Minerva S.A. Individual and consolidated interim financial information and independent auditor s report on review of interim financial information

Transcription

1 Minerva S.A (Free translation from the original issued in Portuguese. In the event of any discrepancies, the Portuguese language version shall prevail.) Individual and consolidated interim financial information and independent auditor s report on review of interim financial information At September 30, 2018

2 Contents Page Independent auditor s report on review of the interim financial information 3 Individual and consolidated interim financial information 5 Notes to the individual and consolidated interim financial information for the nine-month period ended September 30, Earnings Release 79

3 3 (Free translation from the original issued in Portuguese. In the event of any discrepancies, the Portuguese language version shall prevail. See Note 31 to the interim financial information.) Independent Auditor s Report on review of the individual and consolidated interim financial information To the Management, Board of Directors and Shareholders of Minerva S.A. Barretos SP Grant Thornton Auditores Independentes Av. Engenheiro Luís Carlos Berrini, 105 Itaim Bibi São Paulo SP Brasil Edifício Berrini One - 12º andar T Introduction We have reviewed the individual and consolidated interim financial information of Minerva S.A. ( Company ), included in the Quarterly Financial Information Form (ITR) for the quarter ended September 30, 2018, which comprises the balance sheet as at September 30, 2018, and the related income statement and statement of comprehensive income for the three and nine month periods then ended, and the statement of changes in equity and statement of cash flows for the nine-month period then ended, including the explanatory notes. The Company s Management is responsible for the preparation of the individual and consolidated interim financial information in accordance with CPC 21 (R1) Demonstração Intermediária and IAS 34 Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as for the presentation of such information in accordance with the standards issued by the Brazilian Securities and Exchange Commission (CVM) applicable to the preparation of Interim Financial Information (ITR). Our responsibility is to express a conclusion on this individual and consolidated interim financial information based on our review. Scope of review We conducted our review in accordance with Brazilian and international standards on review of interim financial information (NBC TR 2410 and ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the standards on auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

4 4 Conclusion on the individual and consolidated interim financial information Based on our review, nothing has come to our attention that causes us to believe that the individual and consolidated interim financial information included in the ITR referred to above is not prepared, in all material respects, in accordance with CPC 21 (R1) and IAS 34, applicable to the preparation of Interim Financial Information (ITR) and presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission (CVM). Emphasis of matter Restatement of the corresponding figures As mentioned in Note 4 f), the statements of cash flows for the nine-month period ended June 30, 2017 were reclassified for better presentation of the comparative corresponding figures, as described in such Note. Our conclusion does not have any modification regarding this matter. Other matters Statements of Value Added ( DVA ) We have also reviewed the individual and consolidated statements of value added (DVA) for the nine-month period ended September 30, 2018, prepared under the responsibility of the Company s Management, the presentation of which is required by the standards issued by the Brazilian Securities and Exchange Commission (CVM) applicable to the preparation of Interim Financial Information (ITR), and considered supplemental information by IFRS, which does not require the presentation of a DVA. These statements were subject to the same review procedures described above and, based on our review, nothing has come to our attention that causes us to believe that they are not prepared, in all material respects, in relation to the individual and consolidated interim financial information taken as a whole. São Paulo, November 06, 2018 Daniel Gomes Maranhão Junior Partner Grant Thornton Auditores Independentes

5 5 Minerva S.A. Balance sheets as at September 30, 2018 and December 31, 2017 (Free translation from the original issued in Portuguese. In the event of any discrepancies, the Portuguese language version shall prevail.) (In thousands of Brazilian reais - R$) ASSETS Parent Consolidated Note 09/30/ /31/ /30/ /12/2017 Current assets Cash and cash equivalents 5 3,653,950 2,554,043 4,173,266 3,807,342 Trade receivables 6 703, ,997 1,503,631 1,385,460 Inventories 7 452, , , ,809 Biological assets 8 152, , , ,317 Recoverable assets 9 668, , , ,515 Other receivables - 100, , , ,408 Total current assets 5,731,098 4,458,270 7,909,929 7,351,851 Noncurrent Assets Other receivables - 10,049 8,978 13,922 11,514 Related parties , , Recoverable taxes 9 179, , , ,747 Deferred taxes ,001 95, ,365 95,148 Judicial deposits - 27,330 21,376 28,150 21,792 Investments 11 3,283,385 3,067, Property, plant and equipment 12 1,810,349 1,821,931 3,300,574 3,498,652 Intangible assets , , , ,621 Total noncurrent assets 6,186,203 5,805,596 4,406,245 4,553,474 Total assets 11,917,301 10,263,866 12,316,174 11,905,325 The accompanying notes are an integral part of this interim financial information.

6 6 Minerva S.A. Balance sheets as at September 30, 2018 and December 31, 2017 (Free translation from the original issued in Portuguese. In the event of any discrepancies, the Portuguese language version shall prevail.) (In thousands of Brazilian reais - R$) LIABILITIES Parent Consolidated Note 09/30/ /31/ /30/ /12/2017 Current liabilities Borrowings and financing 14 2,849,331 1,944,652 3,116,500 2,187,470 Trade payables , , ,904 1,048,399 Taxes payable and payroll and related taxes 16 95,552 89, , ,970 Other payables , , , ,391 Total current liabilities 4,274,008 2,914,334 5,164,803 3,947,230 Noncurrent liabilities Borrowings and financing 14 4,691,679 4,177,751 8,272,117 7,419,538 Convertible debentures Taxes payable and payroll and related taxes 16 61,128 43,226 75,611 51,449 Provisions for tax, labor and civil risks 20 34,032 34,936 51, ,343 Allowances for investment losses 11 1,751,324 1,243, Related parties 10 2,470,883 1,779, Other payables ,975 38,382 Deferred taxes , ,306 Total noncurrent liabilities 9,009,046 7,278,455 8,517,124 7,887,018 Equity 21 Capital - 144, , , ,854 Capital reserves - 120, , , ,504 Revaluation reserves - 52,549 53,712 52,549 53,712 Earnings reserves Accumulated losses - (1,306,243) (134,683) (1,306,243) (134,683) Treasury shares - (36,846) (99,679) (36,846) (99,679) Other comprehensive income (loss) - (339,929) (64,631) (339,929) (64,631) Total equity attributable to Company's owners (1,365,753) 71,077 (1,365,753) 71,077 Noncontrolling interests Total equity (1,365,753) 71,077 (1,365,753) 71,077 Total liabilities and equity 11,917,301 10,263,866 12,316,174 11,905,325 The accompanying notes are an integral part of this interim financial information.

7 Minerva S.A. Statements of profit and loss for the periods ended September 30, 2018 and 2017 (Free translation from the original issued in Portuguese. In the event of any discrepancies, the Portuguese language version shall prevail.) (In thousands of Brazilian reais - R$) Parent Consolidated 3rd Quarter 2017 Note 3rd Quarter /30/ /30/2017 3rd Quarter /30/2018 3rd Quarter /30/2017 Net operating revenue 23 2,139,086 5,820,400 1,831,577 4,499,748 4,337,676 11,604,771 3,417,814 8,139,041 Cost of sales - (1,532,731) (4,302,488) (1,391,497) (3,350,209) (3,515,248) (9,527,265) (2,797,691) (6,603,312) Gross profit 606,355 1,517, ,080 1,149, ,428 2,077, ,123 1,535,729 Operating income (expenses): Selling expenses 24 (164,779) (465,004) (109,395) (271,463) (264,723) (755,208) (202,125) (494,469) Administrative and general expenses 24 (117,835) (301,741) (86,709) (230,200) (174,687) (461,276) (139,622) (348,805) Other operating income/ (expenses) 24 2,499 (642,291) (145,499) (140,383) 17,883 (563,858) (15,635) (7,769) Share of profit (loss) of investees 11 43,579 (44,840) 103,461 33, Profit (loss) from operations before finance income (costs), net, share of profit (loss) of investees, and taxes - 369,819 64, , , , , , ,686 Finance costs 25 (122,047) (443,484) (242,345) (681,284) (195,743) (724,902) (297,131) (832,202) Finance income 25 16,826 38,558 15,730 62,231 20,028 54,070 19,318 85,858 Exchange rate changes, net 25 (374,013) (1,378,665) 120, ,081 (354,395) (1,360,249) 122, ,055 Finance income (costs), net (479,234) (1,783,591) (105,921) (489,972) (530,110) (2,031,081) (155,744) (610,289) Profit (loss) before taxes (109,415) (1,719,555) 96,017 50,550 (129,209) (1,733,917) 106,997 74,397 Income tax and social contribution - current (6,977) (6,977) (14,018) (18,394) (19,826) (32,016) Income tax and social contribution - deferred 18 (22,612) 546,832 (3,223) (11,247) 11, ,588 (1,354) (9,715) Profit (loss) for the period before noncontrolling interests (132,027) (1,172,723) 85,817 32,326 (132,027) (1,172,723) 85,817 32,666 Equity attributable to: Company s owners - (132,027) (1,172,723) 85,817 32,326 (132,027) (1,172,723) 85,817 32,326 Noncontrolling interests (Loss) Profit for the period (132,027) (1,172,723) 85,817 32,326 (132,027) (1,172,723) 85,817 32,666 The accompanying notes are an integral part of this interim financial information. 7

8 (Free translation from the original issued in Portuguese. In the event of any discrepancies, the Portuguese language version shall prevail.) Minerva S.A. Statements of comprehensive income (loss) for the periods ended September 30, 2018 and 2017 (In thousands of Brazilian reais - R$) Parent Consolidated 3rd Quarter /30/2018 3rd Quarter /30/2017 3rd Quarter /30/2018 3rd Quarter /30/2017 Loss for the period (132,027) (1,172,723) 85,817 32,326 (132,027) (1,172,723) 85,817 32,666 Other comprehensive income (loss) to be reclassified to profit (loss) for the period in Valuation adjustments to equity (175,709) (275,298) (11,667) (2,708) (175,709) (275,298) (8,909) (2,708) Other comprehensive income (loss), net of income tax and social contribution (175,709) (275,298) (11,667) (2,708) (175,709) (275,298) (8,909) (2,708) Total comprehensive income (loss) (307,736) (1,448,021) 74,150 29,618 (307,736) (1,448,021) 76,908 29,958 Comprenehsive income (loss) attributable to: Company s owners (307,736) (1,448,021) 74,150 29,618 (307,736) (1,448,021) 74,150 29,618 Noncontrolling interests , Total comprehensive income (loss) (307,736) (1,448,021) 74,150 29,618 (307,736) (1,448,021) 76,908 29, The accompanying notes are an integral part of this interim financial information. 8

9 Retained Other Total equity Minerva S.A. Statements of changes in equity - Parent and consolidated for the periods ended September 30, 2018 and 2017 (Free translation from the original issued in Portuguese. In the event of any discrepancies, the Portuguese language version shall prevail.) (In thousands of Brazilian reais - R$) Capital Revaluation earnings (accumulated Treasury comprehensive attributable to Noncontrolling Total Capital reserve reserve losses) shares loss owners interests equity Balances at December 31, , ,504 53,712 (134,683) (99,679) (64,631) 71,077-71,077 - Loss for the period (1,172,723) - - (1,172,723) - (1,172,723) Cumulative translation adjustments (275,298) (275,298) - (275,298) Total comprehensive income (loss), net of taxes (1,172,723) - (275,298) (1,448,021) - (1,448,021) Capital increase 15, ,680-15,680 Cancellation of treasury shares - (67,322) , (-) Treasury shares (4,489) - (4,489) - (4,489) Realization of revaluation reserve - - (1,163) 1, Balances at September 30, , ,182 52,549 (1,306,243) (36,846) (339,929) (1,365,753) - (1,365,753) The accompanying notes are an integral part of this interim financial information. 9

10 Other Minerva S.A. Statements of changes in equity - Parent and consolidated for the periods ended September 30, 2018 and 2017 (Free translation from the original issued in Portuguese. In the event of any discrepancies, the Portuguese language version shall prevail.) (In thousands of Brazilian reais - R$) Earnings reserve Total equity Capital Revaluation Legal Statutory Earnings retention Additional Accumulated Treasury comprehensive attributable to Noncontrolling Total Capital reserve reserve reserve reserve - Art.196 dividends losses shares loss equity interests equity Balances at December 31, , ,851 55,556 9, ,802 26,950 11,433 - (43,112) (71,455) 520,623 1, ,067 Profit for the period , ,326-32,326 Cumulative translation adjustments (2,708) (2,708) - (2,708) Total comprehensive income, net of taxes ,326 - (2,708) 29,618-29,618 Cancellation of treasury shares - (107,347) , (-) Treasury shares (142,967) - (142,967) - (142,967) Realization of revaluation reserve - - (1,459) , Additional distribution proposed (11,433) (11,433) - (11,433) Noncontrolling interests (1,444) (1,444) Balances at September 30, , ,504 54,097 9, ,802 26,950-33,787 (78,732) (74,163) 395, , The accompanying notes are an integral part of this interim financial information. 10

11 11 Minerva S.A. Statements of cash flows for the periods ended September 30, 2018 and 2017 (Free translation from the original issued in Portuguese. In the event of any discrepancies, the Portuguese language version shall prevail.) (In thousands of Brazilian reais - R$) Parent Reclassified Consolidated Reclassified 09/30/ /30/ /30/ /30/2017 Cash flows from operating activities Profit (loss) for the year (1,172,723) 32,326 (1,172,723) 32,666 Adjustments to reconcile profit/loss to operating activities: Depreciation and amortization 72,963 54, ,089 86,452 Allowance for expected credit losses 3,270 4,148 4,865 5,693 Gains on sale of fixed assets 1,686 1,527 3,243 1,818 Equity attributable to noncontrolling interests (340) Fair value of biological assets 5,956 (32,948) 5,956 (32,948) Realization of deferred taxes (546,832) 11,247 (579,588) 9,715 Share of profit (loss) of investees 44,840 (33,029) - - Finance charges 554, , , ,551 Unrealized exchange rate changes 1,077,011 (168,155) 1,372,572 (168,841) Provision for risks (904) (4,219) (96,195) (1,461) Trade and other receivables (147,842) (26,066) (38,377) (181,746) Inventories (65,243) (155,367) (156,817) (65,475) Biological assets 12,775 (14,012) 10,518 (14,293) Recoverable taxes 17,092 (11,830) 650 3,685 Deferred taxes 466, ,344 - Judicial deposits (5,954) (2,511) (6,358) 1,207 Trade payables (44,413) 153,535 (183,495) 119,275 Taxes and payroll charges payable 24, ,756 51, ,292 Other payables 493,053 11, ,128 71,464 Cash flow provided by operating activities 790, , , ,714 Cash flow provided by investing activities Acquisition of subsidiary less cash in the acquisition (1,113,574) Acquisition of investments (27,718) (1,283,893) - Acquisition of intangible assets, net (4,706) (1,140) (6,988) (9,608) Acquisition of property, plant and equipment, net (61,172) (124,201) (138,848) (174,495) Cash flow provided by investing activities (93,596) (1,409,234) (145,836) (1,297,677) Cash flow provided by financing activities Borrowings and financing 1,172,842 2,850,550 1,700,224 2,979,345 Borrowings and financing repaid (1,722,876) (1,456,754) (2,016,532) (2,434,873) Related parties 604, , Changes in noncontrolling interests (1,444) Capital payment in cash 15,680 15,680 Additional dividends proposed paid - (11,433) - (11,433) Treasury shares (4,489) (142,967) (4,489) (142,967) Cash flow provided by financing activities 65,902 1,388,547 (305,117) 388,628 Exchange rate changes on cash and cash equivalents 336,754 66,357 (172,947) 48,156 Increase (decrease) in cash and cash equivalents, net 1,099, , ,924 (198,179) Cash and cash equivalents At the beginning of period 2,554,043 2,245,101 3,807,342 3,397,870 At the end of period 3,653,950 2,649,097 4,173,266 3,199,691 Increase (decrease) in cash and cash equivalents, net 1,099, , ,924 (198,179) The accompanying notes are an integral part of this interim financial information.

12 12 Minerva S.A. Statements of value added for the periods ended September 30, 2018 and 2017 (Free translation from the original issued in Portuguese. In the event of any discrepancies, the Portuguese language version shall prevail.) (In thousands of Brazilian reais - R$) Parent Consolidated 09/30/ /30/ /30/ /30/2017 Revenue 5,788,505 4,422,418 11,769,456 8,200,423 Sales of goods, products and services 5,704,261 4,390,712 11,638,892 8,129,547 Other 84,244 31, ,564 70,876 Inputs acquired from third parties (5,925,321) (4,126,178) (11,750,499) (7,514,727) (includes taxes - ICMS, IPI, PIS, and COFINS) Cost of sales and services (4,612,433) (3,592,415) (9,214,821) (6,220,716) Materials, electric power, outside services and other (1,312,888) (533,763) (2,535,678) (1,294,011) Gross value added (136,816) 296,240 18, ,696 Depreciation, amortization and depletion (72,963) (54,121) (155,089) (86,452) Wealth created by the entity, net (209,779) 242,119 (136,132) 599,244 Wealth received in transfer (6,282) 95,260 54,070 85,858 Share of profit (loss) of investees (44,840) 33, Finance income 38,558 62,231 54,070 85,858 Total wealth for distribution (5+6) (216,061) 337,379 (82,062) 685,102 Wealth distributed (216,061) 337,379 (82,062) 685,102 Personnel 158, , , ,654 Taxes and contributions (518,534) 82,788 (554,852) 120,564 Lenders and lessors 1,316,754 95,313 1,349, ,218 Interest 1,307,450 86,135 1,330, ,654 Rentals 9,304 9,178 18,453 20,564 Shareholders (1,172,723) 32,326 (1,172,723) 32,666 Profit/loss for the periods (1,172,723) 32,326 (1,172,723) 32,326 Noncontrolling interests in retained earnings (consolidation only) The accompanying notes are an integral part of this interim financial information.

13 13 (Free translation from the original issued in Portuguese. In the event of any discrepancies, the Portuguese language version shall prevail.) Notes to the individual and consolidated interim financial information for the quarter ended September 30, 2018 (In thousands of Brazilian reais R$, unless otherwise stated) 1. General information Minerva S.A. (Company) is a publicly-held company listed at the Novo Mercado corporate governance segment with shares are traded on B3 Bolsa, Brasil, Balcão. The Company s main activities include the slaughtering of livestock and processing of meat, sale of fresh chilled, frozen and processed meat and the exporting of live cattle. The Company s shares are traded on B3 Bolsa, Brasil, Balcão, under the ticker symbol BEEF3 and its Level 1 American Depositary Receipts (ADRs) are traded on the OTC market OTCQX International Premier, a segment of the electronic trading platform operated by the OTC Markets Group Inc., in the United States. Parent The Company is headquartered in Barretos (SP) and has manufacturing units located in José Bonifácio (SP), Palmeiras de Goiás (GO), Batayporã (MS), Araguaína (TO), Goianésia (GO), Barretos (SP), Campina Verde (MG), Janaúba (MG), Várzea Grande (MT), Mirassol D Oeste (MT) and Rolim de Moura (RO). The distribution centers for the domestic market are located in the cities of Aparecida de Goiânia (GO), Brasília (DF), Cariacica (ES), São Paulo (SP), Araraquara (SP), Taboão da Serra (SP), Cubatão (SP), Belo Horizonte (MG), Maracanaú (CE), Uberlândia (MG), and Cabo de Santo Agostinho (PE).

14 14 As at September, 2018, the Company s consolidated industrial complex had a daily slaughtering capacity of 26,380 heads and a deboning capacity of 4,596 tons, taking into account subsidiaries Athena Foods S.A in Uruguay (Pulsa S/A and Frigorífico Carrasco S/A), in Colombia (Red. Cárnica S.A.), Paraguay (Frigomerc S/A) and Argentina (Swift Argentina S.A). All plants are compliant with sanitary requirements applicable to exports to countries across the five continents. The Barretos manufacturing unit (SP) has a beef processing line (cubed beef and roastbeef) which is mainly intendend for exports. Direct and indirect subsidiaries Direct subsidiaries located in Brazil: Minerva Dawn Farms S.A (Minerva Fine Foods): located in Barretos (SP), this unit started operations in 2009 to produce, in varying scales, and sell beef, pork and poultry products meeting domestic and foreign demand in the Food Services segment; CSAP Companhia Sul Americana de Pecuária S.A.: located in Barretos (SP), this unit started operations in 2014 to mainly engage in livestock and farming, by breeding and selling live cattle, lambs, pigs and other live animals; Minerva Foods Asia Assessoria Ltda. (formerly Intermeat - Assessoria e Comércio Ltda.) : acquired in the first quarter of 2016, its main activity is the provision of consulting and advisory services in the foreign trade area, for all lines of business in the food industry; and Minerva Comercializadora de Energia Ltda.: located in São Paulo (SP), this unit started operations in 2016 and is mainly engaged in trading and selling electric power. Direct foreign subsidiaries: Athena Foods S.A.: Based in Santiago, Chile (UY), Athenas Foods started operations in 2018 primarily to manage equity interests and manage own assets. The company has the following direct subsidiaries: Pulsa S.A. (UY), Frigorifíco Carrasco S.A. (UY), Frigomerc S.A. (PY), Pul Argentina S.A (AR), Red Cárnica S.A.S (CO), Red Industrial Colombiana S.A.S (CO), and Minerva Foods Chile SPA (CL). Lytmer S.A.: located in Montevideo, Uruguay (UY), engaged in selling live cattle to the foreign market and trading food products. Friasa S.A.: located in Asunción, Paraguay (PY); Minerva Middle East: office located in Lebanon to market and sell the Company s products; Minerva Colômbia SAS: Based in Ciénaga de Oro, next to Montería, in the Córdoba region, Colombia, mainly engaged in the dale of livestock to the foreign market; Minerva Live Cattle Export SPA: Located in Santiago, Chile, primarily engaged in selling live cattle to the foreign market; Minerva Meats USA.: Located in Chicago (USA), this unit started operations in 2015 and is mainly engaged in trading food products. Minerva Australia Holdings PTY Ltd.: Located in Brisbane (Australia), this unit started operations in 2016 and has Minerva Ásia Foods PTY Ltd. as its direct subisidary; and Minerva Europe Ltd.: Located in Brisbane (Australia), this unit started operations in 2017 and is mainly engaged in trading food products.

