REPORT 2017 Sustainability Report 2017

SUSTAINABILITY REPORT 2017 Sustainability Report 2017

Message from the Board of Directors Risk management Beef Desk Message from Management ...IN BUSINESS APPRECIATION AND FOCUS... Industry overview Domestic market Achievements Foreign market Awards Certifications Operational performance Challenges and opportunities ...IN MANAGEMENT Technology Minerva differentials The Company

Mission, Vision, Values Area of operation Economic and financial results Exports Strategic management Investments

Corporate governance Value-Added Statement Commitment Outlooks Governance structure Investors

...IN QUALITY AND SAFETY About the report Sustainable Livestock Farming Materiality Matrix Supplier chain Inspections and audits GRI APPENDIX

Best practices GRI CONTENT INDEX Integrated Management System Efficiency CORPORATE INFORMATION PRODUCTION TEAM ...IN EMPLOYEES Human Resources Management Compensation and benefits Health, safety and quality of life

...IN THE ENVIRONMENT Environmental management Water Effluents Waste Energy

“Above all, we strive to Message maintain a respectful relationships and from the Board of partnerships with our customers, suppliers, DIRECTORS shareholders, consumers 102-14 and all of the other stakeholders with As we celebrate our 25th year anniversary, we are proud of having built a global company that is whom we interact.” committed to sustainability, and adopts the best governance and responsible management practices. Above all, we strive to maintain a respectful relationship and partnership with our customers, suppliers, shareholders, consumers and all other stakeholders with whom we interact. These principles are fundamental in order for us to accom- plish our mission of supplying quality food to all of our consumers that are spread out across more than 100 countries, and we are prepared to reach out into even more markets based upon a consistent and sustainable strategy. This position leads us to believe that we are on Our work, the result of the dedication and efforts the right path and to project a continuity in the of our entire team, allowed us to overcome the growth rate, especially when we are at the fore- challenges we faced in 2017, an unstable year for front of a promising scenario. As a company that Brazil, and in the end, come out as the largest possesses a culture of high performance, focus- in natura beef exporter in South America. ing on efficiency, risk management and structured to serve a global demand, we are prepared to continue to make history in our industry.

Edivar Vilela de Queiroz Chairman of the Board of Directors

4 5 We have developed a successful process for the integration of the new units, which has demon- Message from strated the advantage of having highly disci- plined and dedicated teams on which we can rely on. The work is ongoing and will continue to be a priority in 2018. Integration involves MANAGEMENT more than just technological connectivity or the 102-14 exchange of experiences, but also team preparation from the viewpoint of corporate culture. 2017 was very important year for consolidating The fact that we have managed to overcome our growth strategy. So much so, that during this challenges and grow, reaffirms the success period, we achieved goals that we had been ex- of our business strategy. In the international pecting to reach five-years from now. Besides flex- scene, South America has solidified its position ibility, there were various contributing factors that as the largest beef supplier – and we have be- allowed us to meet our goals and bring together come the leader in exports. Today, we are not the conditions needed, in order to seize business strictly a national company, this means that the opportunities, despite being in a market affected economic situation in Paraguay, Uruguay, Co- by strong economic contractions. Our expansion, lombia and Argentina impacts our business. achieved upon the pillars of focus, discipline and Nevertheless, we believe that the challenging consistency, has transformed us into the largest environment and uncertainty is inclined to im- in natura beef exporter in South America. prove in Brazil by 2018, as well as in Argentina We have moved forward and established each of and Paraguay, countries which have a promis- the pillars of our business plan: geographic diver- ing domestic consumption and governments sification of the production chain, an increase in engaged in stimulating the presence of the sec- origination of third-party products. With the ac- tor in the international market. quisition of new operations in Argentina, Paraguay We are embarking on a new phase of our jour- and Uruguay, our industrial area has now increased ney as a global company, with the competitive to 45% Brazilian and 55% outside the country. advantage of having participated in and led the Regarding distribution, not only did we grow with- largest and most promising export hub: South in our own domestic market and in the markets of America. With a continuing advancement in the countries in which we operate (Paraguay, Uru- governance, permanent value of our human guay, Colombia and Argentina), we also increased resources and stakeholders, responsible and the integration of management and operations of effective risk management and a firm commit- our units. In origination of third-party products, ment to sustainability, we are ready to face the we consolidated the one stop shop concept, which challenges that lie ahead. Consistence, focus services over 40,000 small and mid-sized retailers and discipline, encourage us to be better in ev- in Brazil, to which we ship frozen or refrigerated erything we do. perishable products produced internally or supplied by third party producers. Fernando Galletti de Queiroz CEO 6 7 PPRECIATION and FOCUS…

8 In December 2017, during the end of the year years, an achievement reached in 2017, and will Minerva Foods holiday party, the CEO, Fer- continue to serve as a guide for our future ac- nando Galletti de Queiroz, thanked all of those tions. These two aspects lead the way for Min- who contributed to the exceptional results the erva’s geographical expansion in Brazil and to Company had achieved, highlighting two as- initiate its international rise, entering into Par- pects in particular: appreciation and focus. aguay, Uruguay, Colombia and Argentina. They encompass the whole meaning of the Appreciation and focus are applied to the ideals that have guided the Company since its Company’s own resources – human, organiza- founding in 1992, when the Vilela de Queiroz tional, structural and technological. Through- family acquired Frigorífico Minerva do Brasil out Minerva’s history, these aspects ended up S.A., an abattoir and beef processing unit in adding value to its production processes, its Barretos (SP) which serves as the Company’s product quality and as a result, its business. It headquarters to this day. Appreciation and fo- was thanks to these differentials that in 2017, cus on management, governance, sustainabili- the Company took the lead of in natura meat ty, the market and relationships with all stake- exports in South America holders, are what drove the Company’s first 25

“We want to always live up to the credibility we are entrusted with.”

Antonio Vilela de Queiroz Member of the Board of Directors

10 11 Achievements ISO 2200 – Attests to food safety within the supply chain, from the farmers, processors and packaging, transportation and Awards point of sale. USDA Organic – An American seal accredited by the US De- Best of Dinheiro Rural – Awarded champion in partment of Agriculture (USDA), aimed at developing, main- the Meatpacking Plants category given by Edi- taining and expanding the availability of products from coun- tora Três, highlighting companies that are inter- tries outside the North American market. connected directly or indirectly into the field in Natural Beef Uruguay – A program aimed fundamentally at which they apply the best financial and corporate food safety, animal welfare, sustainable production and respect management practices to their business. for the environment, which guarantees in Uruguay, among Best in Agribusiness – Awarded by Globo Rural other things: magazine, in partnership with Serasa Experian, • Year-round birthing and raising of grazing animals under the category Beef Industry. Certifications • That no hormones, anabolic steroids or growth promotants are used British Brazilian Awards 2017 – Award received • That no proteins derived from animals are used in cattle feed during Think Brazil, held by the British Consul- BRC Food – Global Standard for Food Safe- ate in London (England). The goal is to strength- European Union organic production logo – The main objec- ty – Created by the British Retail Consortium, en the partnership between the United Kingdom tive of this logo is to make organic foods and beverages more it is the strictest food production standard in and Brazil in various sectors, bringing together easily identifiable, along with a system of guarantees that are Europe, establishing quality and safety stan- representatives from Brazilian and British com- effectively understood by consumers and that can be summed dards for food production. Minerva holds cer- panies that invest in Brazil. up as follows: tification for the following units: Barretos and • At least 95% of the ingredients of agricultural origin were pro- Biggest and Best – The event by Exame magazine José Bonifácio (SP), Palmeiras de Goiás (GO), duced using an organic method; only then can the word “or- elects the biggest companies in 20 sectors of the Janaúba (MG), Várzea Grande (MT), Rolim de ganic” or its abbreviation, appear in the product name. national economy, awarding Minerva Foods as Moura (RO), Frigomerc (Paraguay), Carrasco • The product is in compliance with the rules of the control and the Best in Agribusiness. and Pul (Uruguay). certification system, approved by each Member State. Companies that Best Communicate with Jour- Angus Brasil – An initiative of the Certified • The product comes directly from the producer (if it is in bulk), nalists – Promoted by the Center for Commu- Angus Meat Program, through a partner- or is prepared in a sealed package. nications Studies (Cecom) and Negócios da ship between the Brazilian Angus Associa- • The product contains the name of the manufacturer, proces- Comunicação magazine, the award included tion and the meatpacking industry, it attests sor or seller and the code number of the certification body Minerva Foods among the three winners in the to high-quality meat production, from Angus that verified the last point of operation prior to it being placed Meat Agroindustry category. The award recog- cattle and their crossbreeds. on the market. nizes quality in the relationship maintained with Angus Paraguay – Certification from Uru- journalists regarding access, availability and ease guay’s National Meat Institute (INAC), assuring in verifying information. compliance with the highest standards required by the European Union.

12 13 ...IN

ANAGEMENT

14 15 The Company The leading in natura meat exporter in Latin America

A leader of in natura meat exports in Latin JBS Argentina S.A., formerly owned by JBS S.A. America, the largest company in Paraguay, the and JBS Handels Gmbh. Additionally, acquir- biggest exporter in Colombia and the most ing nine new meatpacking units in Mercosul Mission 102-16 diversified company in the South American (five in Argentina, three in Paraguay and one To be a global provider of quality food, with so- meatpacking industry. It was with these accom- in Uruguay), along with one processed foods cial, economic and environmental responsibility. plishments that Minerva S.A. (Minerva Foods) unit and a distribution center in Argentina. The Minerva adopts a high level of operational effi- finalized the year 2017, as it celebrated its 25th Company’s slaughter capacity rose by 52% as it ciency, promoting teamwork and the value of its anniversary. 102-1 | 102-7 continued its expansion. 102-10 | 102-4 | 102-7 employees, in addition to fostering respect and With over 9,700 items available, the Company A public company listed in the Novo Mercado trust within the fields of business it operates in. works to produce and sell in natura meat and segment of B3 S.A. – Brasil, Bolsa, Balcão (B3 – its various meat products in addition to its pro- formerly BM&FBOVESPA), based in the city of cessed foods segment, operating in 26 industrial Barretos (SP), it exports to over 100 countries in Vision 102-16 units spread across seven states in Brazil as well Africa, Asia, the Americas, the Commonwealth Within the domestic markets in which it op- To be the most efficient company in the market, as in Paraguay, Argentina, Uruguay and Colom- of Independent States (CIS), the Middle East, erates, the Company serves around 57,000 always seeking to maximize returns on invested bia. There are three meat processing plants locat- along the North American Free Trade Agreement customers, to which it sells and distributes its capital across its business segments through ap- ed in Brazil and Argentina, and 24 abattoir and (NAFTA) and the European Union, through 13 own and third-party products, focusing on propriate risk management policies. deboning units in operation. 102-2 | 102-4 | 102-7 commercial offices located in Chile, the USA, small and medium retailers. Its distribution The number of structures expanded in 2017, Algeria, Lebanon, Russia, China, Egypt, Great network extends throughout Brazil (Ceará, with the completion, through its subsidiaries Britain, Italy, Australia, New Zealand, Singapore, Federal District, Espírito Santo, Goiás, Minas Values 102-16 in Paraguay, the acquisition of 100% control and Hong Kong. In 2017, Minerva Europe Ltd. Gerais, Pernambuco and São Paulo) and into • Integrity of JBS Paraguay S.A. from Indústria Paraguaya was created as an English subsidiary, providing Argentina, Chile, Colombia and Paraguay. • Commitment Frigorífica S.A., Frigorífico Canelones S.A., and consulting and advising services in the area of Since 2016, the Company has been operating • Responsibility foreign trade. 102-3 | 102-5 | 102-6 in the energy trading market through Minerva • Initiative Energia, a utility company dedicated to man- • Cooperation aging the exposure of its installations on the • Simplicity Brazilian electrical market and to commer- • Determination cialize its energy input to third parties. 102-4

16 17 Areas of operation 102-7 Minerva Casings – Produces and sells natural Minerva Beef Shop – The company’s flagship casings to be used in the production of sausages store offering its consumers the best in quality Business and products 102-2 in the world’s most demanding markets. of Minerva Foods products for that day-to-day The operations of Minerva Foods are primarily Meat and Oth- menu or special occasions. Minerva Biodiesel – With 100% national tech- ers. The Meat division is responsible for the production of fro- nology, developed in partnership with Brazilian Minerva Foods Asia – One of the top Aus- zen and refrigerated beef, deriving from the slaughter of cattle universities, it holds a social seal for biofuel, pro- tralian exporters of meat and its byproducts. Its acquired from livestock ranchers in the countries where its ducing a renewable energy that derives from bo- goal is to deliver quality food to the world in a units operate. Within this segment, it also provides slaughter vine tallow. reliable and safe manner. byproducts. These byproducts are sold domestically within the countries in which they are produced as well as international Minerva Energia – created to manage the ex- Companhia Sul Americana de Pecuária markets into which they export, in addition to the resell and posure of Minerva’s facilities in the Brazilian (CSAP) – Dedicated to the production and sell- electricity market, including monitoring their ing of cattle in diverse systems and categories, distribution of third-party products for the retail and food power consumption, balancing out their long/ developing partnerships with customers and processing industries. short positions and managing their power pur- suppliers under the strictest regulatory criteria. Within the division of Others, the main features are the seg- chase agreements in the regulated and dereg- ments of third-party product distribution, process foods and Intermeat – Trading based in Brazil, with of- ulated power markets. It offers its commercial fices in Paraguay and Uruguay. It sells, imports, live cattle exportation. The third-party product resales segment partners creative, structured and customized and exports frozen meat, refrigerated and/or in- which encompasses the one-stop-shop concept, accounts for the products for reducing energy consumption. results obtained in the resale trading market of other proteins. dustrialized livestock protein products, such as The Company adopted a verticalization strategy for its brand beef, poultry, pork, mutton, and others, to coun- through a production and distribution chain that operates with tries on every continent. the highest efficiency and sustainability to provide the following business and products:

Minerva Beef – Working with commodities and value-added products in Brazil, Paraguay, Uruguay, Colombia, and Argentina.

Minerva Fine Foods – A Brazilian brand operating in the processed meats segment, incorporating different meat processes of preparation, cooking, freezing and packaging, resulting in an extensive line of products.

Minerva Live Cattle Exports – One of the world’s largest live cattle producers, with operating centers strategically located in Brazil, Chile, Colombia and Uruguay. The company offers a wide variety of breeds, animal health status and opportunities for price arbitration.

Minerva Leather – A brand recognized and respected world- wide in the leather industry for its superior quality and capacity, making it today one of the largest suppliers of leather in Latin America.

18 19 1992 Timeline 2004 The inauguration of the new industrial unit in the city of Palmeiras de Goiás, GO.

The Vilela de Queiroz family acquires Frigorífico Minerva do Brasil S.A., its first abattoir and deboning unit, located in Bar- retos, SP where it continues to serve as the company’s current headquarters.

1999 2008

It leased and subsequently acqui- In August, it acquired its first red an industrial unit in the city of unit abroad, in the city of Asun- José Bonifácio, São Paulo. ción, Paraguay.

2009 2003

Live cattle export operations begin in the state of Pará.

Notable for the opening of Minerva Dawn Farms.

20 21 2011 2015

The inauguration of Minerva Leather in Barretos, SP in addition the Company also acquired its first unit in Uruguay, Frigorífico Pul. Frigorífico Red Cárnica S.A., located in Montería, Colombia, is acquired and a contract is executed to lease an abattoir unit in Asun- ción, Paraguay.

2016

Two new Distribution Centers are opened in Latin America. Two trading companies are acquired: IMTP, in Australia (which assumed the name Minerva Foods Asia following acquisition) and INTERMEAT, in Ba- rueri, SP. Both operate as livestock protein importers/ exporters. Minerva Energia is created as a company operating in the energy trading industry.

2017 2012

Minerva Foods celebrates 25 years since its founding. This same year, it acquires nine meatpacking plants in South America: three in Paraguay, one in Uruguay and five in Argentina, where the Company also ob- The year in which Minerva S/A tained two meat processing units and one adopts the Minerva Foods brand Distribution Center, a major step in the and acquires another meatpacking Company’s history of acquisitions. Miner- unit in Paraguay, called Frigomerc. va Foods Europe opens in Great Britain, aimed at providing consulting and advising services in the foreign trade area, and a new international office opens in Singapore. Also during this year, Minerva Foods celebrates 10 years as a company trading on the São Paulo Stock Exchange (B3 – Brasil, Bol- sa, Balcão) and is named 2016 Agribusiness Company of the Year in the annual “Biggest & Best” by Exame magazine.

