TOTVS S A : 2021 - Financial Statements in International Standards

TOTVS S.A.

Financial Statements for the fiscal year ended December 31, 2021

(A free translation of the original in Portuguese)

Contents

Management Report and Comments on the Company's Performance	3
Independent auditors' report on the individual and consolidated financial statements	19
Individual and Consolidated Statement of Financial Position	27
Individual and Consolidated Statements of Profit or Loss	28
Individual and Consolidated Statements of Comprehensive Income	29
Individual and Consolidated Statements of Changes in Shareholders' Equity	30
Individual and Consolidated Statement of Cash Flows	32
Individual and Consolidated Statements of Value Added	33
Notes to the Individual and Consolidated Financial Statements	34
The Company and its operations	34
Basis of accounting	35
Significant accounting judgments, estimates and assumptions	49
Corporate changes	51
Financial instruments and sensitivity analysis of financial assets and liabilities	54
Cash and cash equivalents	61
Financial investments	61
Trade and other receivables	62
Recoverable taxes	64
Income taxes	64
Related party balances and transactions	66
Other assets	67
Equity-accounted investees	67
Property, plant and equipment	70
Intangible assets and Goodwill	72
Labor liabilities	75
Taxes and contributions liabilities	76
Loans, financing and lease liabilities	76
Debentures	78
Business partners´ payables	79
Accounts payable from acquisition of subsidiaries	80
Provision for contingencies	81
Senior shares and mezzanine obligations	85
Shareholders' equity	86
Dividends and Interest on Shareholders' Equity	87
Share-based compensation plan	88
Operating Segments	90
Earnings per share	92
Gross sales revenue	93
Costs and expenses by nature	93
Finance income and expenses	94
Private pension plan - defined contribution	94
Insurance coverage	95
Subsequent events	95
Report from the Statutory Audit Committee	96
Fiscal Council Report	98

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(A free translation of the original in Portuguese)

Management Report and Comments on the Company's Performance

Dear shareholders,

In compliance with the legal provisions, TOTVS S.A., the Brazilian leader in the development and sales of management software, productivity and collaboration platforms, consulting, and related services in Brazil, hereby submits the Management Report and the corresponding Financial Statements, together with the audit report issued by the independent auditors, for the years ended December 31, 2021 and 2020, prepared in accordance with accounting practices adopted in Brazil.

MESSAGE FROM THE BOARD

When we decided to stop and reflect on the meaning of the year 2021 for the world, at first, the most obvious conclusion would be to say that it was exactly the same thing as 2020, that nothing had changed, and that the COVID-19 health crisis continued to rule over the global spotlight, again. It is an undeniable fact that the challenges surrounding the global COVID pandemic have remained and have expanded as we have seen new variants emerge, but we have gone much further: amidst uncertainties and so many priceless losses, we have tested our capacity for resilience as never before and we watched the infinite ability of human beings and organizations to reinvent themselves and adapt faced with a period as adverse as the one we are currently experiencing.

The legacy is positive: we have fully adapted to this new reality. We are adaptable. With science and technology, we created vaccines; we challenged the limits of logistics by distributing them globally; we changed the work dynamics to a hybrid and flexible model; we called on the world to take a new look at the global challenges at COP26, among many other adjustments that had to be made. We didn't stop at any time; rather, we worked hard and responded quickly to it all.

For TOTVS, entrepreneurship and digitalization are must-have ingredients of this journey. All TOTVERs are nonconformists and don't get used to less than what they're actually capable of delivering. It is not just a striking motto; rather, it is something that permeates our culture and was translated into our daily attitudes and deliveries of that period: we turned the 3D ecosystem into reality (3 Dimensions - Management, Business Performance, and Techfin); we created disruptive alliances such as the partnership with B3; we structured innovative investment models through the Corporate Venture Capital as a Service mechanism. In common with these and many other achievements, we have the "technology" factor, which is the most genuine thing we have.

