CSN(SID) - 2022 Q4 - Annual Report

PART I Key Information This section outlines the significant risks associated with an investment in CSN's shares and ADSs, covering Brazil's macroeconomic and political environment, company-specific and industry risks, and risks related to securities ownership Risk Factors Risks Relating to Brazil The company's operations are significantly exposed to Brazil's economic and political conditions, with government intervention, political instability, high inflation, and currency volatility posing substantial risks to financial performance and security value - The Brazilian government has frequently intervened in the economy, with actions affecting interest rates, exchange controls, inflation, and tax policies, which could adversely affect CSN[19] - Political instability, highlighted by corruption investigations and the 2022 presidential election, creates uncertainty that may have material adverse effects on Brazil's macroeconomic environment and CSN's business[22] - The Brazilian real has experienced frequent and substantial volatility against the U.S. dollar; as of December 31, 2022, 60.4% of CSN's total indebtedness (R$25.03 billion) was denominated in or linked to the U.S. dollar, making it sensitive to currency fluctuations[23] - Brazil has historically experienced high inflation; the SELIC interest rate, a key tool to combat inflation, increased from 2.0% at year-end 2020 to 13.75% at year-end 2022, which can restrict economic growth and increase the company's borrowing costs[25][26] Risks Relating to Us and the Industries in Which We Operate CSN faces significant risks inherent to the cyclical steel and mining industries, including volatile demand and prices, dependence on China's economy, operational interruptions, intense competition, high indebtedness, and environmental regulatory impacts - The steel and mining industries are highly cyclical; a slowdown in key consumer markets, such as the domestic Brazilian market for steel and the Chinese market for iron ore, could sharply reduce demand for CSN's products[27] - China is the main driver of global demand for iron ore, accounting for 73% of seaborne trade in 2022; CSN's iron ore export sales to the Asian market, mainly China, were 77% in 2022, indicating that a contraction in China's economy could significantly impact CSN[30] - As of December 31, 2022, CSN had a total debt of R$41.44 billion, which could make it more difficult to refinance maturing debt and may increase borrowing costs[40] - CSN's operations are subject to significant environmental, health, and safety risks, including fires, explosions, and accidents involving dams; stricter environmental regulations, particularly after recent dam failures in Brazil, could require increased capital expenditures and operational modifications[43][49] - CSN Mineração plans to increase its iron ore processing capacity from 34 million tons per year in 2022 to 108 million tons per year by 2033, an expansion subject to numerous risks inherent to large-scale mining projects[55] Risks Relating to Our Common Shares and the ADSs This sub-section details risks for investors in CSN's common shares and ADSs, including controlling shareholder influence, complexities in exercising voting and preemptive rights for ADS holders, and the Brazilian securities market's volatility and lower liquidity - The controlling shareholder has the power to elect a majority of directors and determine the outcome of shareholder actions, which could lead to conflicts of interest with other shareholders[63] - Holders of ADSs may face difficulties in exercising their voting rights in a timely manner due to the procedures of the deposit agreement and notice periods for shareholders' meetings[65][67] - U.S. holders of ADSs may be unable to exercise preemptive rights for new share issuances unless a registration statement is filed under the Securities Act, which the company is not obligated to do[68] - The Brazilian securities market is substantially smaller, less liquid, and more volatile than major U.S. markets, which may limit an investor's ability to sell shares at a desired price and time[67] Information on the Company This section provides a comprehensive overview of Companhia Siderúrgica Nacional (CSN), detailing its history, integrated business segments, competitive strengths, strategic goals, recent acquisitions, operational facilities, ESG initiatives, and regulatory landscape History and Development of the Company Founded in 1941 and privatized in 1993, CSN has evolved into a major integrated steel producer, diversifying into mining, cement, logistics, and energy through strategic acquisitions, notably becoming Brazil's second-largest cement producer by 2022 - CSN was incorporated in 1941 and privatized in 1993, subsequently diversifying from a steel producer into mining, cement, logistics, and energy[71] - In 2021 and 2022, CSN made significant acquisitions in its cement