WEG SA Financial Statements

(Convenience Translation into English from the Original Previously Issued in Portuguese)

WEG S.A.

Individual and Consolidated Financial Statements for the Year Ended December 31, 2019 and Independent Auditor’s Report

Deloitte Touche Tohmatsu Auditores Independentes Deloitte Touche Tohmatsu Rua Orestes Guimarães, 538,

6º andar, salas 602, 603 e 604 89204-060 - Joinville - SC Brasil

Tel.: + 55 (47) 3025-5155 Fax: + 55 (47) 3328-5155 www.deloitte.com.br

(Convenience Translation into English from the Original Previously Issued in Portuguese)

INDEPENDENT AUDITOR’S REPORT ON THE INDIVIDUAL AND CONSOLIDATED FINANCIAL STATEMENTS

To the Shareholders, Board of Directors and Management of WEG S.A.

Opinion

We have audited the individual and consolidated financial statements of WEG S.A. (“Company”), identified as Parent and Consolidated, respectively, which comprise the balance sheet as at December 31, 2019, and the related statements of income, of comprehensive income, of changes in equity and of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the individual and consolidated financial statements referred to above present fairly, in all material respects, the individual and consolidated financial position of WEG S.A. as at December 31, 2019, and its individual and consolidated financial performance and its individual and consolidated cash flows for the year then ended in accordance with accounting practices adopted in Brazil and International Financial Reporting Standards - IFRS, 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 individual and consolidated financial statements” section of our report. We are independent of the Company and its subsidiaries in accordance with the relevant ethical requirements in the Code of Ethics for Professional Accountants and the professional standards issued by the Brazilian Federal Accounting Council (CFC), 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 matters that, in our professional judgment, were of most significance in our audit of the individual and consolidated financial statements of the current period. These matters were addressed in the context of our audit of the individual and consolidated financial statements as a whole, and in forming our opinion thereon, and, therefore, we do not provide a separate opinion on these matters.

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Revenue from contracts with customers

Why this is a KAM How the matter was addressed in our audit

As described in notes 2.21 and 2.22 to the Our audit procedures included, but were not financial statements, revenue from sales is limited to: (i) obtaining an understanding of the recognized when the Company and its flow of sales transactions considering the nature subsidiaries satisfy their performance of the various operations of the Company; obligations upon transferring control of the (ii) identifying the significant internal control products to the customers and as services are activities established by Management and performed. The high volume of transactions related to the sales transactions and requires a robust IT-dependent internal control assessment of the design, implementation and system to capture, record and process test of effectiveness of these control activities; information related to the revenue cycle. and (iii) involving our IT specialists to obtain understanding of IT-dependent internal This subject was considered a key matter in our controls, as well as applying specific tests, audit because: (i) the amounts of revenues related to logical access security, system from sales represent a material balance for the change management and monitoring of Company’s set of financial statements; (ii) the processing routines for the main application volume of transactions and portfolio of products systems and their related database and are considerably high and their processing operating systems used for revenue recognition depends on proper performance of internal purposes. control activities and IT systems in place; (iii) a portion of the Company’s revenues arises from Additionally, in order to obtain sufficient and the execution of construction projects and appropriate audit evidence, we applied specific contracts of which the related underlying test, on a sampling basis, to certain revenue performance obligation is satisfied over time; transactions, reviewing evidence of their and (iv) there is an inherent risk of revenue occurrence, completeness, accuracy and proper being recognized without meeting the minimum accounting. criteria necessary for such recognition. We consider that the revenue recognition procedures adopted by Management are adequate in the context of the individual and consolidated financial statements taken as a whole.

We have also reviewed the adequacy of the disclosures about revenue recognition, presented in notes 2.21, 2.22, 22 and 23 to the financial statements.

Goodwill on acquisition of control

Why this is a KAM How the matter was addressed in our audit

As described in note 14 to the financial Our audit procedures included, but were not statements, the Company has goodwill balances limited to: (i) the assessment of the design generated in the acquisition of control over and implementation of key internal controls investees in Brazil and abroad, whose amounts determined by Management regarding the may present realization risks and, consequently, impairment test of goodwill; (ii) the analyses impairment losses. These assets should be of the Company’s business plans by tested annually or whenever there are indications cash-generating unit; and (iii) the involvement of impairment. The assessment and consequent of our corporate finance experts in the requirement, or not, for the recognition of a assessment and the challenge of key provision for impairment are supported by assumptions, such as the discount rates, as estimated future discounted cash flows well as the calculation methodologies adopted projections, which take into consideration the by Management. local and global economic scenarios and the business plans and budget prepared by the Based on our audit procedures described and Company and approved by the appropriate the audit evidences obtained that support our governance levels. tests, we consider that the impairment tests of goodwill prepared by the Company are This matter was considered significant in our acceptable in the context of the individual and audit as: (i) the amounts of goodwill recorded consolidated financial statements for the year are considered material for the audit; (ii) the ended December 31, 2019. determination of future cash flows discounted to present value and the definition of discount rates We also assessed the appropriateness of the and growth in sales assumptions for the disclosures made by the Company about projection period and in perpetuity involve accounting policies and goodwill balances, uncertainties and a high degree of Management which are presented, respectively, in notes judgment; and (iii) there has been significant 2.10 and 14 to the financial statements. interaction with the Company’s Management in assessing the matter.

Other matters

Statements of value added

The individual and consolidated statements of value added (“DVA”) for the year ended December 31, 2019, prepared under the responsibility of the Company’s Management and disclosed as supplemental information for IFRS purposes, were subject to audit procedures performed together with the audit of the Company’s financial statements. In forming our opinion, we evaluated whether these statements are reconciled with the financial statements and accounting records, as applicable, and whether their form and content are in accordance with the criteria set out in technical pronouncement CPC 09 - Statement of Value Added. In our opinion, these statements of value added were appropriately prepared, in all material respects, in accordance with the criteria set out in such technical pronouncement and are consistent in relation to the individual and consolidated financial statements taken as a whole.

Other information accompanying the individual and consolidated financial statements and the independent auditor’s report

Management is responsible for the other information comprising the Management Report.

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

In connection with our audit of the individual 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 individual and consolidated financial statements

Management is responsible for the preparation and fair presentation of the individual and consolidated financial statements in accordance with accounting practices adopted in Brazil and the IFRS, issued by the 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 individual 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 and its subsidiaries or to cease operations, or has no realistic alternative but to do so.

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

Auditor’s responsibilities for the audit of the individual and consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the individual and consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, 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 individual 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 Company’s and its subsidiaries’ internal control.

• 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 and its subsidiaries’ 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 individual 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 and its subsidiaries to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the individual and consolidated 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 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, when 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 period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The accompanying individual and consolidated financial statements have been translated into English for the convenience of readers outside Brazil.

Joinville, February 17, 2020

DELOITTE TOUCHE TOHMATSU Otávio Ramos Pereira Auditores Independentes Engagement Partner

2020-CWT-0077 VF (PA).docx

Motors | Automation | Energy | Transmission and Distribution | Paints

WEG S.A.

Financial Statements

December 31, 2019 and 2018

WEG S.A. CNPJ 84.429.695/0001 -11 | CVM 00541-0 Publicly Held Company ______

FINANCIAL STATEMENTS

December 31, 2019 and 2018

CONTENTS

Management’s Report ...... 03

Balance Sheets ...... 11

Income Statement ...... 13

Statement of Comprehensive Income ...... 14

Statement of Changes in Equity ...... 15

Statement of Cash Flows ...... 16

Statement of Value Added ...... 17

Notes to the Financial Statement ...... 18

Proposed Capital Budget ...... 50

Supervisory Board’s Statement ...... 51

Board of Directors’ Statement ...... 52

WEG S.A. CNPJ 84.429.695/0001-11 | CVM 00541-0 Publicly Held Company ______

MANAGEMENT’S REPORT

In December 31, 2019

We present to our shareholders the Consolidated Financial Statements of the WEG Group and WEG S.A. for the year ended December 31, 2019.

