Board of Directors 297,663,617 41.84%

Statutory Officers 0 0.0%

Fiscal Council 0 0.0%

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13.10 Pension schemes offered to directors and statutory officers

The Corporation does not have a pension plan.

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13.11 Maximum variable compensation of the Board of directors, officers established in the bylaws and the Fiscal Council for the last 3 fiscal years Annual amounts

Board of Executive Officers Board of Directors Fiscal Council

12/31/2019 12/31/2018 12/31/2017 12/31/2019 12/31/2018 12/31/2017 12/31/2019 12/31/2018 12/31/2017

No. of members 6.00 5.33 5.00 8.50 10.00 9.92 6.00 6.00 6.00

No. of remunerated members 6.00 5.33 5.00 6.50 8.00 7.50 6.00 6.00 6.00

Highest compensation (in Brazilian real) 6,320,524.61 9,865,654.46 5,323,691.10 2,229,453.81 2,627,154.41 3,741,458.99 202,880.40 177,470.32 177,457.92

Lowest compensation (in Brazilian real) 1,696,085.56 1,897,563.63 1,071,052.71 446,400.00 348,359.66 252,000.00 72,000.00 72,000.00 72,000.00

Average compensation (in Brazilian real) 3,515,227.41 4,433,967.82 3,001,595.71 882,678.19 807,755.85 911,765.80 137,645.83 124,761.73 124,755.08

,

Note Board of Executive Officers

12/31/2018 In the Board of Executive Officers, in 2018, the lowest individual compensation effectively received was taken into consideration, including only members who remained as such for 12 months and excluding those who remained in the position for a shorter period.

Board of Directors

12/31/2019 In the Board of Directors, in 2019 two directors chose not to receive compensation and one director is also an Executive Officer, and therefore were not included in the amounts above. In the Board of Directors, in 2019, the lowest individual compensation effectively received was taken into consideration, including only members who remained as such for 12 months and excluding those who remained in the position for a shorter period.

12/31/2018 In the Board of Directors, in 2018 two directors chose not to receive compensation and one director is also an Executive Officer, and therefore were not included in the amounts above.

12/31/2017 In the Board of Directors, in 2017 two directors chose not to receive compensation and one director is also an Executive Officer, and therefore were not included in the amounts above. In the Board of Directors, in 2017, the lowest individual compensation effectively received was taken into consideration, including only members who remained as such for 12 months and excluding those who remained in the position for a shorter period.

Fiscal Council

12/31/2019 In the Fiscal Council, in 2019, the lowest individual compensation effectively received was taken into consideration, including only members who remained as members for 12 months and excluding those who remained in the position for a shorter period.

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13.12 Compensation mechanisms or indemnification for the directors and officers in the event of their termination or retirement The Company's compensation policy provides for compensation related to the Termination of an Executive Officers. In case of termination of the contract, the executive will receive in addition to the legal severance payments:

• Early vesting of Marfrig's Long Term Incentive Programs • 2 years of total Target remuneration, comprising:

o 2 years' compensation (2 x 13.3 x the last base salary received); o Target Bonus (2 x the multiple Target), considering 100% performance rating

The eligibility criteria for that payment are:

• The employee must be in the position of Executive Director in the event of termination;

• Minimum time of 5 years in the company.

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13.13 Percentage of the total compensation received by directors and officers and members of the Fiscal Council who are parties related to the controlling shareholders

Year Board of Directors Board of Executive Officers

Fiscal Council

2019 11.46% 6.36% 0.00%

2018 11.33% 6.15% 0.00%

2017 20.40% 4.74% 0.00%

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13.14 Compensation of the directors and officers and members of the Fiscal Council, by body, received for any reason other than for the position they hold

The managers and the members of the Fiscal Council of the Corporation did not receive in the last three fiscal years compensation for purposes other than the position they occupy at the Corporation.

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13.15 Compensation of the directors and officers and the members of the Fiscal Council recognized in the results of the direct or indirect controlling shareholders of the companies under joint control and of the subsidiaries of the issuer

Fiscal year ended 12/31/2019 - Annual Amounts



Compensation received due to position held in the issuer

Direct and Indirect controlling shareholders - - - -

Subsidiaries of the issuer - - - -

Companies under common control - - - -

Other compensation received









Subsidiaries of the issuer - 712,526.63 - 712,526.63











Subsidiaries of the issuer - 925,396.32 - 925,396.32






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13.16 Other information deemed material

There is no other information the Corporation deems relevant in relation to item 13 that was disclosed in the other items of this Reference

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APPENDIX VII

COPY OF THE BYLAWS HIGHLIGHTING

THE PROPOSED AMENDMENTS AND THE REPORT DETAILING

THE ORIGIN AND JUSTIFICATION OF THE CHANGES

(pursuant to Article 11 of CVM Instruction 481 of December 17, 2009)

PROPOSED VERSION

(track changes on the version in effect)

REPORT OF ORIGIN AND JUSTIFICATION

CHAPTER III

The establishment of the Statutory Audit

Committee pursuant to the Bylaws strictly in

accordance with the requirements regarding

the operation and independence

established in the regulations of the

Securities and Exchange Commission of

Brazil are an important step towards

improving the Company’s corporate

governance practices.

We hereby clarify that there are no business

impacts stemming from the present

amendment to the Bylaws of the Company.

CORPORATE BODIES

Chapter IV – Statutory Audit Committee

established pursuant to the Bylaws

The Statutory Audit Committee, established

pursuant to the Bylaws as a permanent

advisory committee to the Board of

Directors, consists of at least three (3)

members, at least one (1) of whom must be

an Independent Director and at least one (1)

must have recognized experience in

corporate accounting matters.

Paragraph 1 - The same member of the

Statutory Audit Committee may possess both

the characteristics mentioned in the head

paragraph.