segment (Elizabeth Cimentos, LafargeHolcim) and energy segment (Santa Ana Energética, CEC, CEEE-G), increasing its total installed cement capacity to 17 million tons per year and enhancing its energy self-sufficiency[71] - In March 2023, CSN signed a US$1.4 billion pre-payment export financing agreement to fund growth projects, including a new pellet feed plant at its Casa de Pedra mine[80] Business Overview CSN operates an integrated business model across five segments: Steel, Mining, Cement, Logistics, and Energy, leveraging captive resources and proprietary infrastructure for a low-cost structure, with strategic goals focused on high-margin products, market share expansion, and energy self-sufficiency - CSN operates an integrated business model with five segments: steel, mining, cement, logistics, and energy, which supports resilient and profitable operations[73][82] - Key competitive strengths include a highly integrated business model, strong domestic market share in flat steel (~25% in 2022), a diverse product portfolio, a profitable mining business, and a low-cost structure[82][84] - Strategic goals include focusing on high-margin coated steel products, expanding iron ore shipments to over 60 million tons per year, consolidating its position in the Brazilian cement market, and increasing clean energy generation[86][87][88][89] - Recent acquisitions in 2021-2022 significantly expanded the cement and energy segments, with the purchases of Elizabeth Cimentos and LafargeHolcim making CSN the second-largest cement player in Brazil[91][92] Organizational Structure CSN conducts its business directly and through a network of subsidiaries, supporting its five main operating segments: steel, mining, logistics, cement, and energy - The company operates its business directly and through various subsidiaries, which are detailed in the notes to the consolidated financial statements[326] Property, Plant and Equipment This section lists CSN's principal properties as of December 31, 2022, including its main steel mill in Volta Redonda, Rio de Janeiro, and primary mines in Minas Gerais, along with a detailed table of owned or leased properties across Brazil, the USA, Portugal, and Germany - CSN's main steel mill, Presidente Vargas Steelworks, is located in Volta Redonda, RJ; its primary iron ore and limestone mines are in Minas Gerais, connected by rail and road[326] Overview of Key Owned Properties | Description | Activity | Country | State | City | Title | | :--- | :--- | :--- | :--- | :--- | :--- | | Presidente Vargas Steelworks | Steel Mill | Brazil | Rio de Janeiro | Volta Redonda | Owned | | CSN Paraná | Galvanized and Pre-Painted Products | Brazil | Paraná | Araucária | Owned | | CSN Porto Real | Galvanized Steel Producer | Brazil | Rio de Janeiro | Porto Real | Owned | | Casa de Pedra Mine | Iron Ore Mine | Brazil | Minas Gerais | Congonhas | Owned and Third Parties | | Arcos Mine | Limestone Mine & Cement Plant | Brazil | Minas Gerais | Arcos | Owned | | SWT | Steel Profile Manufacturer | Germany | Saalfeld-Rudolstadt | Unterwellenborn | Owned | | Lusosider | Flat Steel Producer | Portugal | Seixal | Seixal | Owned | Operating and Financial Review and Prospects This section analyzes CSN's financial performance and condition for the year ended December 31, 2022, discussing macroeconomic impacts, market overviews, revenue and cost breakdowns by segment, liquidity, capital expenditures, debt structure, and R&D initiatives Operating Results In 2022, CSN's operating results were significantly impacted by lower iron ore prices and reduced sales volume in the mining segment, leading to a 7.4% decrease in net operating revenues to R$44.36 billion and a 39.7% fall in gross profit to R$13.31 billion Consolidated Results of Operations (R$ millions) | | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net operating revenues | 44,362 | 47,912 | 30,064 | | Cost of products sold | (31,054) | (25,837) | (19,125) | | Gross profit | 13,308 | 22,075 | 10,939 | | Operating income | 7,642 | 20,540 | 5,714 | | Net income for the period | 2,168 | 13,596 | 4,293 | - Net operating revenues decreased by 7.4% in 2022 to R$44.36 billion, primarily due to lower prices and sales volume in the mining segment[356] - Mining net operating revenues decreased by 30.6% in 2022 to R$12.53 billion, driven by a 24.7% decrease in average iron ore prices[358] - Cement net operating revenues increased by 97.2% in 2022 to R$2.82 billion, mainly due to a 53.9% increase in sales volume, partly from the consolidation of LafargeHolcim[362] - Gross profit decreased by 39.7% in 2022 to R$13.31 billion, resulting from lower revenues and a 20.2% increase in cost of products sold[369][362] EBITDA Reconciliation (R$ millions) | | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net income | 2,167.7 | 13,595.6 | 4,292.6 | | Depreciation/amortization/depletion | 2,792.8 | 2,114.7 | 2,421.5 | | Income tax and social contribution | 1,958.7 | 5,000.1 | 625.5 | | Net financial income | 3,515.0 | 1,944.2 | 796.3 | | EBITDA | 10,434.2 | 22,654.6 | 8,135.9 | Liquidity and Capital Resources CSN's liquidity and capital resources are primarily managed through operating cash flow and debt instruments, with cash and cash equivalents decreasing to R$11.99 billion and total debt increasing to R$40.92 billion as of December 31, 2022 - Cash and cash equivalents decreased from R$16.65 billion at year-end 2021 to R$11.99 billion at year-end 2022[374] - Cash provided by operating activities decreased significantly from R$14.79 billion in 2021 to R$2.04 billion in 2022, mainly due to lower net income[375] - Cash used in investing activities was R$11.46 billion in 2022, a sharp increase from 2021, primarily due to R$8.55 billion paid for acquisitions like LafargeHolcim and CEEE-G[376] - Total debt increased from R$32.51 billion in 2021 to R$40.92 billion in 2022; as of Dec 31, 2022, 38.3% of debt was denominated in reais and the remainder primarily in U.S. dollars[384] Debt Maturity Profile as of Dec 31, 2022 (R$ thousands) | Maturity | Principal Amount | | :--- | :--- | | 2023 | 5,270 | | 2024 | 3,875 | | 2025 | 3,459 | | 2026 | 4,640 | | 2027 | 2,988 | | After 2027 | 21,209 | | Total | 41,441 | Research and Development, Patents and Licenses, Etc. CSN drives innovation through its subsidiary CSN Inova, focusing on process optimization, new revenue sources, and sustainability via partnerships with startups, universities, and innovation hubs, including evaluating decarbonization technologies - CSN's innovation is led by its subsidiary, CSN Inova, which focuses on process optimization, new revenue, and sustainability through partnerships with startups, universities, and innovation hubs[401] - In 2022, CSN Inova Ventures had a portfolio of eight startups, with investments ranging from R$1.0 million to R$10.0 million per company[403] - CSN Inova Tech is actively monitoring and evaluating technologies for decarbonization, including projects for processing steel slag and producing pellets and briquettes without fossil fuels[401] Trend Information The company identifies several key trends affecting its business, including global uncertainty from the Russia-Ukraine conflict impacting raw material prices, volatility in the Chinese economy affecting the iron ore market, and resilience in the Brazilian cement market due to infrastructure projects - The Russia-Ukraine conflict has created global trade uncertainty and increased prices for certain raw materials, prompting a search for alternative coal suppliers[404] - Uncertainty in the Chinese economy, related to COVID-19 policies and the housing market, is expected to continue causing volatility in the global iron ore market in 2023[404] - In Brazil, the cement market is expected to remain resilient, supported by infrastructure projects and potential government housing programs for low-income families[404] Directors, Senior Management and Employees This section provides information on CSN's governance and human capital, detailing the composition and biographies of its Board of Directors and Board of Executive Officers, compensation, roles of the Fiscal and Audit Committees, employee headcount, and profit-sharing plans Directors and Senior Management CSN is managed by a Board of Directors and a Board of Executive Officers, both elected for two-year terms, with Benjamin Steinbruch serving as both Chairman and CEO, overseeing general guidelines and day-to-day operations - The company is managed by a Board of Directors and a Board of Executive Officers, both serving two-year terms[405] - Benjamin Steinbruch serves as both the Chairman of the Board of Directors and the Chief Executive Officer[408][409] - The Board of Directors is responsible for setting general guidelines and policies, while the Board of Executive Officers handles implementation and day-to-day operations[407] Compensation In 2022, the total compensation for all members of the Board of Directors and Board of Executive Officers was R$43.6 million, while the aggregate compensation for the fiscal council members was R$0.64 million 2022 Aggregate Compensation | Group | Compensation (R$ millions) | | :--- | :--- | | Board of Directors & Executive Officers | 43.6 | | Fiscal Council | 0.64 | Board Practices CSN's board-level practices include a Fiscal Committee, permitted under Brazilian Corporate Law, responsible for monitoring management, and an independent Audit Committee composed of three members who qualify as 'audit committee financial experts' under SEC rules - CSN has a Fiscal Committee (Conselho Fiscal) composed of three effective members and three alternates, responsible for monitoring management and reporting to shareholders[417] - The Audit Committee (Comitê de Auditoria) consists of three independent members of the Board of Directors: Yoshiaki Nakano, Antonio Bernardo Vieira Maia, and Miguel Ethel Sobrinho; all are considered 