22 23 growth, all the while Uruguayan shipments to standing the characteristics and the potential of Strategic Japan are on the cusp of being approved. Co- its operations; identifying aspects considered to lombia possesses excellent genetic breed mate- be high priority under the auspices of acquisi- rial and offers the possibility for efficient land tions; and making use of benchmarks, with an use in livestock production. interchanging of best practices for effective in- 103-3 MANAGEMENT This is a unique time for South America, and tegration, allowing all units to incorporate not Minerva has been ready for it. In 2017, thanks just the fundamental aspects, such as internal to the continuous development of its strategy models and the pillars of risk management, lo- throughout the years, it was poised to seize the gistics and distribution, but to also learn from opportunity to acquire the JBS units in Mer- the experiences of other countries. cosul, thus entering into Argentina. This op- Integration will consolidate Minerva’s flexibility eration was done with consistency, focus, and to operate in different geographic locations, in Meat has become an increasingly global com- capturing the value in the countries in which it discipline. By the end of the year, it entered its order to avoid market restrictions imposed in modity, with food safety and tax hurdles de- operates, according to the economic conjunc- second stage of gaining value. The challenge for other regions. Arbitration allows for the genera- scending out of every country, in addition to ture aforementioned. 2018 is to finalize the operational integration tion of value that involves the seasonality of the industry leading supplier ever more present in The Company’s strategic pillars have been ef- phase in all units following the business culture, variations and conditions within each market. international markets. Among all exporting re- fective on three fronts: low-cost operation, with created by the Company, all the while respect- This competitive advantage also favors earing gions, South America is unbeatable in compe- operational management dedicated towards ing and adapting to the peculiarities of each value through synergies that will enable the tition and is currently the largest player in the this objective, in an effort to handle any mar- country. The work of integration is being com- Company to achieve its major objective for the international trade. Markets are opening up to ket volatility; increasing the capacity of distri- pleted using the following three aspects: under- coming year: deleveraging and cash flow. South American suppliers, all the while main- bution flow in order to not only transport its tain a thriving domestic market in their own own products, but third-party products as well, countries. Mercosul is the primary supplier to which has reinforced the Company’s commer- the Far East, with Southeast Asia accounting cial characteristic; and risk management. These for 40% of exports, notably there has been an areas work in harmony, adjusting to each other, increasing preponderance among buyers from with risk management playing a fundamental the Middle East. It is within this context of role in the alignment of operations by consid- high competitiveness in South America and a ering issues such as the creation of margins and This is a unique time world with an ever growing demand for more financial indicators such as working capital and meat, that the strategy used by Minerva Foods profitability when making decisions. based on three pillars: increase in distribution, This business model was developed behind a for South America, allowed for the Company to serve all of its do- backdrop in which Brazil has been experienc- mestic markets in which it operates; expand ing significant market consolidation, in addi- and Minerva has been its penetration into exports based upon a large tion to Paraguay demonstrating a major poten- network of international offices and represen- tial market growth and competitive production ready for it tatives, that of which currently covers a large costs. Argentina is going through a period of part of high-demand markets; and geographic inserting itself into the international market, diversification in South America, resulting in in addition to showing a promising domestic

24 25 Corporate GOVERNANCE

The Company is a signatory to various Minerva Foods is aligned with the Code of CVM Instruction No. 358, which defines the agreements aimed at Best Practices of Corporate Governance, pub- most rigorous standards of disclosure and use valuing human rights lished by the Brazilian Institute of Corporate of information on material act or facts related and sustainability Governance (IBGC) and its actions are gov- to publicly-held companies. 103-3 erned according to the rules of Brazil’s Secu- Moreover, Minerva has internal controls corre- Commitment 102-12 | 103-3 rities and Exchange Commission (Comissão sponding to fighting corruption, loss prevention The phone channel has analysts available for The Company is a signatory to various agreements, de Valores Mobiliários – CVM), with the Cor- and fraud, maintaining fair competition among personal assistance, available from 6 a.m. to 8 in addition to complying with guidelines set up by porations Act (Law No. 6.404/76) and by the others, constantly monitoring practices adopted p.m., Monday through Saturday, that conduct different organizations and fulfilling its commit- Company’s own Articles of Incorporation. upon the Company’s behalf, promoting review the information gathering process, which serves ments undertaken with government agencies. These guidelines are part of a matrix manage- of the environment, verifying conflicts of interest as the basis for the next stage of fact-finding, • National Pact for the Eradication of Slave Labor, ment model that makes internal processes dy- and carrying out training aimed at guaranteeing thus insuring the gathering of facts, necessary involving the production chains of national and namic and provides more agility and efficiency compliance with all applicable international and data and details in regard to the reporting indi- international companies. in responding to market demands. national laws and regulatory standards. 102-25 | 103-3 vidual’s motive and level of commitment. • The Working Group on Sustainable Livestock The Company is listed in the B3 Novo Merca- To support its approach to management, the In 2017, the Company received 125 grievances/ GTPS), internationally known as Brazilian do index and follows rules such as: issuing only Company maintains Minerva Connection – complaints referred to the Internal Ombudsman Roundtable on Sustainable Livestock (BRSL), ordinary shares; granting all shareholders tag- Minerva Foods Ombudsman, a communica- and 19 cases that were referred to the External an organization dedicated to promoting sus- along rights in the event of the alienation of tion channel that receives complaints from em- Ombudsman, all of which were resolved during tainable livestock development through chain shareholding control; maintaining the strictest ployees and civil society, through a transparent the year. There were also 64 reports during the articulation, continuous improvement and the policies for disclosing negotiations involving process, free of retaliation. Through this chan- year relating to the impacts on human rights, spe- dissemination of information. securities issued by the Company and other as- nel, direct and indirect employees, essential cifically in reference to workplace harassment, • International Finance Corporation (IFC) Per- pects. It is committed to the IBGC’s principles service providers and the community are able physical aggression and discrimination – all which formance Standards, the goal of which is to proof transparency, equality, accountability and to freely and securely discuss any illegal prac- were resolved during the period. 103-2 | 103-3 vide guidelines regarding identifying, mitigat- corporate responsibility. It also complies with tices and inappropriate conduct, among other ing and managing of risks and impacts, in order things, in addition to actions that are not com- to promote sustainable business. pliant with the Codes for Ethical Conduct and current laws. 205-2 | 103-3

26 27 • Conduct Modification Agreement for Sus- tainable Livestock Farming, sponsored by the Pará State Federal Public Prosecutor’s Office. • Public Livestock Commitment, through which criterias are followed for cattle operations and industrial products in the Amazon Biome, such as zero deforestation, opposition to invasion of indigenous lands and other protected areas and opposition to slave labor, Ethical culture 102-17 among others. 103-2 | 103-3 Minerva Foods believes that the sustain- • Resolution No. 1,854, which establishes social ability of its business depends on an ethical and environmental guidelines and criteria for corporate culture aligned with the highest the Brazilian Development Bank (BNDES) to standards, permanently disseminated and support the cattle farming sector. assimilated by employees in every internal In addition, Minerva Foods is a member of and area and at every level. a participant in various organizations, includ- In order to achieve this level of excellence, ing the Brazilian Association of Publicly Traded we maintain two instruments: the Code of Companies (Associação Brasileira das Compan- Ethical Conduct and the Employee Manual. Governance hias Abertas – Abrasca); Brazilian Association The former covers the basic internal prin- structure 102-18 of Animal Recycling (Associação Brasileira de ciples for relationships with stakeholders, At the center of the corporate governance struc- The obligations and competencies of the Execu- Reciclagem Animal – ABRA); São Paulo State management and respect for all aspects of ture at Minerva Foods is the Board of Directors, tive Boards are to coordinate, administrate, man- Cold Goods Trade Association (Sindicato da In- sustainability. It provides guidance on re- which is aligned with the Risk Committee (a age and supervise their executive and administra- dústria do Frio no Estado de São Paulo – Sin- porting instances of noncompliant conduct non-statutory body, responsible for limiting tive duties, within their respective areas, aimed difrio); and the Brazilian Association of Zebu within the Company. the Company’s exposure to credit risks from at guaranteeing that there are internal control The Employee Manual provides workers Breeders (Associação Brasileira dos Criadores de customers and the market, through credit anal- mechanisms geared towards ensuring operational Zebu – ABCZ). The company also holds a seat with information on Minerva’s history, la- efficiency, appropriate management of Company yses and management of customer portfolios) on the Governance Board of the Brazilian Beef bor relations, job duties, quality control, activities and business and appropriate reporting and the Audit Committee. The two Executive Exporters Association (ABIEC). 102-13 property security, rules for access, use of of information that directly impacts and is related Boards reporting directly to the CEO (Statutory technology and general guidelines. to the Company’s financial statements. and Non-Statutory Boards) are accountable to These documents are given to everyone Altogether, there are 31 members at every lev- the Board of Directors. upon hire, at which time a presentation is el of corporate governance, most of which are shown on the company and an assessment men. In relation to age group, 54.84% are be- See the GRI Appendix for a breakdown of the diversity is done of the new employee’s understand- figures for members of the corporate governance bodies tween 30 and 50 years of age, with the remain- ing in relation to the many topics covered. and the proportion of upper management members hired from local communities. ing being over the age of 50.

28 29 Board of Directors 102-18 | 102-26 Investors The Board of Directors is the body represent- Minerva Foods works with a series of instru- Risk ing the shareholders which hold responsibilities ments aimed at maintaining a transparent and that include: (a) determining the policies and equitable relationship with its shareholders and guidelines that serve as the basis for the gener- investors. It has a Material Fact Disclosure Pol- al direction of the Company’s business; and (b) icy, which follows the principles of legal com- MANAGEMENT 102-11 | 102-15 supervising management of the Executive Board pliance, CVM rules and those issued by other and deciding on its powers, appointments and national and foreign regulatory bodies to which removals. There are currently ten members serv- it is subject, along with the Trading Policy of Se- ing on the Board of Directors, with 20% of them curities Issued, the basic principle of which is considered as independent members. This body to guarantee the highest standards in dealings meets ordinarily once every quarter and extraor- with investors. In addition, it maintains the dinarily whenever called upon by the Chairman Dividends Policy, which establishes distribution or by any of its Vice Chairs. As a rule, board of 25% of net earnings and whose annual state- members are elected by the Company’s share- ment of dividends requires that a Shareholders’ holders at the Annual General Meeting to a two- Meeting be held with a majority of nominal The year 2017 was the year in which it was ev- well as the acquisition of units in the Mercos- year re-electable term. shareholder votes. At these meetings, factors ident on how vital risk management is to Min- ul. The operations carried out were based on such as operating results, financial condition, erva’s strategy and how effective it has proven to agility and confidence due to analyses done on Fiscal Council cash needs and the Company’s outlooks are be in making operational decisions, in light of market trends. The Fiscal Council is a non-permanent cor- considered, among other items deemed relevant new business opportunities. Instead of adopt- In the last five months of 2017, the Company porate body, acting independently of manage- by the Board of Directors and shareholders. ing a formal risk management policy, the Com- reached a 22% participation in South Ameri- ment and the independent auditors hired by All of these policies are available online by pany adopted a transversal approach, through a can exports, becoming the largest beef exporter the Company. It is responsible for analyzing accessing the Minerva website, where other series of internal mechanisms and procedures, on the continent. Acquisitions of the Mercos- balance sheets at least every quarter, along with informational resources for communication with duties and tasks based on hierarchical ul units resulted in Geographic diversification other financial statements created from time to with investors can be found along with: events competencies, aimed at monitoring, mitigating making it possible to arbitrate production time by the Company, reporting its conclusions held, reporting of quarterly financial state- and controlling the main risk factors to which methods and strengthen resilience in relation to shareholders and also examining and issuing ments, coverage by financial market analysis, they are exposed. to the seasonalities and volatility of the market. opinions on financial statements for the fiscal exposure of the main financial and operating This form of management allows for foresight This strategy is associated with the growth in year and on management’s annual report. 102-18 indicators, quotes, graphs, downloads of docu- of market facts and to anticipate its movements. exports which represents a natural hedge in ments, press releases and presentations. Infor- One example of this was in the middle of 2017, relation to sharp oscillations in the currency Risk Committee mation is sent by e-mail and direct channels when hardships faced by our largest competi- rates. Minerva Foods total gross revenue for The Risk Committee is a statutory structure at of communication are maintained with the In- tor in the industry opened a gap for us to reac- the year was R$12,981.4 billion, an increase of the Company. This body is tasked with assisting vestor Relations team. tivate the Mirassol D’Oeste (MT) unit resulting 26.5% when compared to 2016. the CEO and the Board of Directors in imple- in an increase of our capacity utilization of our menting the Company’s hedge (risk) and finan- installed equipment to approximately 75%, as cial policy, as well as for assessing the economic situation in Brazil and the world and its potential impacts on financial position of Minerva Foods.

30 31 “Today, we are reaping the

These results show the capacity of predictability and the correct orien- fruit of the tation of business. The location of industrial units in every major cattle-producing region in Brazil, Paraguay, Uruguay, Colombia and Ar- entire trajectory gentina lowers exposure to various risks, such as health outbreaks and we have climate change, which could negatively impact business. That is because the main raw material, cattle, depends on resources such as water, elec- implemented trical power (which in the case of Brazil is dependent on rainfall) and animal feed (connected to agriculture). In addition, laws and regulations over the last are being created as a result of climate changes, compliance with such could also have an impact on business. Among the risks associated with 25 years.” climate change and the environment are the physical changes to the environment generated by fires and droughts which could raise the cost of the cattle farming process by diminishing supply and increasing the cost Adriana for animal supplements. Pedrosa In this sense, the Company seeks to mitigate risks related to climate changes by monitoring the consumption of resources in its direct op- Corporate Financial erations (industrial, logistics and transport) and by establishing internal Operations Manager actions, such as the creation of a record on the amount of Greenhouse Gas (GHG) emissions. A GHG inventory covering the years 2015 and were created in previous years to reduce or the political and economic adversities of 2017 2016 was published in 2017. mitigate environmental impacts and significant in Brazil, notable for instability in the sector, In an ongoing effort to reduce environmental impact and create oppor- risks were implemented, considerably lessening the risk management policy remained focused tunities, the Company develops studies on energy efficiency, optimiza- environmental impacts and occupational health on the core business of beef and on enhancing tion of water resources and improvements to cooling systems, always and safety risks at each of the units. the areas of distribution and sales. Structurally, focusing on environmental improvements, optimization of the use of In relation to market risks, particularly varia- the Company has a Risk Committee, which is resources, business opportunities and cost reduction. 201-2 tions in the exchange rate, interest rates, credit responsible for assisting the Executive Board Upon reviewing the results of a survey completed in 2015 on the aspects rates and cattle prices, the Company maintains and Board of Directors in implementing ac- and impacts of inherent activities, the Company dedicated 2017 to en- high standards of governance and transparen- tions to mitigate risk factors. These factors are vironmental monitoring in order to meet applicable legal requirements, cy and, through an assertive and appropriate constantly analyzed, with non-stop monitor- with the implementation of technologies and structural adaptations strategy, factors that could affect operations are ing of changes to the macroeconomic and in- done on an as-needed basis at some units, making treatment of effluents managed, administrating possible impacts and dustry scenarios capable of influencing activ- and solid waste more efficient.304-2 risks. To do this, a culture of making decisions ities. In addition to these resources, Minerva Large investments were also made in regard to occupational health based on consistent information was developed, made history by creating the Beef Desk, a risk and safety, aimed at preventing occupational accidents and dis- adopting internal tools and policies for daily management tool. eases. Legal requirements are controlled and monitored through a monitoring of data that underlie strategy – as computerized system: the Using and an Online Integrated Manage- well as the correction of any problems. Amidst ment System (or SOGI, its acronym in Portuguese), action plans See the GRI Appendix for measures adopted in relation to risks, according to the two management models applied: the Value at Risk (VaR) statistical calculation system and a system of calculating impacts, with application of stress scenarios. 32 33 Beef Desk Coordinated by the Market Intelligence area, mitigate the risk of price volatility while also used in the other countries where Minerva other costs, as well as surveying market variables the Beef Desk joins managers on a daily basis maximizing margins. operates (Paraguay, Uruguay, Colombia and to better position its products and brands, such as from various levels – Sales, Planning and Pro- The Beef Desk functions as a commodi- Argentina), as well as in its other business levels of consumption, seasonality and competi- duction, Cattle Procurement, Treasury, Trad- ty trading desk, aimed at providing agility units (Distribution and Minerva Fine Foods). tion with other products. This resource means the ing and Market Risk as well as the COO and and assertiveness when making decisions. Company is able to work with commodities with CEO – to exchange information and strategic The Company also holds weekly meetings – Pricing agility, while also finding the best positioning for decisions, based on interpretation of current Choice Meeting and Pricing – to establish the In 2017, Minerva consolidated its Pricing proj- its brands in the market. market forces and the potential impact on allocation of more profitable beef cuts in the ect, an area managing prices across Brazil, and price curves for inputs and finished products, market, based on the assessment of aspects implemented similar processes in Argentina and outlining the short-term operating strate- such as labor costs, shipping, taxes and more, Paraguay. This model covers all aspects involving gy. Various resources are used in an effort to for the period analyzed. The Beef Desk is also product pricing, such as taxation, logistics and

34 35 ...IN

USINESS

36 Industry OVERVIEW

The year 2017 was notable for the intense volatility in beef demand in Brazil. The first half was characterized by a drop-in consumption, due to factors such as an investigation by the Federal Police, which found irregularities at meatpacking plants (an occurrence which did not involve Minerva), an environment of political instability and weak economic performance. However, signs of recovery in the national economy during the second half caused an upswing in the market, with the sector end- Domestic market ing the year with a slaughter volume of 26.4 The troubled scenario in the industry during million head of cattle, up by 9% when com- the first semester and the higher availability pared to the previous year. of animals ready for slaughter during the year, There was a recovery in exports during the especially at the start of the second semester, period, especially in the second semester. To- dropped the average price per arroba (15 kg) to tal volume shipped reached 1.2 million tons, R$138.80 in 2017, falling 9% compared to the Foreign market which is 12% higher than in 2016 and resulted previous year, according to Boi Gordo Esalq/B3 In exports, the average price of beef registered 3.7% in revenue of US$5.1 billion, 17% more than the – São Paulo State. However, in the last quarter, higher in US currency compared to the average previous year. This result is the outcome of the indicators have pointed towards a recovery, with price in 2016, reaching US$4.20/kg. Recovery oc- continued growing demand in Asian countries, the average price of an arroba at R$142.30, or 5% curred in line with the performance of Brazilian ex- especially in China and Hong Kong, as well as less than in the fourth quarter of 2016. ports and the targeting of markets, in both Asia and in the Middle East and Northern Africa, par- Domestic market consumption trends for 2018 the Middle East. China and Hong Kong were the ticularly in Egypt, Iran and Israel; instability in remain positive. In addition, a drop is expect- two biggest destinations, accounting for approx- beef export volumes from Australia; and paltry ed in unemployment, lowering household debt imately 40% of Brazilian exports during the year, export growth in the USA, up by 1% in relation which could favor the beef market. followed by Egypt, Russia and Iran. to the volume exported in 2016.