15 15 Indirect foreign subsidiaries: Pulsa S.A.: meatpacking company acquired in January 2011, located in the Province of Cerro Largo, near the capital Melo, in Uruguay (UY). Engaged in slaughtering and deboning activities, with 85% of its sales intended for the foreign market, primarily the North American and the European markets; Frigorífico Canelones S.A., meatpacking acquired in July 2017 by the indirect subsidiary Pulsa S.A, located in Canelones in Uruguay (UY). Engaged in the cattle slaughtering and deboning and processing of meat, especially fresh chilled and frozen meat for exports; Frigorífico Carrasco S.A.: meatpacking company acquired in April 2014, located in Montevideo, Uruguay (UY). Engaged in slaughtering, deboning and processing beef and sheep meat, with approximately 68% of its sales intended for the foreign market; Frigomerc S.A.: Meatpacking company acquired in October 2012, located in Asunción, Paraguay (PY), engaged in slaughtering, deboning and processing activities, operating in the domestic and foreign markets. On July 31, 2017; JBS Paraguay S.A., meatpacking acquired in July 2017 by the indirect subsidiary Frigomerc S.A., located in Assuncion, Paraguay (PY), to engage in cattle slaughtering and deboning and processing of meat; Pul Argentina S.A. Based in Buenos Aires, Argentina, the company started activities 2016 and has Swift Argentina S.A. as its direct subsidiary; Swift Argentina S.A., meatpacking acquired in July 2017 by the indirect subsidiary Pul Argentina S.A. located in Buenos Aires (AR) to process and produce meat and sell own and third parties brands, especially Swift products; Red. Cárnica SAS: meatpacking company acquired in July 2015, located in Ciénaga de Oro, near Montería, Córdoba region, in Colombia (CO), to engage in slaughtering, deboning and processing activities, operating in the domestic and foreign markets; Red. Industrial Colombiana SAS: plant acquired in July 2015, located in Ciénaga de Oro, near Montería, in the Córdoba region, Colombia (CO), whose main purpose is the preparation of products for animals, specifically, meat/bone meal, blood and tallow; Minerva Foods Chile SPA: located in Santiago, Chile, primarily engaged in trading and selling the Company s products, and Minerva Ásia Foods PTY Ltd.: this unit is mainly engaged in trading food products.

16 16 Cargo transportation Transminerva Ltda.: located in Barretos (SP), it is engaged in cargo transportation to support the Company, reducing its freight expenses in Brazil. Special Purpose Entities (SPE) for fundraising Minerva Overseas I: located in the Cayman Islands, it was incorporated in 2006 to issue Bonds and receive the respective financial resources, totaling US$ 200 million, in January 2007; Minerva Overseas II: located in the Cayman Islands, it was incorporated in 2010 to issue Bonds and receive the respective financial resources, totaling US$ 250 million, on that date; and Minerva Luxembourg S.A: located in Luxembourg, it was incorporated in 2011 for the specific purpose of issuing Bonds and receiving the respective financial resources, totaling US$ 350 million, and the subsequent re-tap of US$ 100 million, occurred in February and March 2012, respectively. Also in the first quarter of 2013, the company conducted the offer to buyback debt notes using the proceeds from the issue of 2023 Notes in the amount of US$ 850 million bearing interest of 7.75% per year. In the third quarter of 2014, the company carried out the re-tap of the 2023 Notes in the amount of US$ 200 million. During the third quarter of 2016, the company carried out an offering of US$1 billion bearing interest of 6.50% per annum, buying back the 2023 Notes in the amount of US$ 617,874. In the second quarter of 2017, the company carried out a re-tap operation for its 2026 Notes, in the amount of US$ 350 million. During the fourth quarter of 2017, the company carried out an offering of US$ 500 million bearing interest of 5.875% per year, buying back the 2023 notes in the amount of US$ 198,042.

17 17 Other subsidiaries in pre-operational stage Minerva Log S.A (logistics). The direct and indirect subsidiaries above are included in the Company's individual and consolidated quarterly information. The equity interest in each subsidiary is as shown below: 09/30/ /31/2017 Direct subsidiaries Minerva Dawn Farms S/A % % Friasa S/A 99.99% 99.99% Minerva Overseas I % % Minerva Overseas II % % Minerva Middle East % % Transminerva Ltda % % Minerva Log % % Pulsa S.A % Frigorifico Carrasco S.A % Minerva Colômbia S.A.S % % Lytmer S.A % % Minerva Luxembourg S.A % % Frigomerc S/A % Minerva Live Cattle Export Spa % % Minerva Foods Chile Spa % CSAP - Companhia Sul Americana de Pecuária S.A % % Red Cárnica S.A.S % Red Industrial Colombiana S.A.S % Minerva Meats USA Inc % % Minerva Foods Asia Assessoria Ltda % % Minerva Comercializadora de Energia Ltda % % Minerva Australia Holdings PTY Ltd % % Pul Argentina S.A % Minerva Europe Ltd % % Athena Foods S.A % - 09/30/ /31/2017 Indirect subsidiaries Frigorifico Carrasco S.A % - Minerva Foods Chile Spa % - Red Cárnica S.A.S % - Red Industrial Colombiana S.A.S % - Pulsa S.A % - Frigorífico Canelones S.A % % Frigomerc S/A % - JBS Paraguay S.A % 99.99% Industria Paraguaya Frigorífica S.A % 99.99% Pul Argentina S.A % - Swift Argentina S.A % 99.99% Minerva Ásia Foods PTY Ltd % % Hyperinflationary economy - Argentina On June 30, 2018, according to an evaluation conducted by different market players, Argentina s economy was considered hyperinflationary beginning July 1, The Argentinian peso devaluation and an increase in the overall price level in recent periods resulted in inflation indices exceeding 100% on a three-year cumulative basis. In accordance with IAS 29, non-monetary assets and liabilities, equity and the income statement of subsidiaries operating in a highly inflationary economy must be restated for the changes in the pricing power of the functional currency by applying a general price index.

18 18 We concluded that the effects of this hyperinflationary impact, certainly not relevant, arising from our Argentinian subsidiaries, will be determined on a consistent basis and accounted for in our individual and consolidated financial statements for he year ending December 31, Approval of the interim financial information The issuance of this interim financial information as at September 30, 2018 was authorized by the Executive Board and the Board of Directors on November 06, Acquisitions of equity interests (business combinations) JBS Argentina S.A., JBS Paraguay S.A. and Frigorífico Canelones S.A. On July 31, 2017, the acquisition of JBS Argentina S.A., JBS Paraguay S.A. and Frigorífico Canelones S.A. (collectively, acquirees ), respectively, by the Company s subsidiaries: Pul Argentina S.A., Frigomerc S.A. and Pulsa S.A., was completed. Such acquisition transactions were completed under a document named SPA for the acquisition of 100% of the acquirees capital. Therefore, beginning July 31, 2017, the Company, through its abovementioned subsidiaries, acquired the control over such acquirees. The acquirees engage in the same core business as that of the Company. In addition, JBS Argentina S.A. has two manufacturing units for processed products operating under the Swift brand. These acquisitions are strategically aligned with the Company s business plan: Opportunity to become South America s most diversified meat production platform; Geographical diversification: Minerva Group now has slaughtering units in five South America countries and its slaughtering capacity expanded by approximately 9,000 heads/day (+52% over the current one); Minerva s consolidated capacity: expanded from 17.3 thousand to 26.4 thousand heads/day; and Units acquired holding certification to export to premium markets, including the US, Japan and China. The acquisition was completed for the total amount of US$ 322,699,737 (equivalent to R$ 1,010,082 on July 31, 2017), of which US$ 302,699,737 (equivalent to R$ 947,480 on July 31, 2017) was paid in cash and US$ 20,000 thousand (equivalent to R$ 62,602 on July 31, 2017) will remain restricted to cover contingent risks. Acquirees Acquisition price Portion paid Restricted portion JBS Argentina S.A. US$ 182,699,737 US$ 172,699,737 US$ 10,.000,000 JBS Paraguay S.A. US$ 105,000,000 US$ 98,000,000 US$ 7,000,000 Frigorífico Canelones S.A. US$ 35,000,000 US$ 32,000,000 US$ 3,000,000 Total US$ 322,699,737 US$ 302,699,737 US$ 20,000,000 The amount of US$ 22,699,737 was added to the acquisition price of US$ 300,000 thousand as acquisition price adjustment, as set forth in the SPA agreement.

19 19 The right to offset contingencies by using the restricted portion entitled the Company to recognize indeminifiable asset in its consolidated balance sheet, classified in Other receivables. Such indemnifiable asset, measured at US$ 20,000 thousand (same amount as that of the restricted portion), corresponds to the maximum amount that may be reimbursed in offsetting any contingencies identified by the legal advisors engaged by the Company. However, the accurate amount that will be used to offset contingencies would be formalized by the parties at the beginning of On February 20, 2018, the sellers formalized their acceptance of the agreement on the release of the restricted portion. Accordingly, buyers paid the amount of US$ 2,000 thousand (equivalent to R$ 6,501 thousand as of that date), relating to the difference of the original indeminifiable portion (US$ 20,000 thousand). Such amount was paid by subsidiary Frigomerc S.A. The acquirees have the following assets and operating capacities: Acquirees Assets Capacity JBS Argentina S.A. 05 slaughtering and deboning units; 02 industrialized product processing units; 01 distribution center 5,050 head/day 4,774 ton/month JBS Paraguay S.A. 03 slaughtering and deboning units; 3,100 head/day Frigorífico Canelones S.A. 01 slaughtering and deboning unit. 900 head/day Below is the (summarized) balance sheet of each one of the acquired companies as well as a combined total amount as at July 31, 2017, prepared under CPC 15 (R1) Business combinations at the fair value of the identifiable assets acquired and liaibilites assumed: 07/31/2017 Frigorífico In thousands of R$ JBS Argentina JBS Paraguay Canelones Combined balance sheet Current assets Cash and cash equivalents 31,389 31,667 18,662 81,719 Trade receivables 137, ,787 36, ,769 Inventories 95,288 51,895 16, ,234 Recoverable taxes 30,818 31,420 9,702 71,940 Other receivables 50,339 25,644 10,200 86,184 Noncurrent assets Recoverable taxes 21,588-21,588 Deferred tax assets 44,618 2,736 7,216 54,570 Other receivables Property, plant and equipment 794, , ,406 1,208,666 Intangible assets 93, ,036 Total assets 1,299, , ,292 2,078,369

20 20 07/31/2017 Frigorífico In thousands of R$ JBS Argentina JBS Paraguay Canelones Combined balance sheet Liabilities Current Trade payables 102,981 53,233 22, ,367 Borrowings and financing 98,336 26,625 25, ,438 Payroll and related charges and taxes payable 27,879 8,037 13,111 49,027 Other payables 6,070 13,689 2,908 22,668 Noncurrent Borrowings and financing - 110, ,009 Deferred tax liabilities 253,174-7, ,179 Provisions for tax, labor, civil and environmental risks 75,504 26,138 10, ,389 Equity 735, , ,890 1,195,291 Liabilities and equity 1,299, , ,292 2,078,369 Below are the acquirees balance sheet accounts impacted by the measurement at fair value as at July 31, 2017: In thousands of R$ Other receivables Identifiable assets Deferred tax assets Property, plant and equipment Intangible assets Liabilities assumed Deferred tax liabilities Provisions for tax, labor, civil and environmental risks Equity JBS Argentina S.A. Carrying amount 19, ,459 2,533-43, ,771 Fair value adjustment 31, ,454 90, ,174 32, ,181 Fair value 50, ,913 93, ,174 75, ,952 JBS Paraguay S.A. Carrying amount 3,711 4, , , ,450 Fair value adjustment 21,934 (1,778) 3, ,326 16,000 Fair value 25,644 2, , , ,450 Frigorífico Canelones S.A. Carrying amount ,816-8, ,875 Fair value adjustment 9,392-20,590-7,005 1,963 21,015 Fair value 10, ,406-7,005 10, ,890 Total combined amount Carrying amount 23,551 4, ,452 2,533-70, ,096 Fair value adjustment 62,632 (1,778) 657,214 90, ,179 41, ,196 Fair value 86,184 2,736 1,208,666 93, , ,389 1,195,291 If the acquirees had been consolidated beginning January 01, 2017, a revenue of R$1,763,311 and a profit of R$41,371 would have been included in the statement of profit and loss: 07/31/2017 Frigorífico In thousands of R$ JBS Argentina JBS Paraguay Canelones Combined balance sheet Net operating revenue 807, , ,357 1,763,311 Profit for the period from January to July ,924 27,636 1,812 41,371

21 21 Determination of goodwill and gains on bargain purchases Below are amounts relating to goodwill and gains on bargain purchases, which corresponds to the differences between the purchase price paid to acquire control over the acquirees and the amounts of net assets measured at the fair value of the identifiable assets acquired and liabilities assumed as at July 31, 2017: 07/31/2017 Frigorífico In thousands of R$ JBS Argentina JBS Paraguay Canelones Total Consideration transferred 182, ,000 35, ,700 (ii) Equity (fair value) 235, ,227 43, ,710 (i) - (ii) Goodwill / Bargain purchase gain (52,377) 1,773 (8,406) (59,010) (i) - (ii) Goodwill / Bargain purchase gain (R$ thousand) (172,946) 5,766 (26,949) (194,129) The gains on negative goodwill shown above, in the amounts of R$172,946 and R$26,949, were recorded in the income statements of PUL Argentina S.A. and PULSA S.A, respectively, in Other operating income (expenses), on the date of acquisition, as prescribed by CPC 15 (R1). These amounts primarily derived from the recognition of property, plant and equipment at fair value, in both units, and intangible assets, only in PUL Argentina. The goodwill amount of R$5,766 was recorded as Intangible assets in Frigomerc S/A s balance sheet. 3. Basis of preparation Statement of compliance (with IFRSs and CPC standards) The interim financial information has been prepared and is presented in accordance with accounting practices adopted in Brazil, including the provisions of Brazilian Corporate Law and the accounting standards and procedures issued by the Brazilian Securities and Exchange Commission (CVM) and the Accounting Pronouncements Committee (CPC), which are in conformity with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). The Company s interim financial information is presented in accordance with Technical Instruction OCPC 07, which addresses the basic preparation and disclosure requirements to be observed in financial reporting, especially in the explanatory information. Management asserts that all the relevant information reported in the interim financial information is being disclosed and corresponds to that used in managing the Company. The presentation of the Statement of Value Added (DVA), individual and consolidated, is required by Brazilian Corporate Law and the accounting practices adopted in Brazil applicable to publiclyheld companies. IFRS does not require the presentation of such statement. Consequently, the presentation of the Statement of Value Added is considered by IFRS as supplemental information, without any prejudice to the set of financial statements.

22 22 The Company s individual and consolidated interim financial information is presented in Brazilian reais (R$), which is the Company s functional currency. The significant accounting policies adopted in preparing the interim financial information are as follows: These accounting policies were applied consistently to all periods reported, unless stated otherwise. 4. Summary of significant accounting policies a) Basis of measurement The interim financial information was prepared at historical cost, except for the measurement of certain assets and liabilities such as financial instruments and biological assets, which are stated at fair value. b) Functional and reporting currency The interim financial information of each subsidiary included in the Company s consolidation and that used as a basis for measuring investments under the equity method has been prepared based on each entity s functional currency. The functional currency of an entity is the currency of the primary economic environment where it operates. In defining the functional currency of each subsidiary, Management considered which currency significantly influences the sale price of its products and services rendered, and the currency in which most of the cost of its inputs production is paid or incurred. The interim financial information is presented in Brazilian reais, which is the Parent s functional and reporting currency. c) Foreign operations The foreign direct and indirect subsidiaries adopted the following functional currencies in preparing the interim financial information as at September 30, 2018: Guarani (Paraguay-PY) Friasa S.A.; US Dollar (US$) Athena Foods S.A, Frigomerc S.A., Pulsa S.A, Frigorífico Carasco S.A, Lytmer S.A.; Minerva Overseas I, Minerva Overseas II, Minerva Meat USA, Minerva USA LLC, and Minerva Luxembourg; Sterling pound (GBP) Minerva Europe Ltd.; Chilean Peso Minerva Foods Chile SpA and Minerva Live Cattle Export SPA; Colombian Peso Minerva Colombia S.A.S, Red Cárnica S.A.S, and Red Industrial Colombiana S.A.S.; Australian Dollar Minerva Australia Holdings PTY Ltd.; Minerva Asia Foods PTY Ltd.; Argentinean Peso Pul Argentina S.A.

23 23 This interim financial information, where applicable, is adjusted to conform to the accounting practices adopted in Brazil and translated into Brazilian reais (R$) by applying the following procedures: Monetary assets and liabilities are translated using the closing rate of the respective currency for the Brazilian real (R$) at the end of the respective balance sheets; In the last balance sheet corresponding to equity translated at the historical exchange rate prevailing at that time and the changes in equity for the current period/year are translated at the historical exchange rates on the dates of the transactions, and the profit earned or loss incurred is translated and accumulated at an average historical monthly exchange rate, as indicated in the topic below; Revenues, costs and expenses for the current period/year are translated and accrued at an average historical monthly exchange rate; The changes in foreign exchange balances arising from the items above are recognized in a specific equity account, under Other comprehensive income, in accordance with the equity equation, namely: Assets less total liabilities equals total equity; The balances of investments, assets and liabilities, revenues and expenses from transactions between Minerva Group companies included in the consolidated interim financial information are eliminated. d) Foreign currency-denominated transactions and balances Foreign currency-denominated transactions and balances, i.e., all transactions conducted in a currency other than the functional currency, are translated at the exchange rate prevailing on the respective trade date, as required by CPC 02 (R2) Effects of Changes in Exchange Rates and Translation of Financial Statements. Assets and liabilities subject to currency fluctuations are adjusted using the exchange rates prevailing on the last business day of each year or reporting periods. Gains and losses arising from changes in foreign investments are recognized directly in equity, under Other comprehensive income, and recognized in the statement of profit or loss when these investments are fully or partially sold. Nonmonetary items that are measured at historical cost in a foreign currency are translated using the exchange rates prevailing on the transaction date. e) Use of estimates and judgment The preparation of individual and consolidated interim financial information in accordance with IFRS and CPC standards requires Management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and assumptions are revised on an ongoing basis. Revisions related to accounting estimates are recognized in the period in which estimates are revised and in any affected future periods.

24 24 f) Reclassification of the balances in the statements of cash flows for the nine-month period ended Seeptember 30, 2017 In preparing the statements of cash flows for the nine-month period ended September 30, 2017, the Company s Management revised certain accounting policies relating to the reclassification and presentation of certain transactions that ultimately impacted the cash flows from operating, investing and financing activities in the statement of cash flows, summarized below, and reflect the reclassifications of the figures corresponding to the period ended September 30, Such restatement was made as required by technical pronouncements CPC 23 Accounting Policies, Changes in Accounting Estimates and Errors (approved by NBC TG 23 (R-2), issued by the Federal Accounting Council), and CPC 26 (R1) Presentation of financial statements (approved by NBC TG 26 (R-5), issued by the Federal Accounting Council), both approved by the Brazilian Securities and Exchange Commission (CVM), as required by accounting practices adopted in Brazil.The table below shows only those account balances impacted by the reclassifications in the statements of cash flows: Statement of cash flows Parent Consolidated 09/30/ /30/ /30/ /30/2017 (originally reported) Adjustment (reclassified balance) (originally reported) Adjustment (reclassified balance) Cash flows from operating activities Profit (loss) for the period 32,326-32,326 32,666-36,666 Adjustments to reconcile profit (loss) to operating activities: Allowance for expected credit losses - 4,148 4,148-5,693 5,693 Gain (loss) on sale of property, plant and equipment - 1,527 1,527-1,818 1,818 Unrealized exchange rate changes (101,798) (66,357) (168,155) (102,484) (66,357) (168,841) Trade and other receivables (21,918) (4,148) (26,066) (176,053) (5,693) (181,746) (91,390) (64,830) (156,220) (245,871) (64,539) (310,410) Valuation adjustments to equity and cumulative translation adjustments (2,708) (2,708) - Cash flow provided by operating activities (91,390) (64,830) ( ) (278,537) (64,539) (310,410) Cash flows from investing activities Acquisition of intangible assets, net (1,140) - (1,140) (9,608) - (9,608) Acquisition of property, plant and equipment, net (122,674) (1,527) (124,201) ( ) 13,675 (174,495) Cash flows provided by investing activities (1,407,707 (1,527) (1,409,234) (1,311,352) 13,675 (1,297,677) Cash flows provided by financing activities Cash provided by financing activities 1,388,547-1,388, , ,628 Exchange rate changes on cash and cash equivalents - 66,357 66,357 (2,708) 50,864 48,156 Increase/decrease in cash and cash equivalents, net 403, ,996 (198,179) - (198,179) Increase/decrease in cash and cash equivalents, net 403, ,996 (198,179) - (198,179)

25 25 g) Basis of consolidation Business combinations Acquisitions as at or after January 1, 2009 For acquisitions made as at or after January 1, 2009, the Company measured goodwill as the fair value of the consideration transferred, including the recognized amount of any noncontrolling interest in the acquired company, less the net recognized value of the identifiable assets and liabilities assumed at fair value, all measured as at the acquisition date. For each business combination, the Company assesses if it will measure the noncontrolling interests at their fair value or based on the proportionate equity interest of the noncontrolling interests on the identifiable net assets determined on the acquisition date. Transaction costs, whether or not associated to the issuance of debt securities or equity securities, incurred by the Company and its subsidiaries on a business combination, are recognized as expenses as they are incurred. i) Subsidiaries and joint ventures The interim financial information of subsidiaries is included in the consolidated interim financial information as from the date control starts to be exercised through the date it ceases to be exercised. ii) Transactions eliminated in consolidation All intragroup transactions and any intragroup revenue and expenses are eliminated in preparing the consolidated interim financial information. Unrealized gains arising from transactions with investees and recorded under the equity method are eliminated against the investment proportionately to the Company s equity interest in the investees. Unrealized losses, if any, are not eliminated the same way as unrealized gains, but only to the extent that there is no indication of impairment. h) Revenue and expense recognition Results from operations (revenue, costs and expenses) are recognized on the accrual basis for the years and periods. Revenue from sales of products is recognized when its amount can be reliably measured and all risks and rewards are transferred to the buyer. i) Cash and cash equivalents and securities Cash and cash equivalents include cash on hand, bank deposits and highly liquid shortterm investments. See Note 5 for details on the Company s and its subsidiaries' cash and cash equivalents.