As to ESG (Environmental, Social, and Governance), our performance was marked by significant progress, driven by implementing the ESG Policy guidelines. About the E pillar, we developed the first inventory of GHG emissions - Greenhouse Gas - from TOTVS operations as an important step in our environmental agenda. As to the S pillar, we continued strengthening our relations with the community by creating partnerships with the government and society to promote training to achieve skilled labor; we contributed to the employability of many young people through the Social Opportunity Institute (IOS); we continued promoting our Diversity and Inclusion Program; and we structured the flexible work model to be implemented after the pandemic, besides the planning and feasibility of other health and safety measures, as part of TOTVS'S contribution to achieve SDGs 4, 5, and 8, respectively. About the G pillar, we renewed our business' ESG materiality matrix by engaging our stakeholders, and reinforced our commitment to the highest level of ethics and transparency in business relationships, with emphasis on the approval of the Audit Committee's Charter and its conversion into a Statutory Audit Committee, besides the approval of the new Data Privacy and Indemnity Policies for the Management members.

Eventually, to top it all off, we bid farewell to 2021 by celebrating our 15th anniversary of IPO at B3. From the first unicorn to the largest technology company in Brazil, our 40-year trajectory has always been marked by hard work, overcoming and determination, and when we had to look back, it was to better understand the present and shape the future. We made the right choices and the best decisions at every moment in the face of

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(A free translation of the original in Portuguese)

each challenge. We rejuvenated, made progress on this journey, and all this was achieved alongside our clients, partners, TOTVERS and our investors who believed in our legacy and invested in us, in our strategy, in our vision of the future.

It is this energy that has been our daily fuel, which moves us and drives us towards business disruption, transformation of the value chains of the segments in which we operate, and increase in our clients' results. To keep moving forward, in this next cycle we will have the challenge of local elections, which could be marked by strong polarization or a potential emergence of a third way; time will tell. Whatever the path, it will be important to be open as a country to carry out the tax, administrative, and labor reforms that we so desperately need. They will be critical for Brazil's competitiveness in the global gear and to generate high value-added jobs, in a scenario of intense competition and demand for science and workforce.

TOTVS remains firm in its purpose, democratizing technology in everyday life as an element of social and economic transformation and supporting its ecosystem to conquer the future. Despite all challenges TOTVS delivers with mastery the defined purposes for 2021. Congratulations to all participants of our Ecosystem.

Now focus on 2022.

Laércio Cosentino, Chairman of the Board

MESSAGE FROM THE CEO

Another year comes to an end and the progress of vaccination, which has already immunized approximately 80% of the Brazilian population, allowed us to close 2021 within the gradual process of resuming face-to-face activities, while holding health measures and the concern for life as a top priority in our work. For that reason, I would like to express my gratitude to all TOTVERs, their families, and our partners for continuing to face and overcome this challenging period. I also want to wish you a 2022 filled with success, achievements, and good health.

At TOTVS, we delivered another fantastic year of achievements and progress. Our 3D ecosystem (3 Dimensions: Management, Business Performance, and Techfin) is a consolidated reality, where our clients access a broad portfolio that goes far beyond ERP, boosting acceleration of the digitalization journey. We are definitely changing the rules of the game in the business management software market.

We built new and powerful engines that multiply our addressable market by more than 7 times, accelerate the development of new models, build Company value, and increase its competitive advantages. Two of them, Techfin and Business Performance, after less than 3 years into the journey, have shown their potential and already represent over 13% of Total Revenue in 2021.

When we combine SaaS results in Management, Business Performance, and Techfin, these engines closed

2021 representing over 40% of Total Revenue and approximately 70% of year-on-year growth. These results are historical, financial, and operational record-breaking achievements.

In the Management dimension, Recurring Revenue gained speed throughout the year, including in the last quarter. We ended Q4'21 under impressive 24% organic growth compared with Q4'20 and 18% above 2020, representing over 80% of Total Net Revenue in all quarters. This result was due to the focus on SaaS, which grew by over 30%, and on Cloudification, which grew by 48% in 2021. Moreover, 2021 was the third year in a row of double-digit growth, with 30% of SaaS contracting from new names, despite the undisputed leadership in the ERP market, reinforcing that this is an immature and expanding market.