Paragraph 2 – Statutory Audit Committee

members will serve a term of two (2) years,

may be reelected and hold office for a

maximum of ten (10) years. Their investiture

is conditioned on signing the Consent of

Appointment of Statutory Audit Committee

Members, in accordance with Novo Mercado

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Regulations, as well as complying with

applicable legal requirements.

Paragraph 3 - The Statutory Audit

Committee will have the following

responsibilities: a) to provide an opinion on

hiring and removing the external

independent auditor responsible for

independent external audit or any other

service; b) to supervise the activities of: (i)

independent auditors in order to ensure their

independence, the quality and adequacy of

the services provided in relation to the needs

of the Company; (ii) the internal controls area

of the Company; (iii) the internal audit area of

the Company; and (iv) the area responsible

for preparing the financial statements of the

Company; c) to monitor the quality and

integrity of: (i) the internal control

mechanisms; (ii) the quarterly financial

statements, interim financial statements and

financial statements of the Company; and (ii)

the information and measurements disclosed

based on adjusted accounting data and non-

accounting data that add elements not

envisaged in the usual reporting framework

of the financial statements; d) to evaluate

and monitor the risk exposures of the

Company, and even requesting detailed

information on the policies and procedures

related to: (i) management compensation; (ii)

the use of Company assets; and (iii)

expenses incurred on behalf of the

Company; e) to evaluate and monitor,

together with management and internal

audit, the adequacy of related-party

transactions conducted by the Company and

their respective reporting; f) to prepare a

summarized annual report, to be presented

together with the financial statements,

describing: (i) its activities, results,

conclusions and recommendations; and (ii)

any situations in which there is a significant

divergence between the management of the

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Company, external independent auditors and

the Audit Committee regarding the financial

statements of the Company.

Paragraph 4 - The charter of the Statutory

Audit Committee will be approved by the

Board of Directors and should describe in

detail its functions and its operational

procedures.

Paragraph 5 - The compensation of

Statutory Audit Committee members, apart

from the respective budget allocation, will be

fixed by the Board of Directors.

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APPENDIX VIII

PROPOSED CONSOLIDATED BYLAWS

MARFRIG GLOBAL FOODS S.A.

Taxpayer ID (CNPJ/MF): 03.853.896/0001-40

State Registration (NIRE): 35.300.341.031

Public Company

BYLAWS

CHAPTER I

CORPORATE NAME; REGISTERED OFFICE; PURPOSE; TERM

Article 1 – Marfrig Global Foods S/A (“Company”) is a corporation governed by applicable law

and these Bylaws.

Article 2 – The Company has registered office and legal domicile in the city of São Paulo,

state of São Paulo, at Avenida Queiroz Filho, nº 1.560, Bloco 5, Torre Sabiá, 3º Andar, Sala

301, Vila Hamburguesa, CEP 05319-000. The Company may open and close branches,

warehouses, offices, main branches, and any other type of establishment in Brazil and

elsewhere by resolution of the Board of Executive Officers.

Article 3 – The corporate purpose of the Company is (a) to operate a meatpacking business,

including by handling animal slaughtering and butchering (of cattle, buffalo, horses, pigs,

goats, sheep and poultry), packaging, processing and distribution of edible or non-edible

animal products and by-products, including, but not limited to, manufacturing and distribution

of leather products and by-products, in its own or third–parties’ establishments; (b) the

purchase, sale, distribution, agency, import and export of food products in general, including

alcoholic and non-alcoholic beverages, and other products; (c) the purchase and sale of

livestock (cattle, buffalo, horses, pigs, goats, sheep); (d) the supply of manpower to other

companies; (e) engaging in animal husbandry; (f) holding ownership interest, as partner or

shareholder, in other commercial or civil companies; (g) engaging in distribution and sale of

food products in general; (h) engaging in production, distribution and sale of soaps, detergents

and washing preparations, disinfectants, softeners and other cleaning and hygiene products;

(i) engaging in cogeneration and production and sale of energy and biodiesel; (j) operating in

the financial market and in carbon market; (k) engaging in production and sale of vegetable-

based products, oils, derivatives and substitutes; animal feed rations (feed and fodder),

canned food and fats; and (l) transportation of its own and third-party's products; agency and

other related activities, as necessary to fulfill the corporate purpose.

Paragraph 1 – The Company may engage in business in other fields of activity

correlated with the corporate purpose set forth in article 3.

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Paragraph 2 – Following the admission to the Novo Mercado special listing segment of

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros, the Brazilian

Securities, Commodities and Futures Exchange (“BM&FBOVESPA”), the Company, its

shareholders, directors, officers and fiscal council members are now subject to, and

bound by the provisions of the Novo Mercado Listing Regulation (the “Novo Mercado

Listing Regulation”).

Paragraph 3 – The provisions of the Novo Mercado Listing Regulation shall prevail over

these Bylaws where in a tender offer the rights of shareholders are better served under

the provisions of the Listing Regulation.

Article 4 – The Company shall have an indefinite term of duration.

CHAPTER II

CAPITAL STOCK; SHARES

Article 5 – The fully subscribed and paid-in capital stock of the Company is five billion, two

hundred seventy-seven million, two hundred eighteen thousand and two hundred ten reais

(R$5,277,218,210.00), divided into five hundred twenty million, nine hundred forty-four

thousand and nine hundred sixty-six (520,944,966) registered common shares, with no par

value.

Article 6 – Pursuant to a decision of the board of directors, and irrespective of amending these

bylaws, the Company is authorized to increase the capital stock by issuing shares up to the

authorized limit of six hundred and thirty million (630,000,000) common registered shares, with

no par value, provided this includes the issued and outstanding shares of capital stock.

Paragraph 1 – On deciding to issue shares pursuant to the main provision, the board of

directors shall establish the terms of issuance, including issue price and payment

conditions. The board of directors may also decide to issue subscription warrants,

whereas having regard to the authorized share limit.