26 26 j) Financial instruments The Company s and its subsidiaries financial instruments have been classified into the following categories: Non-derivative financial assets Measured at fair value through profit or loss: financial assets held for trading, i.e., acquired or originated primarily for the purpose of sale or repurchase in the short term, and derivatives. changes in fair value are accounted for in profit or loss, and balances are stated at fair value; Held to maturity: non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Company has the positive intent and ability to hold to maturity. income earned are accounted for in profit or loss and balances are stated at acquisition cost plus income earned; Available for sale: non-derivative financial assets that are designated as availablefor-sale or were not classified into other categories: Initially, gains on these assets are fully recorded in profit (loss) for the year. However, gains and losses on the fair value measurement of these assets are recorded in equity, in line item Other comprehensive income, and transferred to profit (loss) when they are realized; Loans and receivables: non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, except for: (i) those that the Company intends to sell immediately or in the short term, and those that the Company classifies as measured at fair value through profit or loss; (ii) those classified as available for sale; or (iii) those whose holders may not substantially recover their initial investment for any reason other than credit deterioration. Income earned is accounted for in profit or loss and balances are stated at acquisition cost plus income earned. Non-derivative financial liabilities The Company initially recognizes debt securities issued and subordinated liabilities on the date they are originated. All other financial liabilities (including liabilities designated at fair value through profit or loss) are initially recognized on trade date when the Company becomes a party to the underlying contract. The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled or settled. Financial assets and financial liabilities are offset and the net amount is presented in the balance sheet when, and only when, there is a legally enforceable right to set off recognized amounts and the intent to either settle them on a net basis, or to recognize the asset and settle the liability simultaneously. The Company and its subsidiaries have the following non-derivative financial liabilities: borrowings, financing, debentures, trade payables, social security contributions, taxes payable and other payables. These financial liabilities are initially recognized at fair value plus any attributable transaction costs. After initial recognition, these financial liabilities are measured at amortized cost under the effective interest method.

27 27 Derivative financial instruments The fair value of derivative financial instruments is calculated by the Company s treasury department based on information on each transaction and related market inputs at the end of the reporting period, such as interest rates and exchange coupon. When applicable, this information is compared to the positions informed by the trading desks of each financial institution involved. Transactions involving derivative financial instruments that were contracted by the Company and its subsidiaries can be summarized as cattle futures contracts, options on cattle contracts and Non Deliverable Forward (NDF), all aiming exclusively to minimize the impact of price fluctuations per arroba (a unit of weight equivalent to 15 kg) of cattle in the statement of profit or loss, and to hedge against exchange risks related to statement of financial position accounts plus cash flows projected in foreign currency. Derivative financial instruments and hedging activities Derivatives are initially recognized at their fair values at the commencement of the derivative agreement and are subsequently remeasured at fair value, whose changes in fair value are recorded in profit or loss. Although the Company uses derivatives for hedging purposes, it did not choose the hedge accounting method. This accounting method is optional and, therefore, not mandatory. k) Trade receivables Carried at their present and realizable values. Trade receivables from foreign customers are adjusted based on exchange rates prevailing at the end of the reporting period. An allowance for expected credit losses is recognized in an amount considered sufficient by Management, based on monitoring of past due receivables and trade notes and the risk of not collecting installment sales. l) Inventories Inventories are stated at the lower of cost and net realizable value, adjusted to market value and for any losses, when applicable. The inventory cost includes expenditures incurred on purchase of inventories, manufacturing and transformstion costs and other costs incurred in bringing the inventories to their present location and condition. m) Biological assets Biological assets are measured at fair value. Changes in fair value are recognized in profit or loss. Agricultural activities, such as cattle herd growth, arising from confinement of cattle or grazing cattle, and growth of different crops, are subject to fair value measurement based on the mark to market (MtM) concept.

28 28 n) Property, plant and equipment Recognition and measurement Property, plant and equipment items are measured at the historical purchase or construction cost, less accumulated depreciation and, where applicable, accumulated impairment losses. The cost of certain property, plant and equipment items was determined by reference to the revaluation carried out prior to the enactment of Law No /2007, effective as at January 1, 2008, thus not requiring the appraisal of the deemed cost. Cost includes expenses that are directly attributable to the purchase of an asset. The cost of assets constructed by the Company and its subsidiaries includes the cost of materials and direct labor, as well as any costs incurred to bring the asset to the location and condition necessary for them to be able to operate in the manner intended by Management. Borrowings costs on qualifying assets have been capitalized since January 1, Rights on tangible assets intended for the maintenance of the Company s and its subsidiaries activities, arising from finance lease transactions, are recognized as if they were a financed purchase. At the start of each transaction, a property, plant and equipment item and a financing liability are recognized, with assets being subject to depreciation calculated in accordance with the estimated useful lives of the respective assets. Gains and losses on the disposal of a property, plant and equipment item are calculated by comparing the disposal proceeds with the carrying amount of the item, and are recognized in other operating income (expenses), in profit or loss. Depreciation Depreciation is recognized in profit or loss on a straight-line basis, based on the estimated useful lives of each part of a property, plant and equipment item, as this method is more representative of the time pattern in which economic benefits from the asset are consumed. The average useful lives estimated by the Company s Management, based on technical studies for the current and comparative periods, are as follows: Parent Consolidated Annual rate - % Annual rate -% Buildings 2.73% 2.28% Machinery and equipment 8.69% 8.38% Furniture and fixtures 9.61% 8.46% Company cars 10.65% 10.97% Computer hardware 18.15% 17.95% The depreciation methods, the estimated useful lives and the residual values are revised at each yearend, and possible adjustments are recognized as accounting estimates are changed.

29 29 As permitted by Law No /07 and mentioned in Note 21, the revaluation reserve balance will be held until its 100% amortization, either by full depreciation or sale of the assets. o) Lease of fixed assets Finance lease agreements are recognized in property, plant and equipment and in liabilities as borrowings and financing at the loesser of the present value of the minimum mandatory lease payments of the agreement or the fair value of the assets, plus, when applicable, the initial direct costs incurred on the transaction. Finance lease is depreciated over the estimated economic useful lives of the assets. Operating lease agreements are recognized as expenses on a systematic basis representing the year in which the benefit on the leased asset is obtained, even if such payments are not made on that basis. p) Intangible assets Intangible assets acquired separately are measured upon initial recognition, at acquisition cost, subsequently, deducted from accumulated amortization and impairment losses, where applicable. Intangible assets with finite useful lives are amortized over their estimated economic useful lives and, when there are indications of impairment, are tested for impairment. Intangible assets with finite useful life are not amortized and are annually tested for impairment. Goodwill on acquisition of subsidiaries Goodwill on the acquisition of subsidiaries is carried as intangible assets in the consolidated interim financial information. q) Impairment test Financial assets The Company annually analyzes if there is an objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

30 30 Nonfinancial assets Management annually tests the carrying amount of assets for impairment to determine whether events or changes in economic, operating or technological circumstances indicate that they might be impaired. Whenever an evidence of impairment is identified and the carrying amount exceeds the recoverable value, an allowance for impairment is recognized to adjust the carrying amount of the asset to its recoverable value. The recoverable amount of an asset or cash-generating unit is the higher of the value in use and net sales price. In estimating the value in use of an asset, estimated future cash flows are discounted to their present values, using a pretax discount rate that reflects the weighted average cost of capital in the industry where the cash-generating unit operates. Whenever possible, the net sales price is determined based on a binding sale agreement conducted on an arm s length basis between the parties, adjusted by expenses attributable to the asset sale. If there is no such binding agreement, it should be based on the market price defined in an active market, or in the most recent transaction price with similar assets. The following criterion is also applied for determining impairment losses on specific assets: Goodwill based on expected future earnings Goodwill is tested for impairment at least annually, or when circumstances indicate a loss due to impairment of the carrying amount. Intangible assets Intangible assets with indefinite useful lives are tested for impairment at least annually, individually or at the level of the cash-generating unit, as the case may be or when circumstances indicate a loss due to impairment of the carrying amount. r) Other current and noncurrent assets and liabilities An asset is recognized in the balance sheet when it is probable that future economic benefits will be generated in favor of the Company and its subsidiaries, and its cost or value can be reliably estimated. A liability is recognized in the balance sheet when the Company has a legal or constructive obligation as a result of a past event, and it is probable that an outflow of resources will be required to settle it. Liabilities include charges, inflation adjustments or exchange rate changes incurred and adjustments to present value. Provisions are recorded based on the best estimates of the risk involved.

31 31 Assets and liabilities are classified as current when their realization or settlement is likely to occur within the next twelve months. Otherwise, assets and liabilities are stated as noncurrent. s) Adjustment to present value of assets and liabilities Noncurrent monetary assets and liabilities are adjusted, when material, to their present value, and current assets and liabilities are adjusted when the effect is considered material in relation to the interim financial information. To calculate the discount to present value, the Company and its subsidiaries consider the amount to be discounted, the realization and settlement dates, according to discount rates that reflect the Company s and its subsidiaries value of money in time, which was approximately 9.87% per year, calculated according to the Company s and its subsidiaries weighted average cost of capital, as well as the specific risks related to the expected cash flows for the respective financial flows. The receipt and payment terms of accounts receivables and payables arising from the Company s and its subsidiaries operating activities are short, thus resulting in a discount amount considered immaterial for recording and disclosure, since the cost of generating information exceeds its benefit. Noncurrent assets and liabilities are calculated and recorded, when applicable and material. Calculations and analyses are revised on a quarterly basis. t) Income tax and social contribution Current and deferred income tax and social contribution for the current year or period are calculated at the rates of 15%, plus a 10% surtax on taxable profit exceeding R$240 for income tax and 9% on taxable profit for social contribution, considering the offset of tax loss carryforwards limited to 30% of the annual taxable profit. Income tax and social contribution expenses comprise current and deferred income taxes. Current and deferred taxes are recognized in profit or loss unless they are related to business combinations or items recognized directly in equity or other comprehensive income. The deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used for tax purposes. Deferred taxes are not accounted for on the following temporary differences: the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, and differences related to investments in subsidiaries and controlled entities when it is probable that they will not be reversed in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes imposed by the same tax authority on the same entity subject to taxation.

32 32 Deferred income and social contribution tax assets are recognized on tax losses, tax credits, differences in accounting practices (IFRS) and deductible temporary differences that were not utilized, when future taxable profits will be available and against which they can be utilized. Deferred income tax and social contribution assets are reviewed at the end of each reporting period and reduced to the extent that their realization is no longer probable. u) Contingent assets and contingent liabilities, and legal obligations The accounting policies adopted to record and disclose contingent assets and contingent liabilities and legal obligations are as follows: (i) contingent assets are recognized only when there are collaterals or favorable, unappealable court decisions. Contingent assets assessed as probable gain are only disclosed in an explanatory note; (ii) a provision for risks on contingent liabilities is recorded when losses are assessed as probable and the involved amounts can be reliably measured. Contingent liabilities assessed as possible losses are only disclosed in a note to the financial statements and contingent liabilities assessed as remote losses are neither provided for nor disclosed; and (iii) legal obligations are recorded as liabilities, regardless of the evaluation of the probabilities of success, for proceedings whereby the Company has challenged the constitutionality of taxes. v) Employee benefits The Company does not have post-employment benefits, such as defined benefit and/or contribution plans. All short-term benefits and paid leaves, as well as profit sharing and bonuses, are in accordance with the IRFS requirements. w) Revenue recognition Sales revenue is recognized net of related taxes and discounts. Taxes on sales are recognized when sales are billed and discounts are recognized when granted. Revenues from sales of products are recognized at the amount of the consideration to which the Company expects to have right, less returns, discounts and rebates and other decudctions, if applicable, and are recognized as the Company fulfills its performance obligations. The breakdown of sales revenue is shown in Note 24. x) Earnings per share Basic earnings per share are calculated based on profit for the period attributable to the Company s controlling and noncontrolling shareholders and the weighted average number of outstanding shares in the respective period. Diluted earnings per share are calculated by adjusting the weighted average number of common shares outstanding by instruments potentially convertible into shares with dilutive effect, during the reporting periods.

33 33 y) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the Company s Board of Executive Officers, which is responsible for allocating funds and evaluating the performance by operating segment and strategic decision-making. z) New standards adopted The following new standards, effective beginning January 1, 2018, were approved and issued by IASB and CPC. Management adopted the following standards: IFRS 9 Financial Instruments Issued in 2014, by IASB, the final version of IFRS 9 Financial Instruments (CPC 48 Financial Instruments), which replaces IAS 39 Financial Instruments: Recognition and Measurement (CPC 38 Financial Instruments) and all former IFRS 9 versions. The new standard combines the three aspects of the project relating to accounting for financial instruments: classification and measurement, asset impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after January 1, Except for hedge accounting, retrospective application is required; however, providing comparative information is not required. The Company adopted the new standard on its effective date and will not restate comparative information. In 2017, the Company and its subsidiaries performed an evaluation of the detailed impact of the IFRS 9 aspects relating to classification, measurement and impairment (for the year ended December 31, 2017, the Company did not designate hedging frameworks for hedge accounting). This evaluation was made based on the information currently available and may be subject to changes arising from amendments to the business models adopted by the Company, for managing its assets over the subsequent years, when the Company and its subsidiaries will adopt the IFRS 9. Below are the main topics covered by the Company s evaluation: i) Classification and measurement Evaluations were made by verifying the business model adopted by the Company in managing its financial assets to the detriment of the classifications established by IAS 39/CPC 38. Management adopted the new standard and, considering the Company s current transactions, did not identify changes that might have a significant impact on the interim financial information of the Company and its subsidiaries.

34 34 (ii) Impairment IFRS 9 requires the Company to record expected credit losses on all of its financial assets measured at amortized cost and at fair value through other comprehensive income, based on 12 months, or over their life, when applicable. For this evaluation, the Company segregated financial assets based on their risk features and operating specifics and implemented models to recognize expected credit losses in light of the guidelines provided by IFRS 9. The Company and its subsidiaries expect to apply a simplified approach and record expected losses over their life or for 12 months, according to features of the financial assets. IFRS 15 Revenue from Contracts with Customers IFRS 15 (CPC 47 Revenue from Contracts with Customers) was issued in May 2004, amended in April 2016, and provided a five-step model to account for revenue from contracts with customers. In accordance with IFRS 15, revenue is recognized at an amount that reflects the consideration to thich the entity expected to be entitled in exchange for the transfer of goods or services to a customer. The new standard will replace all current IFRS revenue recognition requirements. The full retrospective application or the modified retrospective application will be required for annual periods beginning on or after January 1, The Company evaluated the potential impacts of IFRS 15 and di not impact significant impacts in relation to the practices currently applied. The presentation and disclousres required by IFRS 15, however, are more detailed than those in the currently effective IFRS. New standards and interpretations not yet adopted The following standard will become effective for annual periods beginning on or after January 1, IFRS 16 Leases In the middle of 2016, IASB approved this standard, which is effective for annual periods beginning on or after January 01, 2019 and, in general terms, establishes that all lease agreements, either operating or finance, should be accounted for by recognizing the underlying assets and liabilities. The impacts of IFRS 16 on the Company s financial statements and disclosures have been evaluated by Management. a.a) Statements of value added The Company has prepared individual and consolidated statements of value added (DVA) in accordance with CPC 09 Statement of Value Added, which are presented as an integral part of the financial statements according to the accounting practices adopted in Brazil applicable to publicly-held companies, whereas they are considered by IFRS as supplemental financial information, required as part of the financial statements taken as a whole.

35 35 The objective of a statement of value added ( DVA ) is to show the wealth created by the Company and its subsidiaries, its distribution to those that contributed to generate such wealth, such as employees, financial institutions, shareholders, government, as well as the undistribution portion of wealth. 5. Cash and cash equivalents and securities The financial assets of the Company and its subsidiaries are comprised of the following: Parent Consolidated 09/30/18 12/31/17 09/30/18 12/31/17 Cash Banks - checking account 3,253 5, Cash and cash equivalents in foreign currencies 2,483,409 2,194, ,487,401 2,200, Short-term investments In local currency Bank Certificates of Deposit (CDBs) 1,104, ,810 1,131, ,469 Debentures 60,475 67, ,83 91,431 Capitalization bonds 2,000 2,018 7,170 2,018 Investment fund Other financial assets ,92 80,213 1,166, ,498 1,306, ,740 3,653,950 2,554,043 4,173,266 3,807,342 The short-term investments of the Company and its subsidiaries were classified according to their characteristics and purposes, as measured: (i) at fair value through profit or loss or (ii) held to maturity and are stated as follows: Parent Consolidated 09/30/18 12/31/17 09/30/18 12/31/17 Measured at fair value through profit or loss 1,164, ,480 1,299, ,722 Held-to-maturity 2,000 2,018 7,170 2,018 1,166, ,498 1,306, , Trade receivables Parent Consolidated 09/30/18 12/31/17 09/30/18 12/31/17 Trade notes - domestic market 104, , , ,554 Trade notes - foreign market 545, ,001 1,190, ,335 Receivables - related parties 78,383 7, , ,069 1,532, ( - ) Allowance for expected credit losses (25,425) (20,072) (29,038) (23,429) 703, ,997 1,503,631 1,385,460

36 36 The aging list of trade receivables is as follows: Parent Consolidated 09/30/18 12/31/17 09/30/18 12/31/17 Current: 448, ,844 1,019, ,528 Past due: Up to 30 days 144, , , , to 60 days 48,794 41, ,245 75, to 90 days 23,486 44,583 42,217 57,109 Over 91 days 63,376 27, ,578 50, , ,069 1,532,669 1,408,889 Changes in the allowance for expected credit losses in the periods ended September 30, 2018 and December 31, 2017 are as follows: Parent Consolidated Balances at December 31, 2016 (19,100) (19,908) Allowance recognized (5,111) (8,599) Recovered receivables 3,572 3,572 Written-off receivables 781 1,720 Exchange rate changes (214) (214) Balances at December 31, 2017 (20,072) (23,429) Allowance recognized (3,270) (4,865) Recovered receivables 10 1,349 Written-off receivables - - Exchange rate changes (2,093) (2,093) Balances as at September 30, 2018 (25,425) (29,038) The Company has a Receivables Investment Fund (FIDC) for sale of part of its receivables from domestic customers in the amount of R$ 161,947 (R$ 132,934 at December 31, 2017), without co-obligation or right of recourse, of which R$ 6,682 (R$ 5,611 at December 31, 2017) was comprised of subordinated units. The percentage of equity interest and the number of FIDC shares refer to the guarantee and risk limit under the Company s responsibility, which correspond to the entirety of the subordinated shares paid in and held by the Company with FIDC. According to CVM Circular Letter No. 01/2017, for the purpose of presentation of definitive sale of receivables, the transferor cannot have control, involvement or future settlement regarding the overdue FIDC notes and, consequently, exposure to the risks arising from it. Accordingly, the Company is exposed to default risk limited to its subordinated shares. The Company follows a very strict credit granting policy, which results in low levels of default, which may be evidenced by the low amounts recorded, when compared to the Company s and its subsidiaries sales revenue. The Company has no collaterals for past-due trade notes receivable. 7. Inventories Parent Consolidated 09/30/18 12/31/17 09/30/18 12/31/17 Finished products 429, , , ,005 Storeroom supplies and secondary materials 22,838 24,573 91, , , , , ,809

37 37 8. Biological assets The Company and its subsidiaries that have cattle activities, such as cattle herd growth arising from the confinement of cattle or grazing cattle operations, are subject to revaluation of its assets, in order to determine their fair value based on the mark to market (MtM) concept, at least on a quarterly basis, recognizing the effects of such revaluations directly in profit or loss for the periods and years. Operations related to the Company s biological assets are represented by grazing cattle (extensive) and short-term confinement cattle (intensive). The operation is conducted through the acquisition of biological assets for resale, whose mark to market is reliably measured due to the existence of active markets, and are represented as follows: Parent Herd Consolidated Balance at December 31, , ,706 Increase due to acquisitions 271, ,683 Decrease due to sales (261,450) (376.,37) Net (decrease) Increase due to births (deaths) (1,086) (1,477) Changes in fair value less estimated costs to sell 42,171 43,142 Balance at December 31, , ,317 Increase due to acquisitions 244, ,633 Decrease due to sales (254,355) (364,894) Net (decrease)/increase due to births (deaths) (2,561) (2,984) Changes in fair value less estimated costs to sell (5,956) (3,229) Balance at September 30, , ,843 As at September 30, 2018, farm cattle held for sale was comprised of 53,493 heads (62,457 at December 31, 2017), while confined cattle totaled 20,048 heads (20,389 at December 31, 2017). As at September 30, 2018 and December 31, 2017, the Company did not have any type of biological assets with restricted ownership or pledged as collateral of liabilities, and there were no other risks (financial, commitments, and weather-related) that would impact the Company s biological assets. 9. Recoverable taxes Parent Consolidated 09/30/18 12/31/17 09/30/18 12/31/17 Tax on revenue (PIS) 114,623 98, ,349 98,655 Social Security Funding Tax on Revenue (COFINS) 368, , , ,685 Reintegra (special tax for exporting companies) 1,650 1,650 31,276 18,500 State VAT (ICMS) 92, , , ,470 Income tax (IRPJ) and social contribution (CSLL) 251, , , ,193 IPI deemed credit VAT , ,852 Other 19,425 19,387 28,431 38, , ,183 1,063,612 1,064,262 Current 668, , , ,515 Noncurrent 179, , , ,747 PIS and Cofins (taxes on revenue) PIS and Cofins credits arise from the change in tax legislation, according to Laws Nos /02 and 10833/03, which established non-cumulativeness for these taxes, thus generating credits for exporting companies.

38 38 Currently, the Brazilian Federal Revenue Service (RFB) completed its inspection of the Company and its subsidiaries, with most of the requests for reimbursement of credits being authorized by the RFB, which has resulted in a significant amount arising from the refund of those credits during 2018 and Based on studies carried out by the Company s Management regarding the expectation of refund of these tax credits, a portion of these credits was segregated from current assets to noncurrent assets, which, as at September 30, 2018, totaled R$ 104,905, Parent and consolidated. The estimates of realization of the Company s and its subsidiaries tax credits are revised on a quarterly basis. State VAT (ICMS) ICMS credits result from the fact that the Company s exports are greater than its domestic sales, thus generating credits which, after ratified by state tax authorities, are used to purchase inputs for production, which may also be sold to third parties, as provided for in current legislation. Out of the aforementioned credit balance, a substantial portion is under an inspection and ratification process by São Paulo State s Finance Department. The Company s Management expects to recover a significant portion of said credits throughout 2018 and Based on studies conducted by Management, an amount deemed sufficient to cover slower lawsuits was transferred from current assets to noncurrent assets, totaling R$ 55,096, Parent and consolidated. The estimates of realization of the Company s and its subsidiaries tax credits are revised on a quarterly basis. 10. Related parties Related-party transactions, conducted under the following conditions, are summarized in the table below and comprise: Intragroup loans Parent 09/30/18 12/31/17 Minerva Dawn Farms S.A. (Minerva Fine Foods) (a) 63,108 27,529 Transminerva Ltda. (b) 26,238 26,238 CSAP - Companhia Sul Americana de Pecuária S.A. (c) 21,744 21,744 Minerva Overseas Ltd. (d) 294, , , ,949 (a) Working capital loan to Minerva Dawn Farms S.A. (currently Minerva Fine Foods); (b) Transminerva expenses and working capital to be reimbursement; (c) Working capital loan to Companhia Sul Americana de Pecuária S.A.(CSAP); (d) Loan granted to Minerva Overseas Ltda. to be reimbursed. Parent Intragroup borrowings 09/30/18 12/31/17 Minerva Luxemburgo (a) 420,699 85,497 Minerva Overseas II Ltd. (b) 2,050,182 1,693,850 Minerva Log S.A. (c) 2-2,470,883 1,779,347 (a) Loan from Minerva Luxembourg to the Parent company; (b) Loan from Minerva Overseas II to the Parent company; and (c) Loan from Minerva Luxemburgo to the Parent company.