In Business Performance, with the acquisition of RD Station, which is the main market player here in Brazil, we took a decisive step in structuring this dimension, which ended 2021 at a hefty pace, representing 6%

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(A free translation of the original in Portuguese)

of Company Revenue, with emphasis on Recurring Revenue reporting 45% year-on-year organic growth. This is

• dimension with great potential for generating value that we will continue to invest heavily in, under a broad strategy of expanding digital commerce exponentially, with an asset-light model that drives GMV and take-rate growth.

In Techfin, once again proving the robustness of the business model, we broke consecutive credit production records, ending the year at R$9.8 billion, a 48% growth over 2020, without circumventing lending discipline, reflected in the low levels of delinquency throughout the year. There is still much more to come. Our primary goal is to revolutionize the offer of financial services, making us the Financial Platform for the Small and Medium Businesses, expanding our portfolio with more competitive customized products, streamlining access to financial services through integrated solutions based on Big Data.

These advances position TOTVS at a new moment: of strong accelerated growth, with a healthy EBITDA Margin, resulting in a 13 percentage point increase to the Rule of 40, which reached 48% in 2021. This balance between accelerated growth and high margin is unique in the Brazilian technology market and ideal for facing any of the most challenging scenarios, like what we have seen in recent years here in Brazil. Further proof that TOTVS is a distinguished company with a unique ability for transformation. This indicator will also help us flexibly manage and balance the combination of business dimensions at different times and terms of office, benefiting a young, ambitious, and creative culture. We are and will be on the move, seeking to find innovative ways to generate and unlock value.

The creation of Dimensa was one practical example, which now stands on dedicated resources, more focus, and autonomy, in addition to B3, in the purpose of becoming the leading B2B technology option for the financial sector. Another example is the so-called Corporate Venture Capital as a service, a new concept run by an independent external manager that has allowed us to create an investment mechanism aimed at startups with significant innovative and high growth potential.

Our "Sales Machine" continued with record deliveries of net organic ARR growth, totaling R$629 million in 2021, 60% of which came from Volume, meaning, new clientes signings, added to cross and up-sell to the clients base. Such impressive results show our pricing power in a period of high inflation. This commercial success that stems from a combination of factors: (i) NPS - Net Promoter Score - at record-breaking levels; (ii) churn reductions; (iii) TOTVS brand rejuvenation; (iv) an expanded solutions portfolio; (v) cloud migration process, reducing the total cost of clientes assets; and (vi) advanced productivity and efficiency of commercial structure, which concluded an important process in consolidating our franchises, a critical move for new investments, more sophistication and structure for the three-dimensional strategy journey.

As a final point, I emphasize our Follow-on, conducted at the right time and combined with our solid operating cash flow, expands our M&A execution capacity, putting us in a position to capture opportunities. By preserving our discipline, we believe it is only a matter of time before the corrected value of the listed and long-duration equity is reflected on private assets, making room for new M&A transactions.

ESG is the underlying premise of our business in which we continue engaging TOTVERS. We renewed the materiality process by listening to our stakeholders. As a result, in the E pillar, we encourage the debate on expanding the dissemination of data about greenhouse gas emissions, as a next important step, in addition to the environmental indicators and practices we have already reported in our Integrated Report. In the S pillar, our Engagement Survey showed that 94% of TOTVERS are satisfied with the autonomy and 95% believe in the future of TOTVS, thus sustaining our high eNPS (Employee Net Promoter Score) thresholds. In the G pillar, we underscore the launch of our Data Privacy Policy.

Also worth noting are the various recognition awards achieved in 2021: (i) TOTVS was ranked as one of the top 100 companies with the best reputation in Brazil by the Corporate Reputation Business Monitor

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