Vulcabras S A : ITR 4Q22

Centro Empresarial Queiroz Galvão - Torre Cícero Dias

Rua Padre Carapuceiro, 858

8º andar, Boa Viagem

51020-280 - Recife - PE - Brasil

Tel: +55 81 3201-4800

Fax: +55 81 3201-4819 ey.com.br

A free translation from Portuguese into English of independent auditor's report on individual and consolidated financial statements prepared in Brazilian currency in accordance with accounting practices adopted in Brazil and the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB)

Independent auditor's report on individual and consolidated financial statements

To the Shareholders, Board of Directors and Officers

Vulcabras S.A.

Jundiaí - SP

Opinion

We have audited the individual and consolidated financial statements of Vulcabras S.A. (the "Company"), identified as Individual and Consolidated, respectively, which comprise the statements of financial position as at December 31, 2022, and the statements of profit or loss, of comprehensive income, of changes in equity, and of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying individual and consolidated financial statements present fairly, in all material respects, the individual and consolidated financial position of the Company as at December 31, 2022, and its individual and consolidated financial performance and cash flows for the year then ended, in accordance with accounting practices adopted in Brazil and with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).

Basis for opinion

We conducted our audit in accordance with Brazilian and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the individual and consolidated financial statements section of our report. We are independent of the Company and its subsidiaries in accordance with the relevant ethical principles set forth in the Code of Professional Ethics for Accountants and the professional standards issued by Brazil's National Association of State Boards of Accountancy (CFC), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Key audit matters

Key audit matters are those that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the individual and consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide an individual opinion on these matters. For the matter below, our description of how our audit addressed the matter, including any commentary on the findings or outcome of our procedures, is provided in that context.

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Uma empresa-membro da Ernst & Young Global Limited

We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the individual and consolidated financial statements section of our report, including in relation to this matter. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matter below, provide the basis for our audit opinion on the accompanying financial statements.

Impairment of assets with finite and indefinite useful lives

At December 31, 2022, the balance of intangible assets totaled R$ 111 thousand and R$ 209,096 thousand, including goodwill of R$ 198,214 thousand, individual and consolidated, respectively. Consolidated property, plant and equipment, including buildings, machinery and equipment, amounted to R$ 379,031 thousand as of December 31, 2022. In accordance with accounting practices adopted in Brazil and with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), the Company is required to carry out, at least annually, an impairment test of the recorded amounts of these assets.

Monitoring of this matter was considered significant for our audit, since the impairment testing process for these items is complex, involving a high degree of subjectivity, and is based on various assumptions, such as determination of the cash-generating units, discount rates, growth rates, and profitability of the Company's and its subsidiaries' businesses several years ahead.

How our audit addressed this matter:

Our audit procedures included the following, among others: (i) updating of the understanding and assessment of the internal control environment on the processes for evaluating the recoverable amount of the Company's finite- and indefinite-lived assets; (ii) assessment of the governance on the preparation and approval of cash flow projections; (iii) use of specialized professionals to assist us in evaluating the assumptions and methodology used by the Company and its subsidiaries, as well as examination of estimates of future sales, growth rate, discount rate used in discounted cash flows, profit margin of the cash-generating units; and (iv) arithmetic recalculation of the financial model. We also examined the adequacy of the disclosures made by the Company regarding the assumptions used in the asset impairment calculations, which are included in notes 3.13 and 15.

Based on the result of the audit procedures performed on the impairment of tangible and intangible assets, particularly goodwill, which is consistent with management's assessment, we consider that the criteria and assumptions used to determine the recoverable amount of goodwill and other tangible and intangible assets adopted by management, as well as the respective disclosures in Note 15, are acceptable, in the context of the individual and consolidated financial statements taken as a whole.

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Other matters

Audit of corresponding figures

The Company's individual and consolidated financial statements for the year ended December 31, 2021, presented for comparison purposes, were audited by another independent auditor who issued a report dated March 8, 2022 containing an unmodified opinion.

Statements of value added

The individual and consolidated statements of value added (SVA) for the year ended December 31, 2022, prepared under the responsibility of the Company's executive board and presented as supplementary information for IFRS purposes, were submitted to audit procedures conducted jointly with the audit of the Company's financial statements. To form our opinion, we evaluated if these statements are reconciled to the financial statements and accounting records, as applicable, and if their form and content comply with the criteria defined by Accounting Pronouncement NBC TG 09 - Statement of Value Added. In our opinion, these statements of value added were prepared fairly, in all material respects, in accordance with the criteria defined in the abovementioned accounting pronouncement, and are consistent in relation to the individual and consolidated financial statements taken as a whole.

Other information accompanying the individual and consolidated financial statements and the auditor's report

The executive board is responsible for such other information, which comprises the Management Report.

Our opinion on the individual and consolidated financial statements does not cover the Management Report and we do not express any form of assurance conclusion thereon.

In connection with our audit of the individual and consolidated financial statements, our responsibility is to read the Management Report and, in doing so, consider whether this report is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the Management Report, we are required to report that fact. We have nothing to report in this regard.

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