39 39 The Company, understanding the full integration of its operations with its subsidiaries, transfers cash as part of Minerva Group s business plan, always seeking to minimize the cost of its borrowings. The other balances and transactions with related parties are as follows: Payables - Suppliers Parent Consolidated 09/30/18 12/31/17 09/30/18 12/31/17 Minerva Dawn Farms S/A 22,856 4, Transminerva Ltda Frigomerc S.A. 2,635 1,585 - CSAP - Companhia Sul Americana de Pecuária S.A. 8,747 7, Pul Argentina S.A 2,115 1, Minerva Comercializadora de Energia Ltda 14 4, Purchases from other related parties 8,350 24,236 8,350 24,236 44,728 42,822 8,350 24,236 Receivables - customers Parent Consolidated 09/30/18 12/31/17 09/30/18 12/31/17 Minerva Dawn Farms S/A 1,197 2, Frigomerc S.A Pulsa S.A CSAP - Companhia Sul Americana de Pecuária S.A. 12,315 4, Pul Argentina S.A. 63, Frigorífico Carrasco S.A. 1, ,383 7, Parent Consolidated 09/30/18 09/30/17 09/30/18 09/30/17 Sales revenue Minerva Dawn Farms S.A. 21,484 25, Pulsa S.A 17,988 7, Frigorífico Carrasco S.A. 8,725 6, Mato Grosso Bovinos S.A. - 6, Minerva Comercializadora de Energia Ltda. 22,467 2, CSAP - Companhia Sul Americana de Pecuária S.A.. 10, Minerva Chile SPA 1, ,660 48, Purchases Minerva Dawn Farms S.A. 34,822 36, Minerva Indústria e Comércio de Alimentos S.A , CSAP - Companhia Sul Americana de Pecuária S.A. 81,130 47, Pulsa. S.A. 6,982 5, Frigomerc S.A. 70,917 51, Frigorífico Carrasco S.A. 6,302 8, Pul Argentina S.A. 18, Minerva Comercializadora de Energia Ltda. 13,023 7, Mato Grosso Bovinos S.A. - 96, , , Purchases of cattle: Purchases from other related parties (a) 81,753 64,080 82,477 97,752 Purchases from other related parties 81,753 64,080 82,477 97,752 (a) Balance payable to other related parties for purchases of cattle from companies belonging to the Company s shareholders, conducted at usual market prices and conditions. The Company and its direct and indirect subsidaries conduct intercompany commercial transactions, mainly purchases, sales and loans, under the terms and conditions that are usually adopted in agreements in an arm s length, at market conditions, as if the transactions were contracted with unrelated parties.

40 40 During the periods ended September 30, 2018 and 2017, no expected credit losses were recorded and no expenses on uncollectible debts relating to related-party transactions were recognized. Management compensation As at September 30, 2018, the Company recorded expenses on key management personnel compensation (members of the Company s Board of Directors and Supervisory Board and Statutory Executive Officers) in the amount of R$10,744 (R$9,890 at September 30, 2017). All compensation is short term, as shown below: Members /30/18 09/30/17 Board of Executive Officers, Board of Directors and Supervisory Board 21 10,744 9, ,744 9,890 The alternate members of the Board of Directors and Supervisory Board are compensated for each day they attend a Board of Directors meeting. The Company does not offer post-employment benefits in case of termination of employment contract.

41 11. Investments Changes in investments in Minerva S.A. s subsidiaries are as follows: Equity interest - % Balance at 12/31/17 Capital payment in subsidiary through transfer of equity interests Translation adjustments Merger of subsidiaries Capital payment Share of profit (loss) of investees Balance at 09/30/18 Goodwill based on expected future profitability 324,047 (171,542) ,505 Minerva Overseas Ltd % 162,448-34, (44) 196,577 Minerva Overseas Ltd. II % 398,789-83, (5) 482,676 Minerva Middle East % Minerva Log S.A % Minerva Dawn Farms S.A % 83, (20,405) 62,985 Pulsa S.A. (*) % 330,414 (396,537) 68, (2,423) - Frigomerc S.A. (*) % 694,418 (862,154) 111, ,615 - Friasa S.A % 1, (1,097) - Minerva Colombia SAS % 5,049-1, ,559 Frigorífico Carasco S.A % 75,179 (81,226) 13,569, - - (7,522) - Lytmer S.A % 46,933-9, (6,428) 49,733 CSAP - Companhia Sul Americana de Pecuária S.A % ,347 4,103 Minerva Live Cattle Export S.A % 8,376-1, ,542 Minerva Meats USA LLC % Minerva Chile Spa % 4,775 2, (8,025) - Red Cárnica SAS % 143,592 (197,918) 34, ,431 - Red Industrial Colombiana SAS % 8,574 (9,997) 1, (516) - Minerva Foods Asia Assessoria Ltda % ,720 (2,539) 580 Minerva Comercializadora de Energia Ltda % 79, ,000 (38,722) 65,495 Minerva Australia Holdings PTY Ltd. (*) % 3, ,968 5,512 PUL Argentina S.A. (*) % 696,358 (529,505) (349,547) ,694 - Minerva Europe Ltd % Athena Foods S.A. (*) % - 2,246, ,246,171 Investments 3,067,676-11,170-27, ,819 3,283,385 Transminerva % (25,729) (980) (26,709) Minerva Luxembourg % (1,217,466) - (286,470) - - (220,679) (1,724,615) Allowance for investment losses (1,243,195) - (286,470) - - (221,659) (1,751,324) Investments, net 1,824,481 - (275,300) - 27,720 (44,840) 1,532,061 41

42 42 (*) Consolidated information on the following companies (see Note1): Pulsa S.A.; consolidates subsidiary Frigorífico Canelones S.A.; Frigomerc S/A.; consolidates subsidiaries JBS Paraguay S.A. and Industria Paraguaya Frigorífica S.A.; Minerva Australia Holdings PTY Ltd.; consolidates subsidiary Minerva Ásia Foods PTY Ltd.; Pul Argentina S.A.; consolidates subsidiary Swift Argentina S.A.; Athena Foods S.A.: Consolidates subsidiaries Pulsa S.A, Frigorifíco Carrasco S.A, Frigomerc S.A, Pul Argentina S.A, Red Cárnica S.A.S, Red Industrial Colombiana S.A.S., and Minerva Foods Chile SPA. On July 31, 2015, the Company entered into a Purchase and Sale Agreement ( Compra y Venta de Acciones ) to acquire 100% of the capital stock of Red Cárnica S.A.S. and Red Industrial Colombiana S.A.S., thereby obtaining the control of the two subsidiaries as from that date. The transaction was completed for COP$ 28,540 billion (equivalent to R$ 38,529 converted at the exchange rate effective on September 30, 2018). On February 5, 2016, the Company acquired Minerva Foods Asia Assessoria Ltda., and now holds 100% of the equity interest in that subsidiary. The transaction was completed for US$ 50 thousand (equivalent to R$200 thousand at the exchange rate effective on September 30, 2018). On July 22, 2016, its subsidiary Minerva Australia Holdings Pty Ltd. acquired 100% of the capital stock of IMPT PTY Ltd. The transaction was completed for AUD$4.0 million (equivalent to R$11,587 converted at the exchange rate effective on September 30, 2018). On February 21, 2017, the Board of Directors submitted the merger of subsidiary Mato Grosso Bovinos S.A. by the Parent company, Minerva S.A., to the Extraordinary Shareholders Meeting. The merger was approved by the Board of Directors and the transaction was submitted on June 30, On September 19, 2017, the Board of Directors approved the submittal of the merger of subsidiary Minerva Indústria e Comércio de Alimentos S.A. by Minerva S.A., to the Extraordinary Shareholders Meeting. The merger was approved by the Board of Directors and the transaction was submitted on October 31, In July 2018, Athena Foods S.A, a Company s direct subisidary, based in Santiago, Chile, was created and, at the end of September, a capital increase was made through the equity interests of the following companies: Pulsa S.A (UY), Frigorifíco Carrasco S.A (UY), Frigomerc S.A (PY), Pul Argentina S.A (AR), Red Cárnica S.A.S (CO), Red Industrial Colombiana S.A.S (CO), and Minerva Foods Chile SPA (CL), which became indirect subsidiaries of the Company.

43 43 Summary of subsidiaries interim financial information as at September 30, 2018: Equity Current Noncurrent Current Noncurrent Equity/ (equity interest - % assets assets liabilities liabilities deficiency) Minerva Overseas Ltd % , , ,577 Minerva Overseas II Ltd % 125 2,050,182-1,567, ,676 Minerva Middle East Ltd % Minerva Dawn Farms S.A % 36, ,458 9,392 66,814 62,985 Minerva Luxemburgo S.A % 268,295 6,195,536 58,640 8,129,807 (1,724,616) Friasa S.A % Transminerva Ltda % ,108 (26,709) Minerva Log S.A % Lytmer S.A % 53,803 12,912 8,954 8,028 49,733 Minerva Colombia SAS % 10, ,586 6,559 CSAP - Companhia Sul Americana de Pecuária S.A % 92,006 1,709 57,011 32,601 4,103 Minerva Live Cattle Export Spa % 10,904 14,303 15, ,542 Minerva Meats USA LLC % Minerva Foods Asia Assessoria Ltda % Minerva Comercializadora de Energia Ltda % 72,753-7,258-65,495 Minerva Australia Holdings PTY Ltd % 31,522 13,038 29,577 9,471 5,512 Minerva Europe Ltd % Athena Foods S.A (*) % 1,743,662 1,722, , ,678 2,246,655 Total 2,322,183 10,604,734 1,073,063 10,474,303 1,379,551 (*) Consolidated information on the following companies (see Note1): Athena Foods S.A.: consolidates subsidiaries Pulsa S.A, Frigorifíco Carrasco S.A, Frigomerc S.A, Pul Argentina S.A, Red Cárnica S.A.S, Red Industrial Colombiana S.A.S., and Minerva Foods Chile SPA. Changes in subsidiaries in the periods ended September 30, 2018 and 2017 are as follows: 09/30/18 09/30/17 Net revenue Profit (loss) for the year Net revenue Profit (loss) for the year Minerva Indústria de Alimentos Ltda ,909 21,680 Frigorífico Matadero Carrasco S.A. 464,458 (7,523) 308,005 (28,056) Minerva Overseas Ltd - (44) - (4,123) Minerva Overseas II Ltd - (5) - 98,863 Red Cárnica SAS 369,213 19, ,650 (6,710) Minerva Dawn Farms S.A. 32,342 (20,404) 59,435 (8,179) Red Industrial Colombiana SAS 8,122 (516) 5, Minerva Luxemburgo S.A. - (220,679) - (202,316) Friasa S.A. - (1,097) - (182) Transminerva Ltda. 3 (980) 317 (1,421) Minerva Log S.A (1) Lytmer S.A. 136,922 (6,428) 129,096 (3,821) Pulsa S.A. 742,228 (2,423) 440,116 21,715 Frigomerc S.A. 1,736,860 56, ,266 29,280 Minerva Foods Chile Spa 113,199 (8,026) 67,151 (3,815) Minerva Colombia SAS 5, ,600 (2,261) CSAP - Companhia Sul Americana de Pecuária S.A. 93,340 3,347 53,616 (78,328) Mato Grosso Bovinos S.A ,477 8,644 Minerva Live Cattle Spa (251) Minerva Foods Asia Assessoria Ltda. - (2,538) 15 (2,141) Minerva Comercializadora de Energia Ltda. 957,591 (38,723) 683,693 22,339 Minerva Australia Holdings PTY Ltd 138,972 1,969 96,714 (378) PUL Argentina S.A. 1,486, , , ,922 Minerva Europe Ltd All amounts are stated as 100% of the subsidiaries profit (loss).

44 Property, plant and equipment a) Breakdown of property, plant and equipment as at September 30, 2018 and December 31, 2017: Parent Description Depreciation rate - % Historical cost Accumulated depreciation 09/30/18 Net 12/31/17 Net Buildings 2.73% 982,385 (171,130) 811, ,207 Machinery and equipment 8.69% 925,664 (264,518) 661, ,850 Furniture and fixtures 9.61% 9,776 (4,499) 5,277 5,149 Company cars 10.65% 14,678 (8,151) 6,527 7,283 Computer hardware 18.15% 11,455 (6,656) 4,799 4,661 Land 75,877-75,877 75,877 Reforestation 3,193 (1,151) 2,042 2,842 Construction in progress 264, , ,580 Allowance for impairment of assets (21,518) - (21,518) (21,518) 2,266,454 (456,105) 1,810,349 1,821,931 Consolidated Description Depreciation rate - % Historical cost Accumulated depreciation 09/30/18 Net 12/31/17 Net Buildings 2.28% 1,990,028 (416,410) 1,573,618 1,586,568 Machinery and equipment 8.38% 1,968,314 (775,142) 1,193,172 1,302,541 Furniture and fixtures 8.46% 26,633 (16,741) 9,892 9,725 Company cars 10.97% 34,017 (25,541) 8,476 12,379 Computer hardware 17.95% 25,053 (16,899) 8,154 6,307 Land 228, , ,735 Reforestation 3,193 (1,151) 2,042 2,842 Construction in progress 294,677 3, , ,073 Allowance for impairment of assets (21,518) - (21,518) (21,518) 4,548,482 (1,247,908) 3,300,574 3,498,652

45 b) Summary of changes in property, plant and equipment from 01/01/2018 to 09/30/2018: Parent Buildings Machinery and equipment Furniture and fixtures Company cars Computer hardware Land Reforestation Construction in progress Allowance for impairment of assets Total Balance at December 31, , ,850 5,149 7,283 4,661 75,877 2, ,580 (21,518) 1,821,931 Additions ,877-61,172 Transfers 21,394 53, , (77,513) - - Disposals - (1,620) (3) (33) (30) (1,686) Depreciation (17,346) (50,337) (535) (1,102) (948) - (800) - - (71,068) Balance at September 30, , ,146 5,277 6,527 4,799 75,877 2, ,944 (21,518) 1,810,349 Consolidated Buildings Machinery and equipment Furniture and fixtures Company cars Computer hardware Land Reforestation Construction in progress Allowance for impairment of assets Total Balance at December 31, ,586,568 1,302,541 9,725 12,379 6, ,735 2, ,073 (21,518) 3,498,652 Additions 9,652 27,925 1, ,481 1,437-96, ,848 Transfers 65,777 53,159 2, , (123,888) - - Disposals (128) (2,621) (10) (419) (60) - - (5) - (3,243) Depreciation (36,333) (103,712) (3,546) (4,470) (1,765) - (800) - - (150,626) Translation adjustments (51,918) (84,120) (32) (49,087) - 1,715 - (183,057) Balance at September 30, ,573,618 1,193,172 9,892 8,476 8, ,085 2, ,653 (21,518) 3,300,574 c) Works and construction in progress As at September 30, 2018, works and construction in progress refer to the following main projects: expansion of Minerva Dawn Farms plant; expansion of the Red Cárnica (COL) plant, and structuring and expansion of distribution centers. 45

46 46 d) Allowance for impairment of assets As required by the accounting practices adopted in Brazil and international financial reporting standards (IFRS), the Company annually evaluates whether there is evidence of impairment of its assets. In this regard, the industrial plant of Goianésia (GO) has been underutilized for strategic reasons since Therefore, the analysis of the value of the plant based on cash generation was impaired; thus, the Company decided to evaluate the net sale value of the selling expenses. Based on an appraisal conducted by an independent firm, such plant s value is higher than its realization value, of R$ 34,175, of which R$ 21,518 corresponds to property, plant and equipment and R$ 12,657, to expected future profitability, which generated the need to recognize an allowance for impairment. e) Amounts pledged as collateral Property, plant and equipment items pledged as collateral for borrowings and financing totaled R$ 102,359 as at September 30, 2018 (R$ 151,738 at December 31, 2017). 13. Intangible assets Parent Consolidated 09/30/18 12/31/17 09/30/18 12/31/17 Goodwill paid on acquisitions 272, , , ,107 Right of use - Aircraft 1,793 1,793 1,793 1,793 Assignment of right of way Trademarks and patents ,362 91,420 Software 20,544 17,733 22,855 20, , , , ,621 Changes in intangible assets during the period ended September 30, 2018 are as follows: Parent Goodwill paid on Right of use - Assignment of Software acquisitions aircraft right of way acquired Total Balance at December 31, ,372 1, , ,148 Acquisition ,706 4,706 Merger / Acquisition of companies Amortization (1,895) (1,895) Transfer Balance at September 30, ,372 1, , ,959 Goodwill paid on acquisition s Right of use - aircraft Consolidated Assignment of right of way Tradema rks Software acquired Total Balance at December 31, ,107 1, ,420 20, ,621 Acquisition 1, ,988 6,988 Merger / acquisition of companies Amortization (impairment) (1,485) (2,978) (4,463) Transfer (438) - Translation adjustments 2, (39,573) 232 (37,302) Balance at September 30, ,584 1, ,362 22, ,844

47 47 The Company records the amortization of its software, the only intangible asset that can be amortized, according to the contractual license period, when purchased from third parties, or for the period estimated by the Company for software internally developed. As at September 30, 2018 and December 31, 2017, the average amortization rates were 19.9% and 19.2%, respectively. Goodwill based on expected future profitability Consolidated 09/30/18 12/31/17 In Direct Subsidiaries: Minerva Dawn Farms (MDF) - (i) 166, ,487 Brascasing Industria e Comércio Ltda. - (ii) 74,596 74,596 Mato Grosso Bovinos S/A (vi) 174, ,278 Other (vii) 9,515 9,515 In Indirect Subsidiaries: Pul S/A (iii) 61,643 61,643 Frigomerc (iv) 62,126 62,126 Frigorifico Carrasco S.A. (v) 47,773 47,773 Other (vii) 19,166 15, , ,107 (i) As required by CVM Resolution No. 580/09 CPC 15 (R1), the Company revised the calculations of identifiable assets acquired and liabilities assumed upon recognition to the fair value of the acquisition of an additional 30% of the shares representing the capital stock of Minerva Dawn Farms (MDF), which was classified as a business combination in stages. Therefore, segregating the goodwill calculated in the initial (provisional) recognition at fair value from the Company s interest in that transaction was necessary, in the amount of R$ 188,391 (R$ 188,391 at December 31, 2012), segregating goodwill based on expected future profitability (R$ 98,714), customers list (R$ 87,733) and appreciation of assets (R$ 1,944), according to other CPC pronouncements, instructions and guidance. As mentioned above, during the fourth quarter of 2012, the Company acquired the residual interest of 20% in MDF shares which were held by Dawn Farms, thus becoming the holder of 100% of MDF s control. As at December 31, 2015, the Company recorded an allowance for impairment in the amount of R$ 21,904; (ii) In December 2011, the Company acquired 5% of the capital stock of the jointly-owned subsidiary Brascasing Comercial Ltda., and now holds 55% of that company, and consequently, its control. As this transaction is considered as a business combination in stages, the Company recorded its equity interest and non-controlling interest at their fair value, and recorded goodwill for expected future profitability of R$ 93,185. After the full acquisition of the Company, goodwill totaled R$ 98,094. As at December 31, 2015, the Company recorded an allowance for impairment totaling R$ 23,498, arising from overproduction/oversupply, due to the reduction of worldwide consumption, mainly from the slowdown in China and the decrease in oil prices, directly impacting markets like Russia, one of the main markets for the Company s business; (iii)during the year ended December 31, 2011, the Company acquired 100% of the voting shares of Frigorífico Pulsa S.A., which occurred on March 22, 2011, which resulted in goodwill on expected future profitability of R$ 61,643 being recognized;

48 48 (iv)during the fourth quarter of 2012, the Company acquired 100% of the shares in Frigomerc S.A., recording goodwill on expected future profitability of R$ 58,380. On March 16, 2013, the purchase and sale agreement of Frigomerc S.A. was amended, which established a supplemental working capital of R$ 3,746 (USD1,830 thousand), totaling R$ 62,126 as at December 31, 2012; (v) During the period ended June 30, 2014, the Company acquired 100% of the voting shares in Frigorífico Matadero Carrasco S.A. (Frigorífico Carrasco S.A.), occurred on April 30, 2014, which resulted in a goodwill of R$ 34,700 on expected future profitability to be recorded. According to the acquisition agreement, there was an increase in goodwill on expected future profitability of R$ 13,073, totaling R$ 47,773; (vi)during the year ended December 31, 2014, the Company merged 100% of the voting shares in Mato Grosso Bovinos S.A. through the exchange of 29 million common shares issued by the Company (BEEF3) through the Extraordinary Shareholders Meeting (ESM) of both companies, which resulted in the recording of goodwill on expected future profitability of R$ 174,278; (vii)during the second quarter of 2013, the Company acquired the remaining 8% of the shares in Friasa S.A., which resulted in the recording of goodwill on expected future profitability of R$ 7,233, totaling R$ 9,298 on June 30, During the first quarter of 2016, the Company acquired 100% of the capital stock in its subsidiary Intermeat Assessoria e Comércio Ltda., occurred on February 05, 2016, resulting in goodwill on expected future profitability of R$ 217 thousand. During the second quarter of 2016, through its subsidiary Minerva Australia Holdings Pty Ltd acquired 100% of the capital stock of its indirect subsidiary IMTP PTY Ltd., occurred on July 22, 2016, resulting in goodwill on expected future profitability of R$10,061 (R$ 11,477 at September 30, 2018). On July 31, 2017, subsidiary Frigomerc S.A acquired 100% of the common shares in JBS Paraguay S.A, which resulted in a goodwill on expected future profitability of R$ 5,766 (R$ 7,689 at September 30, 2018) being recorded. As required by the accounting practices adopted in Brazil and international financial reporting standards (IFRS), the Company annually evaluates whether there is evidence of impairment of its assets. As a result of the impairment testing, as at December 31, 2017, no losses for the Company s cash-generating units (CGUs) were identified. The Company used the value in use method to perform the impairment test. For all CGUs, a fiveyear projection, with no growth in perpetuity, in addition to financial budgets prepared by Management for the start of the cash flow projections (2018) were considered. The discount rate applied was 9.6% (10.4% in 2016). In prior years, the Company recognized impairment losses for some CGUs. In this regard, the Goianésia (GO) plant, formerly Lord Meat, for strategic reasons, has been under-utilized and recorded impairment loss, as mentioned in Note 12. As at December 31, 2016, the Company recorded an allowance for impairment for CGU MFF in the amount of R$ 21,904.