OUTLOOK

Both developed and emerging economies have grown along the year. The continuity of this global scenario will depend on the performance of commodity prices, inflation and interest rate levels prevailing in the main economies, in addition to factors that may improve global GDP forecasts, such as, for instance, a definitive solution for the commercial disputes between the USA and China. As per International Monetary Fund (IMF) forecasts (as at October 2019) global Gross Domestic Product (GDP) is expected to grow by 3.0% along 2019, which is lower than GDP growth of 3.6% in 2018. In Brazil, despite the lowest Selic rate prevailing since implementation of the Real plan, the economic recovery has been taking place slowly. IMF expects Brazilian GDP to grow by approximately 1.0% in 2019.

ECONOMIC AND FINANCIAL FACTORS

REVENUE In 2019, Consolidated Net Operating Revenue (NOR) reached R$ 13,347 million, a growth of 11.5% year-on-year.

Domestic market: Net operating revenue in the domestic market reached R$ 5,563 million, growth of 9.5% year-on- year and representing 41.7% of total net operating revenue. If adjusted for the acquisition of TGM Indústria e Comercio de Turbinas e Transmissões Ltda. (TGM), Geremia Redutores Ltda., PPI-Multitask and V2COM growth in revenue would be 9.1% in 2019. The Company's good performance in the domestic market is mainly explained by the good demand for short cycle equipment, such as electric motors, serial automation equipment and mainly distributed solar generation systems. For long cycle equipment we had a gradual improvement in orders, mainly in the power transmission and distribution and automation panels businesses. In addition, specific industries, such as the pulp and paper and mining ones increased demand for long cycle equipment in 2019.

External Market: The external market posted growth of net operating revenue of 13.0% reaching R$ 7,784 million, which corresponds to 58.3% of total net revenue. In local currencies, weighted by the weight of each market, revenue growth in the foreign market was 10.4% in the year. This growth has significantly contributed to the increase in the business of long cycle products, in particular in our GTD operations in the USA.

Below, we set out the performance in each of WEG's business areas:

Industrial Electro- The area of industrial electro-electronic equipment includes low and medium voltage electric Electronic motors, reducers, drives & controls, industrial automation equipment and services, solutions Equipment for Industry 4,0 and maintenance services. Electric motors and other equipment items are used in virtually all industrial segments, in equipment items such as compressors, pumps and fans, for example. We compete with our products and solutions in the main world markets.

In Brazil, we have noted consistency in sales of short cycle products, especially low voltage motors and serial automation equipment, which grew throughout 2019. The demand has been distributed among customers in all segments, mainly smaller original equipment manufacturers (OEMs). In the foreign market, we have continued to note good demand for long cycle equipment, such as automation panels and high voltage motors. Projects to increase capacity and build new plants in important market segments for WEG, such as those of oil and gas, mining and water and sanitation, were the main destinations for such type of equipment. For short cycle equipment, we have begun to note signs of slowing down, mainly from the third quarter onwards, mainly affecting the demand for low voltage motors and serial automation equipment.

WEG S.A. CNPJ 84.429.695/0001-11 | CVM 00541-0 Publicly Held Company ______

MANAGEMENT’S REPORT

In December 31, 2019

Power Generation, The products and services included in this area are electric generators for hydroelectric and Transmission and thermal power plants (biomass), hydroelectric turbines (SHP's), steam turbines, wind Distribution (GTD) turbines, solar generation, power transformers, substations, control panels and systems integration services. In the GTD area in general, and specifically in power generation, investment maturity periods are longer, with slower investment decisions and longer project and manufacturing lead times.

The performance of this business area in the domestic market has reflected the lower share of wind generation projects of our revenues. However, the good performance of the solar generation businesses, especially distributed solar generation, together with power transformers and substations, helped to make up for the lower share of wind generation projects. The performance of the foreign market was positive, mainly the power transmission and distribution (T&D) operations in the USA and Mexico, which have been showing the result of the expected synergies, in addition to the good performance noted in the operations of large electric generators in the USA and India.

Motors for Our focus in this area has traditionally been on the Brazilian market, in which we hold a good domestic use share in the single-phase motors market for consumer durables, such as washing machines, air conditioners and water pumps, among others. In the last few years, we have started internationalization of this business area, offering a complete product portfolio to our customers worldwide. In this short cycle business, changes in consumer demand are quickly transferred to the industry, with almost immediate impacts on production and revenue.

We have attained good performance in sales of this business area in Brazil in 2019, a movement explained by the improvement in the economic activity and mainly by the higher share of sales to important customers and segments, such as those of washing machines and air conditioners. In the foreign market, we have had a drop in revenue reported by the Chinese operation, mainly due to the effects of the trade war with the USA.

Paints and Varnishes In this area of operation, which includes liquid paints, powder paints and electro-insulating varnishes, we have kept a very clear focus on industrial applications and the Brazilian market, expanding to Latin America. Our strategy in this area is to cross-sell to customers of our other areas. The target markets range from manufacturers of white goods to the shipbuilding industry. We seek to maximize scale of production and the efforts to develop new products and new segments.

Revenue growth in the domestic market is related to the performance of the industrial and consumer goods markets, which have showed a gradual recovery throughout 2019. This is a consequence of the improvement in certain segments, such as those of auto parts, road equipment and sanitation, as well as normalization of preventive maintenance in important segments, such as those of oil and gas, mining and shipbuilding. In the foreign market, the increase in revenue reflects our ongoing efforts to gain new customers and increase our market share.

COST OF GOODS SOLD The cost of goods sold showed an increase of 10.5% and reached R$ 9,394.2 million which represents a gross margin of 29.6% (29.0% in 2018). In 2019, we have noted less pressure on costs of the main raw materials and, despite the exchange rate variation in the period, we managed to improve our gross margin, as a result of efforts to reduce costs and improve processes, which led to productivity gains.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Consolidated selling, general and administrative expenses totaled R$ 1,801.6 million an increase of 5.6% year-on-year, influenced mainly by foreign exchange fluctuation on expenses of operations abroad. When analyzed in terms of operating revenue the expenses show a reduction year-on-year reaching 13.5% (14.3% in 2018) the result of efforts to increase productivity implemented in recent years.

WEG S.A. CNPJ 84.429.695/0001-11 | CVM 00541-0 Publicly Held Company ______

MANAGEMENT’S REPORT

In December 31, 2019

EBITDA The increase in Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA), has been the main highlight in the year. EBITDA calculated in accordance with the methodology established in CVM Ruling No. 527/2012 reached R$ 2,244.5 million, a 23.1% increase on the prior year with EBITDA margin of 16.8% (15.2% in 2018).

(R$ million) 2019 2018 % 2017 % Net Operating Revenues 13,347.4 11,970.1 11.5% 9,523.8 40.1% Net Income before Minorities 1,632.5 1,344.1 21.4% 1,140.9 43.1% (+) Income taxes & Contributions 172.0 153.4 12.1% 99.5 72.8% (+/-) Financial income (expenses) 43.3 9.5 356.1% (58.0) n.a. (+) Depreciation & Amortization 396.8 317.0 25.2% 283.9 39.8% EBITDA 2,244.5 1,824.1 23.1% 1,466.3 53.1% EBITDA Margin 16.8% 15.2% 15.4%

FINANCIAL RESULT The net financial result was negative by R$ 43.3 million in 2019 (negative in R$ 9.5 million in 2018). This net result is derived from financial revenues of R$ 917.4 million in 2019 (R$ 877.7 million in 2018) and financial expenses of R$ 960.7 million in 2019 (R$ 887.2 million in 2018) due to the decrease in interest rates (CDI) and inflation adjustment of provisions for the period.