38 39 “What is evident is that from the start Minerva knew what it wanted Paraguay – In 2017, in line with growth of the Gross Domestic Product (GDP) of Paraguay, to be and what it estimated at 4.3% by the Paraguayan Central Bank, the beef market ended the year with capital and other large cities, at the same time wanted to do.” positive results. Domestic consumption rose demand for more expensive cuts has risen at to 25.5kg per inhabitant, 3.6% higher than in supermarkets, restaurants and butcher shops. 2016, according to data from the Organization Uruguay – Uruguayan meatpackers slaughtered Luis for Economic Co-operation and Development 2.3 million head of cattle in 2017, a volume 3% (OECD-FAO). With 2.1 million head of cattle higher than in 2016. The average cattle price for Ricardo slaughtered during the year, the country had a the year reached US$165.70/100 kg, practically Luz volume of 6% higher than in 2016. This result unchanged when compared to the previous year. was driven mostly by exports. The average price The export volume in Uruguay reached 313,200 COO Beef was up by 9%, reaching US$165.80/100 kg. tons and was up by 4% compared to the previ- Brazil-Colombia Exports saw growth starting in the second ous year. Export revenue totaled US$1.6 billion semester, ending the year at 286,000 tons, in 2017, with over 50% of shipments going to 3% more than in 2016, and with revenues of China and the USA. US$1.2 billion, rising 11% than the previous Argentina – In 2017, the country experienced a year. Chile led in purchases, with 37% of total panorama of improvement in key livestock indi- volume shipped, followed by Russia and Brazil, cators. There were 2.8 million tons of beef pro- accounting for 21% and 9% of total exports, reduced, approximately 8% more than in 2016, with spectively. Paraguay also had a year marked by 90% going to domestic consumption. Slaughter access to new markets, health certification of its volume increased by 8% in relation to the previ- entire herd by Chile and approval by the United ous year, totaling 12.8 million head, which is ev- States Department of Agriculture (USDA) for idence of the country’s recovering industry. The beef imports from the country. average cattle price was practically unchanged, The USDA estimates that around 241,000 tons at US$192.40/100 kg. The growth in volume of could be consumed domestically in 2018, ex- Argentine exports grew by 44% from 2016 to Outlooks related to beef exports for the indus- slaughtered meat, in contrast to the stability of ceeding the amount consumed in 2017 by near- 2017, reaching 226,100 tons, providing revenue try in Argentina remain positive for the coming the average price of the raw material, indicates the ly 9,000 tons. According to the organization, in of US$1.4 billion, 36% over the previous year, years. In addition to a favorable economic en- beginning of greater availability of animals ready recent years there has been a notable increase with most exports going to Asia and Europe. vironment, with a managed floating exchange for slaughter, as a result of the process of recom- in the supply of the brand’s meat, a wide ac- Only China, the top destination, saw growth in rate, the current government has played a fun- position of the Argentine livestock in recent years. ceptance of packaged cuts and easy sales in the volume, accounting for 76% of exports in 2017. damental role in proactively opening markets, with high hopes in relation to the USA and Chi- na. The meat industry is among the main topics on the government agenda.

40 41 Operational PERFORMANCE

In 2017, Minerva Foods promoted the largest ex- commercial and logistic in Paraguay, Uruguay, considering the results of pro forma from January business units. The advancement of this stage pansion of its operations in 25 years, becoming and Argentina had already been completed. Par- to June, accounting for 14% of total exports; and should result in greater synergy gains, which will the largest in natura exporter in South America, aguay and Uruguay are already fully operating in Colombia responsible for 74% of the country’s increase the Company’s competitive advantages accounting for 22% of shipments of the region. under the new standard, and in Argentina, the exports. The success of integration is due to the precisely during a period of limited global sup- Acquisition of nine meatpacking units in Para- plan is to finalize integration in April 2018. At implementation of the so-called Minerva Model, ply of meat and demand continues to rise. guay, Uruguay and Argentina, where a processed the same time, implementation of the risk man- which employs operational efficiency programs, foods unit and a distribution center were also agement instruments (Beef Desk, Choice Meet- commercialization and process standardization, purchased, reactivation of the Mirassol D’Oeste ing and Pricing) has already been concluded at based on the risk management pillars that Man- (MT) unit and better domestic and foreign sales the new units in Paraguay, Uruguay and Argen- agement has worked with over recent years at resulted, in a slaughter volume of over 2 million tina. During the period, Minerva has remained head of cattle by the end of 2017, growing by focused on lowering the need for working capi- 30.2% above the previous year. The Company’s tal and consequently improving the cash conver- capacity utilization of installed equipment rose sion cycle of the new business units. Market share – 2017 to 74.5%, that is, 6.1 percentage points (p.p.) over Even with integration moving forward, the new 74% the rate reported the previous year. units had a higher participation in the results and, as a consequence, other commercial oppor- See the GRI Appendix for the number and percentage of animals raised and/or processed, by species and tunities arose, serviced by the distribution chan- raising method. nels, tradings and international offices. In 2017, At the same time that it was promoting its op- the Company remained among the top three ex- erational expansion, the Company made prog- porters in the countries where it maintains oper- ress on one of its main goals: conclusion of the ations. In Brazil, its market share reached 19%; 29% integration process for new units located in Mer- in Paraguay, it reached 29%, 9 p.p. higher com- 19% cosul. 42 Under this task, most of the stages to pared to the previous year; in Uruguay, a par- 15% integrate operational systems and procedures, ticipation of 15%, in line with 2016; Argentina, 14%

0 Argentina Brazil Colombia Paraguay Uruguay

42 43 Challenges and opportunities Technology Operation Weak Meat and the accusation In the area of technology and innovation at Min- made by executives at one of the country’s erva Foods, the keyword in 2017 was standardiza- largest meatpackers imposed a series of chal- tion. While the Company worked to integrate and lenges to the sector and created opportunities expand its operations, actions were intensified to that Minerva was observing and prepared for. standardize processes, systems and methodologies, Due to the information being released at the both in Brazil and in other Mercosul countries. time by the press, which generalized problems In this context, the Project to Standardize Material being found, it was necessary for the Company Descriptions (or PDM, its acronym in Portuguese) to take steps was to first, ensure its Brazilian is highlighted within the area of Supplies. Minerva and foreign investors that it was not part of the adopted modern and well know methodologies, investigations. Second, to reveal the opportu- aligned with the concept of strategic sourcing, nities that had arisen. Case in point: exports through which specifications, the supplier market to Egypt by one of the companies being inves- and other aspects involving sourcing of products Minerva differentials tigated were suspended because of the inves- and services are mapped and assessed in an effort Minerva works with specialized profession- tigations involving Brazilian companies, Min- to obtain a detailed analysis of the total cost of ac- als in the area of technology and innovation, erva decided to transfer part of what it was quisition. Registration of materials was also stan- who possess in-depth business knowledge producing in Brazil over to Paraguay, therefore dardized, aimed at reducing unnecessary costs as well as technical mastery of modern pro- continuing shipments into Egypt. This mea- resulting from the same items being listed with dif- gramming languages, and who work with a sure resulted in a higher profit margin for op- ferent descriptions. This work involved over 18,000 Another notable highlight in the area of Infor- high degree of commitment. erations realized at the Company’s Paraguayan items in Brazil alone, where the process has been mation Technology was the complete restructur- The Company has adopted a detailed proj- industrial park. concluded. These changes are continuing through- ing of the cost center planning accounting within ect management model, with professional Afterwards, accusations by executives at Bra- out the 2018 year, in the other countries in which the Integrated Enterprise Management System oversight by the Project Management Office zil’s largest meat buyer caused uncertainty in Minerva has operations. (SAP), vital for the acquisition of the new Mer- (PMO) that organizes activities and seeks to the market resulting in a 15% short-term drop cosul units, since the Company had only been mitigate risks. As part of its strategy to stan- in raw material prices. Within this context, prepared to work with systems in Brazil. Prior dardize the technological platforms, in con- Minerva expanded its capacity utilization and to acquiring these units, the system was imple- junction with implementation companies that accessed new customers in Brazil and abroad, mented at Minerva Leather, in Colombia and in are familiar with the internal processes and with an opportunity arising to purchase the Uruguay, consolidating the standardization plat- local partners in each country, capable of con- competitor’s assets in Mercosul. form at a global level. tributing concrete knowledge of local laws and For 2018, the goal is to stabilize these systems and particularities. Information Technology plays methods in order to make progress on technological the role of assuring that processes are secure, innovations and gain more efficiency in processes. agile and standardized across all units.

44 45 Economic and

FINANCIAL Main indicators (R$ millions) Variation Variation Variation 4Q17 4Q16 3Q17 2017 2016 (%) (%) (%) Slaughter (thousands) 869.3 479.8 81.2 804.2 8.1 2,775.8 2,132.2 30.2 RESULTS Sales volume (1,000 t) 238.8 129.4 84.5 215.5 10.8 731.6 548.1 33.5 Gross revenue 4,251.6 2,729.3 55.8 3,659.5 16.2 12,981.4 10,263.0 26.5

Domestic market 1,848.8 1,182.0 56.4 1,531.8 20.7 5,379.9 3,806.8 41.3

Foreign market 2,402.8 1,547.3 55.3 2,127.8 12.9 7,601.5 6,456.2 17.7

In 2017, Minerva Foods ended the year with a Domestic market sales increased by 41.3% in Net revenue* 3,964.7 2,556.4 55.1 3,417.8 16.0 14,033.5 9,648.7 45.4 gross revenue of approximately R$13.0 billion, annual comparison, reaching R$5.4 billion, Adjusted Ebitda* 363.4 249.9 45.4 311.8 16.6 1,265.8 989.3 28.0 26.5% higher than in 2016, making it a new while on the foreign market, sales were up by Adjusted Ebitda margin* 9.2% 9.8% -0.6 p.p. 9.1 0.0 p.p. 9.0% 10.3% -1.2 p.p. all-time record. The Meat division had a gross around 18%, totaling R$7.6 billion. Net debt/LTM revenue of R$10.0 billion, 18.6% more than the The Others division also saw a record gross rev- Adjusted Ebitda* 4.6 3.4 1.1 4.2 0.4 4.6 3.4 1.1 year prior. This performance is a reflection of enue of R$3 billion, surpassing its 2016 mark by Net profit (losses) (313.5) 12.3 N/D 85.8 N/D (280.9) 195.0 N/D

the consolidation, which began on August 1, of around 62%. Performance in this division is the * 2017 includes pro forma net revenue and Ebitda figures for the plants in the Mercosul assets acquired on August 1, 2017. the new units located in Argentina, Uruguay result of a combination of the resulting increase and Paraguay, along with strong international in distribution of third-party products (go to demand as well as the state of recovery of meat market strategy), performance tradings and an consumption in Brazil, prompting the reopen- increase in industrialized products in the oper- ing of the Mirassol D’Oeste (MT) plant. ations of Argentina, commencing in the second semester. Below are the Company’s main results: R$13.0 billion in gross revenue in 2017, 26.5% more than the previous year

46 47 Exports 102-7

Food sales and distribution Europa – Europe held a 13% share in exports, 2 p.p. Commonwealth of Independent States (CIS) – The share held less than in 2016. Nevertheless, the region made a by the Commonwealth of Independent States, represented mostly significant contribution to the increased profitabili- by Russia, accounted for 7% of exports, 3 p.p. more than in 2016. ty of exports as a destination for prime cuts. This result is proof of recovery in Russia, whose share of Company exports rose by 145% from 2016 to 2017.

European Union CEI NAFTA 7% 5% 13% Asia Middle 24% East North American Free Trade Agreement (NAFTA) – This Asia – In 2017, Asia’s share region received 5% of exports 23% in Company exports fell by in 2017, a result that is stable 2 p.p., when compared to the compared to the previous year. Americas previous year, accounting for Revenue from exports to the 24% of total exports. Although USA, the largest importer, was Middle East – This region China, the chief destination 64% higher for the period. 18% Africa accounted for 23% of the total export revenue, 2% for exports in the region, has more than in 2016. seen its share fall to 20%, a 9% significant portion of exports went to Hong Kong.

Americas – The Americas Africa – Africa’s share in Min- region accounted for 18% of erva’s exports fell by 5 p.p. In exports during the year, 3 p.p. relation to the previous year, more than in 2016. Chile con- accounting for 9% of the Com- tinues to be the largest con- pany’s total foreign sales. Cuts sumer in the region, with an consumed in this region (espe- increase of 62% (in revenue) cially front quarter cuts) were in relation to the previous year. redistributed to some of the countries in Asia, such as Hong Kong, and to countries in the Middle East. 48 49 Investments In 2017, investments in capital goods totaled approximately R$1.4 billion. Of this total, nearly R$190 million were invested in maintenance, with R$78.7 million going towards expansion and R$1.1 billion paid towards the acquisition of Mercosul units. R$1.4 1,382.2 billion in Evolution of investments investments (cash effect), by capital goods quarter, over the 1,113.6 last 12 months (in R$ millions)

189.9

78.7

Expansion Maintenance Acquisition Total

50 51 Value-Added Outlooks

STATEMENT201-1 (In thousands of Brazilian reals) Expectations for 2018 are positive in relation to Minerva Foods is heading towards becoming an social and economic indicators. Growth is being international and diversified beef trading plat- forecasted in domestic meat consumption as well form with a unique position in the region with as the opening of foreign markets, with Miner- the best potential to supply the world, at a time va Foods taking a new position in global terms, when countries are turning towards their stron- Parent Company Consolidated 2017 2016 2017 2016 which is having a positive impact on exports. gest industries, which in South America is the Revenue 6,592,827 6,343,812 12,158,401 9,722,186 Moreover, the fact that South America is a key production of proteins, particular that of beef.