'audit committee financial experts' by the board[421] Employees As of December 31, 2022, CSN had 26,766 employees, a significant portion of whom are unionized and participate in a profit-sharing plan, reflecting the company's good relationship with its labor unions Employee Headcount | Year-End | Number of Employees | | :--- | :--- | | 2020 | 23,196 | | 2021 | 24,660 | | 2022 | 26,766 | - A substantial number of employees are represented by labor unions, with collective bargaining agreements renewed annually; the company believes it has a good relationship with them[423] - All employees participate in a profit-sharing plan based on company and business unit results[425] Share Ownership The Steinbruch family holds an indirect majority ownership interest in CSN's controlling shareholders, Vicunha Aços S.A. and Rio Iaco Participações S.A., while executive officers and directors directly held an aggregate of 101,502 outstanding common shares as of December 31, 2022 - The Steinbruch family holds an indirect majority ownership interest in the company's controlling shareholders[426] - As of December 31, 2022, executive officers and directors directly held a total of 101,502 common shares[426] Major Shareholders and Related Party Transactions This section identifies CSN's major shareholders, Vicunha Aços S.A. and Rio Iaco Participações S.A., both indirectly owned by the Steinbruch family, and describes its related party transactions, which are conducted at market prices with internal controls to manage potential conflicts of interest Major Shareholders As of March 31, 2022, CSN's controlling shareholders were Vicunha Aços S.A. (40.99%) and Rio Iaco Participações S.A. (3.45%), both indirectly owned by the Steinbruch family, with no different voting rights compared to other shareholders Major Shareholders as of March 31, 2022 | Shareholder | Common Shares Owned | Percent of Outstanding Shares | | :--- | :--- | :--- | | Vicunha Aços S.A. | 543,617,803 | 40.99% | | Rio Iaco Participações S.A. | 45,706,242 | 3.45% | | CFL Ana Participações S.A. | 135,904,451 | 10.25% | | Others | 600,865,451 | 45.31% | | Total | 1,326,093,947 | 100.00% | Related Party Transactions CSN engages in commercial and financial transactions with related parties, including subsidiaries and joint ventures, at market prices and conditions, maintaining internal controls to manage potential conflicts of interest and ensure approvals are based on the company's best interest - Transactions with related parties, such as subsidiaries and joint ventures, are carried out at market prices and conditions[428] - CSN guarantees certain indebtedness of related parties, such as loans for its jointly controlled entity TLSA[430] Financial Information This section presents CSN's consolidated financial statements and discusses significant legal and administrative proceedings, including contingencies related to labor, civil, tax, and environmental matters, antitrust scrutiny, and the company's dividend policy Consolidated Statements and Other Financial Information This subsection details CSN's significant legal, administrative, and arbitration proceedings, including a R$14.17 billion tax assessment related to the Namisa transaction, antitrust proceedings with CADE regarding its Usiminas stake, complex legal challenges concerning railway concessions, and environmental proceedings, while outlining its dividend policy of a minimum 25% annual payout - As of December 31, 2022, CSN had provisions of R$0.38 billion for 10,290 labor claims and R$0.85 billion for civil contingencies[433][434] - A major tax contingency involves a R$14.17 billion assessment for alleged unpaid capital gains tax on the sale of a stake in former subsidiary Namisa; the company's assessment of loss risk is 'possible'[435] - CSN is under a Performance Commitment Agreement (TCD) with the antitrust authority CADE, requiring it to reduce its equity stake in competitor Usiminas within a specified timeframe[438][440] - The company is involved in complex legal proceedings with TCU and ANTT regarding its Northeastern Railway System concessions (FTL and TLSA), which could result in the loss of concessions[441][443] - CSN's dividend policy requires a minimum annual payout of 25% of adjusted net profits, subject to the company's financial condition and strategic needs[461] The Offer and Listing This section provides details about the trading of CSN's securities, with common shares trading on the B3 stock exchange in Brazil under 'CSNA3' and American Depositary Shares (ADSs) trading on the NYSE under 'SID', noting the Brazilian market's lower liquidity and regulatory framework - CSN's common shares trade on the B3 exchange in Brazil under the symbol 'CSNA3'[470] - American Depositary Shares (ADSs), each representing one common share, trade on the NYSE under the symbol 'SID'[470] - The Brazilian securities market is regulated by the CVM and is noted to be significantly less liquid than the