NET INCOME As a result of the aforementioned effects, Consolidated Net Income attributable to WEG S.A. shareholders reached R$ 1,614.6 million 20.6% over the figure of R$ 1,338.3 million obtained in 2018. Return on equity was 20.9% in 2019 (19.9% in 2018) and net margin reached 12.1% (11.2% in 2018).

RETURN ON INVESTED CAPITAL Return on Invested Capital (ROIC) in 2019 increased 2.7 p.p. in relation to 2018 reaching 20.2%. The growth in Operating Profit After Tax (NOPAT) given the growth in revenue and the improvement in margins, more than offset the growth in invested capital, the expansion of which is explained by the greater need for working capital and for investments in property, plant and equipment as well as intangible assets undertaken over 2019.

DEBT AND CASH POSITION The capability to identify and benefit from investment opportunities with attractive returns is one of the main characteristics of the WEG business model. This capability is gained through financial flexibility which allows us to benefit from investment opportunities when these present themselves and is evidenced by a solid capital structure and maintenance of preferential access to funds and competitive sources of financing with the main financial institutions both in Brazil and abroad. At December 31, 2019 cash and cash equivalents, financial investments and derivative financial instruments totaled R$ 3,581.4 million applied in top-tier banks, mostly in local currency while gross financial debt totaled R$ 2,305.5 million where 41% of which is short-term and 59% is long-term. At the end of 2019 the net cash position was R$ 1,275.9 million.

WEG S.A. CNPJ 84.429.695/0001-11 | CVM 00541-0 Publicly Held Company ______

MANAGEMENT’S REPORT

In December 31, 2019

R$ (Thousand) December 2019 December 2018 December 2017 CASH & FINANCIAL INSTRUMENTS 3,581,442 4, 483,366 4,755,885 - Current 3,414,373 3,753,662 4,585,606 - Long Term 167,069 729,704 170,279 DEBT 2,305,527 100% 3,792,308 100% 4,110,082 100% - Current 950,249 41% 2,061,163 54% 2,027,375 49% - In Brazilian Reais 87,566 175,475 1,300,232 - In other currencies 862,683 1,885,688 727,143 - Long Term 1,355,278 59% 1,731,145 46% 2,082,707 51% - In Brazilian Reais 107,930 315,291 457,386 - In other currencies 1,247,348 1,415,854 1,625,321 NET CASH (DEBT) 1,275,915 691,058 645,803

INVESTMENTS (CAPEX) The investment program in property, plant and equipment to expand and modernize production capacity was most significant in the production units abroad. We highlight Mexico, country in which we have inaugurated the first foundry unit of WEG outside Brazil, as well as China, country in which we have been investing in the expansion of the industrial electric motors plant located in Rugao as well as in the inauguration of the serial automation products plant located in Jintan. Investments in expansion and modernization of production capacity totaled R$ 524.3 million in 2019 where 65% was earmarked for manufacturing parks and other subsidiaries abroad, while 35% was intended for assets in Brazil. Further to these organic investments we have concluded the acquisitions of NPS, Geremia Redutores, PPI-Multitask and V2COM in 2019. It is important to stress our capability to adjust the pace of the performance of the investment program to effective market demand, we constantly seek to maximize the return on invested capital.

INVESTMENTS IN RESEARCH, DEVELOPMENT AND INNOVATION In Research, Development and Innovation, we spent R$ 339.3 million in 2019 or approximately 2.5% of net operating revenue. The RD&I program is focused on the development of new products, the continual improvement of existing products, applied engineering and in the improvement of industrial processes, constantly striving to maintain our technological leadership position in the market.

DIVIDENDS AND INTEREST ON CAPITAL Management shall propose to the Annual General Meeting the allocation of R$ 892.0 million for the payment of dividends and interest on capital as remuneration to shareholders on profit for 2019 representing 55.2% of the profit for the year before statutory adjustments. In August 14, 2019, we made payment of proceeds relating to remuneration of shareholders that were declared over the first six-month period of the year (interim dividends and interest on capital) in a total of R$ 374.2 million. Payment of proceeds relating to the second six-month period (supplementary) of R$ 517.8 million shall take place in March 11, 2020. In accordance with our policy on the allocation of profit we report interest on capital on a quarterly basis and dividends based on profit obtained in each six-month period i.e. six proceeds payments per year which are paid on a biannual basis.

WEG S.A. CNPJ 84.429.695/0001-11 | CVM 00541-0 Publicly Held Company ______

MANAGEMENT’S REPORT

In December 31, 2019

PROFIT, DIVIDENDS AND PAY-OUT Amounts in R$ million:

55% 51% 52% 53% 53% 1,614.6

1,338.3

1,156.1 1,117.6 1,142.1

892.0 703.7 592.8 578.9 606.8

2015 2016 2017 2018 2019

Dividends Net Earnings Pay-out (%)

CAPITAL MARKET The Company has 2,098,658,999 common shares. Shares are traded on B3 S.A. - Brasil, Bolsa, Balcão stock exchange under the ticker WEGE3 and closed the last trading session of December 2019 valued at R$ 34.66, a nominal increase of 97.6% over the year and 100.7% when considering dividends and interest on capital declared in the period.

2019 2018 ∆ Share Price (R$) 34,66 17,54 97.6% Traded financial volume (R$ thousand) 18.354.296 12.817.606 43.2% Number of shares traded (thousand) 797.654 672.784 18.6%

Book value per share 4,26 3,68 15.8%

Market cap (R$ billion) 72,7 36,8 97.6%

ACQUISITIONS

ACQUISITION OF THE BUSINESS OF ENERGY STORAGE SYSTEM FROM NPS, IN THE USA On February 13, 2019, the Company announced the acquisition of the business of energy storage by batteries systems (Energy Storage System – ESS) from Northern Power Systems (“NPS”), and started to be able to project, develop and manufacture energy storage systems, in Barre, Vermont, USA.

Under this purchase agreement, WEG has become the sole owner of the assets, patents portfolio, know-how and related materials, including all designs, projects, specifications and software used in the projects and maintenance of the energy storage systems of NPS.

ACQUISITION OF GEREMIA REDUTORES, IN BRAZIL On February 14, 2019, we announced that subsidiary WEG-CESTARI signed a contract for the acquisition of the entire capital stock of Geremia Redutores, a Brazilian manufacturer of Reducers, Gearboxes, Speed Multipliers and Components for Mechanical Transmission. The transaction was approved by CADE (Administrative Council for Economic Defense) on October 23, 2019.

WEG S.A. CNPJ 84.429.695/0001-11 | CVM 00541-0 Publicly Held Company ______

MANAGEMENT’S REPORT

In December 31, 2019

Founded in 1973, with headquarters in Bento Gonçalves city, state of Rio Grande do Sul, 111 kilometers from Porto Alegre city, Geremia has total area of 52,000 square meters, of which the area of 15,000 square meters is built. Employing around 220 people, the company serves the entire local and international markets, mainly in South and Central America.