Sale of goods, products, and services 6,556,140 6,306,666 12,067,854 9,637,469 player in terms of competitiveness to supply the These are favorable circumstance for the Com- Other income 36,687 37,146 90,547 84,717 demand in international market plays to the fa- pany to consolidate its strategy in promising Inputs acquired from third parties vor of the Company’s business. markets, for instance, domestic consumption in (Tax inclusive – ICMS, IPI, PIS and COFINS) (5,833,979) (5,567,903) (10,807,290) (8,641,802) Brazil and in other countries where it has units Costs of products, goods and services sold (4,974,437) (4,866,647) (9,384,842) (7,456,396) in which it exports. Materials, energy, third-party services, and others (859,542) (701,256) (1,422,448) (1,185,406)

Gross value added 758,848 775,909 1,351,111 1,080,384

Depreciation, depletion and amortization (75,659) (43,382) (145,020) (80,367)

Net added value produced by the organization 683,189 732,527 1,206,091 1,000,017

Added value received in transfer (48,560) 254,693 104,216 142,466

Result of equity accounting (125,375) 141,785 - - Financial income 76,815 112,908 104,216 142,466

Total value added for distribution (5+6) 634,629 987,220 1,310,307 1,142,483

Distribution of value added 634,629 987,220 1,310,307 1,142,483

Labor 248,687 241,688 448,674 360,411

Taxes, fees and contributions 110,436 50,193 134,976 52,415

Remuneration to third-party capital providers 556,529 500,469 1,007,340 534,622

Interest 544,598 484,914 963,353 496,280 Rent 11,931 15,555 43,987 38,342

Remuneration to shareholders (281,023) 194,870 (280,683) 195,035

Earnings withheld/losses for the fiscal years (281,023) 194,870 (281,023) 194,870

Non-controlling interest in retained earnings (only consolidated) 340 165

52 53 ...IN

UALITY AND SAFETY

54 55 In 2017, Minerva also promoted a campaign re- ers, particularly pairs of geographic coordinates, lated to the Rural Environmental Registry (or with exact verification of location. This informa- Sustainable CAR, its acronym in Portuguese), disseminating tion makes territorial management of the loca- information on its objectives, the advantages and tion possible. In association with the Company’s the consequences for producers whose proper- database, this management results in a survey of ty is not regularly registered and time limits. In the amount and type of cattle in each region (a LIVESTOCK addition, livestock ranchers receive updated indirect influence on productivity). Consequent- formation on the best raising and management ly, procurement is more directed, representing a techniques, aimed at productivity in conjunction savings, since the sourcing of raw materials ac- with social and environmental responsibility. counts for 75% to 85% of the final product cost. FARMING Sustainable Cattle Ranching therefore adds val- Logistics costs are also optimized due to better ue to the business as long as its progress make it route management. 103-2 | 103-3 possible to subsidize purchases based on territo- In 2017, Minerva Foods faced and overcame the would take one to two days to be completed, rial intelligence. Various types of documents are See the GRI Appendix for challenges of a troubling scenario, seeking to build gained agility as this resource now permits the requested when creating records on new suppli- certifications and data on production units. closer a relationship with its suppliers. Commer- verification of various information, such as the cial portfolios were reassessed to include partners profile of cattle provided, and the frequency of committed to the highest standards of sustainabil- sales to Minerva. ity, while at the same time, were in line with the The Company is a member of the Brazilian sales strategy, discounts and cash payment offers Roundtable on Sustainable Livestock (BRSL). were expanded. Upon reactivating the Mirassol It therefore operates using strict criteria for D’Oeste (MT) industrial unit, the same proce- the sourcing of raw materials, to ensure that dures were adopted to guarantee animal welfare suppliers comply with guidelines prohibiting and the sourcing of qualified suppliers. child and forced labor, violence in the field and Capillarization of the purchase of cattle was the agrarian conflicts, the exploration of areas un- aspect that concentrated, as major achievements der embargo, conservation units, protection of the period, orienting secure negotiations, high- areas and indigenous lands, and deforestation est returns, development and enhancement of in the Amazon Biome. Geospatial monitoring internal systems that add value to the Company’s of the Amazon Biome has been in effect since structural capital and above all the assurance that 2010 in addition, meetings are held with Bra- the products are not associated with non-respon- zil’s National Indian Foundation (Fundação sible socio-environmental practices. Important Nacional do Índio – Funai) and the Chico results were obtained during the year through the Mendes Institute for Biodiversity Conserva- use of audits: the percentage of regulated purchas- tion (Instituto Chico Mendes de Conservação es, based on the use of maps and perimeters, rose da Biodiversidade – ICMBio), for consultation, from 92% to 99%. 103-2 | 103-3 which provide up-to-date information on any Technology contributed to enhancing the over- conflicts with indigenous/Quilombola com- sight and management of purchases. Based on munities and any encroachment by supplier the so-called QLIK system, data analyses that properties onto conservation units. 103-2 | 103-3

56 57 Supplier chain Outlooks @+Lucrativa Talking Livestock 102-9 | 103-2 | 103-3 In 2017, Minerva Foods developed prod- This is a program providing technical and financial The Talking Livestock program includes meet- The entire strategy adopted throughout 2017 ucts and tools for the supplier chain which support for producers to acquire supplements and ings, seminars and on site field visits to cattle by the Company was developed in line with in- will be implemented in 2018. The Company feed, from rearing to fattening, aimed at young ani- ranchers, held under the auspices Bond of Trust ternal actions, among which the main program plans to launch an app that will include the mals, slaughtered within a maximum of 24 months program. Throughout the year technicians, vet- is highlighted: Bond of Trust program, on to which initia- and weighing around 18 arrobas (15k). This proj- erinarians, zoo technicians and agronomists give tives were created that will provide - infor ect is developed in partnership with the São Paulo presentations and discuss topics related to quality, Bond of Trust (Laço de Confiança) mation that is easily accessible by its target State Agribusiness Technology Agency (Agência sustainability, animal welfare, humane slaughter An ethical and transparent relationship with cat- audience: cattle ranchers. Paulista de Tecnologia de Agronegócios – APTA) among other topics with suppliers, considering tle ranchers is one of the cornerstones of the pro- Through the use of the app, producers will and includes guidelines for cattle ranchers to in- regional particularities. In 2017, in addition to the gram. Through this program, Minerva Foods be able to track the time when the supplied crease productivity and revenue based on better topics included on annual agendas, guidelines on provides channels of communication in which it cattle has reached the meatpacking plant, as feed for animals and heavier carcass weights. In good vaccination practices were also highlighted. shares technical and practical knowledge related well as the start of slaughter. They will then 2017, the program had 66 participating suppliers. to quality, production and enhancement of sus- be able to download the packing list for the tainable cattle ranching. supplied cattle and carry out simulations of Reports on climate conditions by region, informa- @+Lucrativa, among other things. Devel- tion on the Company’s quarterly reports, confine- opment of the app is being overseen by a ment studies with analyses of market trends and a group of cattle ranchers, in order to test its packing lists – with data and additional guidelines, efficacy and contribute to its improvements. such as fat cover scores and the age of animals slaughtered, as an example of the information found publications provided to cattle ranchers. In 2017, the program had 6,086 registered suppliers. Held in 2017:

8 seminars in 6 states with the participation of approximately 400 livestock producers

58 59 Animal welfare 103-2 | 103-3 Minerva Foods uses procedures that guarantee the Through the Best practices in the use of vete- Best welfare of animals sent for slaughter, such as suitab- rinary drugs brochure, the Company provides le vehicles and appropriately trained drivers. Instal- guidance to its partners on adopting conducts lations are adapted with the aim of guaranteeing the and behaviors in order to prevent, control and animals’ comfort during their stay at the facility in treat diseases and on the application of vaccines PRACTICES 103-2 | 103-3 order to avoid stress. and medications, respecting the waiting period, The Company has animal welfare programs in pla- which increases the quality of production and ce at all units and promotes employee training that the profitability of sales for suppliers. As the only company in Latin America’s meat- In all of production, the impacts relating to is provided by specialized companies with extensi- packing sector to receive recognition from the the food safety are assessed. To ensure sani- ve knowledge and experience in the area of animal Inspections and audits World Bank Group’s International Finance Cor- tary control in all units, in order to comply welfare, such as WPA, BEA Consultoria and SPT. 103-2 | 103-3 poration (IFC), Minerva works in line with the with regulations, laws and applicable stan- Among the same lines of responsibility, the Com- Industrial units and products made by Miner- highest criteria of sustainability and value crea- dards as well as customer expectations, fun- pany holds a certification from the Professional va Foods are subject to continuous inspections tion throughout the entire production chain. damental procedures are applied in self-con- Animal Auditor Certification Organization (PAA- by federal authorities. In Brazil, the Company It uses standardized internal procedures in its trol programs, which are also verified by CO), an internationally recognized institution in complies with regulations established by the Mi- Health and Safety, Food Safety, Environmental, Brazil’s Federal Inspection Service (or SIF, its the area of Animal Welfare, composed of five Ame- nistry of Agriculture, Livestock and Supply (or and Social Responsibility divisions, carried out acronym in Portuguese) and by responsible rican organizations with expertise in best practi- MAPA, its acronym in Portuguese) and by the by the area of Integrated Management System agencies in Paraguay, Uruguay, Colombia and ces, and scientific knowledge of the meat industry, Brazilian Health Regulatory Agency (or Anvisa, (or SGI, its acronym in Portuguese), which is Argentina, which operate under a regime of accredited by the American Meat Institute (AMI). its acronym in Portuguese). In Paraguay, Uru- responsible for assuring rigors compliance with continuous inspections. Additionally, there is The suppliers with whom cattle negotiations are guay, Colombia and Argentina, units undergo standards and limits established by law. This a Chemical Residue Control Program, which held, receive informative materials with guidelines constant inspections by local health authorities. commitment provides greater efficiency in the covers the analyses of the final product with on management, animal welfare, and good practi- production processes, which reduces exposure the aim of detecting occurrence of any chemi- ces for applying veterinary medications. See the GRI Appendix for to risks and potential impacts on its operations, cal compound residue found with a risk-based indicators related to this topic. allowing for a global outlook of business oppor- frequency. An internal advising program for tunities and market demands. animal suppliers is maintained in an effort to develop responsible use of veterinary medications and good agricultural practices. 416-1

Minerva Foods assesses 100% of production in relation to potential impacts on health and safety, aimed at continuous improvements

60 61 Food safety and quality 103-2 | 103-3 Traceability 103-2 | 103-3 Daily internal self-monitoring programs, are Minerva Foods uses a tracking system that mo- maintained at each of the Company units, inclu- nitors every step in the value chain, from the ding the Hazard Analysis and Critical Control procurement of cattle to the delivering of the fi- Integrated Management System 103-2 | 103-3 Point (HACCP) program, Sanitation Standard nal product to the consumer. In addition to The Integrated Management System (SGI in Portuguese) operates collaborative- Operating Procedures (SSOP), Sanitation Ope- Brazilian System of Identification and Certifi- ly to promote continual improvement of production processes and promote rating Procedure (SOP), Specified Risk Material cation of Bovine and Bubaline Origin (SISBOV, best practices. This system ecomposses the areas of Environmental, Occupa- (SRM), Animal Welfare (AW) and Good Manu- its acronym in Portuguese), a tracking system tional Health and Safety, Food Safety and Social Responsibility. Commencing facturing Practices (GMP). administered by the Ministry of Agriculture, in 2015, one of the projects that were developed, fosters the engagement of All production units are inspected by Brazil’s Fe- the Company has created a series of cattle con- all Company employees, better known as SGI Week. Now in its third year, deral Inspection Service (SIF) and are certified trol programs at ranches of commercial part- during this week, it gathers more than 12,000 participants from all of Miner- for a wide variety of countries, based on strict ners, as mentioned under the Supplier Chain va Foods business units, conveying a message of “With efficiency and quality, sanitation controls that are frequently supervised item in this chapter. we make history,” the highlight being the celebration of the Company’s 25th by regulatory agencies. Units in Paraguay, Uru- anniversary. This area also works to manage risks and impacts, by formaliz- guay, Colombia and Argentina are also subject ing processes in internal written procedures. to inspections by the corresponding local federal Among these Company documents is the Health and Safety Policy, Environ- inspection agencies. mental, and the Food Safety and Social Responsibility Policy, which establish the following guidelines: • Promote and protect the health and safety of the people working at Minerva. • Respect the environment by preventing pollution and promoting nature conservation. • Offer safe and quality food products and work to continually improve them. • Respect its employees. • Comply with the law. • Strive to understand the needs and expectations of its customers.

62 63 Efficiency Efficiency programs – Bible, White Bone and Winning Attitude (Atitude Campeã) – Seeks Winning Attitude – were fundamental to the to use best practices found among different good performance of Minerva Foods in 2017. units to set an ambitious operating goal for the Among its goals are the standardization of pro- entire industrial complex. For example, if the cesses, increases in yield and productivity and a Bible program finds that a São Paulo unit has reduction in volatility in operational results. They the best deboning operation and identifies that also provide for greater employee engagement the slaughtering method is more effective at guarantees the best conditions for transforming the Rolim de Moura (TO) unit, each becomes challenges into achievements consistently and ef- standard. Once these standards an established, fortlessly. In 2017, an evolution was made to the each unit seeks to perform based on the best pillar supporting these programs: operate with standard for all tried and tested indicators. excellence and at a low cost. This is a type of annual competition, where ev- White Bone (Osso Branco) – Aimed at maxi- ery month employees at the best performing mizing deboning capacity, to ensure that the least units in a given department and those with the amount of product possible is left on the bone, most satisfactory results take part in a special which increases the yield of each unit by making luncheon, receive a trophy and compete in a better use of the carcass. drawing for products such as computers and TVs. At the end of the year, the unit that has Bible (Bíblia) – Aimed at standardizing processes the most points is the winner, and all 100% of at industrial complexes and capturing operational its employees at that unit receive bonuses. The synergies. The Company identifies and registers same benefit is given to the workers with the best practices at its units, ensuring that they be- best performance by department. come standard in every unit. This results in more efficiency and productivity at all operations.

In 2017, A Winning Attitude incorporated high investments in awards and bonuses in addition to providing Minerva a significant gain in efficiency

64 65 ...IN

MPLOYEES

66 67 Compensation and benefits Employees receive a fixed monthly compensation, with an annual readjustment based on percentages established in collective bargaining agreements. The compensation pro- Human cedure seeks to maintain a competitive internal and external balance, creating the conditions that allow for attract- ing, incorporating and retaining of qualified professionals. With the evolution of its Human Resources practices, in RESOURCES 2018 Minerva Foods will adopt the policies and practices established by Mercer for compensation, as well as region- alized salary surveys that will support its competitiveness and provide support for compensation practices to attract, MANAGEMENT incorporate and retain qualified professionals. The company also offers other additional benefits, an on- site restaurant in the workplace, grocery vouchers, meal vouchers, funeral assistance, transport vouchers and oth- Over its 25-year history, Minerva has built a cor- er resources mandated by law and collective bargaining porate culture where continuous appreciation of agreements and agreements signed with trade union rep- its employees has played a fundamental role in resentatives, the Company also has agreements with health turning the Company into a global player in its insurance plans, pharmacies, gas stations, butcher shops, sector. Committed to the principles established dentists and others that serve workers in the Company's in the Code of Ethical Conduct, in labor laws and The Company continued to make improve- units/municipalities, providing them with discounts and in Regulatory Norms (or NRs, as they are known ments to Human Resources documents, along special payment methods. 401-2 | 103-2 | 103-3 in Brazil), the Company has adopted procedures with the restructuring that started in 2016, and criteria that guarantee the well-being and when a review of operational processes began, safety of its employees in the workplace, as well fostering better employee management, pro- as provide attractive compensation, training and moting re-adaptation of compensation and initiatives to increase the quality of life. Notable adoption of programs to continually enhance among these commitments is the training center operational efficiency. for People with Disabilities, making it possible In parallel, Minerva has an ongoing process of for the integration of people with disabilities in integration with the units acquired in Mercos- to society. 103-2 | 103-3 ul, extending Human Resources procedures to With the acquisition of the Mercosul units and these other countries, in compliance with local the reactivation of the Mirassol D'Oeste (MT) laws, as well as comprehension of the Compa- unit, by the end of 2017, Minerva had 18,059 ny's culture, in an effort to achieve operational employees. Of this total, 1,364 were third-party efficiency. 103-2 | 103-3

service providers, allocated to the areas of Ad- See the GRI Appendix for the employee profile according to gender, job category ministration, Commercial and Industrial/Op- and minority group. erational, whether through direct contracts or as legal entities. 103-2 | 103-3

68 69 Health, safety and

quality of life 103-2 | 103-3 Part of the day-to-day activities at the Compa- ny is maintaining a healthy and safe environment in all operations. That is why health and safety results are key Cipa members meet regularly and promote indicators for safe management of operations, specific events such as the Occupational Acci- which requires periodic assessment and moni- dent Prevention Week (or Sipat, its acronym in toring of work conditions. Portuguese), which is held in conjunction with Therefore, a strict management system for oc- SGI Week and includes presentations, training, cupational health and safety standards is in medical assessments, fun activities and more. place at all units. In Brazil, for example, there All employees are represented by formal health are the Regulatory Standards – NR09: Environ- and safety committees made up of workers who mental Risk Prevention Program; NR10: Elec- help to monitor and advise on occupational trical Systems Safety; NR12: Machinery and health and safety programs. 403-1 Equipment; NR13: Boiler and Pressure Vessel Worker health and safety is also expressed in Safety; NR16: Hazardous Work (Risk of Ex- collective bargaining agreements signed with plosion); NR17: Ergonomics; NR33: Confined trade union organizations. Minerva Foods Health and Culture and campaigns – Events Minerva Cares – Employees volunteer to take Spaces; NR35: Working at Height; and NR 36: strives to comply with and follow legally estab- with presentations, debates and activities related part in social responsibility projects benefiting Work in Meatpacking Plants. lished safety standards, implementing collec- to health, the environment and safety are held at needy communities. One initiative in 2017 was It is our desire that all employees adopt safe- tive and individual measures, such as training all units. On the annual agenda are events such the Christmas Campaign, the result of which was ty behaviors and work practices, to ensure this and provision of Personal Protective Equip- as, World Water Day, World Health Day, Pink a drive for the collection of Christmas baskets, we conduct safety training and hold educa- ment (PPE), in an effort to guarantee a safe and October, Smoking Cessation Campaign, and toys and clothing for kids, 430 kilos of non-per- tional campaigns throughout the year. These healthy workplace and prevent the occurrence among others. ishable food items and 230 bags of candy for kids commitments are elaborated in our Health and of job related accidents/illnesses. were collected, which was then donated to eight Meeting with a Manager – In 2017, 56 meetings Safety, Environmental, Food Safety, and Social different non-profit organizations. See the GRI Appendix for health and safety were held between employees and managers, with Responsibility Policy at Minerva Foods. indicators and related topics covered in formal agreements with unions. questionnaires used to find the degree of satis- Maternity Project – A multidisciplinary team The Internal Committee for Accident Preven- faction in relation to organizational climate in assists and provides advice to pregnant employ- tion (Comissão Interna de Prevenção de Ac- The Company also pays close attention to mo- Company units. This survey resulted in a variety ees through discussions about prenatal care, nu- identes – Cipa) is maintained at all units op- tivational factors that have a direct impact on of improvement action plans involving structure, tritional support, delivery of a maternity kit and erating in Brazil. The Commission is made up employees, proposing new solutions that meet climate and processes. All employees have an op- an instructive booklet. Another specialized team of by direct elected employee representatives their needs. and by appointed employer representatives. A range of initiatives aimed at improving the portunity at these meetings to offer suggestions makes visits to provide support to mothers and quality of life of its employees is therefore pro- and improve their work areas with managers. babies. Minerva has adopted an Inclusion Pro- moted by the Company, such as: gram for People with Disabilities, developed for training professionals who are prepared to meet the labor market needs. In 2017, the program trained 15 people to work in the labor market.