NYSE, with greater market concentration[474][475] Additional Information This section covers key corporate and legal information, detailing the company's corporate purpose, directors' powers, capital stock, voting and preemptive rights, Brazilian exchange control regulations for foreign investors, and a summary of Brazilian and U.S. federal income tax consequences for shareholders Memorandum and Articles of Association This subsection outlines key provisions of CSN's bylaws and Brazilian Corporate Law, including its broad corporate purpose, defined directors' powers, capital stock of 1,326,093,947 common shares with an authorized capital of up to 2.4 billion shares, and shareholders' voting and preemptive rights - As of December 31, 2022, CSN's capital stock comprised 1,326,093,947 common shares, with an authorized capital of up to 2,400,000,000 common shares[482] - Each common share entitles the holder to one vote at shareholders' meetings; shareholders representing at least 5% of common shares can request cumulative voting for director elections[484] - Shareholders have a general preemptive right to subscribe to shares in any capital increase, in proportion to their ownership[490] Exchange Controls This subsection describes Brazilian exchange control regulations for foreign investors, requiring local representation and registration with the CVM and Central Bank to facilitate currency conversion and remittance of dividends, while noting the government's right to impose temporary restrictions during severe economic imbalances - Foreign investors must comply with CMN Resolution 4,373, which includes appointing a representative in Brazil and registering with the CVM and Central Bank to trade securities[495] - A certificate of registration allows the ADR depositary to convert dividends and other distributions into foreign currency for remittance abroad[495] - The Brazilian government retains the right to impose temporary restrictions on foreign capital remittances during severe economic imbalances[495] Taxation This subsection summarizes the main Brazilian and U.S. federal income tax consequences for investors, detailing dividend withholding tax exemptions, interest on shareholders' equity subject to a 15% rate, varying capital gains tax rates, and U.S. tax treatment of distributions and sales, including potential Passive Foreign Investment Company (PFIC) classification - Brazilian Tax: Dividends paid on profits generated since Jan 1, 1996, are not subject to withholding tax; however, payments of interest on shareholders' equity are subject to a 15% withholding tax (25% for residents of tax havens)[499] - Brazilian Tax: Capital gains on shares sold on the Brazilian stock exchange are generally exempt for non-resident 4,373 Holders not in a tax haven; otherwise, rates can range from 15% to 25%[501] - U.S. Tax: For U.S. Holders, distributions are generally taxed as dividend income; subject to certain conditions, these may be considered 'qualified dividend income' taxable at a preferential rate[512][514] - U.S. Tax: The company believes it should not be treated as a Passive Foreign Investment Company (PFIC), but this is an annual determination; PFIC status would result in adverse U.S. tax consequences for U.S. Holders[520] Quantitative and Qualitative Disclosures About Market Risk CSN is exposed to market risks from interest rates, currency exchange rates, and commodity prices, which its treasury department manages using policies and derivative instruments like swaps and futures to minimize capital costs and financial volatility, with significant U.S. dollar debt exposure mitigated by hedge accounting - The company is exposed to market risks from changes in interest rates, currency exchange rates, and commodity prices, which it manages through internal policies and derivative instruments[530] - CSN is exposed to floating interest rates such as U.S. dollar LIBOR, Brazilian TJLP, and CDI due to its debt structure and cash positions[531] Debt Interest Rate Exposure as of Dec 31, 2022 | Currency | Average Interest Rate | Total Debt (R$ thousands) | | :--- | :--- | :--- | | US$ | 6.21% | 25,025,568 | | R$ | 15.40% | 16,186,891 | | EUR | 3.33% | 228,489 | - The company has significant exposure to U.S. dollar exchange rate risk due to its dollar-denominated debt and export revenues; as of Dec 31, 2022, the net U.S. dollar exposure after hedging was R$0.78 billion[538][539] Description of Securities Other Than Equity Securities This section describes the fees associated with CSN's American Depositary Shares (ADSs), where Citibank, N.A. serves as the depositary, requiring ADR holders to pay fees for services like issuance and withdrawal, and for expenses incurred by the depositary, which also reimburses the company for certain ADR program-related costs ADR Holder Fees | Depositary Service | Fee Payable by ADR Holders | | :--- | :--- | | Issuance and delivery of ADRs | US$2.00 for each 100 ADSs (or