ACQUISITION OF 51% EQUITY INTEREST IN PPI-MULTITASK, IN BRAZIL On September 3, 2019, we announced an agreement to acquire controlling interest in PPI-Multitask group, specializing in Industrial Automation Systems Integration, MES (Manufacturing Execution System) Solutions, IIoT (Industrial Internet of Things) and software for the industry. With the closing of the agreement, WEG now holds 51% equity interest in PPI. The company has been included in the consolidated balance sheet since October 2019. Founded in 1992, in the São Paulo city/ São Paulo state, PPI-Multitask has long experience in the integration of automation systems for controlling industrial machines and processes, having one of the most renowned MES software developed in Brazil. Its solutions allow automating data collection and online monitoring of plants, connecting to the company's other management systems and preparing the industrial hub to meet the new demands of Industry 4,0.

ACQUISITION OF 51% EQUITY INTEREST IN V2COM, IN BRAZIL On October 2, 2019, we announced an agreement to acquire 51% equity interest in V2COM, a company specialized in IoT (Internet of Things) and complete telemetering solutions for electric power systems and Smart Grid. Founded in 2002, its headquarters are located in the São Paulo city/São Paulo state, further having a hardware manufacturing plant in the Florianópolis city/Santa Catarina state. With strong experience in the energy area, the company has a wide portfolio of projects implemented involving telemetry, reporting, loss analysis and IoT for companies, utilities and providers of electricity, water and gas services, among others. Specifically in the segment of power utilities, it monitors assets involving installed power of more than 30GW. The company has been included in the consolidated balance sheet since October 2019. V2COM is also enabled to serve Industry 4.0 and develops sensing solutions using its IoT platform denominated "IntelligenceWare Suite". In addition to operating in an innovative way with software and systems in the most diverse segments, offering connectivity in any environment, including by satellite, it is at the forefront of agreements with international providers for projects using 5G technology in Brazil.

SUCCESSION PLANNING

Motors Unit On September 2, 2019, we announced changes in the Executive Board of the Motors Unit effective January 1, 2020, with the leaving of Mr. Luís Alberto Tiefensee, and the appointment of Mr. Alberto Yoshikazu Kuba as Managing Director of the WEG Industrial Motors Unit and Mr. Julio Cesar Ramires as Managing Director of the WEG Commercial Motors and Appliances Unit.

Energy Unit On September 2, 2019, we announced that Mr. Eduardo de Nóbrega would leave the position of Managing Director of the WEG Energy Unit on January 1, 2020 to assume the position of Managing Director of WEG China. On October 24, Mr. João Paulo Gualberto da Silva was appointed for the position of Managing Director of WEG Energy on January 1, 2020.

HUMAN RESOURCES The Company ended 2019 with a total of 31,830 employees, an increase of 2.3% compared to the previous year. The distribution of employees by geographic region is shown below.

2019 2018 ∆ Total employees 31,830 31,104 2.3% North America 4,077 3,962 2.9% South America 22,950 22,102 3.8% Europe 1,426 1,319 8.1% Africa 648 669 -3.1% Asia Pacific 2,729 3,052 -10.6%

WEG S.A. CNPJ 84.429.695/0001-11 | CVM 00541-0 Publicly Held Company ______

MANAGEMENT’S REPORT

In December 31, 2019

PROSPECTS For 2020, we expect another year of growth, although the forecasts indicate stability in the level of growth of the main world economies, with the GDP of these countries forecast to grow 1.7%, according to the IMF, in line with the expectations for 2019. It is worth noting that the continuity of this expansion scenario will depend on the levels of inflation and interest rates in the main economies, in addition to the improvement in the business environment, mainly between the USA, Europe and China. Special attention should be given to industrial businesses that involve short cycle products, especially in the foreign market, where signs of slowing down have been noted in the second half of 2019. In Brazil, the prospects are positive, with forecast GDP growth for 2020 above 2%, according to the IMF, above the forecast growth of 1% for 2019. Low interest and inflation rates should also contribute to a gradual resumption of investments, growth in industrial production and consequently in our industrial businesses. In GTD, the power transmission auctions held in recent years bring good prospects for the power transmission and distribution unit, as well as good performance of the solar generation businesses, especially distributed solar generation. Therefore, we will continue to expand our presence in new markets and expand the products line, both organically, investing in research, development and innovation, and with strategic acquisitions and partnerships. In 2020, our capital budget foresees investments of R$ 690.9 million in fixed assets and R$ 13.8 million in intangible assets.

AUDIT SERVICES In accordance with CVM Ruling No. 381/03, we represent that the Company and its subsidiaries adopt a formal procedure to consult the independent auditors, Deloitte Touche Tohmatsu Auditores Independentes ("Deloitte"), in order to ensure that the provision of other services does not affect its independence and objectivity necessary for the performance of independent auditing services. Accordingly, Deloitte annually issues in its audit report a declaration of independence, pursuant to NBC TA 260 (R2) from the Federal Accounting Council (CFC), which states that, as provided by the rules of independence adopted by the Brazilian Securities and Exchange Commission (CVM), there is no relationship between Deloitte, its associates and affiliates and the Company that may affect its independence. This statement is submitted to WEG's Board of Directors. The policy of the Company and its subsidiaries in engaging independent auditors ensures that there is no conflict of interest, loss of independence or objectivity. During9, 201 we made payments to Deloitte for the financial statements audit service, specific management consulting services and services for the translation of the financial statements into the English language, as follows:

R$ thousand 2019 Audit of Financial Statements 2,815.0 98.1% Management Consulting 53.8 1.9% Grand Total 2,868.8 100.0%

ARBITRATION CHAMBER The Company is bound to arbitration in the Market Arbitration Chamber, pursuant to the Arbitration Clause contained in its Bylaws.

Jaraguá do Sul (Santa Catarina State), February 2020. THE MANAGEMENT.

WEG S.A. CNPJ 84.429.695/0001-11 | CVM 00541-0 Publicly Held Company ______

FINANCIAL STATEMENTS 2019 Balance Sheets in December 31, 2019

In R$ Million

PARENT CONSOLIDATED Notes 12/31/19 12/31/18 12/31/19 12/31/18

Assets Current assets Cash and cash equivalents 4 69,046 200,693 1,946,044 2,205,700 Financial investments 5 817,630 978,627 1,444,227 1,324,188 Derivative financial instruments 29 - - 24,102 223,774 Trade receivables 6 - - 2,747,084 2,440,844 Inventories 7 - - 2,817,129 2,458,410 Recoverable taxes 8 6,063 17,083 394,839 421,938 Dividends and interest on capital receivable 136,286 150,114 - - Other current assets - 527 387,477 363,727 1,029,025 1,347,044 9,760,902 9,438,581

Noncurrent assets Financial investments 5 - - - 562,782 Derivative financial investments 29 - - 167,069 166,922 Judicial deposits 17,d 4,657 4,657 68,506 58,368 Due from related parties 9 3 15 - - Deferred taxes 10 4,863 3,322 182,042 142,669 Recoverable taxes 8 - - 78,708 167,689 Other noncurrent assets - - 101,472 80,496

Investments 11 7,833,527 6,537,391 28,012 20,362 Property, plant and equipment 12 4,219 4,305 3,776,561 3,541,954 Lease right of use 13 - - 204,623 - Intangible assets 14 - - 1,319,746 1,220,027

7,847,269 6,549,690 5,926,739 5,961,269

Total assets 8,876,294 7,896,734 15,687,641 15,399,850

The accompanying notes are an integral part of these financial statements.