49 Borrowings and financing Parent Consolidated Type Finance charges 09/30/18 12/31/17 09/30/18 12/31/17 5 th issue debentures % of CDI 357, , , ,884 BNDES (1/2/3) TJLP + spread 12,637 18,659 12,637 18,659 FINEP (7) TJLP + spread ,919 Lease (3) TJLP + 3.5% p.a Bank Credit Note (5) 8.18% p.a ,707 31,846 NCE (1/5) CDI + spread 313, , , ,488 NCE (1/5) Fixed rate 1,016, ,453 1,016, ,453 IFC (2/4/6) CDI + spread 89,648 96,631 89,648 96,631 Hedging instruments - Derivatives CDI + spread 1,377 3,254 1,377 3,254 1,791,480 1,755,052 1,812,187 1,790,817 Foreign currency (US dollar) Advances on foreign exchange contracts (ACCs) (1/5) Interest from 2.53% to 5.53% p.a.+ forex 1,339, ,356 1,339, ,356 Interest of 4.42% p.a.+ forex 302, , , ,592 NCE (5) Senior Unsecured Notes - (5) Forex + interest 3,158,262 2,660,345 6,533,430 5,742,396 Perpetual notes (5) Forex + interest of 8.75% p.a. 1,109, ,913 1,224,675 1,009,352 PPE (1) Interest of 2.4% p.a. + Libor 222,088 66, ,088 66,741 Operation 4131 (5) Forex + interest - 149, ,379 Other Types (5/8) Forex + interest , ,350 CCE (5) Forex + interest 422, ,413 - Hedging instruments - Derivatives (804,756) (284,975) (804,756) (284,975) 5,749,530 4,367,351 9,576,430 7,816,191 Total borrowings 7,541,010 6,122,403 11,388,617 9,607,008 Current 2,849,331 1,944,652 3,116,500 2,187,470 Noncurrent 4,691,679 4.,177,751 8,272,117 7,419,538 The Company provided the following collaterals to borrowings and financing: 1. Surety/letter of guarantee from the parent company VDQ Holdings S.A. 2. Mortgage; 3. Financed assets; 4. Promissory notes signed by subsidiaries Minerva Alimentos, Pulsa and Frigomerc; 5. Surety or letter of guarantee by the Company; 6. Letter of guarantee from subsidiaries Minerva Alimentos, Pulsa and Frigomerc; 7. Bank guarantee; 8. STLC (Stand-by Letter of Credit) or Corporate Guarantee. As at September 30, 2018, the noncurrent portion of the Company s (parent) borrowings and financing matures as follows: Total BNDES 2, ,150 Debentures - 345, ,849 IFC 8,607 17,215 17,215 17,215 8, ,859 NCE - 313,190 39, ,731 Pre-shipment ,589-1,086,094-2,538,473 4,229,156 Hedging instruments - Derivatives (744) (657) (152,305) (154,360) - (308,066) 10, ,384 56, ,804 8, ,789 (154,360) 2,538,473 4,691,679

50 50 As at September 30, 2018, the noncurrent portion of consolidated borrowings and financing matures as follows: Perpetual Total BNDES 2, ,150 CCB 23,136 50,283 10,180 10,180 10,180 6, ,129 Debentures - 345, ,849 IFC 8,607 17,215 17,215 17,215 8, ,859 NCE - 313,190 39, ,731 Senior Unsecured Notes ,696,364 1,804,117-6,500,481 Perpetual Notes ,198,984 1,198,984 Hedging instruments - Derivatives (744) (657) (152,305) (154,360) (308,066) 33, ,667 66,936 27,395 18,787 (146,135) (154,360) 4,696,364 1,804,117 1,198,984 8,272,117 Below are the Company s and its subsidiaries main borrowings and financing as at September 30, On that date, the Company was compliant with all covenants established for each type of borrowings and financing: International Finance Corporation (IFC) In September 2013, IFC and the Company entered into a 10-year financing agreement, in the amount of R$137,718, which was paid on October 24, The debt balance came to R$ 89,648 as at September 30, 2018, and interest is calculated based on CDI + spread, which are paid semi-annually. The debt matures on April 15, Debt notes/ bonds abroad On September 20, 2016, the Company completed the offer to buyback bonds issued abroad by its subsidiary Minerva Luxembourg S.A., maturing in By means of an early buyback offer, US$ 617,874 were bought back (R$ 2,010,562 on that date) of the principal amount of the 2023 Notes, equivalent to approximately 71% of the outstanding 2023 Notes. The early buyback offer of debt notes was carried out using the proceeds from the issue of the 2026 Notes (which will bear annual interest of 6.50%) and is part of a clear strategy to manage liabilities, aiming at the constant improvement of the Company s debt cost. Part of this offer consisted in the payment of a premium to the holders of the notes, embedded and implicit in the transaction and in the proposed exchange relations, amounting to US$ 40,143 thousand, as well as transaction costs in the amount of US$ 28,859 totaling US$ 69,002 that will be amortized in Finance costs during the effective term of the 2026 Notes. On February 10, 2017, the Company exercised the early option to purchase its debt securities bearing annual interest of % and maturing in 2022 (2022 Notes). The total debt was US$ 105,508 (R$ 328,710 on that date). The price paid was 106,125 of the face value, plus interest accrued until that date. In June 2017, the Company completed the re-tap of the notes maturing in September 2026, totaling US$ 350,000 thousand, which bear interest of 6.50% p.a. (2026 Notes). On September 19, 2017, the Company completed the offer to buyback bonds issued abroad by its subsidiary Minerva Luxembourg S.A., maturing in By means of an early buyback offer, US$ 198,042 were bought back (R$ 605,103 on that date) of the principal amount of the 2023 Notes, equivalent to approximately 79% of the outstanding 2023 Notes.

51 51 The early buyback offer of debt notes was carried out using the proceeds from the issue of the 2028 Notes (which will bear annual interest of 5,875%) and is part of a clear strategy to manage liabilities, aiming at the constant improvement of the Company s debt cost. Part of this offer consisted of the payment of a premium to the holders of the notes, embedded and implicit in the transaction and in the proposed exchange relations, amounting to US$ 9,209 thousand, as well as transaction costs in the amount of US$ 20,271 totaling US$ 29,480 that will be amortized in Finance costs during the effective term of the 2028 Notes. On January 31, 2018, the Company exercised the early option to purchase its debt securities bearing annual interest of 7.75% and maturing in 2023 (2023 Notes). The total debt was US$ 52,099 (R$ 164,919 on that date). The price paid was % of the face value, plus interest accrued until that date. Liabilities related to Notes as at September 30, 2018 in the consolidated interim financial information is R$ 6,533,430 (R$5,742,396 at December 31, 2017). The Notes and the debentures are expected to maintain a financial covenant which measures the ability to cover debt in relation to EBITDA (earnings before interest, taxes, depreciation and amortization). The contractual ratio of both financial instruments indicates that the debt coverage level may not exceed 3.5 times the EBITDA in the last 12 months. For these purposes, the following definitions are considered: (I) Net debt means the sum of the balance of loans and financing, without considering exchange rate changes occurred in the period since the contracting of the debt, less the sum of: (i) available cash (as defined below) and (ii) inflation adjustment losses (as defined below); (II) Cash and cash equivalents - means the sum of the balances of the following Company s balance sheet accounts: Cash and cash equivalents and Securities ; (III) inflation adjustment losses - means a number of exceptions, including but not limited to exchange rate changes since the issue of the Note and/or allowed debts, related to specific operating transactions, totaling US$308,000 thousand. (IV) EBITDA - means the amount calculated on the accrual basis over the last 12 months, equal to the sum of net revenue, less: (i) the cost of services rendered, (ii) administrative expenses, plus: (a) depreciation and amortization expenses, (b) finance income (expenses), net, (c) equity in the earnings (losses) of subsidiaries, and (d) direct taxes. The financial covenants refer to authorization or not to incur new debts, by executing all new refinancing-related debts, in addition to a predefined amount for credit facilities of working capital and investments. Covenants are calculated based on the consolidated interim financial information.

52 52 Perpetual notes On March 27, 2014, the Company completed the issue of perpetual bonds abroad totaling US$ 300,000 thousand, with semi-annual payments at an annual rate of 8.75%, by means of its wholly-owned subsidiary Minerva Luxembourg S.A. The issue of the notes aimed to extend the average maturity of the Company s debt and improve its capital structure through the use of a different fundraising instrument, diversifying even more the investors base. The transaction was settled on April 03, The Company shall guarantee all the obligations of the Issuer regarding the issue referred to above. The liability related to perpetual notes, as at September 30, 2018, in the consolidated interim financial information, is R$ 1,224,675 (R$ 1,009,352 as at December 31, 2017).These notes have the same financial covenants as those for the Notes. i) Level of subordination As at September 30, 2018, 0.90% of the Company s and its subsidiaries total debt has collaterals (1.58% at December 31, 2017). ii) Possible restrictions imposed on the Issuer, particularly with respect to setting indebtedness limits and taking out new debts, the distribution of dividends, the disposal of assets, the issuance of new securities and the sale of shareholding control The Notes also have clauses that limit the Company with respect to: (i) new debts if the Net Debt/EBITDA ratio is higher than 3.75/1.00 and 3.50/1.00, respectively; (ii) the distribution of dividends. Accordingly, Minerva undertakes not to pay and not allow its subsidiaries to pay any dividends or interest on invested capital held by others than its subsidiaries (except: (a) dividends or distributions paid on qualified interests of Minerva, and (b) dividends or distributions payable by a subsidiary, on a pro rata basis, or more favorable to Minerva); (iii) the change of shareholding control; and (iv) the disposal of assets, which can only be achieved by complying with the requirements, among which, in the case of sale of assets, it is necessary that the sale value be the market value. CCB issued in favor of the BNDES is expected to have early maturity if the shareholders agreement, articles of incorporation or Bylaws of the Company or its controlling companies, include a provision whereby a special quorum is required to approve issues that limit or restrict the control over any of these companies by their related controlling shareholders, or rather, a provision that leads to: (i) restrictions on the Company s ability to grow or develop technology; (ii) restrictions on the Company s access to new markets; or (iii) restrictions or losses on the Company s ability to pay financial obligations arising from the Bank Credit Note (CCB).

53 53 5 th issue of nonconvertible debentures On October 02, 2017, the Company offered debentures not convertible into shares, in the amount of R$ 350,487, maturing on October 02, Such debentures are pegged to to Agribusiness Receivables Certificate (CRAs), which are the subject of the 2nd series of the 1st issue of CIBRASEC Companhia Brasileira de Securitização, distributed through an offering, under CVM Instruction No The principal, amounting to R$ 350,487, bears interest at the accumulated variation (effective rate) of 105.5% of the average daily rates of the Interbank Deposits (DI). The proceeds were used to finance the Company s activities relating to livestock production and industrialization and sale of meat. In the process of issuing such debentures, the Company incurred transaction costs in the amount of R$ 6,806, which will be fully amortized through 2020, recorded in its interim financial information as a reduction of liabilities, to be amortized for the effective term of these debentures. As at September 30, 2018, the amount is R$ 357, Trade payables Parent Consolidated 09/30/18 12/31/17 09/30/18 12/31/17 Domestic suppliers 379, , , ,190 Foreign suppliers 46,944 35,651 19,542 79,209 Related parties 36,378 18, , , ,904 1,048,399 Aging list of trade payables: Parent Consolidated 09/30/18 12/31/17 09/30/18 12/31/17 Current: 434, , , ,554 Past due: Up to 30 days 10,455 12,457 37,873 62, to 60 days 8,478 3,534 49,262 8, to 90 days 4,620 7,177 8,489 8,006 Over 91 days 4,909 2,040 27,796 17, , , ,904 1,048, Payroll and related charges and taxes payable Parent Consolidated 09/30/18 12/31/17 09/30/18 12/31/17 Payroll charges Salaries and management fees ,233 9,144 Payroll taxes FGTS and INSS (employees and third parties) 10,386 11,172 29,915 28,320 Accrued vacation/13 th salary and related taxes 57,551 33,683 92,688 70,543 Other wages and charges 5,244 4,137 7,782 4,397 Total payroll charges 73,655 49, , ,404 Taxes payable State VAT (ICMS) 8,570 10,512 8,570 15,021 Federal tax installment plans 66,932 31,527 78,611 45,368 State tax installment plans 47 28,300 8,024 28,300 Corporate Income Tax (IRPJ) ,903 9,613 Social Contribution on Net Profit VAT ,541 5,158 Funrural 4,017 8,027 4,177 8,123 Other taxes and fees 3,459 4,759 18,642 19,238 Total taxes payable 83,025 83, , ,015 Grand total 156, , , ,419 Current 95,552 89, , ,970 Noncurrent 61,128 43,226 75,611 51,449

54 54 Adhesion to PERT (Special Tax Debt Settlement Program) Provisional Act No. 783, dated May 31, 2017, and regulated by PGFN Administrative Ruling No. 690, dated June 29, 2017, allows to settle National Treasury Attorney General s Office (PGFN) debts, of a tax nature or not, that have matured through April 30, 2017 and have been included in the Debts to the Federal Government Register through the date taxpayers join the program, which is called Special Tax Debt Settlement Program (PERT). In joining the program, the taxpayer undertakes to pay regularly the debts past due after April 30, 2017, included or not in the Debts to the Federal Government Register, and remain compliant with the Severance Pay Fund (FGTS) obligations. Adhesion to the Program implies irrevocable and irreversible acknowledgement of the debts included in the PERT. The subsequent inclusion of debts under any installment payment scheme is prohibited, except for ordinary request for tax payment in installments. As at September 30, 2018, the outstanding balance, Parent and consolidated, is R$ 22,437 and R$ 28,908, respectively. The Company adhered to the following payment terms: I. Payment cash and in kind of, at least, 20% of the total consolidated debt, without reduction, in five monthly consecutive installments, maturing from August to December 2017, and the remaining amount by using social contribution tax loss carryforwards or other credits relating to taxes administered by the Federal Revenue Service (the payment scheme Minerva S.A adhered to under the Federal Revenue Service program); II. Down payment of 7.5% or 20% of the debt amount under the program, in up to five months, and payment of the debt balance, beginning January 2018, in a lump sum or in up to 145 months. In 2017, the taxpayer should make a down payment, calculated at 7.5% or 20% of the debt amount, with no discounts. The down payment is payable in up to five months. For 2018, the debt balance of the installment program, after discounts are applied, may be paid in a lump sum (art. 3, II, a, of Provisional Act No. 783/2017) or in up to 145 months (art. 3, II, b, of Provisional Act No. 783/2017); (the payment scheme Minerva S.A. adhered to under the PGFN program). Adhesion to PRR (Rural tax debt refinancing program) On April 18, 2018, the Rural tax Debt Refinancing Program (PRR), established by Law No , of January 09, 2018, was changed after the vetos overturned by the Congress were published. The change was regulated by Normative Instruction No , of April 25, 2018, which amended Normative Instruction No , of January 19, On May 30, 2018, the Company joined the refinancing program under the conditions below: The consolidated debt with the National Treasury Attorney General (PGFN) and the Federal Revenue Service (RFB) on the date of adhesion amounted to R$ 1,016,630. A cash payment and in kind of 2.5% of the consolidated debt amount was made (R$ 25,416), without reduction, in 02 monthly consecutive installments maturing in May and June After the down payment was made, a reduction of R$ 470,162 was obtained and, with the Federal Revenue Service, the remaining debt, by using social contribution tax loss carryforwards in the amount of R$ 470,346. As at September 30, 2018, the debt balance is R$ 44,494 and R$ 49,702, Parent and consolidated, respectively.

55 Other payables Parent Consolidated 09/30/18 12/31/17 09/30/18 12/31/17 Advances received (a) 833, , , ,710 Fair value - share swap (b) - 7,576-7,576 Payables - acquisitions (d) 8,827 8,827 8,827 72,739 Other operating provisions 23,433 26,340 62,589 98,748 Total 865, , , ,773 Current 865, , , ,391 Noncurrent ,975 38,382 (a) Advances from the Company s customers according to the credit policy defined by Management; (b) The Company entered into swap contracts with Credit Suisse under which future financial flows are exchanged for the fluctuation in the price of its shares. Such transaction does not change the percentage of the Company s outstanding shares and did not result in cash disbursement, since it is an adjustment to fair value of the transaction with future realization. On March 15, 2018, the share swap transaction was settled; (c) Payables due to acquisition of the direct subsidiaries Red Cárnica S.A.S. and Red Industrial Colombiana S.A.S. and the indirect subsidiaries JBS Argentina S.A., JBS Paraguay S.A., Industria Paraguay Frigorifica S.A. and Frigorifico Canelones S.A. 18. Deferred income tax and social contribution Parent Consolidated Assets 09/30/ /31/ /30/ /31/2017 Tax losses - IRPJ 203, , , ,165 Tax loss carryforwards - CSLL 73,201 51,899 73,201 51,899 Total 276, , , ,064 Temporary differences - assets Provisions for tax, civil and labor risks 10,420 10,727 18,729 56,038 Allowance for impairment of assets 7,316 7,316 7,316 7,316 Allowance for expected credit losses 8,645 6,825 8,645 6,825 Other Total temporary differences - assets 302, , , ,243 Liabilities Temporary differences - liabilities Unrealized gains on the fair value of biological assets (24,282) (26,308) (24,282) (26,308) Business combinations (33,096) (33,096) (33,096) (33,096) Revaluation reserve (25,247) (25,845) (25,247) (25,845) Appreciation in subsidiaries (6,424) (6,424) (6,424) (6,424) Other temporary deductions (38,867) (34,111) (161,354) (309,728) Total temporary differences - liabilities (127,916) (125,784) (250,403) (401,401) Total deferred taxes 175,001 95,148 92,092 (135,158) Total assets 175,001 95, ,365 95,148 Total liabilities - - (101,273) (230,306) 175,001 95,148 92,092 (135,158)

56 Breakdown of deferred income tax and social contribution Changes in tax loss carryforwards were as follows: Balance at December 31, 2017 Recognized in profit or loss Parent Realization of deferred taxes Balance at September 30, 2018 Deferred income tax and social contribution on tax loss carryforwards 196, ,451 (466,979) 276,536 Total deferred tax assets 196, ,451 (466,979) 276,536 Balance at December 31, 2017 Recognized in profit or loss Consolidated Realization of deferred taxes Cumulative translation adjustments Balance at September 30, 2018 Deferred income tax and social contribution on tax loss carryforwards 196, ,535 (470,345) 2, ,805 Total deferred tax assets 196, ,535 (470,345) 2, ,805 The Company joined the Special Tax Debt Settlement Program (PERT) whereby taxpayers may settle National Treasury Attorney General (PGFN) debts, of a tax nature or not, that have matured through April 30, 2017 and have been included in the Debts to the Federal Government Register through the date taxpayers join the program. The Company opted to make a down payment in cash of at least 20% of the consolidated debt amount, without reduction, in five monthly consecutive installments maturing from August to December 2017, and the remaining amount, by using social contribution tax loss carryforwards, in the amount of R$ 50,693. The Company joined the Rural Tax Debt Settlement Program (PRR) whereby taxpayers may settle National Treasury Attorney General (PGFN) debts, of a tax nature or not, that have matured through April 30, 2017 and have been included in the Debts to the Federal Government Register through the date taxpayers join the program. The Company opted to make a down payment in cash of at least 2.50% of the consolidated debt amount, without reduction, in two monthly consecutive installments maturing in May and June 2018, and the remaining amount, by using social contribution tax loss carryforwards, in the amount of R$ 466,979. The deferred tax asset from tax loss carryforwards were recognized for the period from December 31, 2010 to June 30, 2018 in the Parent. The amount accrued as at September 30, 2018 is R$ 307,805 (R$ 196,064 at December 31, 2017). The decision of the Company s and its subsidiaries Management to record such deferred tax assets, on social contribution tax loss carryforwards, was based on the business plan and financial and budget projections prepared internally and by independent consultants and revised at least annually.

57 57 These deferred income tax and social contribution assets are expected to be realized as follows: 09/30/18 09/30/18 Parent Consolidated , ,988 39, ,577 35, ,870 30, onwards 180, , , ,805 (*) The Company expects to realize temporary income tax and social contribution differences in up to 10 years. The technical studies that supported the decision to recognize or maintain deferred tax assets and tax loss carryfowards were properly revised and approved at the Board of Directors' Meetings. The effects of changes in deferred taxes on profit (loss) for the years are as follows: Parent Consolidated 09/30/18 09/30/17 09/30/18 09/30/17 Temporary additions Sundry provisions 85,891 17, ,147 17,922 Fair value of biological assets 712, , , ,031 Temporary deductions Sundry provisions (79,682) (8,519) (79,682) (8,519) Depreciation - tax base differences (13,987) - (33,869) - Fair value of biological assets (706,503) (408,540) (706,503) (408,540) Deferred tax base (1,822) (24,106) 2,552 (24,106) Deferred income tax and social contribution - temporary difference (619) (8,197) 868 (8,196) Realization of deferred income tax and social contribution - temporary difference ,532 Deferred income tax and social contribution on tax loss carryforwards 547,451 (3,051) 578,720 (3,051) Total deferred income tax and social contribution 546,832 (11,247) 579,588 (9,715) Changes in deferred tax liabilities related to tax losses and temporary differences are as follows: Balance at January 1, 2018 Recognition of deferred taxes Parent Realization of deferred taxes Cumulative translation adjustments Balance at September 30, 2018 Tax loss 196, ,451 (466,979) - 276,536 Provisions for tax, civil and labor risks 10,727 - (307) - 10,420 Other temporary additions - 26,781 (26,781) - - Allowance for impairment of assets 7, ,316 Allowance for expected credit losses 6,825 1,823 (3) - 8,645 Unrealized gains on the fair value of biological assets (26,308) - 2,026 - (24,282) Business combinations (33,096) (33,096) Revaluation reserve (25,845) (25,247) Appreciation in subsidiaries (6,424) (6,424) Other temporary deductions (34,111) (4,756) - - (38,867) Total deferred tax assets 95, ,299 (491,446) - 175,001

58 58 Balance at January 1, 2018 Recognition of deferred taxes Consolidated Realization of deferred taxes Cumulative translation adjustments Balance at September 30, 2018 Tax loss 196, ,535 (470,345) 2, ,805 Provisions for tax, civil and labor risks 56, (39,364) 1,958 18,729 Other temporary additions - 26,781 (26,781) - - Allowance for impairment of assets 7, ,316 Allowance for expected credit losses 6,825 1,823 (3) - 8,645 Unrealized gains on the fair value of biological assets (26,308) - 2,026 - (24,282) Business combinations (33,096) (33,096) Revaluation reserve (25,845) (25,247) Appreciation in subsidiaries (6,424) (6,424) Other temporary deductions (309,728) (5,570) 143,459 10,485 (161,354) Total deferred tax assets (135,158) 602,666 (390,410) 14,994 92,092 Based on budget, business plan and budget projection, Management estimates that the tax credits arising from temporary differences will be realized by a) Current - payable Income tax and social contribution are calculated and recorded based on the taxable result, including tax incentives that are recognized as taxes are paid and taking into consideration the rates established by the prevailing tax legislation. b) Reconciliation of income tax and social contribution balances and expenses The accrued balance and the result of the taxes on profit are as follows: Parent Consolidated 09/30/18 09/30/17 09/30/18 09/30/17 Profit (loss) before taxes (1,719,555) ( ) Additions Temporary differences 85, Permanent differences 385, , Realization of temporary differences Realization of revaluation reserve Effect of the first-time adoption of IFRS 2,155, , Deductions Temporary differences (79,682) (8,519) (79.682) (8.867) Permanent differences (738,740) ( ) ( ) ( ) Effect of the first-time adoption of (2,691,668) ( ) ( ) ( ) IFRS Tax base ( ) ( ) Realization of tax losses - (8.975) - (8.975) Tax base after tax loss carryforwards ( ) ( ) Income taxes Income tax payable - (5.092) (18.394) (23.106) Social contribution payable (CSLL) - (1.885) - (8.910) Current income tax and social contribution expense - (6.977) (18.394) (32.016) Income tax and social contribution were calculated in accordance with prevailing legislation (Law No /2014).