70 71 ...IN THE ENVIRONMENT

72 The Company has also adopted a corporate En- vent leaks and the use of modern equipment to vironmental Impacts and Aspects Management manage water resources, Minerva seeks to min- Environmental program, aimed at the execution of action plans imize its maximum water consumption with based on a survey of environmental impacts most water being used in production activities. across its entire industrial complex. In parallel, the Most of the Company units are supplied with Company has developed training programs for surface water that goes through treatment sta- MANAGEMENT leaders to incorporate aspects of social and envi- tions before being used in production. Environ- ronmental sustainability when making decisions. mental supervisors monitor the entire process and report the results to factory and corporate managers, which promotes an integration be- Water 103-2 | 103-3 tween the areas in order to increase the efficient In past years, the Company initiated studies on use of hydric resources. water usage, providing support for optimization See the GRI Appendix for a table of consumption without adversely impacting on total water discharge, separated by quality and destination. the quality of processes. With resources to pre- Operations and activities at Minerva Foods are Logbook done using the most modern procedures and This resource is used to monitor: equipment to optimize the use of natural re- • Technical data on each unit and effluent treat- sources. The Company complies with the legal ment systems requirements applicable to its operations by the • Environmental licensing information, per- means of instruments for the adept management missions for water use, discharge of treat- of solid waste, liquid effluents and atmospheric ed liquid effluents and attend to the tech- emissions at all units. For the management and nical constraints In 2017, the following control of operations, supervisors use Logbook, a • Monitoring of environmental KPIs (Key Per- data tool in conjunction with an action plan gen- formance Indicators): water consumption, activities to optimize erator with all data being compiled so as to main- generation of effluents, liquid effluent quality, tain the monitoring and control of operations at receiving body quality, operational costs and water are highlighted: a single location. 103-2 | 103-3 revenues, recovery of oils and fats in physical-chemical treatment systems • Performance charts (dashboards) • Control of solid waste generation and disposal • Control of chemical products used in physi- Leak maintenance cal-chemical treatment systems Water flow restrictor on faucets • Control of biological products used in treatment systems Hose replacement on boot washers • Control of daily parameters of settleable solids in the biological treatment system 103-2 | 103-3 Water gun nozzles for carcass and perianal washing The result was a 12% reduction in water consumption over the previous year.

74 75 Effluents 103-2 | 103-3 Waste 103-2 | 103-3 All units have primary and secondary Effluents The Industrial Solid Waste Management Pro- Treatment Stations (or ETEs, their acronym gram is responsible for guaranteeing environ- in Portuguese). Liquid effluents discarded in mentally adequate treatment. Each type of ac- meatpacking operations undergo physical and tivity produces a category of waste, which has a biological treatment and are monitored by sam- specific disposal method. Materials are there- ple, through which the Company verifies the fore selected that can be reused and/or that efficacy of the system and identifies points for should be eliminated or decontaminated. Units improvement. There are units that use this efflu- document disposals on log sheets, such as, the ent for fertigation, and these units are increas- Waste Transport Manifest (WTM), the check- ing their coverage area, while another industrial list of the truck that will transport, invoice, cer- plant, the process of implementing fertigation is tificate of disposal and the licenses of the col- in the final phase. Units that use or will use this lecting companies and disposal locations. process periodically carry out applicable mon- In 2017, 32,161.997 kg of waste was recycled, itoring of the soil, groundwater and receiving composed of paper/cardboard, clear and mixed water bodies. plastics, containers, among others. Minerva makes permanent investments in improving treatment stations to maintain the average global efficiency of minimal organic load removal (Biochemical Oxygen Demand –BOD) at 85%.

Energy Each industrial unit is responsible for their own energy management. Every month, managers provide data on energy use to the Engineering department, which admin- isters consumption. The total interference is considered in indicators such as price per kilo of deboned product. The Brazilian units, with the exception of Goianésia (GO), ac- 2,161.997 Kg quire energy on the free market. 3 Minerva also has a Strategic Energy Efficiency Plan to as- sess the performance of its units and promote improve- of waste, ments at those where results are not satisfactory. Minerva Energia has been maintained since 2016, man- made up of paper/cardboard, aging internal consumption and offering partners person- alized products on Brazil's Deregulated Energy Market, clear and mixed plastics, aimed at directly and indirectly lowering the Company's containers among others own costs.

76 77 About Materiality Matrix The content of this report was defined based on Registration (CAR). As a further result of this the Materiality Matrix created in 2016 – as de- study, Minerva considered the inclusion of two scribed in the previous publication – and revised new topics in its materiality: 1) Anti-corruption THE REPORT in 2017 based on project of benchmarking that practices and participation in public policies and involved three other companies in Minerva's 2) Trends in international health restrictions. area of operation. The result of this work was Therefore, the 11 material themes on which submitted to the Company's directors and jus- this document is based, accompanied by their tified exclusion of two previously highlighted corresponding GRI indicators, shown below, topics, which gave the report greater objectivity: are covered throughout the report, which was 1) Customer relations, brand value and reputa- structured using the aspects valued by Minerva tion; and 2) Land regulations, environmental li- Foods and on which it focuses the management Minerva Foods is publishing its seventh annual sustain- censing, Forest Code and Rural Environmental of its business. 102-46 | 102-47 ability report, providing accountability to its stakeholders on the achievements and challenges of 2017. This document follows the guidelines of the most recent version of the Standards of the Global Reporting Initiative (GRI), Minerva Materiality 2017 103-1 Core option, and contains no restatement of information. Limit – inside Limit – outside In 2017, the scope and limits were changed, with the inclu- Industrial/ Material topics Related Materiality Administrative operational Customers Suppliers sion of information on the units of Paraguay and Uruguay. indicators assessment and commercial The previous document, in reference to 2016, was pub- Business feasibility lished in July 2017. 102-48 | 102-49 | 102-50 | 102-51 | 102-52 | 102-54 Economic outlooks and 201-1 | 102-43 | This report contains the actions and operations the Com- industry challenges 102-44 Priority X X X pany's industrial units in Brazil and, when indicated, for Anti-corruption practices and participation 205-1 | 205-2 | Very X X X those maintained abroad. The information and perfor- in public policies (new 205-3 | 415-1 important mance indicators reported were subject to analysis and re- topic) ceived independent assurance from Grant Thornton Brasil Trends in international sanitary restrictions Very 416-1 | 416-2 | FP5 important X X X X Ltda. 102-45 | 102-56 (new topic)

For any questions, comments or doubts regarding this doc- Industry trends ument, the Company has provided the following email ad- 308-1 | 308-2 | 414-1 | 414-2 | 407-1 | 408-1 | dress: [email protected]. 102-53 Traceability and criteria 409-1 | 414-1 | 414-2 | Priority X X X for acquiring cattle 103-2 | 414-1 | 414-2 | FP1 | FP2 Hygiene and food 416-1 | 416-2 | FP5 Very X X safety important Very Animal welfare FP9 | FP13 important X Climate changes and Very long-term expectations 201-2 important X X X X for livestock

78 79 Minerva Materiality 2017 103-1 Limit – inside Limit – outside Approach to engage stakeholders Frequency of engagement Stakeholder groups Industrial/ Material topics Related Materiality Shareholders, investor groups Administrative operational Customers Suppliers Minerva Day Annual and financial institutions indicators assessment and commercial Earnings call Quarterly Shareholders, investor groups Coexisting in harmony and financial institutions BRSL Continual Customers, industry companies, Workforce health 403-1 | 403-2 | governments, suppliers, NGOs, unions Priority X X X and safety 403-3 | 403-4 Talking Livestock Continual Cattle ranchers and trade associations 201-3 | 202-2 | 401-1 | Very Management of 401-2 | 404-1 | 405-1 | important X X Ombudsman (Minerva Connection) Continual Employees and external public human capital 103-2 | 412-2 | 410-1 Commemorative Dates Continual Employees and local communities Environment Water use, effluent SGI Week Annual Employees and local communities management and 303-1 | 306-1 | 306-2 | impacts of cattle Priority X X X 306-3 | 306-4 | 103-2 Hello Minerva (Customer Service) Continual Customers ranching on springs Minerva Blog and basins Continual Customers, civil society, (http://portal.minervafoods.com/blog employees, external public at large Production in sensitive Very 304-2 | 307-1 | 411-1 X X areas and biomes important

Stakeholder engagement 102-43 | 103-2 | 103-3 Minerva Foods adopts a specific approach to In addition to maintaining an Ombudsman, each of its different stakeholders. Annual meet- in 2017 Minerva Foods held various events on ings are held for financial stakeholders, includ- commemorative dates and the 3rd SGI Week, ing Minerva Day – in São Paulo (BR) and in which involved employees and local commu- New York (USA) – and quarterly earnings calls nities in several meetings regarding the en- to show its economic performance. Moreover, vironment, social responsibility, health and investors have full access to the Investor Re- safety, and food safety. lations team through the institutional website Events such as Talking Livestock, which cov- and by phone. The Company communicates ers topics related to sustainability, efficiency with its human capital through tools such as in the field and animal welfare, among other the Minerva Connection channel, a way for things, aimed at suppliers of the Company's employees and the external public to express main raw material (cattle). The sector of Cat- opinions, criticism and suggestions. tle Procurement also sends these stakeholders emails containing reports and information on economic and climate scenes as well as price variations in raw material.

80 81 Total third-party employees by gender* 102-8

2017 2016 GRI Women Men Women Men Third-party employees ND ND 120 780

Total 1,364 1,364 APPENDIX * We do not have data on third-party employees by gender. Information regarding operations in Brazil and abroad. Initiatives endorsed by the Company

Initiatives developed externally 102-12 Adhesion Name Date adopted Countries and/or Stakeholders operations applied involved Federal Mandatory Conduct Modification Agreement 07/07/2009 Brazil Prosecution for Sustainable Cattle Ranching Office of Pará National Compact for the Information on employees and other workers 102-8 Eradication of Slave Labor 05/19/2009 Brazil Various IFC Performance Standard (PS) 2013 Brazil, Paraguay, IFC Total employees Brazil + abroad: 18,059 Uruguay and Colombia Meatpacking Total employees in Brazil: 10,774 Volunteer Greenpeace Term of Commitment 10/05/2009 Brazil (Amazon Biome) sectors Brazilian Development Brazilian Bank Resolution No. 1,854 2009 Brazil Development Total number of employees by gender 102-8 Bank (BNDES) Livestock Compact 10/15/2008 Brazil Instituto Ethos 2017 2016

Men Women Men Women

13,622 4,437 3,736 9,989

Total 18,059 13,725 Engagement of stakeholders

Key topics and concerns raised 102-44 Key topics and concerns raised through stakeholder engagement, by stakeholder group

Main topics and concerns Measures adopted Stakeholder groups Total employees by gender and region 102-8 • Promotion of events discussing topics related to the industry such as Talking Livestock. Sustainability; efficiency • Mailing of e-mails to our suppliers. Cattle ranchers, 2017 2016 in the field; raw material • Participation in industry discussion groups, such as BRLS. In associations and market; animal welfare other countries, such as Paraguay, the Company participated trade associations Region Men Women Total Men Women Total in roundtables with nongovernmental organizations (WWF) and government agencies, such as USAID. North 504 1,393 1,897 467 1,258 1,725 Economic scenario; financial results; • Promotion of events such as Minerva Day, Northeast 14 45 59 14 43 57 held in Brazil and in the USA Shareholders and Company performance • Earnings teleconference calls to discuss the Company’s quarterly financial stakeholders in relation to the national results, in addition to easy access to the Investor Relations team. Center-West 2,736 1,181 3,917 929 2,116 3,045 and international scenario Health and safety; • SGI Week held to discuss and promote awareness Southeast 1,595 3,294 4,889 1,669 3,400 5,069 environment; food on these topics, in addition to promoting Employees and quality and hygiene and internal communication for employees. local communities South 1 11 12 0 8 8 household budget

Total 3,295 7,479 10,774 3,079 6,825 9,904

* Information regarding operations only in Brazil.

82 83 Diversity in governance Risk management bodies and local hiring Market aspect Proportion of senior management members hired from the Description of impacts, risks, and opportunities 102-15 Mitigation measure 202-2 local community* All cattle acquired are inspected by veterinarians and physicians from Brazil’s Federal Inspection Significant Total senior Number of senior Percentage of senior Service (Serviço de Inspeção Federal – SIF), an agency under the Ministry of Agriculture. In Health Paraguay, Uruguay, Argentina and Colombia, cattle acquisitions are also subject to supervision by operational units* management members management members hired management members hired the respective health authorities. from the local community from the local community Operating margins are defined by the ratio between the cost of acquiring raw materials and the sale price 2017 2016 2017 2016 2017 2016 Cost of raw material of products. To balance out this equation, units are maintained at strategic points, with adoption of tools such as the Beef Desk. BTS – Barretos Unit 10 2 4 1 40 50 Growth in the customer portfolio, with on-site service starting, and a higher number of items per order have added a higher margin to the operation. There was also an increase in credit and payment terms. The Customers CPT – Corporate 8 9 3 5 38 56 Company works with the one-stop-shop concept, where the customer’s purchases are concentrated in a single supplier that is responsible for delivering all products within 24 hours. JBO – José Bonifácio 2 1 50 Minerva is exposed to impacts as a result of exchange rate variations and changes in the JNB – Janaúba 7 1 14 international economy; imposition or increases of tariffs; health and non-health barriers; demand Exports for exchange rate controls and restrictions on exchange rate operations; and strikes and other MDO – Mirassol D'Oeste 14 4 29 events. These risks are minimized by distributing exports to 100 countries, located in Europe, the Middle East, Africa, Asia and the Americas. PAL – Palmeiras de Goiás 6 1 17 The credit portfolio is continually monitored to limit the Company’s exposure. Credit risk is therefore Credit diluted through a detailed analysis of customers’ financial statements, an internal customer risk RMO – Rolim de Moura 1 0 0 classification system and consultations of credit score agencies. VZG – Várzea Grande 4 1 25 The hedge policy takes into account the Company’s two main risk factors: the exchange rate and live Hedge policy cattle. Based on identification of these exposures, the Treasury works to neutralize and/or mitigate risks, ARN – Araguaína 2 1 50 following limits determined by the Board of Directors. To avoid administrative and criminal sanctions, as well as liability for damages, Minerva Foods adopts * In 2017, this indicator began to be consolidated for the José Bonifácio, Janaúba, Mirassol D’Oeste, Palmeiras de Goiás, Rolim de Moura and Várzea Grande units. Environmental standards a strict procedure for cattle acquisitions. The Company complies with legal requirements and maintains The definition used for “senior management:” holds a responsibility of supervising, such as supervisors, coordinators and managers. The geographic definition of “local” at the organization: the entire area covered by a worker’s native state. certifications that guarantee the standard of quality established by the Brazilian and international markets. For management positions, other criteria hold greater relevance, such as education, industry experience and availability to move. The definition of “significant operational The Company’s consolidated financial indebtedness makes it necessary for a substantial portion of its locations” are those that are located closest to the industrial units. cash flow to be used to make payments on principal and related interest. The Company ended 2017 with a cash position of R$3.8 billion, a sufficient amount to amortize debt up to 2026. On December 31, 2017, Management of liabilities approximately 80% of all debt was exposed to exchange rate variation. Leverage measured using the net debt to EBITDA ratio for the last twelve months reached 4.6x at the end of December 2017, with a debt duration of 5.4 years. Another important step in management of liabilities was completed in December Individuals serving on governance bodies, by 2017, with the issuance of 2028 Bonds at an annual coupon rate of 5.875%.

age group* 405-1 Age group Percentage Women Men Operational performance (total) (total) Under 30 0 0 0 Percentage and total 30 to 50 54.84 1 16 Percentage and total of of animals raised and/ Over 50 45.16 0 14 animals raised and/or or processed, by * Data for 2017. processed, by type FP9 raising method FP9 Total Percentage Total Percentage

