M Dias Branco S A Indústria e Comercio de Alimentos : 2021 Annual Financial Statements

SUMMARY

MANAGEMENT REPORT

MESSAGE FROM THE CEO ................................................................................................................ 3

M. DIAS BRANCO.............................................................................................................................. 5

MARKET CONTEXT ............................................................................................................................. 8

ECONOMIC AND FINANCIAL PERFORMANCE ............................................................................ 10

CAPITAL MARKET ............................................................................................................................ 20

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) ............................................................... 21

HUMAN CAPITAL ............................................................................................................................. 28

ADDITIONAL INFORMATION .......................................................................................................... 29

INDEPENDENT AUDITOR'S REPORT ................................................................................................. 30

FINANCIAL STATEMENTS ................................................................................................................ 36

NOTES TO THE FINANCIAL STATEMENTS ........................................................................................ 44

STATEMENTS OF EXECUTIVE OFFICERS AND AUDIT COMMITEE REPORT .................................... 115

MESSAGE FROM THE CEO

Ladies and Gentlemen,

2021 was marked by several challenges for the market and society in general. The coronavirus pandemic, the macroeconomic, political and social context led people, institutions and organizations to adapt and adopt protective measures in line with their strategies.

M. Dias Branco, based on its own experience of almost 70 years in the market, and firmly motivated by the belief in Brazil and in the recovery of the world economy, carried out important strategic changes, with the purpose of continuing its historical path of growth and profitability, combined with the maintenance of the recognized quality of its products.

As the main obstacles faced in 2021, we highlight the rise in the costs of our supplies due to the depreciation of Brazilian Real against the US Dollar, as well as the rise in commodity prices. In a scenario of consumption impacted by inflation, there are natural difficulties in offsetting this increase in costs in passing through the price to the consumer. We know, however, that this is an atypical and transitory scenario. In this context, in addition to several other measures, we adopted concrete and effective actions to recover margins and protect cash.

The Company, rated with AAA rating with a stable outlook, reaffirmed by Fitch Ratings, has high financial solidity and low leverage, with emphasis on the debt extension after the issuance of the Agribusiness Receivables Certificates - CRA, carried out in 2021. This solid financial structure combined with an efficient pricing policy and constant attention to consumer desires and possibilities have been of fundamental importance for us to overcome these challenges.

We continue to invest to enable sustainable growth in the medium and long term, especially with the launch of higher value-added products and investments in marketing. It is in this context that the acquisition of the Latinex company in 2021 is inserted. With the FIT FOOD, Frontera, Smart and Taste&Co brands, Latinex reinforces the Company's presence in healthy food and snacks, in addition to marking its entry into the seasonings, sauces and condiments, which reflects the Company's commercial strategy to grow profitably, including in its portfolio products with high growth potential and value.

In the search for greater efficiency and productivity, we carried out an important corporate restructuring. Some positions were suppressed, others created and some areas unified. All in favor of greater synergy, security and agility in the performance of our activities. In this context, two new statutory boards were created: Vice-Presidency for Supply Chain and Vice-Presidency for Legal, Governance, Risks and Compliance.

This corporate restructuring generated significant savings in our costs and also provided us with an adequate structure to continue growing with a focus on the needs of our customers and the development of the market in which we operate, as well as representing a reinforcement of our unwavering commitment to seek to guarantee the highest level of corporate governance in our operations.

In 2021, we also revised M. Dias Branco's strategic sustainability agenda with a focus on 2030, with long-term public commitments. Climate change, diversity, inclusion and surrounding communities are topics that received even more attention. We remained in the ISE portfolio (B3's Corporate Sustainability Index), evolved from D to B- in the CDP (Carbon Disclosure Project) ranking, and raised funds unprecedented in the Company's history through the already issued CRA, which was delivered as "Green Bond".

In terms of social investment, among other actions, we donated more than 4,300 tons of food to institutions in the vicinity of our units to food banks. We also collaborated with the victims of the rains that hit Bahia at the end of the year.

We are a Company attentive to its time. We are present on the main e-commerce and delivery platforms in the country and we remain connected with startups and disruptive culture through our Germinar program.

We recognize our leading position in the national market for pasta and cookies and we are proud of the dedication and union of our employees, and we allow ourselves, supported by our entrepreneurial spirit, market experience, work capacity, and innovation, we are able, always and more and more, to live up to our positioning of "Dream, Do, Grow", generating value to shareholders and the society.

Thank you.

Ivens Dias Branco Júnior

CEO

M. DIAS BRANCO

M. Dias Branco S. A. Indústria e Comércio de Alimentos is a publicly traded corporation listed on B3 S.A. - Brasil, Bolsa, Balcão in Novo Mercado segment (MDIA3). Leader in Brazil's cookie & cracker and pasta markets, M. Dias Branco operates in industrialization, sale and distribution of food. The Company's purpose is to feed and inspire people turning dreams into reality.

In 2021, the Company launched a new positioning and organizational identity translated into three words: Dream, Do, Grow. This positioning refers to the Company's almost 70-year history, honoring the past, connecting with the challenges of the present and communicating what we desire for the future.

Mission

To offer quality, innovative, healthy and tasty food with competitive prices, providing well-being and happiness to people.

Vision

To be a large food company in Brazil, with a global presence, diversified operations, sustainable growth and respect for our origins.

Values

Simplicity in relationships and in the search for practical solutions; Attitude to innovate and make it happen;

Collaboration for business growth;

Respect for people and the common good; Excellence in everything we do.

M. Dias Branco's business model highlights the modern production facilities, with plants strategically located throughout the country, portfolio of strong brands with nationwide coverage and spread distribution, in addition to financial robustness and strong cash generation to support the growth strategy.

In its portfolio, the Company has more than 20 brands, including Adria, Basilar, Bonsabor, Estrela, Isabela, Finna, Fortaleza, Medalha de Ouro, Pelaggio, Pilar, Piraquê, Predilleto, Puro Sabor, Richester,

Salsitos, Vitarella, Zabet, among others, and the recently acquired Fit Food, Frontera, Smart and Taste&Co. The broad diversity of brands aims to meet different consumer profiles, operating in a complementary way across different markets and product categories.

The main product categories are cookies and crackers, pasta, wheat flour and bran, margarine and vegetable shortening, in addition to other product lines, such as cakes, cake mixes, snacks and packaged toast. With the acquisition of Latinex company in 2021, the Company reinforced its presence in healthy foods and snacks, in addition to marking its entry into the seasonings, sauces and condiments segments.