59 59 Income tax and social contribution calculations and respective income tax returns, when requested, are open to review by tax authorities for varying periods and statutes of limitations in relation to the related payment date or tax return filing dates. Based on studies and projections for the following years and considering the limits established by prevailing legislation, Management expects that the existing tax credits will be realized over a maximum term of ten years. The net carrying amounts has no direct relationship with the taxable profit for income tax and social contribution due to the differences between the accounting criteria and the pertinent tax legislation. Therefore, we recommend that the evolution of the realization of the tax credits resulting from tax loss carryforwards and temporary differences should not be taken as an indication of future taxable income. 19. Leases The Company is a lessee in various agreements, which are classified as finance or operating lease. a) Finance lease Finance leases are recognized in the Company s current liabilities and noncurrent liabilities with a contra entry to property, plant and equipment. b) Operating lease Operating leases continue to be accounted for as required by Brazilian Corporate Law, that is, lease expensesare recognized on a monthly basis. The Company has three operating lease agreements: two plants located in Asunción, in Paraguay, through its subsidiary Frigomerc S.A., and one plant located in the city of Batayporã, State of Mato Grosso. Leases are as shown below: Leased assets Weighted average interest rate Weighted average interest rate (years) Total expense at 09/30/18 Total expense at 09/30/17 Industrial Plant in Brazil IPCA + livestock / IGPM Indeterminate 1,,530 1,530 Industrial Plants in Paraguay Fixed + Forex Aug ,961 3,590 3,491 5,120

60 Provisions for tax, labor and civil risks Summary of contingent liabilities recognized The Company and its subsidiaries are parties to several of lawsuits tarising from the normal course of their businesses, for which provisions were recognized based on the assessment of their legal counsel and Management s best etimates. The main information on these lawsuits is shown below: Parent Consolidated Lawsuits 30/09/18 31/12/17 30/09/18 31/12/17 Provisions for tax risks 1,890 1,890 1,890 40,004 Provisions for labor lawsuits 30,646 31,550 46,704 53,393 Provision for environmental risks ,858 Provision for civil risks 1,496 1,496 2,554 20,088 34,032 34,936 51, ,343 Labor lawsuits Parent Civil and tax lawsuits Environmental lawsuits Total Balance at December 31, ,347 3,386-29,733 Provisions recognized in the year 1, ,736 Addition due to mergers 7, ,686 Provisions reversed in the year (4,219) - - (4,219) Balance at December 31, ,550 3,386 34,936 Provisions reversed in the period (904) - - (904) Balance at September 30, ,646 3,386-34,032 Labor lawsuits Civil and tax lawsuits Environmental lawsuits Total Balance at December 31, ,547 3,386-36,933 Provisions recognized in the year 5, ,151 Provisions for acquisition of companies 21,900 58,562 33, ,584 Provisions reversed in the year (7,273) - - (7,273) Translation adjustments for the period 68 (1,856) 736 (1,052) Balance at December 31, ,393 60,092 33, ,343 Provisions recognized in the period 11, ,780 Provisions reversed in the period (9,917) (57,964) (34,588) (102,469) Translation adjustments for the period (8,102) 1, (5,506) Balance at September 30, ,704 4,444-51,148 Civil and tax risks These lawsuits refer to claims questioning the constitutionality of the use of reduced taxes on gross revenues and also to the discussion on the noncollection of taxes on export revenue. As at September 30, 2018, these risks were assessed as probable loss and involve the amounts of R$ 3,386, Parent, and R$ 4,444, consolidated (R$ 3,386, Parent, and R$ 60,092, consolidated, as at December 31, 2017).

61 61 Labor claims Most of these labor claims involve overtime, commuting time, health hazard premium and mandatory thermal comfort breaks. Based on the opinion of the legal counsel that handles these lawsuits and Management s experience in similar cases, as at September 30, 2018, provisions were recognized for labor lawsuits assessed as probable loss in the amount of R$ 30,646, Parent, and R$ 46,704, consolidated (R$ 31,550, Parent, and R$ 53,393, consolidated, as at December 31, 2017). Environmental risks Most of the lawsuits involve claims for the adequacy of some areas of the plants so that the technical standards required by the relevant agencies in each of the countries where the Company s meatpacking plants are located. As at September, 30, there were no environmental contingencies (R$ 33,858, consolidated, at December 31, 2017). Other lawsuits (assessed as possible loss) Labor and social security As at September 30, 2018, the Company and its subsidiaries are parties to labor lawsuits (public civil actions) and social security lawsuits, in the total amount of approximately R$ 8,240, whose likelihood of loss is considered possible, but not probable, and for which Management does not consider necessary to recognize a provision for loss. SENAR In March 2003, the Company filed for a writ of mandamus to suspend the withholding and transfer of SENAR. To avoid losing the right to require the contribution of Funrural and SENAR, the INSS (Social Security Authority) issued various tax assessment notices against the Company to date. The amount involved in these notices, whose likelihood of loss was assessed by the Company s legal counsel as possible, is approximately R$ 28,882. Such lawsuits involve a significant uncertainty level on the likelihood of loss for cetain matters being discussed at the judicial level. State VAT (ICMS) The Company was issued tax assessments relating to differences in the computation schedule for the base of ICMS and ICMS-ST by applying the reduction on its operations in the States of Minas Gerais, São Paulo and Goiás. As at September 30, 2018, the amount involved in these lawsuits, assessed as possible loss, is approximately R$ 138,303. Vessel Barcarena/PA On October 6, 2015, the vessel that would export livestock from Port of Vila do Conde, in Barcarena (PA), careened. Although the full responsibility for the cargo relied with the contracted shipping company, the Company received a number of notices of violation for environmental damages. As at September 30, 2018, the amount involved in these lawsuits, assessed as possible loss, is approximately R$ 38,429.

62 62 Other tax, civil and environmental lawsuits As at September 30, 2018, the Company and its subsidiaries are parties to other tax, civil and environmental lawsuits, in the total amount of approximately R$ 3,390, R$ 3,676 and R$ 542, respectively, whose likelihood of loss is considered possible, but not probable, in accordance with the Company s legal counsel, and for which Management does not consider necessary to recognize a provision for possible loss. Diligence and Investigation by the Brazilian Federal Police On May 16, 2017, the Brazilian Federal Police began an investigation named Operation Lucas to investigate alleged payments made to certain employees of the Brazilian Ministry of Agriculture, Livestock and Supply in the State of Tocantins in northern Brazil, including the former supervisor of said federal government agency in the State of Tocantins. The investigation mentions several beef and dairy processing plants in Tocantins, including the Company s plant in Araguaína. Since the beginning of the investigation, the Company s management has been cooperating fully with the investigating authorities, providing all the information have been requested, including for Operation Vegas, unfolding of Operation Lucas. In accordance with good corporate governance practices and in response to negative publicity regarding this matter, as well as to respond to its stakeholders, the Company s executive officers and Board of Directors resolved to conduct an internal investigation on this matter. The Company, through its Internal Audit and Compliance function, reviewed internal controls and payments in connection with its operations in the State of Tocantins and all material findings were shared with the relevant authorities. In addition, the Company engaged an experienced Brazilian law firm to conduct an independent review of its policies and procedures relating to its internal and financial processes. Management has committed to improve the internal compliance procedures in place since 2015 and implement additional procedures in order to align them with the main corporate governance practices and transparency practices (Integrity Program), which has actually been made by the formalization and dissemination of internal policies and programs. In the opinion of the Company s external legal counsel, there is no risk that the legal entity will be involved in a criminal procedure as a defendant.

63 Equity a. Capital The Company s subscribed and paid-in capital as at September 30, 2018 is R$ 150,432 (R$ 134,752 at December 31, 2017), represented at September 30, 2018 by 226,418,459 (229,860,259 at December 31, 2017) book-entry common shares with no par value, all of which are free and clear of any burden or encumbrance. During 2016, the Company incurred costs on the issuance of new shares that totaled R$ 5,898. Accordingly, the capital balance in the interim financial information is R$ 128,854. The Extraordinary Board of Directors Meeting of April 11, 2016 approved the Company s capital increase in the amount of R$ 746,474, through the issue of 47,850,957 common shares. With the approval, capital increased from R$ 950,598, representing 191,993,702 common shares, to R$ 1,697,073, representing 239,844,659 common shares. The Annual and Extraordinary Board of Directors Meeting of April 29, 2016 approved a capital reduction of R$ 1,562,321, without changing the number of shares issued by the Company, to absorb accumulated losses. As a result of the reduction, the Company s capital totals R$ 134,752, represented by 239,844,659 common shares. The Annual and Extraordinary Board of Directors Meeting of April 29, 2016 approved a capital reduction of R$ 1,562,321, without changing the number of shares issued by the Company, to absorb accumulated losses. As a result of the reduction, the Company s capital totals R$ 134,752, represented by 239,844,659 common shares. On March 22, 2017, the Board of Directors approved the cancellation of all 9,984,400 common shares issued by the Company, acquired under the 2016 buyback program and currently held in treasury. The cancellation of shares will not imply any changes in the total capital amount. As a result of the cancellation of shares, the Company s capital will remain at R$ 134,752, represented by 229,860,259 common shares. On March 05, 2018, the Board of Directors approved the cancellation of all 6,241,800 common shares issued by the Company, acquired under the 2017 buyback program and currently held in treasury. The cancellation of shares will not imply any changes in the total capital amount. As a result of the cancellation of shares, the Company s capital will remain at R$134,752, represented by 223,618,459 common shares.

64 64 The Board of Directors, at the Extraordinary Shareholders Meeting of September 13, 2018, approved the Company s capital increase in the amount of R$15,680, through the issue of 2,800,000 common shares. With the approval, capital increased from R$ 134,752, representing 223,618,459 shares, to R$ 150,432, representing 226,418,459 common shares. b. Capital reserve Consists of amounts received by the Company and that do not go through profit or loss because they refer to amounts allocated to strengthening capital, which do not require any effort from the Company in terms of delivering goods or providing services. As at September 30, 2018, the Company s capital reserve is R$ 120,182 (R$ 187,504 as at December 31, 2017). c. Revaluation reserve The Company appraised its fixed assets in 2003 and The remaining balance totaled R$ 52,549 as at September 30, 2018 (R$ 53,712 at December 31, 2017), net of taxes. As mentioned above and in compliance with Law No /2007, the Company elected to maintain the revaluation reserve through December 31, 2007, until its full realization, which should occur through depreciation or disposal of revalued assets. d. Legal reserve Calculated at 5% of profit for the year as provided for in article 193 of Law No. 6404/76, up to the limit of 20% of capital. In the year when the balance of the legal reserve, plus the amounts of capital reserves addressed by paragraph 1 of article 182 of Law No. 6404/76, exceeds 30% of the capital, the allocation of a portion of the profit for the year to the legal reserve will not be mandatory. As at December 31, 2017, the amount of R$ 9,744 was absorbed by the loss for the year, according to art. 189 of Law No. 6404/76. e. Earnings reserve The earnings reserve was recorded based on the remaining balance of the profit for the year, after the allocations to the legal reserve and the distribution of minimum mandatory dividends, and will be used to finance the Company s operations. As at December 31, 2017, the amount corresponding to Statutory Reserve, in the amount of R$ 107,802, plus R$ 9,744 relating to the Legal reserve and R$ 26,950 relating to Earnings retention Art. 196 was absorbed by loss for the year, according to Art. 189 of Law No. 6404/76.

65 65 f. Earnings retention art. 196 The earnings retention reserve refers to the retention of the remaining balance of 2016 retained earnings, in the amount of R$26,950, in order to meet the business growth project established in its investment plan, according to the capital budget approved and proposed by the Company s Management. The balance of this reserve will be used ad referendum of the Annual Shareholders Meeting, pursuant to article 196 of the Brazilian Corporate Law. As at December 31, 2017, the amount was absorbed by loss for the year, according to art. 189 of Law No. 6404/76. g. Treasury shares On March 20, 2017, pursuant to paragraph 1 of article 30 of Law No. 6404/76 and CVM Instruction No. 567, the Board of Directors approved the acquisition of up to nine million, two hundred and forty-seven thousand, one hundred and forty-nine (9,247,149) registered, book-entry common shares with no par value, representing 10% of the ninetytwo million, four hundred and seventy-one thousand, four hundred and eighty-five (92,471,485) Company outstanding shares on that date, not including controlling shareholders. The Company s Board of Directors also approved the cancelation of shares issued by the Company and acquired within the scope of the 2016 buyback plan, totaling 9,984,400 registered, book-entry common shares with no par value, amounting to R$ 107,346 treasury shares on that date. On March 05, 2018, the Company s Board of Directors approved the cancelation of shares issued by the Company and acquired within the scope of the 2017 buyback plan, totaling 6,241,000 registered, book-entry common shares with no par value, amounting to R$ 67,322, which were held in treasury on that date. The table below shows the changes in treasury shares: Number of shares Amount (R$) Average cost (R$) Average market value Balance at December 31, ,241,800 99, Share buyback 550,000 4, Cancellation of shares (6,241,800) (67,322) Balance at September 30, ,550,000 36, h. Dividends and interest on capital The Company s bylaws establish the payment of a minimum mandatory dividend of 25% of the profit for the year, adjusted pursuant to the law.

66 66 i. Valuation adjustment to equity According to CPC 02 R2/IAS 21 Effects of Changes in Foreign Exchange Rates and Translation of Interim Financial Statements, changes in financial instruments (direct and indirect) are recorded in foreign currency and accounted for under the equity method. According to CPC 37 R1/IFRS 1 First-Time Adoption of International Financial Reporting Standards, as a result of the application of CPC 02 R2 prior to the date of firsttime adoption, IFRS first-time adopters must zero the balances of exchange gains (losses) on investments recorded in equity (on the cumulative translation adjustments item) by transferring them to retained earnings/accumulated losses (on the profit reserve item), and disclose the profit distribution policy applicable to such balances. The Company does not calculate these adjustments for distribution of profit. 22. Segment reporting Business segments Livestock Meat Consolidated 09/30/18 09/30/17 09/30/18 09/30/17 09/30/18 09/30/17 Net revenue 448, ,185 11,155,943 7,897,856 11,604,771 8,139,041 Cost of sales (360,168) (195,003) (9,167,097) (6,408,309) (9,527,265) (6,603,312) Operating expenses (54,887) (28,610) (1,725,455) (822,433) (1,780,342) (851,043) Impairment of assets Finance income (costs), net 14,439 (2,062) (2,045,520) (608,227) (2,031,081) (610,289) Profit (loss) before taxes 48,212 15,510 (1,782,129) 58,887 (1,733,917) 74,397 On a geographical basis, the segment revenue is based on the customer s location. Segment assets are based on the geographical location of the assets. There are no revenues from transactions conducted with a single foreign customer that account for 10% of total revenues or more. The main business segments of the Company and its subsidiaries are the production and sale of fresh beef, livestock and its by-products. 23. Net operating revenue Parent Consolidated 09/30/18 09/30/17 09/30/18 09/30/17 Revenues from domestic sales 2,209,666 1,973,061 4,617,302 3,531,127 Revenues from foreign sales 4,078,133 2,947,347 7,682,647 5,198,652 Deductions from revenue - Taxes and other (467,399) (420,660) (695,178) (590,738) Net operating revenue 5,820,400 4,499,748 11,604,771 8,139,041

67 67 As required by paragraph 2 of article 20 of CVM Instruction No. 480/09, projections and estimates presented by publicly-held companies shall be revised on a periodic basis, at time intervals hat are adequate to the subject of the projectio, which, under no circumstances, shall exceed one year. Additionally, paragraph 4 of article 20 of CVM Instruction No. 480/09 establishes that, every time standardized financial statements or interim financial information are filed, the Company shall trace the projected to the results actually obtained and indicate any variances. The Company disclosed in its Reference Form for 2016 projections relating to net revenue for 12 months, from January to December Based on the assumptions and variables indicated in item 11.1 of the Company s Reference Form, the Company s consolidated net revenue for 12 months, from January to December 2018, is expected to range from R$15.0 billion to R$16.0 bilion. As at September 30, 2018, the Company s consolidated net revenue over the last 12 months was R$15.6 billion, which allowed the projection to remain unchanged. 24. Expenses by nature Parent Consolidated 09/30/18 09/30/17 09/30/18 09/30/17 Classified as Selling expenses (465,004) (271,463) (755,208) (494,469) General and administrative expenses (301,741) (230,200) (461,276) (348,805) Other operating income (642,291) (140,383) (563,858) (7,769) Total (1,409,036) (642,046) (1,780,342) (851,043) Expenses by nature Variable selling expenses (417,664) (222,333) (656,906) (406,230) General, administrative and selling expenses (152,747) (124,016) (264,573) (205,455) Personnel and commercial expenses (181,364) (146,283) (269,696) (216,575) Depreciation and amortization (14,970) (9.,31) (25,309) (15,014) Other operating income and expenses (642,291) (140,383) (563,858) (7,769) Total (1,409,036) (642,046) (1,780,342) (851,043) 25. Finance income (costs), net Parent Consolidated 09/30/18 09/30/17 09/30/18 09/30/17 Finance income Income from short-term investments 38,558 62,231 54,070 85,858 38,558 62,231 54,070 85,858 Finance costs Interest expense (421,765) (439,245) (726,623) (686,603) Other finance income (costs) (21,719) (242,039) 1,721 (145,599) (443,484) (681,284) (724,902) (832,202) Exchange rate changes, net (1,378,665) 129,081 (1,360,249) 136,055 Finance income (costs), net (1,783,591) (489,972) (2,031,081) (610,289)

68 Earnings (loss) per share a) Basic earnings (loss) Basic earnings (loss) per share is calculated by dividing the profit (loss) attributable to the Company s shareholders by the weighted average number of common shares issued during the period, excluding the common shares purchased by the Company and held in treasury. Basic 09/30/18 09/30/17 Profit (loss) attributable to Company's owners (1,172,723) 32,326 Weighted average number of common shares issued (thousands) 226, ,860 Weighted average number of treasury shares (3,550) (7,402) Weighted average number of outstanding common shares (thousands) 222, ,458 Basic earnings (loss) per share - R$ ( ) b) Diluted earnings (loss) per share Diluted earnings (loss) per share are calculated by adjusting the weighted average number of outstanding common shares, assuming the conversion of all potential common shares that would result in dilution. The Company has only one class of common shares that would potentially result in dilution: debentures mandatorily convertible into shares: Diluted 09/30/18 09/30/17 Profit (loss) attributable to Company's owners (1,172,723) 32,326 Weighted average number of outstanding common shares (thousands) 222, ,458 Weighted average number of common shares used to calculate basic earnings 222, ,458 (loss) per share - thousands Diluted earnings (loss) per share - R$ ( ) Risk management and financial instruments The Company s operations are exposed to market risks, especially foreign exchange and credit risks. The Company s investment management policy establishes the use of derivative financial instruments for hedging against these risk factors. Additionally, the Company may also contract derivative financial instruments to implement operating and financial strategies defined by the Board of Executive Officers and duly approved by the Board of Directors. Market risk management is carried out through the use of two models: calculation of VaR (Value at Risk) and calculation of impacts by applying stress scenarios. In the case of VaR, Management uses two distinct models: Parametric VaR and Monte Carlo Simulation VaR. Risks are constantly monitored and calculated at least twice a day.

69 69 It is worth noting that the Company does not use exotic derivatives and does not have any such instrument in its portfolio. a. Policy on the Treasury's hedging transactions The Treasury Department is responsible for the implementation of the Company s hedging management policy and follows the decisions of the Risk Committee, which is composed of the Company's Board of Executive Officers and employees. The Risk Management Board is responsible for overseeing and monitoring compliance with the guidelines designed by the hedging policy, and reports itself to the CEO and the Risk Committee. The Company s hedging policy, approved by its Board of Directors, takes into consideration its two main risk factors: exchange rate and finished cattle. I. Currency hedging policy The currency hedging policy aims to hedge the Company against currency fluctuations and is divided into two segments: i) Flow Cash flow hedging strategies are daily discussed with the Market Committee. The purpose of the cash flow hedging policy is to guarantee the Company's operating profit and hedge its flow of currencies, other than the Brazilian real, within a year. Hedge operations may use financial instruments available in the market, such as: US dollar futures transactions on B3, NDFs, funds raised in foreign currency, options and inflow of funds in US dollars. ii) Balance sheet The balance sheet hedge is monthly discussed at Board of Directors meetings. The purpose of the balance sheet hedging policy is to hedge the Company against its long-term debt in foreign currency.

70 70 Balance sheet exposure is the flow of US dollar-denominated debt with maturity higher than one year. Hedge operations may use financial instruments available in the market, such as: US dollar cash withholding, bond buyback, NDFs, futures contracts on the BM&F, swaps, and options. II. Cattle hedging policy The objective of the cattle hedging policy is to minimize the imacts of fluctuation in the cattler arroba price on the Company s profit (loss). The policy is divided into two topics: i) Cattle forward contracts In order to guarantee raw material, especially in the cattle offseason, the Company purchases cattle for future delivery and uses B3 to sell futures contracts, minimizing the risk of price fluctuations per arroba of cattle. Hedge operations may use finished cattle instruments available in the market, such as: finished cattle futures contracts on B3 and options on finished cattle futures contracts on B3. ii) Hedging of meat sold In order to guarantee the cost of the raw material used in its meat production, the Company uses the BM&F to purchase futures contracts, minimizing the risk of price fluctuations per arroba of cattle and hedging its operating margins obtained when meat is sold. Hedge operations may use finished cattle instruments available in the market, such as: finished cattle futures contracts on B3 and options on finished cattle futures contracts on B3.