WEG S.A. CNPJ 84.429.695/0001-11 | CVM 00541-0 Publicly Held Company ______

FINANCIAL STATEMENTS 2019 Balance Sheets in December 31, 2019

In R$ Million

PARENT CONSOLIDATED Notes 12/31/19 12/31/18 12/31/19 12/31/18

Liabilities and Equity Current liabilities Trade payables 15 - - 839,879 842,957 Borrowings and financing 16 - - 936,370 2,049,093 Derivative financial instruments 29 - - 13,879 12,070 Payroll and tax charges 7,651 10,069 390,119 303,561 Income and social contribution taxes 34 78 31,578 24,968 Dividens and interest on capital payable 144,611 165,016 145,376 165,441 Advances from customers - - 814,964 655,242 Profit sharing - - 212,608 167,941 Lease - - 49,168 - Bill and hold sales - - 414,337 155,137 Provision for product warranties - - 168,338 155,532 Accounts payable - subsidiaries abroad - - 210,113 161,572 Other current liabilities 2,021 2,567 264,292 340,490 154,317 177,730 4,491,021 5,034,004

Noncurrent liabilities Borrowings and financing 16 - - 1,348,599 1,723,021 Derivative financial instruments 29 - - 6,679 8,124 Lease - - 153,667 - Provisions for contingencies 17,a 4,730 4,730 551,578 547,637 Deferred taxes 10 - - 75,143 86,537 Other noncurrent liabilities - - 130,964 147,270 4,730 4,730 2,266,630 2,512,589

Total liabilities 159,047 182,460 6,757,651 7,546,593

Equity Owners of the Company Share capital 19,a 5,504,517 5,504,517 5,504,517 5,504,517 Capital reserves (101,676) (77,826) (101,676) (77,826) Stock option plan 21 12,857 9,615 12,857 9,615 Treasury shares 19,d (11,419) (15,261) (11,419) (15,261) Earnings reserve 1,707,252 959,255 1,707,252 959,255 Carrying value adjustments 359,298 380,781 359,298 380,781 Other comprehensive income 894,526 779,326 894,526 779,326 Additional dividends proposed 351,892 173,867 351,892 173,867 8,717,247 7,714,274 8,717,247 7,714,274

Noncontrolling interests - - 212,743 138,983

Total equity 8,717,247 7,714,274 8,929,990 7,853,257

Total liabilities and equity 8,876,294 7,896,734 15,687,641 15,399,850

The accompanying notes are an integral part of these financial statements.

WEG S.A. CNPJ 84.429.695/0001-11 | CVM 00541-0 Publicly Held Company ______

FINANCIAL STATEMENTS 2019 Statement of Profit and Loss | Years ended December 31, 2019 and 2018

In R$ million, except when stated otherwise

PARENT CONSOLIDATED Notes 12/31/19 12/31/18 12/31/19 12/31/18

Net revenue 22 - - 13,347,434 11,970,090 Cost of goods sold and services rendered 24 - - (9,394,166) (8,500,816) Gross profit - - 3,953,268 3,469,274 Selling expenses 24 - - (1,253,165) (1,139,413) Administrative expenses 24 (2,408) (2,606) (521,798) (541,257) Management fees 9 (2,715) (2,535) (26,609) (25,374) Other operating expenses 25 (7,937) (9,114) (314,397) (259,628) Share of profit of investees 11 1,594,481 1,310,479 10,435 3,429 Profit before finance income (costs) 1,581,421 1,296,224 1,847,734 1,507,031 Finance income 26 33,189 41,431 917,382 877,674 Finance costs 26 (820) (6) (960,665) (887,163) Profit before taxes on income 1,613,790 1,337,649 1,804,451 1,497,542 Current taxes 27 (751) (707) (217,098) (188,185) Deferred taxes 27 1,542 1,377 45,102 34,791 Profit for the year 1,614,581 1,338,319 1,632,455 1,344,148 Attributable to: Owners of the Company 32 1,614,581 1,338,319 Noncontrolling interests 17,874 5,829

Earnings per share attributable to the 32 owners of the Company Basic earnings per share (in R$) 32,a 0,76978 0,63815 Diluted earnings per share (in R$) 32,b 0,76931 0,63776

The accompanying notes are an integral part of these financial statements.

WEG S.A. CNPJ 84.429.695/0001-11 | CVM 00541-0 Publicly-Held Company ______

FINANCIAL STATEMENTS 2019 Statement of Comprehensive Income | Years ended December 31, 2019 and 2018

In R$ Million

PARENT CONSOLIDATED 12/31/19 12/31/18 12/31/19 12/31/18

Profit for the year 1,614,581 1,338,319 1,632,455 1,344,148 Amounts that may be subsequently reclassified to income statement

Hedge accounting 7,477 (7,302) 7,477 (7,302) Change in equity interest (6,070) - (6,070) - Cumulative translation adjustments 117,792 324,284 122,796 326,967

Total comprehensive income attributable to: 1,733,780 1,655,301 1,756,658 1,663,813 Owners of the Company 1,733,780 1,655,301 Noncontrolling interests 22,878 8,512

The accompanying notes are an integral part of these financial statements.

WEG S.A. CNPJ 84.429.695/0001-11 | CVM 00541-0 Publicly-Held Company ______

FINANCIAL STATEMENTS 2019 Statement of Changes in Equity | Years ended December 31, 2019 and 2018

In R$ Million

Paid-in Capital reserves Stock Treasury Earnings reserves Carrying Additional Retained Other comprehensive income Equity capital option plan shares value dividends earnings adjustments proposed Goodwill Revaluation Legal Reserve for Deemed Translation Change in Hedge Owners of Noncontrolling Total reserve of reserve capital cost adjustment equity accounting the Company interests subsidiaries budget interest ' assets

At January 1, 2018 3,533,973 (79,042) 3,630 4,437 (17,392) 218,528 2,050,908 406,240 132,455 - 473,699 - (11,355) 6,716,081 122,381 6,838,462 Payment of dividends ------(132,455) - - - - (132,455) - (132,455) Capital increase 1,970,544 - - - - (218,528) (1,752,016) ------Treasury shares sold - 1,617 - - 2,131 ------3,748 - 3,748 Pricing of stock options - - - 5,178 - - - - - (579) - - - 4,599 - 4,599 Capital transactions - (4,031) ------(4,031) 8,090 4,059 Reversal of prior year dividends ------836 - - - 836 - 836 Carrying value adjustments: Deemed cost net of taxes ------2 - - - - - 2 - 2 Realization of deemed cost, net of taxes ------(25,461) - 25,461 ------Cumulative translation adjustments ------324,284 - - 324,284 2,683 326,967 Hedge accounting - Cash flow , net of taxes ------(7,302) (7,302) - (7,302) Profit for the year ------1,338,319 - - - 1,338,319 5,829 1,344,148 Proposed allocations: Legal reserve (Note 19,c) - - - - - 66,916 - - - (66,916) ------Dividends (Note 19,b) ------173,867 (346,655) - - - (172,788) - (172,788) Interest on capital (Note 19,b) ------(357,019) - - - (357,019) - (357,019) Reserve for capital budget ------593,447 - - (593,447) ------

At December 31, 2018 5,504,517 (81,456) 3,630 9,615 (15,261) 66,916 892,339 380,781 173,867 - 797,983 - (18,657) 7,714,274 138,983 7,853,257

Payment of dividends ------(173,867) - - - - (173,867) - (173,867) Treasury shares sold - 3,626 - - 3,842 ------7,468 - 7,468 Pricing of stock options - - - 3,242 - - - - - (989) - - - 2,253 - 2,253 Capital transactions - (27,476) ------(27,476) 50,882 23,406 Reversal of prior year dividends ------938 - - - 938 - 938 Carrying value adjustments: Realization of deemed cost, net of taxes ------(21,483) - 25,482 (3,999) - - - - - Cumulative translation adjustments ------117,792 - - 117,792 5,004 122,796 Hedge accounting - Cash flow net of taxes ------7,477 7,477 - 7,477 Variação na participação societária ------(6,070) - (6,070) - (6,070) Profit for the year ------1,614,581 - - - 1,614,581 17,874 1,632,455 Proposed allocations: Legal reserve (Note 19,c) - - - - - 80,729 - - - (80,729) ------Dividends (Note 19,b) ------351,892 (538,780) - - - (186,888) - (186,888) Interest on capital (Note 19,b) ------(353,235) - - - (353,235) - (353,235) Reserve for capital budget ------667,268 - - (667,268) ------

As at December 31, 2019 5,504,517 (105,306) 3,630 12,857 (11,419) 147,645 1,559,607 359,298 351,892 - 911,776 (6,070) (11,180) 8,717,247 212,743 8,929,990

The accompanying notes are an integral part of these financial statements.