Heifers 231,201 15 Feedlot 656,160 43

Steers 1,293,493 85 Drylot 143,665 9

Total 1,524,694 100 Pasture-raised 425,398 28 Modified confinement 299,471 20

Total 1,524,694 100

84 85 Percentage of production volume manufactured in operating units certified by an independent organization in compliance Human Resources Management/ with internationally recognized food safety management sys- Professional profile tem standards FP5

2017 2016 Total number and percentage of employees by job category

Units Certifications Volume Production Certifications Volume Production and gender* 405-1 produced percentage produced percentage Area Total (No.) Women (%) Men (%) (kg) for each (kg) for each certification certification Administrative 1,667 39.35 60.65 Araguaína (TO) BRC grade AA 33,318,583 100 HACCP 92,179.052 86.0 Industrial/Operational 8,637 29.42 70.58 Barretos (SP) BRC grade A 38,723,942 100 BRC grade A 212,286.680 17.5 Commercial 470 19.57 80.43 Campina Verde (MG)1 N/A N/A N/A HACCP 15,038.355 14.0 Total 10,774 30.53 69.47 Janaúba (MG) BRC grade AA 27,543,523 100 BRC grade A 103,029.765 8.5 * Information only regarding operations in Brazil for 2017. José Bonifácio (SP) BRC grade AA 42,639,219 100 BRC grade A 156,348.778 13.0 Palmeiras de Goiás (GO) BRC grade AA 79,154,383 100 BRC grade A 365,226.680 30.1 Rolim de Moura (RO) BRC grade AA 44,341,083 100 BRC grade A 110,353.578 9.1 Total number and percentage of employees by job category Várzea Grande (MT) BRC grade AA 38,246,235 100 BRC grade A 263,312.814 21.7 Mirassol D’Oeste (MT)2 N/D 47,847,464 N/D and age group* 405-1 Total 318,529,167.58 1,317,775,70 Under 30 Area Total 30 to 50 (%) Over 50 (%) 1. Operations halted at unit. (%) 2. The Mirassol D’Oeste unit will seek certifications in 2018, considering that it restarted operations in the second half of 2017 and is currently preparing to be audited. Administrative 1,667 42.83 51.47 5.70 Industrial/Operational 8,637 44.25 48.37 7.38 Commercial 470 20.42 74.25 5.33 Negative social impacts in the supply chain and actions taken 414-2 Total 10,774 43.00 49.98 7.02 Number of Percentage of suppliers Percentage of suppliers that Number of * Information only regarding operations in Brazil for 2017. suppliers that could create actual and could create actual and potential supplier that could potential negative impacts in negative impacts in society Total subjected to create actual society related human rights related to human rights and with suppliers assessment and potential and with whom improvements whom contracts were terminated 405-1 of impacts on Total number of employees by minority groups* negative impacts were agreed upon based on assessments and the human rights Grand Mixed Not on human rights based on assessments reason this measure was taken Area Asian White Indigenous Black total Race stated 2016 4,684 7 4,684 0.14 0 Administrative 1,667 stated 1,074 1 480 63 1 2017 5,046 7 (MTE) 5,046 0 0 Industrial/Operational 8,637 226 3,193 9 4,753 455 1 Number of Percentage of suppliers Percentage of suppliers that Number of suppliers that could create actual and could create actual and potential Commercial 470 31 354 0 58 19 8 supplier that could potential negative impacts in negative impacts in society Total subjected to Total (%) 100 2.83 42.89 0.09 49.10 5.00 0.09 create actual society related human rights related to human rights and with suppliers assessment and potential and with whom improvements whom contracts were terminated *Information only regarding operations in Brazil for 2017. of impacts on negative impacts were agreed upon based on assessments and the human rights on human rights based on assessments reason this measure was taken 2016 4,684 7 4,684 0,14 0 Turnover rate (%)* 401-1 2017 5,046 7 (MTE) 5,046 0 0 Brazil Paraguay Uruguay Colombia Argentina Total turnover Number of Percentage of suppliers Percentage of suppliers that Number of suppliers that could create actual and could create actual and potential supplier 3.93 11.77 0.53 5.39 0.35 4.39 that could potential negative impacts in negative impacts in society Total subjected to * Data for 2017. create actual society related human rights related to human rights and with suppliers assessment and potential and with whom improvements whom contracts were terminated of impacts on negative impacts were agreed upon based on assessments and the human rights on human rights based on assessments reason this measure was taken 2016 4,684 7 4,684 N/D 0 2 (FUNAI and 2017 5,046 Quilombola) 5,046 0 0

86 87 Total employees hired and rate of new hires* 401-1 Uruguay and Paraguay operations –

Total employees hired Rate of new hires (%) total employees hired and rate of new hires* 401-1 Region Age group Total Women Men Women Men Minerva Rate of new Under 30 Under 30 30 to 50 30 to 50 Over 50 Over 50 employees Women Men unit hires (women) (men) (women) (men) (women) (men) Under 30 97 324 2.41 8.03 hired North 30 to 50 63 129 1.56 3.20 Uruguay Carrasco 49 8,7 8 41 3 28 4 13 1 0 Over 50 0 5 0.00 0.12 Uruguay 21 3,3 4 17 1 14 3 3 0 0 Under 30 278 992 6.89 24.60 Pul Center-West 30 to 50 317 700 7.86 17.36 Paraguay Plants 2 126 10,7 12 114 3 67 9 45 0 2 Over 50 19 56 0.47 1.39 and 8 * Data for 2017. Under 30 188 420 4.66 10.41 Southeast 30 to 50 136 290 3.37 7.19 Uruguay and Paraguay operations – Over 50 2 17 0.05 0.42 401-1 * Information only regarding operations in Brazil for 2017. total terminated employees and turnover rate* Total Minerva Turnover Under 30 Under 30 30 to 50 30 to 50 Over 50 Over 50 terminated Women Men unit rate (women) (men) (women) (men) (women) (men) employees Uruguay Carrasco 70 10.3 12 58 2 30 4 18 5 11 Total number of terminated employees and turnover rate* 401-1 Uruguay 13 2.9 3 10 1 2 2 5 1 2 Total number of employees Rate of employee Pul Terminations turnover Region Age group Paraguay Plants 2 218 13.7 24 194 7 93 14 93 3 8 Women Men Women Men and 8

Under 30 62 237 2.07 7.90 * Data for 2017. North 30 to 50 56 113 1.87 3.77 Over 50 2 9 0.07 0.30 Human Resources Management/ Under 30 138 550 4.60 18.34 Center-West 30 to 50 193 399 6.44 13.30 Health, safety and quality of life Over 50 9 33 0.30 1.10 Under 30 177 347 5.90 11.57 Topics related to health and safety covered in Southeast 30 to 50 215 353 7.17 11.77 formal agreements with unions* 403-4 Over 50 29 77 0.97 2.57 Cover Collective Number of health Total number Clauses Unit bargaining clauses cove- HS clauses * Information only regarding operations in Brazil for 2017. and safety of clauses covering HS (%) agreements ring hs topics Araguaína Yes Yes 18 1 2nd (Emergency Care/doctor's notes) 6 Uruguay and Paraguay operations – 32nd (Doctor's Notes); 37th (en- Barretos Yes Yes 52 3 hancement course); 44th (accident 6 communication) total employees by gender and age group* 19th (periodic medical exams); Campina th Total Yes Yes 29 2 27 (labor relations – resolving 7 Minerva Under 30 Under 30 30 to 50 30 to 50 Over 50 Over 50 Verde employees in differences) unit (women) (men) (women) (men) (women) (men) th 2017 16 (hygiene of restrooms, drinking fountains, etc.); 17th (compli- nd Uruguay – 564 16 101 28 316 16 87 Janaúba Yes Yes 23 3 ance with safety standards); 22 13 Carrasco (medical and physical therapy department) Uruguay – Pul 640 10 109 54 367 36 64 15th (hygiene of restrooms, drinking fountains, etc.); 16th (medical and José th Paraguay – 1,179 57 328 161 539 29 65 Yes Yes 21 4 physical therapy department); 17 19 Plants 2 and 8 Bonifácio (compliance with safety standards); th * Data for 2017. 18 (doctor's notes) Palmeiras Yes Yes 19 1 2nd (Emergency Care/doctor's notes) 5 de Goiás

88 89 Topics related to health and safety covered in Training and qualification formal agreements with unions* 403-4 Cover Operations in Brazil – training hours and number of Collective Number of health Total number Clauses Unit bargaining clauses cove- HS clauses and safety of clauses covering HS (%) participations by job category in 2017 404-1 agreements ring hs topics Job category Total training hours Number of participants 18th (periodic medical exams); Rolim de rd Administrative 1,013.63 474 Moura Yes Yes 34 2 33 (labor relations – resolving 6 differences) Commercial 44.00 118 st 21 (inspection, audits and train- Leadership 566.19 2,088 ing); 41st (ppe); 42nd (cipa); 43rd (disease prevention policies); 44th Operational 3,329.67 14,686 Várzea Yes Yes 59 7 (periodic medical exams); 45th 12 Grande (doctor's notes); 46th (emergency Mixed 3,151.95 11,439 care-first aid); 48th (audits-periodic Research area 0.33 2 inspection) Total 8,105.77 28,807 * Data for 2017. Workers representation in health and safety formal In 2017, the training tools used, which are included in the training and development procedure, are as followed, The Mandatory Techniques Training Matrix, Timeline of Mandatory Technical Training and committees in 2017* 403-1 Diagnosis of Need for Training (DNT).

Amount of workforce represented in health and safety Uruguay and Paraguay Operations – average training Total formal committees made up of Percentage workforce employees at different levels of hours per employee, by gender 404-1 organizational hierarchies Average hours of Average hours of training per Average hours of training per Units (Paraguay and Uruguay) training per employee employee – women employee – men Brazil – 7,402 263 3.6 Uruguay Carrasco 2.7 5.4 2.4 Argentina – 1,097 27 2.5 Uruguay Pul 8.3 8.9 8.2 * Data for this indicator only regards operations in Brazil and Argentina. Paraguay Plants 2 and 8 13.2 11.7 11.4

Health and safety committee on which Level of operation within Uruguay and Paraguay Operations – average training hours employees serve at different levels hierarchy the organization per employee, by job category 404-1 Internal Accident Prevention Committee (Comissão Interna Employee and employer representatives de Prevenção de Acidentes – Cipa) Units Factory worker Supervisor Assistant Manager Sales Director Uruguay Carrasco 2.7 5.1 N/D 9 N/D N/D Specialized Service in Safety Engineering and in Occupational Medicine Employer representative Uruguay Pul 7.7 16.6 8.9 15.4 8 8 Paraguay Plants 2 and 8 12.3 13.7 33.6 7.5 7 7 Type of injury and rates of injury, occupational diseases, lost work days, and absenteeism, and total number Environmental management of work-related fatalities* 403-2 1 Operations in Brazil – total water removed by source 303-1 Rate of Absenteeism (only units located in Brazil): 1.94%. 2017 2016

Number of Days Work-related Man-hours Frequency Total volume Groundwater Surface water Total volume Groundwater Surface water Country/Unit Severity rate Units illnesses lost fatalities worked rate used (m³) collected (m³) collected (m³) used (m³) collected (m³) collected (m³) Araguaína (TO) 477,572 477,572 540,399.72 54,039.97 486,359.75 Brazil 43 2,259 0 13,996,088.89 5.00 161 Barretos (SP) 530,887 92,126 438,761 624,690.50 624,690.50 Paraguay Frigomerc 2, 5 and 8 N/D 249 0 2,610,620.82 17.24 95 Campina Verde N/A N/A N/A 22,984.00 22,984.00 (MG)2 Uruguay N/D 3,257 0 2,150,151.95 50.23 1,514.80 Carrasco Pul Janaúba (MG)3 389,588 275,824 113,764 341,775.00 341,775.00

Colombia N/D 535 0 1,394,123.56 56.67 384 José Bonifácio Red Cárnica (SP) 687,766 687,766 629,987.80 629,987.80

* Data for 2017. Mirassol 358,337 358,337 D'Oeste (MT)4 Palmeiras de Goiás (GO) 1,006,851 1,006,851 1,108,858.00 1,108,858.00

90 91 1 Operations in Brazil – total water removed by source 303-1 2017 2016 Total water discharge by quality and destination 306-1 Total volume Groundwater Surface water Total volume Groundwater Surface water Total volume of Units Destination Water quality Treatment method Was water reused? used (m³) collected (m³) collected (m³) used (m³) collected (m³) collected (m³) water discharged Rolim de For the Barretos, José For the Araguaína, José Moura (RO) 569,148 569,148 571,624.60 571,624.60 Bonifácio, Mirassol Bonifácio Mirassol D’Oeste D’Oeste, Palmeiras de and Janaúba units, the Várzea 807,213 807,213 841,936.51 841,936.51 Goiás, Rolim de Moura water used for washing Grande (MT) and Várzea Grande Monthly analyses Effluent Treatment the corral comes from units, all treated are carried out Stations (ETEs) for grey water, whether from Total volume of 4,827,362 1,055,716 3,771,646 4,682,256.00 1,025,803.00 3,656,453.00 to monitor the all units are made up water removed effluents are sent to efficiency of the of primary treatment Water Treatment Station a receiving body; for system for all units; (grading, sifting, backwashing or from de- 1. Data for 2017. the Araguaína unit, icing the chambers. The 2. Operations are still halted at the Campina Verde unit; therefore, there was no consumption to declare. the efficiency of fat retention) and 2017 4,470,070 fertigation is done removal of organic secondary treatment Barretos unit collects all 3. Only the Janaúba unit collects surface water as well as groundwater. on the Company’s of its backwashing water 4. In July 2017, the Mirassol D’Oeste unit restarted operations; therefore, volumes shown here are only in reference to the months of July through December. property; and for load measured in (anaerobic, facultative and returns it for treatment the Janaúba unit, all BOD is above 85% and polishing ponds; at the Water Treatment effluents undergo removed, which is for the Mirassol Station in a closed circuit. secondary treatment in excess of legal D’Oeste unit, The fertigation project and are sent for requirements. activated sludge). at Palmeiras de Goiás Uruguay and Paraguay operations – total treatment at the is being finalized with municipal Effluent installation of equipment water removed by source (m³) 303-1 Treatment Station. (pipes and spray nozzles). Type of source Minerva unit Total per unit Surface Groundwater Supply company (ESSAP) Uruguay Carrasco 545,582 545,582 - - All units in Paraguay and Uruguay permanently monitor parameters of effluents according to cor- Uruguay Pul 646,836 646,836 - - porate management policy. Moreover, all plants have Effluent Treatment Stations (or ETEs). Paraguay Plant 2 480,613 429,174 51,439 Paraguay Plant 8 418,954 329,120 89,834 The total volume of effluents in 2017 for Plant 2, in Paraguay, was 408,521 m3, of which 36,500 m3 Total water consumed 2,091,985 1,192,418 758,294 141,273 was used to wash corrals. At Plant 8, also in Paraguay, there were 356,111 m3 in total effluents for the same year, and the entire volume at both units went to the collector.

At Uruguay units – Pul and Carrasco – total effluent volume was 549,8113 m and 463,745 m3, res- Total water discharge by quality and destination 306-1 pectively. At the Pul unit, effluents went to a water course, while at the Carrasco unit they went to Total volume of the collector. Destination Water quality Treatment method Was water reused? water discharged

For the Barretos units, masonry boxes were constructed to store water for backwashing the Operations in Uruguay and Paraguay – Water Treatment Station Receiving body for filters and returning the the following units: water for treatment. parameters used to monitor effluents Barretos, Campina Verde, Rolim de All units remove at For the José Bonifácio unit, a least 60% of BOD, Biochemical Oxygen Total solids in Total solids in Moura, José Bonifácio, pursuant to current All effluents tank was installed for storing BOD parameter Palmeiras de Goiás and generated by Minerva water discharged from Demand (BOD) suspension suspension parameter law. Although the Year Legal requirement Várzea Grande. Foods units go the bottom of the boiler. – annual average – annual average Legal requirement Company correctly (mg/l) 2016 3,979,520.13 through Wastewater (mg/l) (mg/l) (mg/l) Municipal Effluent complies with Treatment Stations, For the Palmeiras de Treatment Station current law, the including primary Goiás unit, a project average removal of Paraguay Plant 2 71.5 250 45.8 500 (ETE) – Janaúba. BOD from Minerva and secondary was created to carry out treatment. fertigation, to minimize Paraguay Plant 8 100.7 250 68.2 500 Fertigation/percolation Foods units is at effluents discharged trench for the around 80%. into a receiving body. Uruguay Pul 32.3 60 43.9 150 Araguaína unit. Uruguay Carrasco 120.7 700 250.5 N/A For the Janaúba unit, a water reuse center was designed for water used in the spray bath. The Araguaína unit maintains fertigation.