71 71 Statement of derivative positions The statement of derivative positions was prepared to present the derivative financial instruments contracted by the Company in the periods ended September 30, 2018 and December 31, 2017, according to their purpose (asset hedging and other purposes): Asset hedging position Description thousand Notional amount in R$ thousand Cumulative effect in R$ thousand 09/30/ /31/ /30/ /31/2017 Amount receivable / Amount payable / (received) (paid) Futures Contracts Purchase commitments DOL (US$) Other BGI (arrobas) Corn (bags) Sale commitments Foreign currency DOL (US$) BGI (arrobas) Options Contracts Long position - Purchase Foreign currency Other BGI (arrobas) Short position - Sale Foreign currency DOL (US$) Other BGI (arrobas) Long buying position Foreign currency Other BGI (arrobas) Short selling position Forreign currency Other BGI (arrobas) Forward contracts Long position NDF (dollar) Short position NDF (Euro) NDF (dollar) NDF (ARS) The reference values represent the base value, i.e. the opening amount at which the derivative agreement is entered into in order to calculate the positions and market value. The fair values were calculated as follows: USD Futures Contracts: US dollar futures contracts traded on B3 total fifty thousand US dollars (US$50,000) per notional contract and are adjusted on a daily basis. The fair value is calculated by multiplying the notional amount in US dollars by the reference US dollar for the contract disclosed by B3; Finished Cattle Futures Contracts (BGI): Finished cattle futures contracts (BGI) traded on B3 have the amount of 330 arrobas;the fair value is calculated by multiplying the notional amount in reais per arroba by the reference amount for the contract disclosed by B3. Short Position Forward Contracts - NDF (Euro): The contracts are traded on OTC markets and, therefore, are not standardized neither adjusted on a daily basis.

72 72 Their fair value is calculated by multiplying the traded notional amount and market rate prevailing on that date. If held through maturity, the PTAX EURO selling rate disclosed by the Central Bank of Brazil; Short Position Forward Contracts - NDF (Dollar): The contracts are traded on OTC markets and, therefore, are not standardized neither adjusted on a daily basis. Their fair value is calculated by multiplying the traded notional amount and market rate prevailing on that date. If held through maturity, the PTAX 800 selling rate disclosed by the Central Bank of Brazil; Short Position Forward Contracts - NDF (ARS): The contracts are traded on OTC markets and, therefore, are not standardized neither adjusted on a daily basis. Their fair value is calculated by multiplying the negotiated notional amount and market rate prevailing on that date. If held through maturity, the ARS/USD selling rate disclosed by MAE will be used. The fair values were estimated on the date of the interim financial information, based on relevant market inputs. Revisions in assumptions and changes in the financial market operations may significantly affect the estimates presented in the interim financial information. The outstanding marked-to-market OTC NDF, swap and options transactions traded on B3 Bolsa, Brasil, Balcão are recorded in the balance sheet accounts as at September 30, 2018 and December 31, 2017 under NDF receivable/payable, swaps and options receivable, as follows: Derivative financial instruments 09/30/ /31/2017 Mark-to-market Mark-to-market Options 112, Swap 121,134 (27,343) NDF (EUR+DOL+LIVESTOCK) 569, ,912 Total 803, ,427 b. Currency and interest rate risks The risk of fluctuations in exchange rate and interest rate on loans and financing, shortterm investments, receivables in foreign currency arising from exports, investments in foreign currency, and other payables denominated in foreign currency may be managed by using derivative financial instruments traded on stock exchanges, or OTC transactions such as swap, NDFs (Non Deliverable Forwards), and options.

73 73 The table below shows the Company s consolidated position, specifically with respect to its financial assets and liabilities, divided by currency and exchange exposure, thus presenting a picture of the net position of assets and liabilities per currency, compared with the net position of derivative financial instruments intended for hedging and management of the exchange exposure risk: Consolidated 09/30/2018 Currencies Local Foreign Total Assets Cash 1,513-1,513 Banks - checking account 152,202 2,712,756 2,864,958 Short-term investments 1,208,603 98,192 1,306,795 Trade receivables 328,908 1,174,723 1,503,631 Total current 1,691,226 3,985,671 5,676,897 Total assets 1,691,226 3,985,671 5,676,897 Consolidated 09/30/2018 Currencies Local Foreign Total Liabilities Financing - current 1,040,220 2,571,593 3,611,813 Trade payables 845,362 19, ,904 Total current 1,885,582 2,591,135 4,476,717 Financing - noncurrent 770,590 7,809,593 8,580,183 Total noncurrent 770,590 7,809,593 8,580,183 Total liabilities 2,656,172 10,400,728 13,056,900 Net financial debt 964,946 6,415,057 7,380,003 Hedging derivatives - Net position 1,377 (804,756) (803,379) Currency position, net 966,323 5,610,301 6,576,624 The net position of derivative financial instruments is broken down as follows: Financial Instruments (net) Long (short) position, net at 09/30/2018 Long (short) position, net at 12/31/2017 Futures contracts - DOL (Dollar) - (502,352) Futures contracts - BGI (Finished cattle) (82,843) (21,136) Options contracts (Dollar, Cattle, Corn and IDI) Swap contracts 121,134 (27,343) NDF (dollar + EURO + cattle + ARS) 4,003,900 (1,322,203) Total, net 4,043,093 (1,872,176) Financial assets and financial liabilities are restated in the interim financial information as as September 30, 2018 and December 31, 2017, at amounts that approximate the market values. Their respective revenues and expenses are recognized and presented on these dates according to their expected realization or settlement. Note that the amounts related to export orders (firm sale commitments) refer to orders from approved customers not invoiced yet (and therefore not accounted for), but which are already hedged against the risk of changes in foreign currency rates (US dollar or another foreign currency) through derivative financial instruments.

74 74 Below is a list of NDF agreements held by the Company and effective as at September 30, 2018: Type Position Currency Maturity Notional amount NDF PURCHASE DOL 06/10/2019 1,000,000 Credit risks The Company is potentially subject to credit risks related to accounts receivables, which are minimized with the diversification of its customer portfolio, given that the Company does not have a customer or business group that accounts for more than 10% of its revenues and restricts the granting of credit to customers with good financial and operating indices. c. Cattle price risks The Company s business is exposed to the volatility of cattle prices, its main raw material, whose variation results from factors outside Management s control, such as climate, volume of supply, transportation costs, agricultural policies and others. The Company, in accordance with its inventory policy, maintains its management strategy for this risk, working on physical control, which includes purchases in advance, confinement of cattle and the signing of contracts for future settlement (OTC and stock exchange), which ensure the realization of its inventories at a determined price level. Fair value Over-the-counter (OTC) market 09/30/2018 Forward contract purchased Notional amount (@) 950,567 Futures Contract Price (R$/@) 138 Total R$/ ,737 Fair value BM&F Market 09/30/2018 Futures contracts - short Notional amount (@) 859,320 Futures Contract Price (R$/@) 151 Total R$/ ,038 d. Cash sensitivity analysis table The purpose of the sensitivity analysis statements is to disclose separately the derivative financial instruments which, in the Company s opinion, are intended to hedge the exposure to risks. These financial instruments are grouped according to the risk factor that they intend to hedge (price risk, currency risk, credit risk etc.).

75 75 The scenarios were calculated based the following assumptions: An upward movement represents an increase in prices or risk factors as at September 30, 2018; A downward movement represents a decrease in prices or risk factors as at September 30, 2018; Probable scenario: 6% impact; 25% fluctuation; and 50% fluctuation. The cash sensitivity statements were prepared in compliance with CVM Resolution No. 475/08 and take into consideration the positions in derivative financial instruments and their impacts on cash only: Probable scenario Transaction Movement Risk 6% fluctuation Possible scenario 25% fluctuation Remote scenario 50% fluctuation Hedge derivatives High Cattle (4,569) (20,234) (40,845) Cattle High Cattle 7,844 32,684 65,368 Net 3,275 12,450 24,523 Hedge derivatives High US dollar (112,587) (112,587) (112,587) Invoices + Cash - in $US High US dollar 51, , ,186 Net (60,724) 103, ,599 Hedge derivatives High Euro Invoices - in $EUR High Euro 7,631 31,796 63,593 Net 7,631 31,796 63,593 Hedge derivatives High ARS Invoices - in $ARS High ARS 169, ,920 1,413,840 Net 169, ,920 1,413,840 Hedge derivatives High Dollar 205, ,211 1,716,421 Borrowings in $US High Dollar (492,433) (2,051,804) (4,103,608) Net (286,462) (1,193,594) (2,387,187) Share Share swap Low s Net Exchange rate USD Ptax sale (Source: The Central Bank of Brazil); Exchange rate EUR Ptax sale (Source: The Central Bank of Brazil); Exchange rate ARS Ptax sale (Source: Bloomberg). Statement of gains (losses) on hedging instruments Hedging derivatives x Cattle: In the probable scenario with a 6% market fluctuation, the Company could gain R$3,275; whereas in a 25% fluctuation scenario, said gain would come to R$12,450, and R$24,523 upon a fluctuation of 50%; Hedge derivatives x Invoices + Cash in US$: In the probable scenario with a 6% market fluctuation, the Company could lose R$60,724; whereas in a 25% fluctuation scenario, the Company could gain R$103,506, and R$319,599 upon a fluctuation of 50%;

76 76 Hedge derivatives x Invoices + Cash in EUR: In the probable scenario with a 6% market fluctuation, the Company could gain R$7,631; whereas in a 25% fluctuation scenario, said gain would come to R$31,796, and R$63,593 upon a fluctuation of 50%; Hedge derivatives x Invoices + Cash in ARS: In the probable scenario with a 6% market fluctuation, the Company could gain R$169,661; whereas in a 25% fluctuation scenario, said gain would come to R$706,920, and R$1,413,840 upon a fluctuation of 50%; Hedge derivatives: In the probable scenario with a 6% market fluctuation, the Company could lose R$286,462; whereas in a 25% fluctuation scenario, the Company could lose R$1,193,594, and R$2,387,187 upon a fluctuation of 50%; e. Call Margin A margin requirement call is applied to exchange transactions, whereby in order to cover margin calls, the Company uses public and private fixed income bonds, such as CDBs (bank deposit certificates) held in its portfolio, thus mitigating impacts on its cash flow. As at September 30, 2018, the amounts deposited for margin totaled R$21, Statements of comprehensive income As required by CPC 26 (R1) (IAS 1) Presentation of Interim Financial Statements, the Company presents below the changes in comprehensive income (loss) for the periods ended September 30, 2018 and 2017: Parent Consolidated 09/30/18 09/30/17 09/30/18 09/30/17 Profit (loss) for the period (1,172,723) 32,326 (1,172,723) 32,666 Valuation adjustment to equity (275,298) (2,708) (275,298) (2,708) Total comprehensive income (loss) (1,448,021) 29,618 (1,448,021) 29,958 Comprehensive income (loss) attributable to: Company s owners (1,448,021) 29,618 (1,448,021) 29,618 Noncontrolling interests Total comprehensive income (loss) (1,448,021) 29,618 (1,448,021) 29,958

77 Insurance The Company and its subsidiaries have an insurance policy that mainly takes into consideration the concentration of risks, the significance and the replacement value of the assets. The main information on insurance coverage effective on September 30, 2018 is as follows: Coverage Insured amount Buildings Fire and sundry risks 793,274 Facilities, equipment and inventories Fire and sundry risks 979,050 Vehicles and aircraft Fire and sundry risks 159,658 Overseas transportation Fire and sundry risks 80,078 Civil liability Operational risks 20,519 2,032,579 The Company and its subsidiaries have coverage for all products transported in Brazil and abroad. The risk assumptions adopted, in view of their nature, are not part of the scope of the audit of the financial statements and, therefore, were not audited by the Company s independent auditors. The Company contracted insurance policies for all plants and distribution centers. 30. Events after the reporting period Offering for Early Buyback of Perpetual Bonds On November 1, 2018, the Company launched the offering for early buyback of perpetual bonds representing debt issued abroad by its subsidiary Minerva Luxembourg S.A. at an interest rate of 8.75%. These bonds are currently outstanding in the international market. Extraordinary Shareholders Meeting The Extraordinary Shareholders Meeting held on October 15, 2018 approved a capital increase through the private subscription of up to R$1,059 million through the issuance of up to 165 million shares at a price of R$6.42. As an additional benefit, 3-year subscription bonuses were assigned to the subscribers of the shares used to increase capital. Those shareholders holding a position through the end of October 15, 2018 were entitled to subscribe the shares. These shareholders are entitled to subscribe up to new registered, book-entry common shares, without par value, per each common share held as of that date. The preemptive right to subscribe new shares shall be exercised from October 16, 2018, inclusive, to November 14, 2018, inclusive. The main objective of the transaction is to speed up the Company s develerage process, since the Net debt/ebitda ratio for the last 12 months is as high as 5.0x. Aditionally, the same Meeting approved an increase in the percentage that would require the Company to hold a public offering of shares as a defense tactic (the so-called poison pill), which was 20% and became 33.34%.

78 78 Athena Foods S.A. Minerva continues to seek improvements to its capital structure. To that end, the Company issued a notice to the market announcing plans to conduct an initial public offering of its outside units, Athena Foods S.A. After completing the process to integrate the units, the possibility to derive value from operations in Paraguay, Argentina, Uruguay, Colombia and the distribution in Chile was identified and, thus, in the 2Q18 earnings release, plans of holding an IPO in Santiago, Chile, were announced. The Chilean market was chosen to launch this offering because the country is known by its high corporate governance standards, high internal savings rate, among other factors. This process is under an advanced development phase and the transaction is scheduled to be completed within the first half of Explanation added to the translation for the English version The accompanying individual and consolidated interim financial information was translated into English from the original Portuguese version prepared for local purposes. Certain accounting practices applied by the Entity that conform to those accounting practices adopted in Brazil may not conform to the generally accepted accounting principles in the countries where this interim financial information may be used * * *

79 3Q18 Earnings Release Barretos, November 6, 2018 Minerva S.A. (BM&FBOVESPA: BEEF3 OTC - Nasdaq International: MRVSY), the South American leader in the export of fresh beef and cattle byproducts, which also operates processed foods segment, announces today its results for the third quarter of 2018 (3Q18). The financial and operating information herein is presented in BRGAAP and Brazilian reais (R$), in accordance with International Financial Reporting Standards (IFRS). 3Q18 Highlights Minerva (BEEF3) Price on 11/6/2018: R$ 5.60 Market cap: R$1,267.9 million 226,418,459 shares Free Float 48% Conference Call November 7, 2018 Portuguese 9:30 AM a.m. (Brasília) 6:30 AM a.m. (US EST) Phone: +55 (11) Code: Minerva English 10:30 p.m. (Brasília) 7:30 AM a.m. (US EST) Phone: +1 (844) Code: Minerva IR Contacts: Eduardo Puzziello Kelly Barna Matheus Oliveira Luiza Puoli Operating cash flow reached R$406.5 million and recurring free cash flow to equity was R$93.5 million in 3Q18. Consolidated capacity utilization grew almost 5 p.p. to 79.8% this quarter. Gross revenue reached R$4,594.0 million in 3Q18, of which 43%, or R$2.0 billion, from the Brazilian Industry Division; 40% or R$1.8 billion from Athena Foods; and 17% or R$782 million from the Trading Division. LTM gross revenue was once again an all-time high, at R$16,652 million, 44% higher than in the same period last year. Exports accounted for 61% of the Company s gross revenue in the quarter. In the last twelve months ended September 30, 2018, Minerva accounted for 21% of South American exports, or around 7% of global exports, and once again consolidated its position as the leading beef exporter in the region. Minerva s net revenue reached R$4,337.7 million in 3Q18. In LTM3Q18, net revenue reached R$15.6 billion, up 17% year on year. Based on these results, the Company maintained its net revenue guidance for 2018 at between R$15.0 billion and R$16.0 billion. EBITDA totaled R$449.2 million in 3Q18, up 44% over 3Q17, while the EBITDA margin stood at 10.4%, 130 bps more than in 3Q17. In LTM3Q18, adjusted EBITDA amounted to R$1,451.0 million, 21% higher than in the same period in 2017, with an EBITDA margin of 9.3%. The cash position totaled R$4.2 billion and net debt stood at R$7.2 billion on 9/30/2018. At the close of 3Q18, financial leverage, measured by the net debt/ltm adjusted EBITDA ratio, was 5.0x, in line with the previous quarter. In order to accelerate the financial deleveraging process, the Extraordinary Shareholders Meeting held on October 15, 2018 approved the proposal for a capital increase through the private subscription of up to R$1,059 million through the issue of up to 165 million shares at R$6.42. As an additional advantage, subscription warrants were issued to the subscribers of the capital increase shares. On November 1 st, the Company announced the Offer for the Early Repurchase of its 8.75% perpetual bonds, issued through its subsidiary Minerva Luxembourg S.A., currently in the international market. Phone: (11) ri@minervafoods.com

80 3Q18 Earnings Release Message from Management The combination of the effective implementation of a diversification strategy in South America, with decision-making based on focus, discipline and consistency, and excellence in risk management was translated into the Company s results in the third quarter of Gross revenue came to an all-time high of R$4.6 billion in 3Q18. The EBITDA margin stood at 10.4%, returning to the level prior to the acquisition of assets in 2017, as the integration process was completed. Despite the recent appreciation of the U.S. dollar, net financial leverage remained flat at 5.0x at the end of September 2018, thanks to the successful hedging strategy and free cash generation of R$94 million in the quarter. At the end of September, the Company had R$4.2 billion in cash, which is sufficient to amortize its debt through 2026, and the debt duration remained at over five years. Sales were once again led by exports, which accounted for 61% of consolidated gross revenue, at R$2.8 billion, up 32% over 3Q17 and approximately 12% higher than in 2Q18. The two Divisions (Brazilian Industry and Athena Foods) had an excellent export performance. We were able to achieve these results thanks to the strategic positioning of our units, allowing greater arbitrage between the regions, and to our extensive reach in the global beef market. We are currently the leading South American exporter in terms of revenue, with 21.4% of total exports in the last 12 months, while we account for approximately 7% of global exports. Minerva continues seeking to improve its capital structure, which is why it is presenting two projects designed to accelerate the deleveraging of its balance sheet, a process that is already in progress and includes the recent announcement of the repurchase of perpetual bonds. The first project was the announcement of studies on the IPO of our international units, Athena Foods. After completing the integration process of the units, we identified opportunities for extracting value from the operations in Paraguay, Argentina, Uruguay and Colombia, as well as distribution in Chile, and we announced our intention to hold an initial public offering on the Santiago Stock Exchange, in Chile, in our 2Q18 earnings release. We chose Chile for this IPO, since the country is characterized by high corporate governance standards and high domestic savings rate, among others. This process is in an advanced stage of development, and we expect to conclude this operation in the first half of The second project was the announcement, in September, of the Private Capital Increase of up to R$1.1 billion. The transaction was authorized by the Extraordinary Shareholders Meeting held on October 15. The subscription price of the capital increase was set at R$6.42 per share, based on the average price in the last 30 trading sessions before September 11, We also offered an additional advantage to our investors who participated in the capital increase: a subscription warrant valid for three years. When exercised, these warrants will have the same rights as those granted by the Company s registered common shares. We believe that the successful completion of these two operations will strengthen the Company from a financial point of view and prepare it for renewed value creation for our shareholders. Fernando Galletti de Queiroz, CEO 2

81 3Q18 Earnings Release Results Analysis Key Consolidated Indicators R$ Million 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg Total slaughter ( 000 head) % % 3, , % Slaughter - Brazil % % 1, , % Slaughter - Athena % % 1, % Total sales volume ( 000 tons) % % % Volume - Brazil % % % Volume - Athena % % % Gross revenue 4, , % 3, % 16, , % Export market 2, , % 2, % 10, , % Domestic market 1, , % 1, % 6, , % Net revenue (1) 4, , % 3, % 15, , % Adjusted EBITDA (1) % % 1, , % Adjusted EBITDA margin (1) 10.4% 9.1% 1.3 p.p. 9.5% 0.9 p.p. 9.3% 9.0% 0.3 p.p. Net debt/ltm adjusted EBITDA (1) (x) Net income (loss) n.a % -1, n.a. (1) LTM3Q17 includes pro-forma net revenue and EBITDA figures for the plants of the Mercosur assets acquired on August 1, New Areas of Operation In order to improve communication with the market and facilitate the understanding of its business areas, Minerva has adopted, as of the 1Q18 earnings release, a new revenue reporting structure based on the areas of operation described below: Brazilian Industry Division: It consists of the result from production of fresh beef, slaughter byproducts, such as offal, tripe, tallow, bone meal, biodiesel and leather, and processed foods, such as portioned meals and Minerva Fine Foods products, in Brazil, sold both in the domestic and the export market. Colombia Figures 1 and 2 Brazilian Industry Division and % of Gross Revenue Brazil (% of Gross Revenue in 3Q18) Paraguay Athena Foods 40% Chile Uruguay Brazilian Industry Division 43% Trading Division 17% Argentina 3

82 3Q18 Earnings Release Athena Foods: It consists of the result from production and/or distribution of fresh beef, slaughter byproducts, such as offal, tripe, tallow, bone meal, biodiesel and leather, and processed foods, such as portioned meals and Swift products, in Paraguay, Argentina, Uruguay, Colombia and Chile, sold both in the domestic and the export market. Figures 3 and 4 Athena Foods and % of Gross Revenue Colombia Brazil (% of Gross Revenue in 3Q18) Trading Division 17% Paraguay Chile Uruguay Athena Foods 40% Brazilian Industry Division 43% Argentina Trading Division: The production units of this division are spread across South America and Oceania. It consists of the result from the Live Cattle and Protein Trading segments in the export market, the Protein Trading and Resale of Thirdparty Products segments in the domestic market and the Energy Trading segment in the Brazilian market. Colombia Figures 5 and 6 Trading Division and % of Gross Revenue Paraguay Brazil Trading Division 17% (% of Gross Revenue in 3Q18) Brazilian Industry Division 43% Athena Foods 40% Chile Argentina Uruguay Australia New Zealand 4