WEG S.A. CNPJ 84.429.695/0001-11 | CVM 00541-0 Publicly-Held Company ______

FINANCIAL STATEMENTS 2019 Statement of Cash Flows – Indirect Method | Years ended December 31, 2019 and 2018

In R$ Million

PARENT CONSOLIDATED 12/31/19 12/31/18 12/31/19 12/31/18

Operating activities Profit before taxes 1,613,790 1,337,649 1,804,451 1,497,542 Depreciation and amortization 86 88 396,783 317,023 Stock option plan expenses 4,451 5,930 6,940 6,067 Share of profit of investees (1,594,481) (1,310,479) (10,435) (3,429) Provision for credit risk - - 2,722 6,824 Provision for tax, civil and labor liabilities - - 3,941 40,676 Provision for inventory losses - - 3,803 15,344 Provision for product w arranty - - 12,806 37,441 Write-off of noncurrent assets - - 13,998 9,881 Accrued interest on borrow ings and financing - - 78,383 84.537 Income from financial investments (39,195) (40,661) (99,966) (178,941) Profit sharing - employees - - 282,231 225,299 (15,349) (7,473) 2,495,657 2,058,264

(Increase)/decrease in trade receivables 11,247 (16,925) (150,828) (188,969) (Increase)/decrease in inventories - - (311,532) (441,614) Increase/(decrease) in trade payables (3,953) 2,383 321,190 264,025 Income tax and social contribution paid (795) (677) (210,488) (192,889) Payment of profit sharing - employees - - (236,146) (199,162) Net cash flow from operating activities (8,850) (22,692) 1,907,853 1,299,655

Investing activities Investments (250,000) 6,172 - - Acquisition of property, plant and equipment - - (496,115) (403,543) Acquisition of intangible assets - - (28,367) (25,860) Acquisition of company - business combination (net of cash) - - (121,830) (118,257) Financial investments (367,353) (578,374) (676,688) (1,572,280) Redemption of financial investments 567,545 70,125 1,219,397 1,275,297 Proceeds from the sale of property, plant and equipment and in - - 43,855 11,353 Dividends and interest on capital received 604,299 529,288 - - Net cash flow from investing activities 554,491 27,211 (59,748) (833,290)

Financing activities Proceeds from borrow ings and financing - - 1,407,993 1,005,626 Repayment of borrow ings and financing - - (2,778,344) (1,758,424) Interest paid on borrow ings and financing - - (68,008) (91,811) Treasury shares 3,842 2,131 3,842 2,131 Dividends and interest on capital paid (681,130) (604,148) 680,924 (603,957) Net cash flow from financing activities (677,288) (602,017) 2,115,441 (1,446,435)

Exchange rate changes on cash and cash equivalents - - 7,680 23,085 Increase/(decrease) in cash and cash equivalents (131,647) (597,498) (259,656) (956,985)

Cash and cash equivalents at January 1 200,693 798,191 2,205,700 3,162,685 Cash and cash equivalents at December 31 69,046 200,693 1,946,044 2,205,700

The accompanying notes are an integral part of these financial statements.

WEG S.A. CNPJ 84.429.695/0001-11 | CVM 00541-0 Publicly-Held Company ______

FINANCIAL STATEMENTS 2019 Statement of Value Added | Years ended December 31, 2019 and 2018

In R$ Million

PARENT CONSOLIDATED 12/31/19 12/31/18 12/31/19 12/31/18

Revenues - - 14,942,787 13,415,555 Sales of goods, products and services - - 14,900,758 13,386,915 Other revenues - - 44,751 35,464 Allowance for / Reversal of allowance for doubtful debts - - (2,722) (6,824) Inputs purchased from third parties (5,458) (6,984) 8,222,395 (7,607,673) Materials, electric power, third-party services and others (1,008) (1,050) (8,179,720) (7,565,662) Others (4,450) (5,934) (42,675) (42,011) Gross value added (5,458) (6,984) 6,720,392 5,807,882 Depreciation, amortization and depletion (86) (88) (396,783) (317,023) Wealth created by the Company (5,544) (7,072) 6,323,609 5,490,859

Wealth received in transfer 1,627,670 1,351,910 927.817 881.103 Share of profit of investees 1,594,481 1,310,479 10,435 3,429 Finance income 33,189 41,431 917,382 877,674 Wealth for distribution 1,622,126 1,344,838 7,251,426 6,371,962

Wealth distributed 1,622,126 1,344,838 7,251,426 6,371,962 Personnel 6,215 6,019 3,173,416 2,639,287 Salaries and wages 5,958 5,743 2,699,186 2,268,488 Benefits 174 158 379,830 280,861 Severance pay fund (FGTS) 83 118 94,400 89,938 Taxes, fees and contributions 514 498 1,476,632 1,454,946 Federal 514 498 1,314,646 1,310,533 State - - 147,353 129,964 Municipal - - 14,633 14,449 Lenders and lessors 816 2 968,923 933,581 Interest 816 2 958,081 883,600 Rentals - - 10,842 49,981 Shareholders 1,614,581 1,338,319 1,632,455 1,344,148 Dividends 538,780 346,655 538,780 346,655 Interest on capital 353,235 357,019 353,235 357,019 Retained earnings 722,566 634,645 722,566 634,645 Retained earnings - noncontrolling interests - - 17,874 5,829

The accompanying notes are an integral part of these financial statements.

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

1 INFORMATION ABOUT THE COMPANY WEG S.A. ("Company") is a publicly-held limited liability corporation headquartered at Avenida Prefeito Waldemar Grubba, 3300, in Jaraguá do Sul - State of Santa Catarina (SC), Brazil, holding company comprising the WEG Group ("Group"), whose main activity is the production and trade of capital goods such as electric motors, generators and transformers; gear units and geared motors; hydraulic and steam turbines; frequency converters; motor starters and maneuver devices; control and protection of electric circuits and industrial automation; power sockets and switches; electric traction solutions for heavy vehicles, utility vehicles and locomotives, and urban and sea transportation; solutions for the generation of renewable and distributed energy, exploring all opportunities in small hydro, thermal biomass, wind and solar energy powerplants; solutions for Industry 4.0; no-breaks and alternators for groups of generators; conventional and movable electric substations; industrial electro electronic equipment systems; industrial paint & varnish and paints for automotive repainting. The operations are performed through manufacturing facilities located in Brazil, Argentina, Colombia, Mexico, United Stated, Portugal, Spain, Austria, Germany, South Africa, India, and China, with commercial activities carried out in more than 135 countries. The Company has shares traded on B3 under ticker symbol “WEGE3” and has been listed since June 2007 in the special segment of corporate governance called Novo Mercado. The Company has American Depositary Receipts (ADRs) - Level 1 that are traded on the over-the-counter (OTC) market in the United States under the ticker symbol “WEGZY”.