92 93 Amount of Operations in Brazil – total weight of waste by type and Amount of Amount of Amount of Non- waste (kg) Treatment Treatment Treatment Treatment waste (kg) waste (kg) waste (kg) 306-2 hazardous Uruguay method/final method/final method/final method/final disposal method* Uruguay Paraguay Paraguay waste Carrasco disposal disposal disposal disposal Hazardous waste Non-hazardous waste Pul Plant 2 Plant 8 Disposal method Kg Waste type Kg Waste type

Paper/cardboard, clear Removed by plastic, mixed plastic, contracted Recycling Recycling containers and drums, Paper 44,420 Recycling 18,300 company for 60,740 (donated to 30,190 (donated to Recycling Not applicable Not applicable 32,161,997 raffia bags, ferrous recycling PROCICLA) PROCICLA) metals, non-ferrous metals, pallets and rendering plant waste Organic waste from Removed by Processed by Processed by Composting Not applicable Not applicable 48,025 rumen content and Ferrous 41,800 Recycling 12,850 contracted 9,100 a contractor 46,020 a contractor organic cafeteria waste metals company for recycling company company Batteries, electronic Recovery, including 33,106 waste, light bulbs, used 38,150 Tallow acid energy recovery vegetable oils and other Reuse Reuse used oils Recipients and tanks N/A N/A N/A N/A 3,987 (removed by 2,603 (removed by Health service waste, supplier) supplier) Incineration used PPE, rags and (mass burning) 4,384 objects impregnated Not applicable Not applicable with chemical products Pallets N/A N/A N/A N/A 60,550 Incinerated in 19,080 Incinerated in or oils and greases boiler boiler Toxic chemical product Landfill 410 containers 2,864,218 Common trash Municipal Municipal Common 223,000 Landfill 58,800 Municipal 175,663 landfill 193,150 landfill Other (to be specified trash landfill Composting Composting by the organization) 393,820 Tridecanter sludge

* Data for 2017. Boiler ash N/A N/A N/A N/A 96,450 Composting 140,014 Composting

There is a solid waste treatment plan approved by the appropriate authorities at the Paraguay and Sand and manure N/A N/A N/A N/A 81,390 Composting 38,340 Composting Uruguay units – National Directorate of the Environment (Dinama).

Municipal Municipal Rubble N/A N/A N/A N/A 24,060 landfill 34,420 landfill Operations in Paraguay and Uruguay – total weight of waste (kg) Removed by the Pul by type and disposal method* 306-2 Sludges unit and (effluent 203,000 Composting 6,670,000 deposited 689,170 Composting 187,570 Composting treatment) in the Hazardous waste Uruguay Carrasco Uruguay Pul Paraguay Plant 8 Paraguay Plant 2 company’s own landfill

Light bulbs and fluorescent tubes 150 118 173 64 Pressed waste FAN – 396,000 Composting N/A N/A 1,388,850 Composting 555,610 Composting Lead batteries and batteries 98 208 24 30 Rumen Alkaline batteries 22 N/A N/A N/A

Used oil N/A 1,536 2,800 1,510 Removed by Electronic waste 189 N/A 12 81 Polyethylene contracted (bags) 1,800 Recycling 57,000 company for N/A N/A N/A N/A CRT Monitors 36 N/A N/A N/A recycling Total 495 1,862 3,009 1,685

* Disposal method: final disposal of waste is done by licensed companies. Drums 1,800 Reuse N/A N/A N/A N/A N/A N/A

Fat from cleaning 42,000 Landfill N/A N/A N/A N/A N/A N/A chambers

Total 953,820 6,816,950 1,201,110 1,246,997

94 95 Total hazardous waste Security personnel trained in the policies and procedures of

transported in 2017 306-4 the organization in regards to human rights 410-1 Hazardous waste is transferred from Unidade Minerva Peso (kg) All contracted Property Security personnel are trained on aspects of human rights through an in- company units to the waste treatment Uruguay Carrasco 495 storage centers of contracted compa- tegration training video developed using Company information. Uruguay Pul 1.862 nies. No hazardous waste is exported Paraguay Plant 2 1.685 Total employees working Percentage of security or imported from any of the Minerva in the area of security that Paraguay Plant 8 3.009 Total employees working in personnel trained on policies factories in Uruguay and Paraguay. received training on policies Year the area of security directly and procedures specific and procedures specific employed by the organization to human rights and their to human rights and their application to security application to security 2016 100 2017 2,859 2,859 100 Human Rights * Minerva does not have a third-party team in the Property Security area. The number reported is only Company employees and all are trained, regardless of whether they are contractors or hires. Operations and suppliers identified as high risk of having

incidents of forced or compulsory labor 409-1 Name of operations, suppliers and/or countries/geographic Operations, suppliers and/or countries/geographic areas Employee training on policies or procedures concerning as- areas that pose a risk of incidents of forced or compulsory labor Supplier 1 Otaviano Aparecido Ferreira pects of human rights 412-2 Supplier 2 Hélio Cavalcanti Garcia Supplier 3 Jamil Inácio Ribeiro Percentage of employees Employees trained on policies Supplier 4 Fausto Scholl trained on policies and Year Total employees (units) and procedures concerning Supplier 5 Adilson Ribeiro Bonfim procedures concerning aspects aspects of human rights Supplier 6 Machado e Machado Telecomunicações Ltda. of human rights Supplier 7 CSM. Agropecuária S/A 2016 8,002 3,564 44.5 Countries/geographic areas 1 Novo Repartimento – Pará 2017 10,249* 3,983 38.86 Countries/geographic areas 2 Poxoréo – Mato Grosso * The training was carried out only for the Beef Brasil refrigeration units which have a total of 10,279 employees. For this reason, the total number of employees for this indicator is different than the total number of employees in all units of Brazil. Countries/geographic areas 3 Colmeia – Tocantins Countries/geographic areas 3 Paranatinga – Mato Grosso Countries/geographic areas 4 Figueiredo – Pará Total hours dedicated to Percentage of hours dedicated Countries/geographic areas 5 Figueiredo – Pará Number of hours dedicated to training on policies and to training on policies and Year Countries/geographic areas 6 Campinas – São Paulo employee training (units) procedures concerning aspects procedures concerning aspects Countries/geographic areas 7 Barreiras – Pará of human rights of human rights 2016 15,550.131 3,170.0 20.3 2017 8,105.77 2,453.3 30.2

96 97 General disclosures Standard Page Omission UNGC SDG Organizational profile √ 102-1: Name of the organization 16 √ 102-2: Activities, brands, products, and services 16 √ GRI 102-3: Location of headquarters 16 √ 102-4: Location of operations 16, 17 √ 102-5: Ownership and legal form 16 √ 102-6: Markets served 16 √ CONTENT INDEX GRI 102: General 102-7: Scale of the organization 16, 17, 18 19, 48 e 49 √ disclosures 102-8: Information on employees 82, 83 8 and other workers √ Standards option Core 102-54 | 102-55 102-9: Supply chain 58, 59 102-10: Significant changes to the organization 16 and its supply chain √ 102-11: Precautionary principle or approach 31, 32, 33, 34, 35 √ 102-12: External initiatives 27, 83 √ 102-13: Membership of associations 28 √ Strategy GRI 102: General 102-14: Statement from senior decision-maker 4, 5, 6, 7 √ disclosures 102-15: Key impacts, risks, and opportunities 31, 32, 33, 34, 35, 85 √ Ethics and integrity GRI 102: General 102-16: Values, principles, standards, 17 16 disclosures and norms of behavior √ Governance structure 102-18: Governance structure 29, 30 √ GRI 102: General The Company does not maintain performance 102-28: Evaluating the highest governance disclosures evaluation on the operation of its administration, body’s performance √ nor of their respective members. Stakeholder engagement 99 Minerva Foods’ stakeholder groups are: civil society; customers; employees, outsourced workers and their unions; 102-40: List of stakeholder groups local communities; shareholders, groups of investors and √ financial institutions; providers; companies in the sector; and the State (government). 99 102-41: Collective bargaining agreements 100% of direct employees are covered by collective bargain- √ 8 ing agreements. GRI 102: General 99 disclosures The materiality review process carried out in 2017 relied on the support of a specialized consulting firm, which used a survey and analyses of information on the industry, 102-42: Identifying and selecting stakeholders in addition to interviews with top Company executives, √ identifying factors to the success of the business. The criteria for selecting these stakeholders were a high level of demand in relation to sustainability themes and increased legitimacy in their categories. 102-43: Approach to stakeholder engagement 80, 81 √ 102-44: Key topics and concerns raised 83 √

98 99 General disclosures Standard Page Omission UNGC SDG General disclosures Standard Page Omission UNGC SDG Reporting practice Economic performance 78, 100 103-1: Explanation of the material 79, 80 Industrial units in Brazil (parent company): José Bonifácio topic and its boundary √ (SP), Palmeiras de Goiás (GO), Batayporã (MS), Araguaína GRI 102: General 103-2: The management approach 27 (TO), Goianésia (GO), Barretos (SP), Campina Verde (MG) disclosures and its components √ and Janaúba (MG), Mirassol D’Oeste (MT), Várzea Grande (MT) and Rolim de Moura (RO). Distribution Centers in 103-3: Evaluation of the management approach 24, 25, 26, 27 √ Brazil (parent company): Aparecida de Goiânia (GO), Brasília 201-1: Direct economic value generated 1 | 2 | 5 | 52 (DF), Cariacica (ES), Taboão da Serra (SP), Araraquara (SP), and distributed √ 7 | 8 Taboão da Serra (SP), Belo Horizonte (MG), Fortaleza (CE), 201-2: Financial implications and other risks 32 Uberlândia (MG) and Cabo de Santo Agostinho (PE). Internal and opportunities due to climate change and external subsidiary industrial units: PULSA S/A and

102-45: Entities included in the consolidated Frigorífico Carrasco S/A (both in Uruguay), Red Cárnica S.A.S 101 Minerva does not maintain private pension plan*. Only financial statements and Red Industrial Colombiana S.A.S (both in Colombia), √ GRI 201: Economic official social security is guaranteed to all employees Frigomerc S/A (Paraguay) and Pul Argentina S.A (Argentina). performance contracted under the Consolidation of Work (CLT). Subsidiaries: Minerva Dawn Farms S.A. (Minerva Fine Foods), There are also no contractual arrangements, insurance Cia Sul Americana de Pecuária S.A., Intermeat – Assessoria 201-3: Defined benefit plan obligations and policies or any other instruments that structure means of √ e Comércio Ltda., Minerva Comercializadora de Energia other retirement plans compensation or indemnification in the case of removal Ltda., Lytmer S.A. (Uruguay), Friasa S.A. (Paraguay), Minerva from office or retirement. All benefits relating to pensions, Middle East (Lebanon), Minerva Live Cattle Export SPA retirements or supplements follows the Brazilian social (Chile), Minerva Foods Chile SPA (Chile), Minerva Meats security legislation. USA (USA), Minerva Australia Holdings PTY Ltd. (Australia), Minerva Europe Ltd., Transminerva Ltda., Minerva Overseas Economic standards I, Minerva Overseas II and Minerva Luxembourg S.A., Loin Market presence Investments Ltda. and Minerva Log S.A. 103-1: Explanation of the material 102-46: Defining report content 79, 80 √ 79 topic and its boundary and topic boundaries √ GRI 103: Management 103-2: The management approach 80 102-47: List of material topics 79, 80 √ approach and its components √ 102-48: Restatements of information 78 √ 103-3: Evaluation of the management approach 80 √ GRI 102: General 78, 100 84, 101 disclosures GRI 202: Market 202-2: Proportion of senior management The data and information presented in the GRI In the operations of Paraguay and Uruguay no executives 8 | 13 presence hired from the local community √ indicators refers to industrial units in Brazil and were hired from local communities. international industrial units: Paraguay (controlled Frigomerc S.A., Friasa S.A. and Expacar), Uruguay Indirect economic impacts (subsidiaries Frigorífico Carrasco S.A. and Pulsa S.A.) 103-1: Explanation of the material topic and Colombia (controlled Red Cárnica S.A.S. and and its boundary √ Red Industrial Colombiana S.A.S.). Some information GRI 103: Management 103-2: The management approach also covers the business units of Minerva Casings, approach and its components √ 102-49: Changes in reporting Minerva Biodiesel, Minerva Leather, Minerva Live √ Cattle (subsidiary), Minerva Fine Foods (subsidiary), 103-3: Evaluation of the management approach √ Minerva Comercializadora de Energia, South Anti-corruption American Livestock Company (CSAP) and Intermeat 103-1: Explanation of the material – information highlighted as reported. There were no 79, 80 topic and its boundary √ significant changes in relation to the periods covered in GRI 103: Management 103-2: The management approach previous documents. Under a continuous improvement approach 101 √ process, when feasible, reporting coverage will be and its components expanded during the following cycles to include other 103-3: Evaluation of the management approach 24, 25, 26, 27, 101 √ business under the control of the Company. 101 102-50: Reporting period 78 √ A routine assessment of corruption risk is maintained, in 102-51: Date of most recent report 78 √ which their degree of criticality and priority is identified. At which point the Compliance sector creates an 102-52: Reporting cycle 78 √ 205-1: Operations assessed for risks action plan to mitigate the risk on a case-by-case basis. 16 102-53: Contact point for questions regarding related to corruption Currently, the Company does not enter into agreements 78 the report √ with suppliers who withhold irregularities and as a form GRI 205: Anti-corruption 102-54: Claims of reporting in accordance with of prevention, before entering into any commercial 78, 98 the GRI Standards √ agreement, requests that the supplying company furnishes an anti-corruption policy. 102-55: GRI content index 98 √ 205-2: Communication and training about 26 16 102-56: External assurance 78 √ anti-corruption policies and procedures 205-3: Confirmed incidents of corruption and 101 Management approach √ 16 actions taken There was no record of cases of corruption during the year. 103-1: Explanation of the material 12 | 13 | 14 79, 80 topic and its boundary √ | 15 Environmental standards 1 | 5 | 8 | GRI 103: Management 103-2: The management approach Water 27 √ 12 | 13 | 14 103-1: Explanation of the material topic approach and its components 79, 80 | 15 | 16 and its boundary √ 12 | 13 | 14 GRI 103: Management 103-2: The management approach 103-3: Evaluation of the management approach 24, 25, 26, 27 √ 61, 62, 74, 75 | 15 approach and its components √ 103-3: Evaluation of the management approach 61, 62, 74, 75 √ GRI 303: Water 303-1: Water withdrawal by source 91, 92 6 | 8 | 12

*Employee pension plans are also not offered at operations in Paraguay and Uruguay.