Paragraph 2 – The board of directors, acting within the scope of a stock options plan

approved at a Shareholders Meeting and having regard to the authorized share limit,

shall have authority to grant stock options to directors, officers, employees and

consultants or other providers of the Company and its direct or indirect subsidiaries, and

may for this purpose withdraw the preemptive rights of existing shareholders.

Paragraph 3 – The Company shall not issue participation certificates.

Article 7 – The capital stock shall be represented solely by common shares. Each common

share shall entitle the holder to one vote in decisions taken at Shareholders Meetings. The

Company shall not issue preferred shares.

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Article 8 – The shares of capital stock shall be issued in registered or book-entry form. Where

book-entry shares are issued, they shall be deposited under custody of a CVM-licensed

registrar financial institution.

Sole Paragraph – Due regard given to the limits provided under CVM** regulations,

share transfer and registration costs may be charged directly to the relevant

shareholders, whereas the registrar may charge for its services according to the relevant

registrarship agreement.

Article 9 – Giving regard to the authorized share capital and applicable law, the board of

directors may issue shares, convertible debentures or subscription warrants for public

distribution under a primary market offering or private placement with accredited investors or

exchange offer. In any such event, as permitted under paragraph 4 of article 171 of Brazilian

Corporate Law*, the board of directors may in its discretion restrict the exercise period of, or

withdraw, the preemptive rights of shareholders in the issuance.

CHAPTER III

CORPORATE BODIES

SECTION I

SHAREHOLDERS’ GENERAL MEETING

Article 10 – A Shareholders’ General Meeting shall convene ordinarily once a year and,

extraordinarily upon being called pursuant to applicable law or these Bylaws.

Article 11 – The Shareholders Meetings shall be convened and presided over by the

Chairman of the Board of Directors or, in his absence, by any other Board member or, in their

absence, by a shareholder or executive officer appointed by a majority of votes cast by

attendees. The Chairman of the meeting shall appoint the secretary, who may or may not be

a shareholder.

Article 12 – It shall be incumbent on shareholders convening in a general meeting to decide

on the matters listed below, among other actions prescribed by law and these Bylaws.

I. To elect and remove the directors and to appoint the Chairman of the Board;

II. To establish the aggregate annual compensation of the directors, officers and

fiscal council members;

III. To review the management’s report and the annual financial statements

presented under their responsibility;

IV. To amend the Bylaws;

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V. To decide on the dissolution and liquidation of the Company, or on a

consolidation or spin-off or merger transaction, whether having the Company

as mergor or mergee;

VI. To approve the stock option plan applicable to directors, officers and

employees of the Company and its direct and indirect subsidiaries;

VII. To decide on Management’s proposals concerning allocation of net income for

the year and dividend distributions;

VIII. In the event of liquidation, to elect the liquidator and the fiscal council members

for the liquidation process;

IX. To decide on a going private process (deregistration as a public company) or

delisting from the Novo Mercado segment of the stock exchange operated by

BM&FBOVESPA;

X. Where a valuation of the shares is required in connection with a going private

process (deregistration as a public company) or delisting from the Novo

Mercado segment, as contemplated under Chapter V of these Bylaws, to select

a specialist valuation firm to prepare a valuation report from a nominations list

prepared by the board of directors; and

XI. To resolve on any matter the board of directors may submit to a Shareholders

Meeting.

SECTION II

GOVERNANCE; MANAGEMENT

Subsection I

General Provisions

Article 13 – The Company shall be managed and directed by a Board of Directors and an

Executive Board of Officers.

Paragraph 1 – The directors and officers of the Company, who shall not be required to

post bond, shall take office upon signing an instrument of investiture in the proper

register.

Paragraph 2 – Effective from the Company’s adherence to the rules of the Novo

Mercado listing segment of BM&FBOVESPA, a condition precedent applies requiring

directors and officers to sign a statement prior taking office substantially in the form of

the Standard Statement of Adherence for Directors and Officers provided in the Novo

Mercado Listing Regulation, as well as to meet other applicable legal requirements.

Pursuant to applicable law and regulations, the directors and officers are further required

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to give the Company, and the CVM** and BM&FBOVESPA, as applicable, notice of their

holdings and transactions in securities issued by the Company.

Paragraph 3 – The directors and officers shall remain in office until a successor is

elected and takes office.

Paragraph 4 – Pursuant to article 45 of these Bylaws, effective from May 10, 2014, no

single person shall be permitted to accumulate the offices of chairman of the board and

chief executive officer or lead executive of the Company.

Article 14 – A Shareholders Meeting shall set the aggregate annual compensation payable to

directors and executive officers, and the board of directors shall allocate such amount amongst

the directors and officers giving due regard to the provisions of these Bylaws.

Article 15 – Provided due call notice shall have been given pursuant to these Bylaws, a

quorum to convene the meetings of either the board of directors or the executive board shall

require attendance by a majority of its members. A majority of affirmative votes cast by the

attendees shall constitute a quorum to resolve.

Sole Paragraph – A call notice to any meeting of either the board of directors or the

executive board may be validly waived if the meeting convenes with the presence of all

its members. For purposes of this paragraph, any member casting written votes

(whether delivered to the Company prior to the meeting or by hand through another

member) shall be deemed to present at the meeting.

Subsection II

Board of Directors

Article 16 – The Board of Directors shall be composed of at least five (5) and at most eleven

(11) members elected or removed upon a decision of the Shareholders’ General Meeting. The

directors shall be elected for unified two-year terms of office, reelection being permitted.

Paragraph 1 – The shareholders shall establish the total number of acting directors at

the annual Shareholders Meeting.