2 BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES The consolidated and company financial statements ("financial statements") have been prepared taking into consideration all the Company's significant information, which corresponds to that information used by the Management in its management, prepared in accordance with the International Financial Reporting Standards - "IFRS", which have been implemented in Brazil by the Committee for Accounting Pronouncements ("CPC"), approved by the Brazilian Securities and Exchange Commission ("CVM") and the Brazilian Federal Accounting Council ("CFC").

The financial statements have been prepared on the historical cost basis, except for the measurement of certain financial instruments at fair value, when required by the standard.

These consolidated and company financial statements were authorized for issue at the Executive Board's meeting held on February 17, 2020.

2.1 Basis of consolidation The consolidated financial statements have been jointly prepared with the parent company's, using consistent accounting policies, and are comprised of the direct and indirect subsidiaries' financial statements. All unrealized balances, revenues, expenses, gains and losses arising from intercompany transactions of the Group included in the consolidation are eliminated. Changes in the corporate interest in a subsidiary that do not result in a loss of control are accounted for as transactions between shareholders in equity. Profit and loss for the year and comprehensive income are attributable to the parent company's shareholders and noncontrolling interest of the consolidated companies. Losses are attributable to minority interest, even if they result in a negative balance. The subsidiaries that comprise the consolidated financial statements are presented in Note 11.

2.2 Business Combinations When the Company acquires a business, it assesses the assets and liabilities assumed aiming at classifying them and allocating them in accordance with the contractual terms, the economic circumstances, and the relevant conditions, in up to one year subsequent to the acquisition date. The goodwill is initially measured as the excess of the consideration transferred in relation to net assets acquired (identified assets and assumed liabilities). If the consideration is less than the fair value of the net assets acquired, the difference is recognized as gain in the income statement. Subsequent to the initial recognition, the goodwill is measure at cost, minus any accumulated losses of the recoverable value, which is tested on a yearly basis. For recoverable value testing purposes, the goodwill acquired in a business combination is, as from the date of acquisition, allocated to each one of the Company's cash generating units (CGUs) which are expected to benefit from the combination synergies, regardless of other acquiree's assets or liabilities being attributable to those units. 17

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

Financial information of subsidiaries is recognized in the individual financial statements of the parent company using the equity method.

2.3 Foreign currency translation a) Functional currency of the Group's companies These consolidated financial statements are presented in Reais (R$), which is the Company’s and its located-in-Brazil subsidiaries' functional currency. The functional currency of subsidiaries located abroad is determined based on the principal economic environment in which they operate, and translated into Real (R$) as of the reporting date. b) Transactions and balances Transactions in foreign currency are recognized using the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency in force at the reporting date. All differences are recognized in the statement of profit or loss. Non-monetary items that are measured based on historical cost in a foreign currency are translated using the exchange rate in force at the date of the initial transactions. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rate in force at the date on which the fair value was determined. c) Translation of balance sheets regarding the Group's companies located abroad Foreign currency assets and liabilities recognized by the foreign subsidiary are translated into Reais using the exchange rate of the reporting date, and the corresponding income statements are translated using monthly average exchange rates. Foreign exchange differences resulting from the aforementioned translation are separately recorded in the account cumulative translation adjustments in equity. At the time of sale of a subsidiary abroad, the cumulative translation amount recognized in equity, related to this subsidiary abroad, is recognized in the income statement.

2.4 Cash and cash equivalents Cash and cash equivalents include the balances in current account and short-term highly liquid financial investments which are recorded at cost value plus income earned up to the balance sheet closing date, in accordance with the rates agreed upon with the financial institutions, which do not exceed their market or realization value.

2.5 Financial investments Financial investments are investments with liquidity over three months classified as held to maturity, and they are recorded at cost value plus income earned up to the balance sheet closing date, in accordance with the rates agreed upon with the financial institutions, which do not exceed their market or realization value.

2.6 Trade receivables Trade receivables consist of cash receivable from clients for goods sold or services rendered over the normal course of the Company's activities, stated at present and realization value. The allowance for losses on trade receivables is calculated based on the assessment of the credit, market liquidity and credit level risks, being sufficient to cover expected losses on such receivables.

2.7 Inventories Inventories are assessed and are stated at the average production or acquisition cost, considering the present value, when applicable. The Company and its subsidiaries determine the cost of their inventories using the absorption method, based upon the weighted moving average. Provisions for inventories due to: realization; slow moving; and obsolete inventories, are recorded in accordance with the Company's policies. Imports in progress are stated at the accumulated cost of each import.

2.8 Property, plant and equipment Fixed assets are assessed at the cost of acquisition and/or construction, minus the corresponding depreciation, except for land which is not depreciated. Maintenance or repair expenditures which do not significantly increase the useful life of the assets are recorded as expenses, when incurred. Gains and losses on disposals are determined by comparing the sale amount and the residual amount, and are recognized in the income statement. Depreciation is calculated using the straight-line method and it takes into account the economic useful life of assets, and it is reviewed periodically aiming at adapting the depreciation rates as required.

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

The carrying amounts of property, plant and equipment are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the Company recognizes a reduction in the carrying amount of this asset.

2.9 Right of use of leased assets All leases in which the Company and its subsidiaries participate as lessees are recognized in the balance sheet in the right-of-use asset line item against the lease liability line item in liabilities, excepting short-term and low-value leases, which are recognized as expense on a straight line basis over the lease term. The right-of-use asset is measured at cost, less accumulated depreciation and impairment, if any, adjusted by any remeasurement of the lease liability. Depreciation is calculated based on the useful life of the asset or lease term. Lease liability is initially measured at present value of lease installments payable, monthly restated by interest discounted and settled for lease payments made.

2.10 Intangible assets They are stated at cost of acquisition, minus amortization. Intangible assets with defined useful lives are amortized taking into account the estimated time of future economic benefit generation. Goodwill due to expectations of future profitability, without a definite useful life, was amortized up to December 31, 2008. As from 2009 goodwill is subject to recoverability testing on a yearly basis, or whenever there are signs of a possible loss of economic value.

2.11 Research, development and innovation Research, development and innovation expenditures incurred on opportunities for gaining scientific and technological know-how, process and products improvement.

2.12 Provision for contingencies Provisions are recognized when the Company and its subsidiaries have a current liability resulting from past events, and it is probable that an outflow of funds will be required to settle the obligation, and a reliable estimate of the value may be made. Provisions are reviewed periodically, respecting their nature and substantiated by the opinion of legal advisors.

2.13 Provision for warranties A provision for warranties is recognized when products are sold or services rendered based on historical data and warranty periods.

2.14 Profit sharing The Company and its subsidiaries provide profit sharing to the employees and the Management based on programs which establish operating goals, approved by the Board of Directors, on a yearly basis. The amount shared is recognized as profit or loss as goals are accomplished.

2.15 Dividends and interest on capital Dividends and interest on shareholders' equity are recognized as a liability based on the minimum dividends established by the Company's Bylaws. Any amount above the minimum non-discretionary dividends is only recognized as liability when approved by the Board of Directors and ad referendum at the Ordinary General Meeting. Dividends proposed for the Board of Directors remain recorded in equity in the caption Additional Dividends.

