São Martinho S A : Dados Econômico-Financeiros

(A free translation of the original in Portuguese)

Parent company and consolidated financial statements

at March 31, 2021

and independent auditor's report

(A free translation of the original in Portuguese)

Independent auditor's report on the parent company and consolidated financial statements

To the Board of Directors and Stockholders

São Martinho S.A.

Opinion

We have audited the accompanying parent company financial statements of São Martinho S.A. ("Company" or "Parent company"), which comprise the balance sheet as at March 31, 2021 and the statements of income, comprehensive income, changes in equity and cash flows for the year then ended, as well as the accompanying consolidated financial statements of São Martinho S.A. and its subsidiaries ("Consolidated"), which comprise the consolidated balance sheet as at March 31, 2021 and the consolidated statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of São Martinho S.A. and of São Martinho S.A. and its subsidiaries as at March 31, 2021, and the financial performance and the cash flows for the year then ended, as well as the consolidated financial performance and the cash flows for the year then ended, in accordance with accounting practices adopted in Brazil and with the International Financial Reporting Standards (IFRS) as 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 parent company and consolidated financial statements section of our report. We are independent of the Company and its subsidiaries in accordance with the ethical requirements established in the Code of Professional Ethics and Professional Standards issued by the Brazilian Federal Accounting Council, 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 year. These matters were addressed in the context of our audit of the parent company and consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate

opinion on these matters.

Matters

Why it is

a Key Audit Matter

How the matter was addressed

PricewaterhouseCoopers, Av. Antônio Diederichsen 400, 21º e 22º, Ed. Metropolitan Business Center, Ribeirão Preto, SP, Brasil, 14020-250, Caixa Postal 308, T: [phone], www.pwc.com.br

São Martinho S.A.

Our audit for the current year was planned and performed on the basis that the operations of the Company and its subsidiaries did not present significant changes in relation to the prior year. We added a key audit matter to address the exclusion of Value-added Tax on Sales and Services (ICMS) from the Social Integration Program (PIS) and Social Contribution on Revenues (COFINS) tax calculation bases and excluded the key audit matter on the measurement of the fair value of biological assets (due to the uncertainties in selecting measurement assumptions at a time the coronavirus pandemic (COVID-19) was declared), and the first-time adoption of IFRS 16/CPC 06 (R2) - Leases (due to first-time adoption of the accounting standard).

Why it is a Key Audit Matter	How the matter was addressed in the audit

Exclusion of Value-added Tax on Sales and Services (ICMS) from the Social Integration Program (PIS) and Social Contribution on Revenues (COFINS) tax bases - Note 22.3

At March 31, 2021, the Company and its subsidiaries recognized R$ 1.4 million of tax credits referring to final and unappealable decisions on lawsuits related to the exclusion of the ICMS from the PIS and COFINS calculation base. This represents the overpaid ICMS plus accruals for the portion considered by the Company's management to be uncontroversial. Management's measurement of overpaid tax involved complex calculations and significant judgment, mainly because: (i) the calculation method and bases are not explicitly stated in the court decisions favorable to the Company and its subsidiaries; (ii) motions for clarification of the general repercussion proceeding had not yet been judged by the Federal Supreme Court (STF) by March 31, 2021, consequently criteria for exclusion of ICMS had not defined as being either the amount paid or the amount displayed on the invoice; (iii) PIS and COFINS tax rate on the sale of ethanol per cubic meter (ad rem), in Brazilian Reais; and (iv) the periods included in the Company's and subsidiaries' lawsuits cover the periods in which they were cooperative members of Copersucar.

On May 13, 2021, the STF finalized its judgment on the motions for clarification determining that ICMS should be excluded from the PIS and COFINS calculation base. The STF clarified that the ICMS overpaid is that specified on the invoice, rather than the tax effectively paid.

We considered this issue to be a key audit matter because of the complexity and judgments required to determine the tax credits recognized by the Company and its subsidiaries.

Our audit approach considered, among others, the procedures below:

• Understanding management's main internal controls used to calculate the tax credits;
• With the support of our tax specialists, we read and analyzed the court decisions rendered for the Company and its subsidiaries, discussed these with management and its tax advisors, and obtained a technical memorandum on the criteria and judgments adopted in the calculation of the tax credits;
• Analysis of the STF decision rendered on May 13, 2021;
• Analysis of management's understanding that further PIS and COFINS credits arising from this issue on the sale of ethanol at a pertinent (ad rem) tax rate are still contingent and, therefore, were not recorded.
• We checked, on a test basis, the calculations for completeness and accuracy of amounts paid by the Company and its subsidiaries, which were used as a basis for the calculation of the tax credits, plus accruals up to March 31, 2021; and
• Evaluation of the appropriateness of the disclosures in the parent company and consolidated financial statements.

Our audit procedures indicated the judgment and criteria used by management to be reasonable and the disclosures consistent with the information obtained.

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São Martinho S.A.

Other matters

Statements of value added

The parent company and consolidated statements of value added for the year ended March 31, 2021, prepared under the responsibility of the Company's management and presented as supplementary information for IFRS purposes, were submitted to audit procedures performed in conjunction with the audit of the Company's financial statements. For the purposes of forming our opinion, we evaluated whether these statements are reconciled with the financial statements and accounting records, as applicable, and if their form and content are in accordance with the criteria defined in Technical Pronouncement CPC 09 - "Statement of Value Added". In our opinion, these statements of value added have been properly prepared, in all material respects, in accordance with the criteria established in the Technical Pronouncement and are consistent with the parent company and consolidated financial statements taken as a whole.

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

The Company's management is responsible for the other information that comprises the Management Report.

Our opinion on the parent company and consolidated financial statements does not cover the Management Report, and we do not express any form of audit conclusion thereon.

In connection with the audit of the parent company 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 in the Management Report, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the parent company and consolidated financial statements

Management is responsible for the preparation and fair presentation of the parent company and consolidated financial statements in accordance with accounting practices adopted in Brazil and with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the parent company and consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the financial reporting process of the Company and its subsidiaries.

Auditor's responsibilities for the audit of the parent company and consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the parent company and consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error,

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São Martinho S.A.

and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Brazilian and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Brazilian and International Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the parent company and consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the Company and its subsidiaries.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the parent company and consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the parent company and consolidated financial statements, including the disclosures, and whether these financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the parent company and consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor's report unless law or

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