Paragraph 2 – At least twenty percent (20%) of the members of the board of directors

shall be Independent Directors (as defined in the Novo Mercado Listing Regulation) and

the capacity of Independent Director necessarily be declared in the minutes of the

Shareholders Meeting that elects them. Where the 20% rule established in this Paragraph

2 results in a fragmented number of directors, such number shall be rounded to the next

integral number; (i) upwards, if the fragment is 0.5 or above, and (ii) downwards, if the

fragment is below 0.5.

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Paragraph 3 – Directors that are elected pursuant to the cumulative voting process

foreseen in article 141, Paragraphs 4 and 5, of Brazilian Corporate Law* shall also be

deemed to be Independent Directors.

Paragraph 4 – The directors shall take office upon signing an instrument of investiture

in the proper register. Unless otherwise decided at a Shareholders Meeting, the directors

shall remain in office until a successor is elected and takes office.

Paragraph 5 – The members of the board of directors must enjoy an upstanding

reputation. Furthermore, unless upon a waiver granted at a Shareholders Meeting,

board of directors candidates must (i) not hold a position in any company deemed to be

a competitor of the Company; and (ii) not have, nor represent any party that has, a

conflict of interest with the Company. Accordingly, any acting director shall be required

to abstain from voting if he or she has a supervening impediment or conflict of interest

in the matter under consideration.

Paragraph 6 – No member of the board of directors may have access to information,

take part in decisions and discussions of the board of directors, or exercise the right to

vote, or in any way intervene in matters in which he or she has, or represents any party

that has, a conflict of interest with the Company.

Paragraph 7 – In order to better perform its role, the board of directors may establish

purpose-specific committees or work groups whose members it will designate from

among the directors and by selecting other persons that perform no role in managing

the Company.

Article 17 – The Chairman of the Board shall be appointed by the Shareholders’ General

Meeting.

Paragraph 1 – It shall be incumbent on the Chairman to preside over Shareholders

Meetings and meetings of the board of directors. In his or her absence or temporary

impediment, another director appointed by a majority of attendees shall perform this

function.

Paragraph 2 – In the event a board seat becomes vacant, and provided such vacancy

does not deprive the board of a majority of the number of minimum active seats defined

at a Shareholders Meeting, the other acting directors may (i) fill in the vacant seat by

appointing a substitute to act as director for the remainder of the term, or (ii) leave the

seat vacant for the remainder of the term, whereas having due regard for the minimum

number of active board seats required under the main provision of article 16.

Paragraph 3 – Where a vacancy does deprive the board of directors of a majority of the

minimum number of active seats defined at a Shareholders Meeting, the board shall call

a Shareholders Meeting to fill in the vacant seat, in which case the substitute director shall

take office for the remainder of the term.

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Paragraph 4 – In resolutions of the board of directors, each director shall be entitled to

cast one vote, except that the Chairman of the Board shall have the casting vote, thus

voting twice on issues where the votes are equally divided due to an even number of

acting directors.

Article 18 – The board of directors shall meet upon being called by the Chairman.

Exceptionally, the meetings of the board of directors may be held by conference call, video

conference or any other means of communication whereby a vote can be cast unequivocally.

Paragraph 1 – The directors shall be given three (3) business days written call notice

of any board meeting, which notice shall state the order of business for the meeting and

attach the related documentation. The call notices shall be delivered by letter, telegram,

fax, email or any other means permitting proof of delivery to be kept.

Paragraph 2 – The decisions of board of directors meetings shall be registered in

minutes drawn up in the proper register and signed by the attendees.

Paragraph 3 – In board meeting decisions, the directors may cast votes in writing, at or

ahead of the meeting, or by fax, email or any other means of communication, and shall

thus be deemed to be present at the meeting.

Paragraph 4 – A majority of affirmative votes cast by directors present at a board

meeting shall constitute a quorum to resolve.

Article 19 – In addition to other actions prescribed by law and these Bylaws, it shall be

incumbent on directors convening in a meeting to decide on the matters listed below.

I. To set the general business guidelines of the Company;

II. To elect and remove the executive officers;

III. To set or change liability caps limiting the executive board’s ability to approve

issuances of debt instruments and notes receivable in connection with capital raising

transactions (including nonconvertible, non-mortgage backed simple debentures, and

bonds, notes, commercial papers or other instruments typically traded on fixed-income

markets) or their ability to establish terms of issuance or redemption of any such

instruments or securities. The board of directors may also require the executive board

to obtain the board’s prior consent for specifically defined transactions, in which case

consent will constitute a condition of validity of the transaction,

IV. To oversee management as performed by the executive board, including by

inspecting the books and records of the Company, and demanding information on

transactions and proposed transactions, and any other actions of the executive officers;

V. To select and remove the independent auditors of the Company;

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VI. To summon the independent auditors to provide information and clarifications,

as it may deem fit;

VII. To review the management’s report and financial statements, and to approve

them for submission to the shareholders’ general meeting;

VIII. To approve the annual budgets of the Company and any budget changes;

IX. To advise the shareholders about proposals management may plan to submit

to a Shareholders Meeting;

X. To authorize the Company to issue shares within the authorized limit of the

share capital set forth under Article 6 of these Bylaws, and to establish the terms of

issuance, including issue price and payment conditions; furthermore, as permitted by

law, in its discretion, to restrict the exercise period of, or withdraw, the preemptive rights

of shareholders in any issuance of shares, convertible debentures and subscription

warrants for public distribution under a primary market offering or private placement with

accredited investors or exchange offer;

XI. To decide on any share buyback program, whether for the repurchased shares

to be cancelled or kept as treasury stock for future reissue, and on the writing of put or

call options on shares issued by the Company;

XII. To decide on the issuance of subscription warrants;

XIII. Within the scope of a stock options plan previously approved at a Shareholders

Meeting, to grant stock options to directors, officers, employees, consultants and other

providers of the Company and its direct and indirect subsidiaries, including by

withdrawing the preemptive rights of shareholders;

