Vulcabras Azaleia S A : Financial Statements 1Q21

Vulcabras Azaleia S.A.

Quarterly financial information on March 31, 2021

(A Free Translation of the original report in Portuguese as published in Brazil contain quarterly financial information prepared in accordance with accounting practices adopted in Brazil and IFRS)

KPDS 792584

Contents

Report on the review of quarterly information - ITR	3
Balance sheets	5
Statements of profit or loss	6
Statements of comprehensive income	7
Statement of changes in equity - Parent company and Consolidated	8
Statements of cash flows - Indirect method	9
Statements of added value	10
Notes to the quarterly financial information	11

KPMG Auditores Independentes

Ed. BS Design - Avenida Desembargador Moreira, 1300 SC 1001 - 10º Andar - Torre Sul - Aldeota 60170-002 - Fortaleza/CE - Brasil

Telefone [phone] kpmg.com.br

Report on the review of quarterly information - ITR

To the Shareholders of Vulcabras Azaleia S/A

Horizonte - CE

Introduction

We have reviewed the individual and consolidated quarterly information of Vulcabras Azaleia S/A ("Company") contained in the Quarterly Information - ITR Form for the quarter ended March 31, 2021, which comprise the balance sheet on March 31, 2021 and related statements of profit or loss, of comprehensive income, of changes in equity and of cash flows for the quarter then ended, including explanatory notes.

Company's Management is responsible for the preparation of the individual and consolidated quarterly information in accordance with CPC 21(R1) and International Standard IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as for the presentation of this information in a manner consistent with the standards issued by the Brazilian Securities and Exchange Commission, applicable to the preparation of the Quarterly Information (ITR). Our responsibility is to express a conclusion on this quarterly information based on our review.

Scope of the review

Our review was carried out in accordance with the Brazilian and international review standards for interim information (NBC TR 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists in asking questions, chiefly to the persons in charge of financial and accounting affairs, and in applying analytical procedures and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Brazilian and International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion on the individual and consolidated quarterly information

Based on our review, we are not aware of any facts that would lead us to believe that the individual and consolidated quarterly information included in the quarterly information referred to above was not prepared, in all material respects, in accordance with CPC 21 (R1) and IAS 34, applicable to the preparation of Quarterly Information (ITR), and presented in a manner consistent with the standards issued by the Securities Commission.

KPMG Auditores Independentes, uma sociedade simples brasileira e firma- membro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative ("KPMG International"), uma entidade suíça.

KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.

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Other matters - Statements of added value

The aforementioned quarterly information includes the individual and consolidated statements of added value for the three-month period ended March 31, 2021, prepared under responsibility of Company's Management, and presented as supplementary information for IAS 34 purposes. These statements have been subject to review procedures performed in conjunction with the review of the quarterly information, in order to determine whether they are reconciled with the quarterly information and accounting records, as applicable, and whether their form and content are in accordance with the criteria defined in Technical Pronouncement CPC 09 - Statement of Added Value. Based on our review, we are not aware of any facts that may lead us to believe that these statements of added value have not been prepared, in all material respects, in accordance with the criteria set forth in this Standard and consistently with respect to the individual and consolidated quarterly information taken as a whole.

Fortaleza, May 11, 2021

KPMG Auditores Independentes

CRC SP-014428/O-6S-CE

Original in Portuguese signed by

Marcelo Pereira Gonçalves

Accountant CRC 1SP220026/O-3

KPMG Auditores Independentes, uma sociedade simples brasileira e firma- membro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative ("KPMG International"), uma entidade suíça.

KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.

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Vulcabras Azaleia S.A. (Publicly-held company)

Balance sheets

March 31, 2021 and December 31, 2020 (In thousands of reais)

		Consolidated		Parent company			Consolidated		Parent company
Assets	Note	03/31/2021	12/31/2020	03/31/2021	12/31/2020	Liabilities	Note	03/31/2021	12/31/2020	03/31/2021	12/31/2020
Cash and cash equivalents	4	66,989	158,552	16	18	Suppliers	17	87,236	62,457	89	289
Interest earning bank deposits	5	79,851	80,949	79,851	80,949	Loans and financing	18	131,344	127,894	-	-
Trade accounts receivable	6	476,590	574,104	-	-	Taxes payable		1,007	11,938	99	97
Inventories	7	436,705	256,924	-	-	Salaries and vacations payable		39,450	30,105	18	-
Recoverable taxes	8	24,835	18,330	563	563	Provisions	20	22,229	22,021	504	765
Income tax and social contribution	9a	5,459	5,108	235	154	Lease liabilities	19	8,880	8,343	-	-
Amounts receivable from disposal of operation	1.1a	4,300	3,440	-	-	Commissions payable		14,191	16,121	-	-
Other accounts receivable		9,999		13,478		1,279		736	Other accounts payable		29,711		26,296		211		217
Total current assets		1,104,728	1,110,885	81,944	82,420	Total current liabilities		334,048	305,175	921	1,368
Interest earning bank deposits	5	9,533	9,594	2	2	Loans and financing	18	162,548	183,735	-	-
Trade accounts receivable	6	1,839	-	-	-	Loans with related parties	11	17,717	17,632	198,724	197,763
Recoverable taxes	8	6,744	6,787	1,805	1,805	Provisions	20	35,635	34,542	-	-
Deferred income tax and social contribution	9b	1,436	1,359	-	-	Deferred taxes on revaluation of property, plant and eq	9b	2,367	2,406	-	-
Judicial deposits	10	14,644	15,080	413	543	Lease liabilities	19	9,124	10,187	-	-
Loans with related parties		-	-	121,188	120,602	Provision for loss with investment	12	-	-	136	124
Amounts receivable from disposal of operation	1.1.a	4,300	5,160	-	-	Other accounts payable		183	183	-	-
Assets for sale		194	194	-	-
Other accounts receivable		2,752		2,702		1,537		1,537	Total non-current liabilities		227,574		248,685		198,860		197,887
Noncurrent assets		41,442	40,876	124,945	124,489	Equity
									Capital	21	1,106,717	1,106,717	1,106,717	1,106,717
Investments	12	58,862	59,999	1,133,919	1,115,038	Revaluation reserves	21	4,595	4,670	4,595	4,670
Investment property	13	2,029	2,121	2,023	2,115	Capital reserves	21	3,439	3,034	3,439	3,034
Right-of-use	19	16,316	15,145	-	-	Equity valuation adjustments	21	24,346	21,114	24,346	21,114
Property, plant and equipment	14	272,375	241,311	162	160	Retained earnings (losses)		4,226		(10,457)		4,226		(10,457)
Intangible assets	15	209,553		208,917		111		111	Equity attributable to controlling shareholders		1,143,323		1,125,078		1,143,323		1,125,078
		559,135	527,493	1,136,215	1,117,424
		Non-controlling interest		360		316		-		-
Total non-current assets		600,577		568,369		1,261,160		1,241,913	Total equity		1,143,683		1,125,394		1,143,323		1,125,078
									Total liabilities		561,622		553,860		199,781		199,255
Total assets		1,705,305		1,679,254		1,343,104		1,324,333	Total liabilities and equity		1,705,305		1,679,254		1,343,104		1,324,333
See the accompanying notes to the quarterly financial information.									-	-	-	-

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