portion thereof) | | Deposit of securities | US$2.00 for each 100 ADSs (or portion thereof) | | Withdrawal of deposited securities | US$5.00 for each 100 ADSs (or portion thereof) | - The depositary reimburses CSN for certain expenses related to the ADR program, such as legal, accounting, and investor relations fees; no reimbursements were received in 2022[549] PART II Controls and Procedures This section addresses the company's internal controls, with management concluding that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, based on the COSO 2013 framework, despite excluding several acquired companies from the assessment - Management concluded that as of December 31, 2022, the company's disclosure controls and procedures were effective[550] - Management assessed the internal control over financial reporting as effective as of December 31, 2022, based on the COSO 2013 framework[551] - The assessment of internal controls for 2022 excluded several companies acquired during the year, including LafargeHolcim (Brasil) S.A., CEEE-G, and Metalgráfica Iguaçu S.A[551] - The independent registered public accounting firm, Grant Thornton Auditores Independentes Ltda., provided an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2022[553][582] Corporate Governance and Other Matters This section covers various governance and compliance topics, confirming the independence and financial expertise of Audit Committee members, detailing the company's Code of Ethics, outlining fees paid to the principal accountant, and highlighting differences between CSN's corporate governance practices and NYSE standards Audit Committee Financial Expert The company's audit committee is composed of three members, all of whom meet the independence requirements of the SEC, NYSE, and Brazilian law, and are determined by the board of directors to qualify as 'audit committee financial experts' - All three members of the audit committee are independent and qualify as 'audit committee financial experts' under SEC rules[554] Code of Ethics CSN adopted a Code of Ethics in 1998, last updated in 2016, which applies to all employees, directors, and officers, reinforcing ethical standards and values through an integrity program that includes training and monitoring - The company has a Code of Ethics, last updated in 2016, that applies to all employees, officers, and directors and complies with SEC requirements[555] Principal Accountant Fees and Services This subsection details the fees paid to the independent auditor, Grant Thornton Auditores Independentes Ltda., for fiscal years 2021 and 2022, categorized into 'Audit fees' for financial statement audits and regulatory filings, and 'Audit-related fees' for services like due diligence, with all non-audit services pre-approved by the audit committee Principal Accountant Fees (R$ thousands) | Fee Type | 2022 | 2021 | | :--- | :--- | :--- | | Audit fees | 6,654.5 | 11,537.0 | | Audit-related fees | 1,991.7 | 2,523.0 | | Total | 8,646.2 | 14,060.0 | Corporate Governance This subsection highlights significant differences between CSN's corporate governance practices and NYSE listing standards for U.S. companies, as CSN, a foreign private issuer, follows Brazilian law, which does not require a majority of independent directors, executive sessions for non-management directors, or dedicated nominating and compensation committees - CSN, as a foreign private issuer, is subject to different corporate governance standards than U.S. listed companies[563] - Unlike NYSE rules, Brazilian law does not require a majority of the board to be independent; CSN does not believe a majority of its directors would meet the NYSE independence test[564] - CSN is not required to have, and does not have, separate nominating/corporate governance and compensation committees composed entirely of independent directors, as required by NYSE rules[567][568] PART III Financial Statements This section contains CSN's audited consolidated financial statements for the fiscal years ended December 31, 2022, 2021, and 2020, prepared in accordance with IFRS, along with an unqualified opinion from Grant Thornton Auditores Independentes Ltda. on both the financial statements and the effectiveness of internal control over financial reporting - The financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the IASB[585][616] - The independent auditor, Grant Thornton Auditores Independentes Ltda., issued an unqualified opinion on the consolidated financial statements for the three-year period ended December 31, 2022[585] - The auditor's report on internal control over financial reporting also expressed an unqualified opinion on its effectiveness as of December 31, 2022, based on the COSO framework[582] - Critical Audit Matters identified were the recoverable value of the investment in the jointly controlled subsidiary TLSA and the fair value of identifiable assets acquired in business combinations during 2022[589][590][593]