XIV. To authorize the Company to give guarantees to secure obligations undertaken

by the Company or its subsidiaries and wholly-owned subsidiaries, where the

transaction value exceeds the liability cap foreseen under the sole paragraph of this

article;

XV. Having regard for the provision under item XVI below, to approve transactions

entailing acquisition or sale of permanent asset items, where the transaction value

exceeds the liability cap foreseen under the sole paragraph of this article;

XVI. To authorize the Company to hold ownership interest in other companies, as

shareholder or partner, or to agree joint ventures with other companies;

XVII. To approve the giving of security interest in assets of the Company or the giving

of collateral to third parties, where the transaction value exceeds the liability cap

foreseen under the sole paragraph of this article;

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XVIII. To approve borrowing transactions, and the execution of credit facility or loan

or leasing agreements not foreseen in the annual budget, where the transaction value

exceeds the liability cap foreseen under the sole paragraph of this article;

XIX. To approve any transaction or series of related transactions between the

Company and any directly or indirectly related party, where the transaction value in any

given year equals or exceeds the liability cap established by the board of directors. For

purposes of this provision, “related party” is defined as any director or officer or

employee of the Company, or any person directly or indirectly holding ownership interest

in shares representing more than ten percent (10%) of the capital stock of the Company;

XX. To authorize any assignment for use, or disposition, transfer or licensing of any

intellectual property or industrial property belonging to the Company;

XXI. To grant prior consent to any spin-off, consolidation or merger transaction, or

liquidation or dissolution transaction, or any other corporate restructuring process of like

effects involving any subsidiary of the Company; and

XXII. To decide on bonus share distributions and on stock split or reverse split

transactions;

XXIII. To express and release to the market within fifteen (15) days after any tender

offer announcement, a reasoned opinion on the tender offer initiated in respect of the

Company shares, advising shareholders on (i) the timing and convenience of the bid

vis-à-vis the interests of shareholders and the liquidity of their shares; (ii) the impact

of the offer on the business interests of the Company; (iii) the bidder’s announced

strategic plans for the Company; and (iv) any other point of consideration the Board

may deem relevant. In expressing an opinion in favor of, or rejecting the tender offer,

the board of directors shall further provide the additional information required under

applicable CVM rules; and

XXIV. Where a tender offer is required to be implemented in connection with a going

private process (deregistration as a public company) or delisting from the Novo

Mercado, to prepare a list nominating three specialist valuation firms with expertise to

determine the economic value of the Company shares and prepare a valuation report.

Sole Paragraph – The board of directors may establish liability caps limiting the ability

of the executive officers to undertake obligations in name of the Company in any of the

transactions listed under items III, XIV, XV, XVII, XVIII and XX of this article.

Subsection III

Executive Board of Officers

Article 20 – The Executive Board shall be composed of two (2) to seven (7) executive officers,

whose titles will be Chief Executive Officer, General Counsel, Investor Relations Officer, Chief

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Financial and Administrative Officer and the other executive officers will have no specific title.

The functions of Investor Relations Officer may be exercised cumulatively with those of any

Officer, as determined by the Board of Directors.

Paragraph 1 – The officers shall be elected for three-year terms, reelection being

permitted.

Paragraph 2 – Where an officer is not reelected, he or she shall remain in office the

successor takes office.

Paragraph 3 – In the event of permanent impediment of an officer or vacancy of an

executive office, the board of directors shall promptly convene in meeting to appoint a

substitute to fill in the position.

Paragraph 4 – Unless specifically authorized by the board of directors, the absence or

impediment of any executive officer for a period in excess of thirty (30) consecutive days

shall end such officer’s term and determine a vacancy, requiring the board of directors

to proceed to fill in the vacant office pursuant to paragraph 3 of this article.

Paragraph 5 – No executive officer shall be permitted to accumulate functions

substituting for any more than one officer at any given time.

Paragraph 6 – The executive board shall meet upon being called by the Chief Executive

Officer or any two other executive officers acting jointly, whenever the interests of the

Company so require. The meetings of the executive board, which shall be held at the

registered office of the Company, shall convene with the presence of a majority of its

members, one of them being the Chief Executive Officer, or otherwise with the absolute

majority of the executive officers. A majority of affirmative votes cast by the attendees

shall constitute a quorum to resolve, provided in the event of a tie the Chief Executive

Officer shall have the casting vote, thus voting twice on issues where the votes are

equally divided. The minutes of the meetings of the executive board of officers shall be

drawn up in the proper register.

Article 21 – It shall be incumbent on the executive board of officers to direct and manage the

business operations of the Company and, in particular, to:

(a). Comply with and enforce the provisions of these Bylaws and the decisions of the

board of directors and the shareholders’ general meeting;

(b). Submit for review by the board of directors the annual management’s report, the

financial statements, the independent auditors’ report, and the proposal on

allocation of net income for the year;

(c). Submit for approval by the board of directors the annual budget proposal;

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(d). Submit for review by the board of directors the quarterly financial reports for the

Company and its subsidiaries;

(e). Issue and approve instructions and internal regulations it may deem necessary or

useful; and

(f). Represent the Company in and out of court, as a plaintiff or defendant, whereas

having due regard for the provisions set forth in article 26.

Article 22 – The Chief Executive Officer shall be responsible for coordinating the actions of

the executive officers, for managing the business activities consistently with the general

business plans of the Company, in addition to performing other functions and discharging

other duties prescribed by the board of directors. Within his or her sphere of authority, and giving

regard to the policies and business guidelines set by the board of directors, the chief executive

officer shall:

(a). Call and preside over the meetings of the executive board of officers;

(b). Supervise the management of the Company, coordinating with, and directing the

activities of, the other executive officers;

(c). Coordinate the personnel policies, as well as the organizational, management,

operating and marketing policies of the Company;

(d). Prepare and submit to the board of directors the annual business plan and budget

proposal; and

(e). Manage the general corporate affairs.