100 101 General disclosures Standard Page Omission UNGC SDG General disclosures Standard Page Omission UNGC SDG Biodiversity Supplier environmental assessment 103-1: Explanation of the material 103-1: Explanation of the material 79, 80 79, 80 topic and its boundary √ topic and its boundary √ GRI 103: Management 103-2: The management approach GRI 103: Management 103-2: The management approach 32, 56, 57, 61, 62 56, 57, 61, 62 approach and its components √ approach and its components √ 103-3: Evaluation of the management approach 32, 56, 57, 61, 62 √ 103-3: Evaluation of the management approach 56, 57, 61, 62 √ 304-2: Significant impacts of activities, products, 103 GRI 304: Biodiversity 32, 56, 57 6 | 14 | 15 and services on biodiversity The Company analyzed possible environmental impacts Effluents and waste on farms of 3,234 new suppliers from various states in Brazil, using as reference, the public consultations of federal 103-1: Explanation of the material 79, 80 √ entities. It maintained research of listed of areas by the topic and its boundary Brazilian Institute of the Environment Environment and GRI 103: Management 103-2: The management approach Renewable Natural Resources (Ibama) and the Prodes Re- 61, 62, 76 308-1: New suppliers that were screened using approach and its components √ port, conducted by the National Institute of Space Research environmental criteria √ 103-3: Evaluation of the management approach 61, 62, 76 √ (INPE), conducting satellite monitoring of deforestation GRI 308: Supplier on properties located in the Amazon biome and sought 2 | 3 | 6 | environmental assessment evidence of invasion into indigenous lands, conservation 306-1: Water discharge by quality and destination 92, 93 √ 12 | 13 | 14 units or ecological corridors. It also adopted the analysis of | 15 deforestation polygons in order to discover possible seizures 2 | 3 | 6 | on behalf of third parties trying to avoid association with the 306-2: Waste by type and disposal method 94, 95 12 | 13 | 14 areas outside socio-environmental criteria. | 15 103 102 In 2017, all 5,046 suppliers were submitted to 308-2: Negative environmental impacts in the There was no significant leakage or spillage in 2017, assessments of environmental impacts, of which 218 supply chain and actions taken √ including in the operations of Paraguay and Uruguay. were identified as capable of generating environmental The Company currently has a good management system, impacts as negative or potential negatives. treatment, control and monitoring of socio-environmental Social standards indicators in order to avoid and/or mitigate potential risks and impacts on nearby communities, including an action Employment 2 | 3 | 6 | plan that covers different possible scenarios that could 306-3: Significant spills 12 | 13 | 14 103-1: Explanation of the material GRI 306: Effluents impact local communities, such as fires, chemical leaks, √ 79, 80 √ | 15 topic and its boundary and waste medical emergency, numbers for emergency contact and GRI 103: Management 103-2: The management approach communication procedures, emergency equipment and the 61, 62, 68, 69 approach and its components √ execution of emergency response. In addition, the Company makes a constant investment on the areas of ammonia and 103-3: Evaluation of the management approach 61, 62, 68, 69 √ in its refrigeration systems, such as leakage (inside operating 401-1: New employee hires and 87, 88, 89 5 | 8 areas and engine room), secondary containment, ventilation employee turnover systems, signs of alert and emergency response equipment. 69, 103 102 In both units of Uruguay and Paraguay, there are no The Company contracts for the removal and transportation GRI 401: Employment differences between the benefits received by full-time and of hazardous waste – carried out by special vehicles designed 401-2: Benefits provided to full-time 2 | 3 | 12 part-time employees, all of which receive food aid. for the type of material transported. They are delivered employees that are not provided to √ 8 306-4: Transport of hazardous waste | 13 | 14 along with a responsible drivers, MTR, invoice, balance √ temporary or part-time employees | 15 At the Canelones Plant in Uruguay, the Company has an sheet, Certificate of Transaction of Waste of Environmental agreement with a sports gym so that employees can practice Interest (CADRI) and description of waste. In 2017, 37,900 fitness exercise. kg of class I waste was disposed of. Occupational health and safety Environmental compliance 103-1: Explanation of the material 103-1: Explanation of the material topic 79, 80 √ 79, 80 topic and its boundary and its boundary √ GRI 103: Management 103-2: The management approach GRI 103: Management 103-2: The management approach and approach 61, 62, 68, 70, 71 √ 61, 62, 74, 75 and its components approach its components √ 103-3: Evaluation of the management approach 61, 62, 68, 70, 71 √ 103-3: Evaluation of the management approach 61, 62, 74, 75 √ 403-1: Workers representation in formal 102 joint management–worker health and 70, 90 √ 8 As of December 31, 2016, the Company became safety committees a defendant in administrative process before the 403-2: Types of injury and rates of injury, occupatio- Environmental Protection Agency of the State of São nal diseases, lost days, and absenteeism, and number 90 √ 3 | 8 Paulo (Cetesb) as a result of an ammonia incident of work-related fatalities that occurred on August 31, 2016, in the Barretos unit GRI 403: Occupational (SP), to a fine of the approximate amount of R$12.5 health and safety 103 403-3: Workers with high incidence or high risk There are no workers involved with occupational activities GRI 307: Environmental 307-1: Non-compliance with environmental million. In February 14, 2017, a hierarchical appeal was 13 | 14 | 15 √ 3 | 8 compliance laws and regulations filed. In November 17, 2017, the appeal was dismissed √ | 16 of diseases related to their occupation that have a high incidence or high risk of diseases related to receiving a reduced fine on the basis of the principles of their occupation. reasonableness and proportionality, which reduced the 403-4: Health and safety topics covered in 89, 90 8 value to R$4,000,000.00, with the possibility of a reduction formal agreements with trade unions √ of 30% if payment occurs by the expiration date set under the Guide of Collection. In operations of Paraguay and Uruguay there were no fines and/or penalties for non- compliance with environmental legislation.

102 103 General disclosures Standard Page Omission UNGC SDG General disclosures Standard Page Omission UNGC SDG Training and education Security practices 103-1: Explanation of the material 103-1: Explanation of the material 79, 80 79, 80 topic and its boundary √ topic and its boundary √ GRI 103: Management 103-2: The management approach GRI 103: Management 103-2: The management approach 26, 68, 70, 90 27 approach and its components √ approach and its components √ 103-3: Evaluation of the management approach 26, 68, 70, 90 √ 103-3: Evaluation of the management approach 27 √ GRI 404: Training 404-1: Average hours of training per 410-1: Security personnel trained in human 91 4 | 5 | 8 GRI 410: Security practices 96 16 and education year per employee rights policies or procedures √ Diversity and equal opportunity Rights of indigenous peoples 103-1: Explanation of the material 103-1: Explanation of the material 79, 80 79, 80 topic and its boundary √ topic and its boundary √ GRI 103: Management 103-2: The management approach GRI 103: Management 103-2: The management approach 68 28, 56, 57 approach and its components √ approach and its components √ 103-3: Evaluation of the management approach 68 √ 103-3: Evaluation of the management approach 28, 56, 57 √ GRI 405: Diversity and 405-1: Diversity of governance bodies 105 84, 87 5 | 8 equal opportunity and employees √ The Company sends quarterly communications to the region Freedom of association and collective bargaining of Funai, in order to identify any new encroachment on indigenous lands throughout the country. Considering the 103-1: Explanation of the material 79, 80 √ importance of this culture, Minerva extended its criteria to in- topic and its boundary clude its analysis by satellite monitoring, based on Decree No. GRI 103: Management 103-2: The management approach and 1,775/96, which identifies the boundaries of land traditionally 62, 68 approach its components √ occupied by these indigenous peoples, with the purpose of GRI 411: Rights of 411-1: Incidents of violations involving finding enrouching farms of potential suppliers with in these 103-3: Evaluation of the management approach 62, 68 √ 2 indigenous peoples rights of indigenous peoples borders. In response to the equerry, Funai notified in regards √ 407-1: Operations and suppliers in which the 104 GRI 405: Diversity and to evidence found of encroachment by a rural property into right to freedom of association and collective In 2017, no risk or violation of the right to exercise freedom 8 equal opportunity √ area of indigenous people in the State of Pará. Through the bargaining may be at risk of association and to collectively negotiate was identified. use of geospatial monitoring, it was discovered that two Child labor suppliers with a probability of invasion of indigenous lands therefore, a business agreements were not established with. 103-1: Explanation of the material 79, 80 In this manner, all were oriented to contact the responsible topic and its boundary √ agency with the objective of pursuing further information GRI 103: Management 103-2: The management approach 56, 57 regarding possible invasion. approach and its components √ Human rights assessment 103-3: Evaluation of the management approach 56, 57 √ 103-1: Explanation of the material 79, 80 104 topic and its boundary √ All suppliers and partners are assessed according Minerva’s 408-1: Operations and suppliers at significant GRI 103: Management 103-2: The management approach GRI 408: Child labor standard of origin by virtue of the undertakings aimed at √ 8 | 16 27, 97 risk for incidents of child labor approach and its components √ the non-occurrence of child or forced labor practices on the properties of its suppliers. 103-3: Evaluation of the management approach 27, 97 √ GRI 412: Human rights 412-2: Employee training on human rights Forced or compulsory labor 97 assessment policies or procedures √ 103-1: Explanation of the material 79, 80 topic and its boundary √ Supplier social assessment GRI 103: Management 103-2: The management approach 103-1: Explanation of the material topic 56, 57 79, 80 √ approach and its components √ and its boundary GRI 103: Management 103-2: The management approach and 103-3: Evaluation of the management approach 56, 57 √ 56, 57, 58, 59, 105 approach its components √ 96, 104 The partners found to be on the list published by the 103-3: Evaluation of the management approach 56, 57, 58, 59, 105 √ Ministry of Labor and Employment (MTE) and that 105 submitted workers to conditions of forced labor have had In 2017, of the 3,234 suppliers that Minerva Foods analy- their commercial activities terminated with the Company, zed 100% were selected based on human rights criteria. and will only be admitted as suppliers after being removal The practice of sustainability is derived from the manage- from the list. During the year, seven suppliers were added 414-1: New suppliers that were screened using ment of properties in accordance with Ibama and with the √ 5 | 8 | 16 to the company’s blacklist system after being caught during GRI 414: Supplier social criteria guidelines of the National Pact for the Eradication of Slave MTE inspections in potential human right violations. As social assessment Labor. In addition, the Company certifies that the raw GRI 409: Forced or 409-1: Operations and suppliers at significant a proactive measure, biannually Minerva Foods, verifies √ 8 material does not come from properties acquired through compulsory labor risk for incidents of forced or compulsory labor with all MTE regional coordinating bodies to ensure that land grabbing, deforestation or through the invasion of there are no conflicts with its suppliers. The “dirty list” is a protected areas in the Amazon Rainforest. database maintained by the MTE, since November 2003. 414-2: Negative social impacts in the supply It publishes cases that the government has characterized as 86 5 | 8 | 16 chain and actions taken √ exploitation by means of rescues of people and employers were entitled to administrative defense in first and second Public policy degree. Thus, they remain on the list for two years, unless 103-1: Explanation of the material 79, 80 they make an agreement with the government. All the topic and its boundary √ productive sectors in the country are subject to having GRI 103: Management 103-2: The management approach some their suppliers registered. 24, 25, 26, 27, 101 approach and its components √ 103-3: Evaluation of the management approach 24, 25, 26, 27, 101 √ 105 GRI 415: Public policy 415-1: Political contributions The Company made no contributions to political √ 16 parties in 2017.

104 105 General disclosures Standard Page Omission UNGC SDG Customer health and safety 103-1: Explanation of the material Limited assurance report issued by 79, 80 topic and its boundary √ GRI 103: Management 103-2: The management approach 56, 57, 61, 62, 63 approach and its components √ independent auditors related to information 103-3: Evaluation of the management approach 56, 57, 61, 62, 63 √ 416-1: Assessment of the health and safety 61 impacts of product and service categories √ on sustainability and social responsibility 105 During the year, 36 notices of infraction were received involving cases relating to the impacts, resulting from products GRI 416: Customer health and services, in health and safety, being: four in Araguaína, and safety 416-2: Incidents of non-compliance nine in Barretos, six in José Bonifácio, three in Palmeiras de concerning the health and safety impacts Goiás, three in Janaúba, four in Mirassol D’Oeste, five in Várzea 16 of products and services Grande and two in Rolim de Moura. An action plan was To: generated for all non conformities identified through company monitoring or verified by SIF that resulted in notices of infrac- Board of Directors and the Shareholders of Minerva S.A. tion, with the addition of corrective and preventive measures, over the products and production processes. São Paulo – SP Food processing sector 56, 57, 60, 63, 104 The cattle acquired by the Company comes from properties Introduction that are 100% in harmony with the following criteria, environmental, land and labor and potential impacts on society. We were contracted by Minerva S.A. (“Minerva Foods”) to submit our limited assurance report In total, 1,524,694 head of cattle were slaughtered in all industrial units located in Brazil, respecting the particulari- on the information compiled for the Minerva S.A. Sustainability and Social Responsibility report, FP1: Percentage of purchased volume ties of each region in which they were purchased. The units from suppliers compliant with company's that commercialized within the Amazon Biome act with relative to the fiscal year ending on December 31, 2017. sourcing policy greater precaution due to the Public Commitment Livestock Procurement/Sourcing agreement, signed with Greenpeace, and the Term of Adjust- practices ment of Conduct (TAC), signed with the Public Ministry of Pará, in reference to environmental controls. The Company Company management’s responsibilities suspends relationships with suppliers that do not adhere to the livestock purchasing guidelines. The management at Minerva S.A. is responsible for preparing and adequately presenting the infor- 56, 57, 60, 63, 104 mation contained in the 2017 Sustainability Report, pursuant to the guidelines of the Global Repor- FP2: Percentage of purchased volume which is 100% of the animals purchased are in compliance with verified as being in accordance with credible, environmental, land and labor criterias. In addition, ting Initiative (GRI) – in its GRI Standards version and using the “Core” reporting option and for internationally recognized responsible production all animals are acquired by following strict quality and √ standards, broken down by standard traceability standards in accordance with international the internal controls that management deems necessary to enable preparation of this information standards related to animal welfare. FP5: Percentage of production volume manufac- free from material misstatement, regardless of whether due to fraud or error. tured in sites certified by an independent third Customer health and safety 86 party according to internationally recognized food safety management sustem standards Independent auditors’ responsibility FP9: Percentage and total of animals raised and/ 85 Our responsibility is to express a conclusion on the information in the Minerva Foods 2017 Sus- or processed, by species and breed type 106 tainability Report, mentioned in the audited items summary chart, based on the limited assurance In the year, two notices were received concerning animal welfare: one in Barretos and one in Rolim de Moura. Due to work conducted according to Technical Notice CTO 01/12, issued by Brazil’s Federal Accounting FP13: Total number of incidents of significant an amendment of the Industrial and Sanitary Inspection of Animal welfare non-compliance with laws and regulations, and Board (Conselho Federal de Contabilidade - CFC) and prepared based on NBC TO 3000 - Assu- Animal Products (RIISPOA) regulation and the methods for adherence with voluntary standards related to verification of federal inspections, Minerva opted to include √ transportation, handling and slaughter practices rance Engagements Other Than Audits and Reviews, issued by Brazil’s Federal Accounting Board only notices of violation that were subject to a warning or a for live terrestrial and aquatic animals fine, and not the non-compliances recorded by the Federal (CFC), which is equivalent to international standard ISAE 3000, issued by the International Fede- Inspection Service (SIF) during its verifications. The notices have not yet been judged by the competent authorities. ration of Accountants, applicable to non-historical information. These standards require compliance with ethical demands, including requirements of independence, and that work be executed with the goal of gaining limited assurance that the information contained in the Sustainability Report, taken as a whole, is free of material misstatements.

106 107 A limited assurance engagement conducted according to NBC TO 3000 (ISAE 3000) consists Scope and limitations mostly of questioning the Company’s management and other Company professionals involved in The procedures applied in a limited assurance engagement are substantially less detailed than those preparing the information contained in the Minerva 2017 Sustainability Report, as well as for ap- applied in an assurance engagement aimed at issuing an opinion on the information contained in plication of analytic procedures for finding evidence that allows us to make limited assurance con- the Minerva Foods 2017 Sustainability Report. Therefore, we were unable to obtain assurance that clusions regarding the information considered as a whole. A limited assurance engagement also we would become aware of all matters that would be identified in an assurance engagement where requires the execution of additional procedures, when the independent auditor is made aware of the objective is to issue an opinion. If we had performed an engagement with the objective of issu- matters that lead him to believe that the information contained in the Minerva Foods 2017 Sustain- ing an opinion, we might have identified other matters and possible misstatements that may exist ability Report, considered as a whole, may present material misstatements. in the information contained in the Minerva Foods 2017 Sustainability Report.

The procedures selected are based on our understanding of aspects related to compilation and Accordingly, we do not express an opinion on this information. Nonfinancial data is subject to presentation of the information contained in the Minerva Foods 2017 Sustainability Report and on more inherent limitations than financial data, due to the nature and diversity of the methods used other circumstances of the engagement and our consideration regarding the areas where material to determine, calculate or estimate this data. Qualitative interpretations of the data’s materiality misstatements may exist. Procedures included: and accuracy are subject to individual presumptions and judgments. Furthermore, our engagement covered neither data reported in prior periods nor future projections and targets. (a) planning of work, considering the relevance, volume of quantitative and qualitative information and operational and internal control systems that served as the basis for preparing the infor- Conclusion mation contained in the Minerva Foods 2017 Sustainability Report – relative to the period of Based on the procedures performed, as described in this report, and the items audited and listed January 1 to December 31, 2017; in the Sustainability Report’s summary chart, nothing has come to our attention that leads us to (b) understanding of the methodology for calculations and procedures for compiling indicators believe that the information contained in the Minerva Foods Sustainability Report related to the through interviews with the managers responsible for preparing information; fiscal year ended on December 31, 2017, was not compiled, in all material aspects, according to the (c) application of analytical procedures concerning quantitative information with inquiries regard- guidelines of the GRI (Global Reporting Initiative), in its GRI Standards version, “Core” reporting ing the qualitative information and its correlation with the indicators reported in the informa- option and in accordance with the records and files that served as the basis for its preparation. tion contained in the 2017 Annual Sustainability Report; and (d) comparison of financial indicators with accounting statements and/or accounting records. São Paulo, 30 de junho de 2018.

The limited assurance engagement also included adherence to the preparatory guidelines and cri- Sergio Yassunori Ishikawa teria for Sustainability Reports in the GRI standard, in the GRI Standards version, applicable to Brazilian Regional Accounting Board Accountant (CT CRC) 1SP-224.021/O-5 preparation of the information contained in the Minerva Foods 2017 Sustainability Report. Grant Thornton Auditores Independentes Brazilian Regional Accounting Board (CRC) 2SP-025.583/O-1 We believe that the evidence found in our engagement is sufficient and appropriate to base our conclusion in a limited manner, for the items listed in the summary chart of the 2017 Sustainability Report.

108 109 Corporate INFORMATION

Minerva Foods Av. Antônio Manço Bernardes, s/n – Rotatória Família Vilela de Queiroz 14.781-545 – Barretos (SP) Phone: (17) 3321-3355

Rua Leopoldo Couto de Magalhães Júnior, 758, cj. 82 – Itaim Bibi 04542-000 – São Paulo (SP) Phone: (11) 3074-2444 www.minervafoods.com Production Team

Credits Coordination Administrative director and IT: Fábio Miguel Longo Sustainability, Compliance and SGI Department: Taciano Custódio e Camila Ito Communication Department: Denise Rocha, Larissa Matos e Lucas Borges

Consulting of indicators, editorial coordination, design and proofread TheMediaGroup

Copywriting KMZ Conteúdo (coordination: TheMediaGroup)

Photos Minerva Foods Image bank

Audit Grant Thornton Brasil Ltda.

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