83 3Q18 Earnings Release You can find the new breakdown since 2015 in Excel at in the Investor Services section Fundamentals and Spreadsheets. Results by Division Slaughter BRAZILIAN INDUSTRY DIVISION In 3Q18, the Company's slaughter volume in Brazil came to 451,800 head of cattle, 17.3% more than in 3Q17, with a capacity utilization rate of 78.1%, up 6.1 p.p. over 2Q18. This increase over the previous quarter was due to (i) lower slaughter volume in 2Q18, due to the truck drivers strike in May and (ii) an exchange rate favorable to exports, combined with stronger demand in the export market in the period. Figure 7 -Installed Capacity Utilization - Brazil 84.1% 81.0% 80.1% 72.0% 78.1% 3Q17 4Q17 1Q18 2Q18 3Q18 Source: Minerva ATHENA FOODS In 3Q18, slaughter volume in Paraguay, Argentina, Uruguay and Colombia came to 451,000 head of cattle, up 7.6% over 2Q18, but the capacity utilization rate of this Division reached 81.5%, 3.4 p.p. more than in 2Q18 and 12.9 p.p. more than in 3Q17. The upturn was fueled by (i) higher slaughter volume in Paraguay to meet demand from Russia, (ii) the fact that 3Q18 was the first quarter in which the units were fully integrated into Minerva s system and (iii) increased production and exports from the Rosário unit, in Argentina. Figure 8 -Installed Capacity Utilization - Athena Foods 78.1% 81.5% 68.6% 68.6% 71.5% 3Q17 4Q17 1Q18 2Q18 3Q18 Source: Minerva Based on the above information, the Company s consolidated capacity utilization came to 79.8% in 3Q18, an increase of 4.8 p.p. over 2Q18 and 2.7 p.p. over 3Q17, as shown below: 5

84 3Q18 Earnings Release Figure 9 -Installed Capacity Utilization - Consolidated 77.1% 74.4% 75.5% 75.0% 79.8% 3Q17 4Q17 1Q18 2Q18 3Q18 Source: Minerva Gross Revenue by Division BRAZILIAN INDUSTRY DIVISION Gross revenue from the Brazilian Industry Division totaled R$1,995.9 million in 3Q18, an increase of 7.6% over 3Q17 and 16.5% over 2Q18. In the last 12 months ended September 2018, gross revenue from this division came to R$7,435.9 million, up 13% over LTM3Q17. Export Market 67.1% of Gross Revenue from the Brazilian Industry Division in 3Q18 Brazilian exports generated R$1,339.5 million in gross revenue in 3Q18, 11% more than in 3Q17 and up 17% over 2Q18. The strong revenue performance was due to a scenario that favors Brazilian exports in the period, fueled by (i) the appreciation of the dollar against the real (+4% vs. 2Q18) and (ii) the growing demand from the export market, especially in Asia and Americas, which was intensified in 3Q18. In LTM3Q18, gross revenue totaled R$4,860.1 million, up 17% year on year. We present below the Division s exports by region between LTM3Q17 and LTM3Q18: Africa: In LTM3Q18, Africa accounted for 14% of the Brazilian Division s total exports, remaining flat year on year. Americas: In LTM3Q18, the Americas received 15% of the Brazilian Division s total exports, up 7 p.p. year on year, as a large share of exports was routed to Chile in the period. Asia: Asia s share of the Brazilian Division s exports grew 4 p.p. between LTM3Q17 and LTM3Q18, to 27%, mainly driven by a year-on-year increase of around 50% in consumption in China and Hong Kong. CIS (Commonwealth of Independent States): The Commonwealth of Independent States, represented mainly by Russia, accounted for 3% of the Brazilian Division s exports in LTM3Q18, 4 p.p. less than in LTM3Q17. It is worth noting that Russia has banned Brazilian beef imports since December As a result, Athena Foods now supplies this region. Europe: Europe was the destination of 14% of the Brazilian Division s exports in the last 12 months ended September 2018, remaining virtually flat year on year. Middle East: The Middle East accounted for 27% of the Brazilian Division s exports, 4 p.p. less than in the twelve months ended September

85 3Q18 Earnings Release America 8% Figures 10 and 11 - Breakdown of Exports by Region Brazil LTM3TQ17 CIS NAFTA 7% 2% Middle East 31% EU 14% LTM3Q18 CIS 3% Middle East 27% Africa 14% Africa 14% EU 15% Asia 23% America 15% Asia 27% Source: Minerva We present below a complete breakdown of the Brazilian Industry Division: Gross Revenue (R$ Million) 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg Fresh beef EM 1, , % 1, % 4, , % Byproducts EM % % % Processed foods EM % % % Subtotal EM 1, , % 1, % 4, , % Fresh beef DM % % 1, , % Byproducts DM % % % Processed foods DM % % % Subtotal DM % % 2, , % Total 1, , % 1, % 7, , % Volume ( 000 tons) 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg Fresh beef EM % % % Byproducts EM % % % Processed foods EM % % % Subtotal EM % % % Fresh beef DM % % % Byproducts DM % % % Processed foods DM % % % Subtotal DM % % % Total % % % Average Price EM (US$/kg) 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg Fresh beef EM % % % Byproducts EM % % % Processed foods EM % % % Total % % % Average dollar (Source: BACEN) % % % Average Price EM (R$/Kg) 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg Fresh beef EM % % % Byproducts EM % % % Processed foods EM % % % Total % % % 7

86 3Q18 Earnings Release Average Price DM (R$/Kg) 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg Fresh beef DM % % % Byproducts DM % % % Processed foods DM % % % Total % % % EM - Export Market, DM Domestic Market Domestic Market 32.9% of Gross Revenue from the Brazilian Industry Division in 3Q18 Gross revenue from the Brazilian Industry Division totaled R$656.5 million in 3Q18, 2% higher than in 3Q17 and up 15.5% over 2Q18. This excellent performance was due to our focus on small and medium retailers and the food service segment, which represented for around 56% of the domestic sales. In 2018, the Company has focused on increasing the type of customers in the food service segment, mainly on bars & snack bars, restaurants, buffets and steakhouses, which together account for 95% of this segment s customers. In addition, sales of third-party products accounted for 37% of the domestic market sales in the last 9M18, in products such as frozen fish, potatoes, cheeses, pork, lamb, among others. In LTM3Q18, gross revenue in the Brazilian domestic market totaled R$2,575.8 million, up 6.0% year on year. ATHENA FOODS Gross revenue from Athena Foods, comprising production units in Paraguay, Argentina, Uruguay and Colombia, as well as distribution in these countries and in Chile, totaled R$1,816.2 million in 3Q18, 63.3% higher than in 3Q17 and 14.9% more than in 2Q18. In the last 12 months ended September 2018, gross revenue from this division totaled R$6,357.6 million, up 121.3% over LTM3Q17. Export Market 72.0% of Gross Revenue from Athena Foods in 3Q18 In 3Q18, gross revenue from Athena Foods exports totaled R$1,307.9 million, 75.8% more than in 3Q17 and up 12.8% over 2Q18. The result was positively impacted by (i) strong exports in Argentina, due to the completed integration of the Rosario unit, (ii) the depreciation of the regional currencies against the dollar and (iii) constant growth in Paraguayan exports to Russia due to the ban on Brazilian exports. Gross revenue from Athena Foods exports totaled R$4,460.4 million in LTM3Q18, up 113.5% year on year. We present below Athena Foods exports by region between LTM3Q17 and LTM3Q18: Africa: Africa accounted for 1% of Athena Foods' exports in the last 12 months ended September 2018, down 200 p.p. year on year. Americas: The Americas accounted for 22% of Athena Foods exports in LTM3Q18, down 10 p.p. year on year, since Paraguayan units are less focused on Chile, but are working to supply Russia, as shown below. Asia: In LTM3Q18, Asia substantially increased its share of Athena Foods exports, with 34% of the total, 14 p.p. more than in the same period last year. The region has thus consolidated its position as the main destination of Athena Foods exports in the period. CIS (Commonwealth of Independent States): The Commonwealth of Independent States accounted for 18% of Athena Foods exports in LTM3Q18, 10 p.p. more than in LTM3Q17. Athena Foods only destination in this region is Russia, whose share of exports has been growing consistently since the ban on Brazilian beef exports. Europe: In LTM3Q18, Europe was the destination of 13% of Athena Foods exports, 2 p.p. more than in LTM3Q17. NAFTA: NAFTA accounted for 5% of Athena Foods beef exports in LTM3Q18, 6 p.p. less than in the same period last year. 8

87 3Q18 Earnings Release Middle East: In LTM3Q18, the Middle East accounted for 7% of Athena Foods total export revenue, down 8 p.p. year on year. Figures 12 and 13 - Breakdown of Exports by Region Athena Foods EU 11% CIS 8% LTM3Q17 Africa 3% Americas 32% EU 13% Middle East 7% NAFTA 5% LTM3Q18 Africa 1% Asia 34% NAFTA 11% Middle East 15% Asia 20% CIS 18% Americas 22% Source: Minerva We present below a complete breakdown of Athena Foods: Gross Revenue (R$ Million) 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg Fresh beef EM 1, % 1, % 3, , % Byproducts EM % % % Processed foods EM % % % Subtotal EM 1, % 1, % 4, , % Fresh beef DM % % 1, % Byproducts DM % % % Processed foods DM % % % Subtotal DM % % 1, % Total 1, , % 1, % 6, , % Volume ( 000 tons) 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg Fresh beef EM % % % Byproducts EM % % % Processed foods EM % % % Subtotal EM % % % Fresh beef DM % % % Byproducts DM % % % Processed foods DM % % % Subtotal DM % % % Total % % % Average Price EM (US$/kg) 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg Fresh beef EM % % % Byproducts EM % % % Processed foods EM % % % Total % % % Average dollar (Source: BACEN) % % % 9

88 3Q18 Earnings Release Average Price EM (R$/Kg) 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg Fresh beef EM % % % Byproducts EM % % % Processed foods EM % % % Total % % % Average Price DM (R$/Kg) 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg Fresh beef DM % % % Byproducts DM % % % Processed foods DM % % % Total % % % EM - Export Market, DM Domestic Market Domestic Market 28.0% of Gross Revenue from Athena Foods in 3Q18 Domestic gross revenue from this Division totaled R$508.2 million in 3Q18, 38.2% more than in 3Q17 and up 20.7% over 2Q18. In the last 12 months ended September, gross revenue from Athena Foods reached R$1,897.2 million, up 142.1% year on year. The result reflects the strategy of repositioning the processed products under the brand Swift in Argentina, mailing in the physical distribution in the traditional retail and the Company s focus on domestic distribution to more resilient markets, such as small and medium retailers, especially those operating in the food service segment under the one-stop-shop concept (sales of third parties products). TRADING DIVISION Exports accounted for 21.5% of gross revenue from this Division, bringing in R$167.9 million in revenue, down 2.9% from 3Q17 and 22.6% lower than in 2Q18. In the last 12 months ended September, gross revenue from exports came to R$764.9 million, up 52.0% year on year. Live cattle exports account for the lion s share of this Trading Division s export revenue. Domestic sales accounted for 78.5% of gross revenue from the Trading Division, which totaled R$614.0 million in 3Q18, 18.0% higher than in 3Q17 and 38.7% more than in the previous quarter. In LTM3Q18, gross revenue came to R$1,993.5 million, up 32.9% year on year. Gross Revenue (R$ Million) 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg Trading gross revenue % % 2, , % Export market % % % Domestic market % % 1, , % Consolidated Results Analysis Exports - Market Share by Country In 3Q18, Minerva remained one of the leading exporters in the countries where it operates. In Brazil, the Company had a market share of 14% in the period. Minerva reached a market share of 42% and 17% in Paraguay and Uruguay, respectively. Minerva also accounted for 15% and 82% of exports in Argentina and Colombia, respectively. 10

89 3Q18 Earnings Release Figures 14, 15, 16, 17 and 18 3Q18 Market Share (% of Revenue) Brazil Paraguay Uruguay Minerva 14% Minerva 42% Minerva 17% Argentina Colombia Minerva 18% Minerva 82% Source: Minerva, Secex, INAC, SENACSA, IPCVA and DANE In the last twelve months ended September 2018, Minerva remained the leading South American beef exporter, with a market share of 21% As South America is responsible for 33% of global exports according to United States Department of Agriculture, Minerva accounted for around 7% of all exports in this period. Figure 19 LTM3Q18 Market Share (% of Revenue) South America Minerva 21% Gross Revenue Source: Minerva, Secex, INAC, SENACSA, IPCVA and DANE Third-quarter net revenue came to R$4,594.0 million, up 25.5% over 3Q17 and 16.2% over 2Q18. In the last 12 months ended September 2018, gross revenue stood at R$16,551.6 million, up 44.4% over LTM3Q17. R$ Million 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg Gross revenue (R$ Million) 4, , % 3, % 16, , % Brazilian Industry Division 1, , % 1, % 7, , % Athena Foods 1, , % 1, % 6, , % Trading Division % % 2, , % 11

90 3Q18 Earnings Release Net Revenue Net revenue totaled R$4,337.7 million in 3Q18, 26.9% more than in 3Q17 and up 16.1% over 2Q18. In the last 12 months ended September 2018, net revenue came to R$15,569.5 million, up 45.6% over LTM3Q17. R$ Million 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg Gross revenue 4, , % 3, % 16, , % Deductions and discounts % % % Net revenue (1) 4, , % 3, % 15, , % % Gross revenue 94.4% 93.4% 1.0 p.p. 94.5% -0.1 p.p. 94.1% 93.3% 0.8 p.p. (1) LTM3Q17 excludes pro-forma net revenue figures of the Mercosur assets acquired on August 1, 2017 Cost of Goods Sold (COGS) and Gross Margin In 3Q18, COGS came to 81.0% of net revenue, or 19.0% in terms of gross margin, 80 bps more than in 3Q17. The increase in COGS was proportional to the upturn in net revenue, both in year-on-year and quarter-on-quarter terms. R$ Million 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg Net revenue 4, , % 3, % 15, , % COGS -3, , % -3, % -12, , % % Net revenue 81.0% 81.9% -0.9 p.p. 81.9% -0.9 p.p. 82.2% 81.4% 0.8 p.p. Gross profit % % 2, , % Gross margin 19.0% 18.1% 0.9 p.p. 18.1% 0.9 p.p. 17.8% 18.6% -0.8 p.p. Selling, General and Administrative Expenses Selling expenses represented 6.1% of 3Q18 net revenue, up 0.2 p.p. over 3Q17 and down 0.8 p.p. from 2Q18. Selling expenses as a percentage of net revenue were in line with the same quarter last year and the average of the last 12 months, while general and administrative expenses remained virtually flat as percentage of net revenue compared with 2Q18 and 3Q17. R$ Million 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg Selling expenses % % -1, % % Net revenue 6.1% 5.9% 0.2 p.p. 7.0% -0.8 p.p. 6.5% 5.9% 0.6 p.p. G&A expenses % % % % Net revenue 4.0% 4.1% -0.1 p.p. 4.1% 0.0 p.p. 4.0% 4.1% -0.1 p.p. EBITDA Third-quarter EBITDA totaled R$449.2 million, climbing 44.1% over 3Q17 and 27.1% over 2Q18. The EBITDA margin reached 10.4% in 3Q18, up 130 bps over 3Q17 and 90 bps more than in 2Q18. In the last twelve months ended September 2018, EBITDA adjusted for non-recurring items amounted to R$1,451.0 million, with a margin of 9.3%. R$ Million 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg Net income (loss) n.a % -1, n.a. (+/-) Deferred income and social contribution taxes % % n.a. (+) Asset impairment n.a. 0.0 n.a % (+/-) Financial result % 1, % 2, % (+/-) Depreciation and amortization % % % (+/-) Proforma EBITDA from Mercosur assets n.a. 0.0 n.a % (+/-) Adjustments to other expenses % % % 12

91 3Q18 Earnings Release Adjusted EBITDA % % 1, , % Adjusted EBITDA margin 10.4% 9.1% 1.3 p.p. 9.5% 0.9 p.p. 9.3% 9.0% 0.3 p.p. Financial Result The financial result was negative by R$530.3 million in 3Q18 and a negative R$2,611.6 million in the last 12 months ended September. The line was impacted by the strong FX variation in the period, as the dollar appreciated 3.8% against the real since 2Q18, with a negative (non-cash) impact of R$354.6 million. Financial expenses totaled R$265.1 million in 3Q18, down 2.3% from 3Q17 and up 1.4% over 2Q18. On the other hand, Other Revenue/Expenses came in as revenue of R$69.3 million, thanks to result of the FX hedge adopted in late 2Q18. R$ Million 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg Financial expenses (interest) % % % Financial income % % % FX variation % % -1, % Other revenue/expenses % % % Financial result % -1, % -2, % Average dollar (R$/US$) (Source: BACEN) % % % Closing dollar (R$/US$) (Source: BACEN) % % % (*) Other expenses (R$ Million) 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg FX hedge % % n.a. Commodities hedge % % % Fees, commissions and other financial expenses % % % Total n.a % % 13

92 3Q18 Earnings Release Net Result In 3Q18, the Company posted a net loss before income and social contribution taxes of R$129.2 million. After income and social contribution taxes, the net loss totaled R$132.0 million, accompanied by a negative net margin of 3.0%, around 22 p.p. more than in 2Q18. After adjusting the net result for the non-cash effects of FX variation and FX hedging, and for income and social contribution taxes, the Company recorded net income of R$78.3 million. R$ Million 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg Net income (loss) before income and social contribution taxes n.a. -1, % -2, n.a. Income and social contribution taxes % % n.a. Net income (loss) n.a % -1, n.a. % Net margin -3.0% 2.5% -5.5 p.p % 21.8 p.p. -9.5% 0.4% -9.9 p.p. R$ Million 3Q18 3Q17 % Chg 2Q18 % Chg LTM3Q18 LTM3Q17 % Chg Net income (loss) n.a % -1, n.a. FX variation n.a % 1, n.a. FX hedge n.a % n.a. Income and social contribution taxes % % n.a. Adjusted income (loss) % % % Cash Flow Operating Cash Flow In the third quarter of 2018, operating cash flow was a positive R$406.5 million. The variation in working capital requirements was negative by R$133.7 million in the quarter. The impact on the working capital line came from Receivables (-R$391 million), due to the higher sales volume, up 16.8% from volume sold in 2Q18 and also the sales (especially of fresh beef) focused on the export market, which has longer payment terms. Working capital consumption was also fueled by Suppliers (-R$23.5 million), as the Company paid cash for most raw material acquisitions in order to benefit from discounts in the off-season (higher cattle prices due to lower supply). On the other hand, Other Payables had a positive variation of R$389.1 million in 3Q18. This variation was mainly driven by Customer Advances (+R$400.4 million), which reflects the result of the Company s credit policy of requiring advances based on the customer/country profile. R$ Million 3Q18 3Q17 2Q18 LTM3Q18 Net income (loss) ,486.1 (+) Net income adjustments ,264.0 (+) Variation in working capital requirements (1)(2) Operating cash flow (1) Excluding equity valuation adjustments and accumulated conversion amounts. (2) Including the Deferred Taxes line totaling R$470.3 million in 2Q18. 14

93 3Q18 Earnings Release R$ Million 3Q18 2Q18 Change Advances from clients Other Other payables Free Cash Flow Cash flow after capex, interest payments and working capital was positive by R$93.5 million in 3Q18. The cash financial result, i.e. excluding the FX variation and the positive result of FX hedging (both of which have no cash effect), totaled R$176.0 million in the quarter. Working capital requirements were negative by R$133.7 million, as mentioned earlier. In the last 12 months ended September 30, 2018, free cash flow was negative by R$51.4 million. R$ Million 3Q18 2Q18 1Q18 4Q17 LTM3Q18 EBITDA ,451.0 (+) Capex (on a cash basis - ex-mercosur) (+) Financial result (on a cash basis) (1) (+) Variation in working capital requirements (2)(3) Free cash flow to equity (1) Excluding the cash result from FX hedge. (2) Excluding equity valuation adjustments and accumulated conversion amounts. (3) Excluding the Deferred Taxes line of R$470.3 million in 2Q18. Capital Structure Minerva closed the third quarter of 2018 with cash and cash equivalents of R$4.2 billion, which is sufficient to amortize its debt through Approximately 86% of total debt was exposed to the exchange rate variation at the end of June Leverage measured by the net debt/ltm adjusted EBITDA ratio was 5.0x on 9/30/2018, with debt duration of 5.4 years. On November 1, the Company announced the Offer for the Early Repurchase of its 8.75% perpetual bond. The Company will use the proceeds from the capital increase to repurchase the bonds. Figure 20 Debt Amortization Schedule on 9/30/2018 (R$ million) 4, ,395.9 Short-term Debt 1, , , Cash 4Q18 1Q19 2Q19 3Q

94 3Q18 Earnings Release R$ Million 3Q18 3Q17 % Chg 2Q18 % Chg Short-term debt 3, , % 2, % % Short-term debt 27.4% 27.1% 0.3 p.p. 24.6% 2.8 p.p. Local currency 1, , % % Foreign currency 2, % 1, % Long-term debt 8, , % 8, % % Long-term debt 72.6% 72.9% -0.3 p.p. 75.4% -2.8 p.p. Local currency % % Foreign currency 7, , % 7, % Total debt 11, , % 11, % Local currency 1, , % 1, % Foreign currency 9, , % 9, % (Cash and cash equivalents) -4, , % -4, % Net debt (1) 7, , % 6, % Net debt/ltm EBITDA (x) (1) Net debt includes FIDC subordinated shares totaling R$6.7 million in 3Q18, R$4.7 million in 3Q17 and R$7.1 million in 2Q18. Investments Investments in fixed assets totaled R$46.1 million in 3Q18, of which R$34.6 million went to operational maintenance and R$11.5 million to expansion of operations See below the breakdown of investments by quarter in the last twelve months: CAPEX (R$ Million) 3Q18 2Q18 1Q18 4Q17 LTM3Q18 Maintenance Expansion Total

95 3Q18 Earnings Release Subsequent Events Extraordinary Shareholders Meeting On October 15, 2018, the shareholders approved a capital increase through the private subscription of up to R$1,059 million through the issue of up to 165 million shares at R$6.42. As an additional advantage, three-year subscription warrants were issued to the subscribers of the capital increase shares. The shareholders of record by the end of October 15, 2018 had the right to subscribe to the shares. These shareholders have the right to subscribe to up to new registered, book-entry common shares for each common share held on that date. The preemptive right to subscribe to the new shares can be exercised between October 16, 2018, and November 14, 2018, inclusive. See below an illustrative example to help the comprehension of the private capital increase operation: This image is part of the Subscription Booklet, available on the Company s Investor Relations website at the Download Center. The main purpose of the operation is to accelerate the Company s deleveraging process, which now has a high net debt/ltm EBITDA: 5.0x. In addition, was approved the increase of the percentage established for the mandatory tender offer for the acquisition of the shares issued by the Company as a mechanism to protect the dispersion of the Company s equity distribution, as commonly called poison pill, that was 20% and now, 33,34%. Offer for the Early Repurchase of its Perpetual Bonds On November 1, 2018, the Company launched the offer for the early repurchase of perpetual bonds representing debt issued abroad by its subsidiary Luxembourg S.A. at an interest rate of 8.75%. These bonds are currently outstanding in the international market. 17

96 3Q18 Earnings Release Minerva Day Sao Paulo and New York 18