Article 23 – The General Counsel shall be responsible for setting guidelines and supervising

the Company’s activities within the wider legal realm, while providing legal assistance to

governance and upper management bodies of the Company.

Article 24 – The Investor Relations Officer shall be responsible for releasing information to

the market, the CVM**, the stock exchange and over-the-counter markets on which securities

issued by the Company are listed to trade, and for keeping current the Company’s public

company registration and record information filed with the CVM** and to ensure the Company

is compliant with the legislation and regulations applicable to public companies.

Article 25 – In addition to performing other functions and discharging other duties prescribed

by the board of directors, whereas giving regard to the policies and business guidelines the

board may have set, the Chief Financial and Administrative Officer shall be responsible for:

(a). Proposing financing alternatives and approving the financial terms and conditions

of transactions and business operations carried out by the Company;

(b). Managing the Company’s cash flows, and the accounts payable and receivable;

and

(c). Managing the accounting and tax department and the financial planning

department.

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Article 26 – The Company shall be represented as follows:

(a). By two (02) officers acting jointly, one of whom must be the Chief Executive Officer,

or the General Counsel, or the Chief Financial and Administrative Officer, the other

being an Executive Officer with no Specific Title;

(b). By any executive officer acting jointly with an attorney-in-fact acting under a power

of attorney granted pursuant to item (a) above; or

(c). By two (02) attorneys-in-fact acting under a power of attorney granted pursuant to

item (a) above.

(d). Individually by the Investor Relations Officer strictly when acting within the scope of

his functions in such capacity, pursuant to article 24 of these Bylaws.

Paragraph 1 – The Company, as compulsorily represented pursuant to item (a) of the

main provision, shall grant powers of attorneys for maximum one-year terms, except that

powers of attorney granted for legal representation in judicial or administrative

proceedings may be granted for an indefinite term.

Paragraph 2 – Special powers of attorney granted pursuant to Paragraph 1 above may

expressly authorize a single executive officer or attorney-in-fact to act individually on

behalf of the Company, and represent or bind the Company in connection with specified

actions or transactions.

SECTION III

FISCAL COUNCIL

Article 27 – The Fiscal Council of the Company, which shall have the responsibilities set forth

under applicable law, shall be composed of three (03) to five (05) members and an equal

number of alternates.

Paragraph 1 – The Fiscal Council shall operate on a permanent basis, in accordance

with applicable legal provisions.

Paragraph 2 – Effective from the Company’s adherence to the rules of the Novo

Mercado listing segment of BM&FBOVESPA, the investiture of fiscal council members

in office is now contingent upon their signing and delivering mandatory statements of

adherence to the Novo Mercado Listing Regulation and other applicable legal

requirements. Under the law and applicable regulations, the fiscal council members are

further required to give BM&FBOVESPA notice of their direct or indirect holdings, and

transactions from time to time carried out in securities issued by the Company and

derivatives thereof.

CHAPTER IV

STATUTORY AUDIT COMMITTEE ESTABLISHED PURSUANT TO BYLAWS

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Article 28 - The Statutory Audit Committee, established pursuant to the Bylaws as a

permanent advisory committee to the Board of Directors, consists of at least three (3)

members, at least one (1) of whom must be an Independent Director and at least one (1) must

have recognized experience in corporate accounting matters.

Paragraph 1 - The same member of the Statutory Audit Committee may possess both

the characteristics mentioned in the head paragraph.

Paragraph 2 – Statutory Audit Committee members will serve a term of two (2) years,

may be reelected and hold office for a maximum of ten (10) years. Their investiture is

conditioned on signing the Consent of Appointment of Statutory Audit Committee

Members, in accordance with Novo Mercado Regulations, as well as complying with

applicable legal requirements.

Paragraph 3 - The Statutory Audit Committee will have the following responsibilities:

a) to provide an opinion on hiring and removing the external independent auditor

responsible for independent external audit or any other service; b) to supervise the

activities of: (i) independent auditors in order to ensure their independence, the quality

and adequacy of the services provided in relation to the needs of the Company; (ii) the

internal controls area of the Company; (iii) the internal audit area of the Company; and

(iv) the area responsible for preparing the financial statements of the Company; c) to

monitor the quality and integrity of: (i) the internal control mechanisms; (ii) the quarterly

financial statements, interim financial statements and financial statements of the

Company; and (ii) the information and measurements disclosed based on adjusted

accounting data and non-accounting data that add elements not envisaged in the usual

reporting framework of the financial statements; d) to evaluate and monitor the risk

exposures of the Company, and even requesting detailed information on the policies

and procedures related to: (i) management compensation; (ii) the use of Company

assets; and (iii) expenses incurred on behalf of the Company; e) to evaluate and

monitor, together with management and internal audit, the adequacy of related-party

transactions conducted by the Company and their respective reporting; f) to prepare a

summarized annual report, to be presented together with the financial statements,

describing: (i) its activities, results, conclusions and recommendations; and (ii) any

situations in which there is a significant divergence between the management of the

Company, external independent auditors and the Audit Committee regarding the

financial statements of the Company.

Paragraph 4 - The charter of the Statutory Audit Committee will be approved by the

Board of Directors and should describe in detail its functions and its operational

procedures.

Paragraph 5 - The compensation of Statutory Audit Committee members, apart from the

respective budget allocation, will be fixed by the Board of Directors.

CHAPTER IV

FISCAL YEAR AND FINANCIAL STATEMENTS

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Article 29 – The fiscal year shall begin on January 1 and shall end on December 31 of each

year.

Paragraph 1 – At the end of each fiscal year, the financial statements required under

the law and the Novo Mercado Listing Regulation shall be prepared under

management’s responsibility in accordance with applicable legal and regulatory

requirements.

Paragraph 2 – In addition to having the financial statements prepared, and as an integral

part thereof, the executive board shall prepare a proposal no allocations of net income

for the year, whereas giving regard to the provisions of applicable law and these Bylaws.

Paragraph 3 – The following allocations of net profit for the year are mandatory:

(a) a five percent (5%) allocation to the legal reserve, which however may be

waived if it reaches the equivalent of twenty percent (20%) of the capital stock, as issued

and outstanding;

(b) the allocation for payment of the mandatory dividend, as provided under the

law and article 29 of these Bylaws;

(c) allocations to profit reserves and additional payouts, other than the mandatory

dividends prescribed by Brazilian Corporate Law*.

Article 30 – The shareholders shall be entitled to a mandatory dividend distribution in the

equivalent of twenty-five percent (25%) of net income for the year, as adjusted to account for

the following:

I. deductions related to yearly allocations to the legal reserve and to contingency

reserves; and

II. additions related to the reversal, in the year, of prior allocations to the

contingency reserve for losses that did not materialize as anticipated.

Paragraph 1 – Where the mandatory dividend amount exceeds the realized net

profits in a given year, the board of directors may propose to the Shareholders

Meeting the allocation of the excess amount to an unrealized profit reserve account,

such as contemplated under article 197 of Brazilian Corporate Law.

Paragraph 2 – The Shareholders Meeting may, giving regard to applicable legal

restrictions, approve profit sharing payments attributable to directors and officers of the

Company and its subsidiaries, provided any such payment shall be contingent on the

mandatory dividend prescribed in this article being paid to the shareholders.

Paragraph 3 – The Company may prepare semi-annual or other interim financial

statements. Due regard given to applicable legal restrictions, the board of directors may:

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(a) declare interim dividends based on the net income determined in such interim

financial statements, subject to subsequent confirmation by the Shareholders Meeting;

and (b) declare intermediary dividends based on existing profit reserves, as determined

in the most recent annual or semi-annual financial statements.

Paragraph 4 – Dividend payments which remain unclaimed for three years are forfeited

and return to the Company.

Paragraph 5 – Pursuant to a proposal submitted by the executive board, the board of

directors may declare interest on shareholders’ equity for payment or crediting to

shareholders, subject to confirmation at the annual Shareholders Meeting that considers

the financial statements related to that year. Interest on shareholders’ equity declared

to shareholders may be computed as part of the annual mandatory dividend distribution.

CHAPTER V

DISPOSITION OF CONTROL; DEREGISTRATION AS A PUBLIC COMPANY;

DELISTING FROM THE NOVO MERCADO

Article 31 – Any single transaction or series of successive transactions for disposition of

control is required to be agreed under a condition precedent or dissolving condition that a

tender offer for all other shares of the Company be conducted by the acquirer of control,

giving due regard to the conditions and deadlines prescribed under applicable legislation

and the Novo Mercado Listing Regulation, thus ensuring other shareholders are extended

the same treatment afforded the selling controlling shareholder.

Article 32 – A tender offer shall likewise be required in any the following events:

I. Where subscription rights or other securities convertible into, or exchangeable

or exercisable for shares are assigned at cost, such that the end result equates to a

disposition of control of the Company, or

II. Where a transaction is agreed for disposition of the controlling interest in a

controlling shareholder of the Company, in which case the selling shareholder will be

required to disclose to BM&FBOVESPA the value assigned to the Company in the

selling transaction and present documentary evidence thereof.

Article 33 – A shareholder acquiring a controlling interest under a private purchase

transaction agreed with the controlling shareholder for any number of Company shares, shall

be required:

I. to conduct a tender offer, as required under Article 31 of these Bylaws; and

II. to refund counterparties (which may have sold shares to the bidder under on-

exchange trades over the six-month period preceding the date of the private

transaction) for any difference between the bid price per share (in the tender offer) and

the adjusted price per share paid in the relevant exchange transactions.

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BM&FBOVESPA will be responsible for implementing the reimbursement process, in

accordance with its own regulations, such that the aggregate reimbursement price can

be allocated amongst the relevant counterparty sellers of shares in proportion to each

of their daily net selling positions as of the relevant trade dates over the relevant six-

month period.

Article 34 – Where a tender offer is required to be conducted by a controlling shareholder or

the Company due to a going private process (deregistration as a public company), the bid

price shall be the Economic Value per share, as determined in a valuation report prepared in

the manner provided in Article 37 of these Bylaws, due regard being given to applicable legal

and regulatory rules.

Article 35 – In the event the Company is set to delist from the Novo Mercado for the shares

to trade elsewhere, or due to a corporate restructuring process where the surviving company

fails to list its shares to trade on the Novo Mercado within one hundred and twenty days

(120) after the date of the Shareholders Meeting that approves the restructuring transaction,

the controlling shareholder shall be required to conduct a tender offer for all the shares and

pay a bid price not lower than the Economic Value per share, as determined in a valuation

report prepared in the manner provided in Article 37 of these Bylaws, due regard being given

to applicable legal and regulatory rules.

Article 36 – In the absence of a controlling shareholder due to widely dispersed ownership,

if the Company is set to delist from the Novo Mercado for the shares to trade elsewhere, or

due to a corporate restructuring process where the surviving company fails to list its shares

to trade on the Novo Mercado within one hundred and twenty days (120) after the date of

the Shareholders Meeting that approves the restructuring transaction, such event shall

trigger the tender offer requirement, and the bid shall be implemented under similar terms and

conditions as provided in the preceding article.

Paragraph 1 – In either of the abovementioned events, the Shareholders Meeting that

approves the action or transaction shall be required to designate the party or parties

responsible for carrying out the tender offer. If attending the meeting, the designated

bidder or bidders shall be required to expressly commit to conduct the tender offer.

Paragraph 2 – Absent a decision designating the party or parties responsible for the

tender offer in the case of a corporate restructuring process where the shares of the

surviving company are not listed to trade on the Novo Mercado, the responsibility for

conducting the tender offer shall lie with the shareholders voting to approve the

restructuring transaction.

Article 37 – A cancellation of the listing authorization ordered as a result of a breach of the

Novo Mercado Listing Regulation shall trigger the tender offer requirement. In this event, the

offer shall be implemented at a bid price not lower than the Economic Value per share, as

determined in a valuation report prepared in the manner provided in Article 37 of these Bylaws,

due regard being given to applicable legal and regulatory rules.

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Paragraph 1 – The responsibility for completing the tender offer required in the main

provision of this article shall lie with the controlling shareholder.

Paragraph 2 – Absent a controlling shareholder due to widely dispersed ownership, if

the event triggering the tender offer requirement consists of a contravening action or

transaction decided at a Shareholders Meeting, the responsibility for completing the

tender offer shall lie with the shareholders that vote to approve the contravening action

or transaction.

Paragraph 3 – Absent a controlling shareholder due to widely dispersed ownership, if

the event triggering the tender offer requirement consists of an act of fact of

management, the directors and officers shall be responsible for calling a Shareholders

Meeting at which the shareholders shall be asked to consider how to remedy the breach

of the Novo Mercado Listing Regulation or, as the case may be, adopt a process to delist

the shares from the Novo Mercado.

Paragraph 4 – Where the Shareholders Meeting convening pursuant to paragraph 3

above votes to delist the shares from the Novo Mercado, the shareholders shall also be

required to designate the party or parties responsible for carrying out the tender offer

foreseen in the main provision. If attending the meeting, the designated party or parties

shall be required to expressly commit to conduct the tender offer.

Article 38 – The valuation reports required under articles 33, 34 and 36 of these Bylaws shall

be prepared by an experienced, independent, specialist valuation firm, which is not susceptible

to being influenced by the decisions of the Company, its directors and officers, or the

controlling shareholder(s). In addition, any such valuation firm shall meet the requirements of

paragraph 1 of Article 8 of Brazilian Corporate Law* and perform the work subject to the liability

clause contemplated under paragraph 6 of said legal provision.

Paragraph 1 – A Shareholders Meeting shall have exclusive discretionary powers and

authority to select and appoint a specialist valuation firm to determine the Economic

Value of the Company shares from among a triple nomination list submitted by the board

of directors. The affirmative vote of holders of record representing a majority of the

outstanding shares in attendance of a Shareholders Meeting convening on first call shall

constitute a quorum to resolve on the appointment, provided blank votes shall be

disregarded. In a Shareholders Meeting convening on second call with any number of

attendees, a quorum to resolve on the appointment shall exist upon holders of record

casting affirmative votes representing at least twenty percent (20%) of the outstanding

shares present at the meeting, not including blank votes.

Paragraph 2 – The tender-offer bidder shall bear all of the costs related to the

preparation of the valuation report.

Article 40 – The Company shall not consent to record any transfer of shares to an acquirer

of control until such time as the latter, consistent with the Novo Mercado Listing Regulation,

shall have delivered a duly signed Statement of Adherence of Controlling Shareholder.

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Likewise, the Company shall not consent to register any shareholders’ agreement regulating

the exercise of controlling power unless the agreement signatories shall have delivered duly

signed Statements of Adherence of Controlling Shareholder.

Article 41 – It shall be permitted for a single tender offer to be registered with a view to

accomplishing one or some of the objectives contemplated in this Chapter V, in the Novo

Mercado Listing Regulation, or the CVM regulation, provided it must be possible to harmonize

the different offer methods, and provided further the procedure shall not be detrimental to the

addressees of the offer, and the CVM shall have consented to such offer, where consent is

required under applicable legislation.

Article 42 – Where these Bylaws, the Novo Mercado Listing Regulation, or the CVM regulation

require a tender offer to be carried out by one or some of the shareholders, the obligation may

be discharged through any willing shareholder or a third party. However, the shareholder(s)

charged with conducting the tender offer shall not be released from the obligation until such

time as a tender offer completes in accordance with applicable rules.

Article 41 – Where these Bylaws are silent on an issue, the matter shall be resolved at a

Shareholders Meeting, due regard being given to the provisions of Brazilian Corporate Law*

(Law No. 6,404/76, as amended) and the Novo Mercado Listing Regulation.

CHAPTER VI

ARBITRATION

Article 43 – The Company, the shareholders, the directors and officers and the fiscal council

members are required to settle by arbitration any and all disputes involving any of them, as

related to, or arising from the application, validity, effectiveness, interpretation, violation and

effects of violation of the provisions of these Bylaws, the Brazilian Corporate Law*, the rules

and regulations of the Brazilian National Monetary Council, the Central Bank of Brazil and the

CVM**, the Novo Mercado Listing Regulation and Sanctions Regulation, the Novo Mercado

Listing Agreement, and the Arbitration Regulation adopted by the Market Arbitration Chamber,

as well as other rules and regulations applicable to the Brazilian capital markets. The

arbitration proceedings shall be conducted by the Market Arbitration Chamber (established by

BM&FBOVESPA) under its adopted Arbitration Regulation.

CHAPTER VII

LIQUIDATION

Article 44 – The Company shall be liquidated in the events contemplated under the law, and

the shareholders’ general meeting shall elect the liquidator or liquidators and the Fiscal

Council which shall operate during the liquidation period, whereas giving regard to applicable

legal formalities.

CHAPTER II

TRANSITORY AND FINAL PROVISIONS

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Article 45 – The Company shall not grant any type of loans or financing or guarantees of any

kind to third parties for purposes unrelated to the business interests of the Company.

Article 46 – The provision under paragraph 4 of article 13 of these Bylaws takes effect from

May 10, 2014, when a revised version of subsection 14.5 of the Novo Mercado Listing

Regulation comes into effect.