2.16 Private pension plan The Company and its subsidiaries sponsor a supplementary private pension fund, which ensures risk benefits and programmed term benefits. Risk benefits (disability, death pension, sickness benefit, and monetary death reserve) are structured in the mode of defined benefit, and fully financed by the sponsor, by the financial allocation system. The programmed term benefit (reversible monthly income for life and the permanent monthly financial income) are structured in the mode of variable contribution and financed by the participants and by the sponsor, by the financial capitalization system. The actuarial commitments to the benefit plan are recorded and provided for based on actuarial calculations, which are periodically prepared by an independent actuary, and they are covered by the benefit plan's guarantee assets. Actuarial calculations are performed using actuarial, financial and economic assumptions such as the mortality chart, mortality chart for disabled persons, actual annual interest rate and historical data of events, death, disability and sickness, occurred in periods prior to the determination of the corresponding costs.

2.17 Financial instruments The Company's and its subsidiaries' main financial instruments include the following ones: 19

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated) a) Cash and cash equivalents: Cash and cash equivalents are stated at market value, which is equivalent to their carrying value; b) Financial investments: Fair value is reflected in the amounts recorded in the balance sheets. Financial investments are classified as securities held to maturity; c) Borrowings and financing: The main purpose of this financial instrument is to generate funds to finance the Company's and its subsidiaries' expansion programs, and possibly cover the needs for its cash flow in the short term: - Borrowings and financing in local currency: are classified as financial liabilities measured at amortized cost and are accounted for at their adjusted amounts based on the contractual rates. The market values of these borrowings are equivalent to their carrying values, as they are financial instruments which have exclusive characteristics, resulting from specific financing sources. - Borrowings and financing in foreign currency: they are financially contracted to provide support to working capital of sales operations performed in Brazil, and of subsidiaries located abroad, and are corrected according to the rates contracted. d) Derivative financial instruments: - Operations with Non Deliverable Forwards (NDF) and SWAPs - recognized at fair value in assets and/or liabilities in contra-entry to the financial profit or loss in the income statement. - Hedge accounting - it aims at hedging against variation risk arising from foreign exchange rates. These operations are recognized at fair value in assets and/or liabilities against the financial profit or loss in the income statement. The amount recorded in equity is immediately transferred to the statement of profit or loss when the transaction subject to hedge affects profit or loss.

2.18 Treasury shares Treasury shares are recognized at cost, and deducted from equity. No gains or losses on the purchase, sale, issue or cancelation of the Company's own equity instruments are recognized in the income statement. Any difference between the carrying amount and the compensation is recognized in capital reserves.

2.19 Share-based plan a) Long-Term Incentive Plan – The Company grants shares to its officers and managers, which will only be delivered after grace periods. Shares are measured at fair value based on the date of grant, using the Black-Scholes-Merton pricing model and are recognized as expenses in the caption Other Income in the income statement for the year against the capital reserve in equity as the terms of the periods for exercising the options are performed. b) Stock call option plan – The Company grants stock call options to its officers, who will only exercise the option subsequent to the vesting period. Options are measured at fair value based on the date of the grant, using the Black- Scholes-Merton pricing model, and recognized as expenses in the caption Other Income in the income statement for the year against the capital reserve in equity as the terms of the periods for exercising the options are performed.

Changes and reversals subsequent to the acquisition calculation are made only when there is: (i) reduction in the exercise price of the granted options; and (ii) reducing the number of options that are expected to be granted.

2.20 Government subsidies and grants Government subsidies are recognized when all corresponding conditions associated with the subsidy have been met. When the benefit refers to an expense item, the subsidy is recognized as revenue during the course of the benefit period, on a systematic basis, in relation to the costs whose benefit aims at offsetting. When the benefit refers to an asset, it is recognized as deferred income and entered into profit or loss at equal amounts over the expected useful life of the corresponding asset.

2.21 Revenue from contract with customer Revenue is recognized to the extent which the company transfers the control over goods and services to the customers, which generally occurs at the moment the customer receives the product. It is measured at the fair value of the consideration received or receivable, excluding discounts, rebates and taxes or charges over sales.

2.22 Revenue from contract with customer - Construction contracts When the results of a construction contract are accurately estimated, revenues and costs are recognized based on the completion stage of the contract at the end of the period, considering the legal possibility of demanding payment by the 20

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated) customer or delivery of the product to the customer (transfer of control), and measured on the basis of the proportion of costs incurred in relation to the total costs estimated in the contract.

2.23 Taxes a) Current and deferred income and social contribution taxes Current and deferred income and social contribution taxes of the Company and its subsidiaries in Brazil are calculated based on the 25% and 9% rates, respectively, and take into account tax losses and negative basis limited to 30% of the taxable profit, except for the subsidiaries located abroad, in which the tax rates valid in the countries where these subsidiaries are located are complied with.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the corresponding amounts used for taxation purposes. b) Other taxes Revenues, expenses and assets are net of taxes on sales, except when the taxes on purchases of goods or services are not recoverable with the tax authorities, in which event the tax is recognized as part of the acquisition cost of the asset or expense item, as the case may be.

2.24 Segment information Management determines the Company's and its subsidiaries' operating and geographic segments base on reports issued internally as business management information. The Company's management is structured, using the operations' information, taking into account the industry, energy, foreign and consolidated segments.

2.25 Statement of value added The Company prepares the Statements of Value Added (DVAs), as required by the Brazilian legislation, as a part of its individual financial statements and supplementary information to the consolidated financial statements.

2.26 Hyperinflationary economy Non-monetary items are adjusted for inflation from the acquisition or remeasurement date through the reporting dates, except for non-monetary items recognized at present value at the reporting dates, which are not adjusted for inflation. Deferred taxes are measured subsequent to the adjustment of non-monetary items, from the acquisition or remeasurement date through the opening balance dates, and subsequently adjusted through the reporting dates. Monetary items are not adjusted, since these are already expressed in the current monetary unit at the end of the reporting periods. Gains and losses on the net monetary position are recorded in profit or loss.

2.27 New standards effective beginning on January 1, 2019 New standards are effective for annual periods beginning on or after January 1, 2019 and were adopted by the Company: a) CPC 06 (R2) (IFRS 16) Leases The Company and its subsidiaries adopted the new pronouncement on January 1, 2019, without the restatement of comparative figures. Regarding leases previously classified as operating leases, the Company elected to recognize the right to use the asset at the amount equivalent to the lease liability on the date of first application. b) ICPC 22 (IFRIC 23) Uncertainty over Income Tax Treatments The Company and its subsidiaries have applied this new interpretation beginning January 1, 2019, which has not affected the result of operations of the Company and its subsidiaries.

2.28 New pronouncements effective beginning January 1, 2020 The new standards or amendments to standards are effective for annual reporting periods beginning on or after January 1, 2020. The application of these new pronouncements did not have any impact on the financial statements of the Company and its subsidiaries.

3 ACCOUNTING ESTIMATES

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

The financial statements include the use of estimates that took into consideration Management's assessments and judgments, past and current experiences, assumptions related to future events and other objective and subjective factors. The significant items subject to those estimates are: a) analysis of the credit risk to determine the allowance for doubtful debts; b) determination of the allowance for inventory losses; c) review of the economic useful life of fixed assets and their recovery in operations; d) impairment test of intangible assets; e) fair value measurement of financial instruments; f) commitments to employee benefit plan; g) share-based plan transactions; h) deferred income and social contribution taxes; and i) provision for contingencies.

The settlement of transactions involving those estimates may lead to amounts different from those recorded in the financial statements due to the inaccuracies inherent in the estimate process. These estimates are periodically reviewed.

4 CASH AND CASH EQUIVALENTS PARENT CONSOLIDATED 12/31/19 12/31/18 12/31/19 12/31/18 a)Cash and banks 7 8 396,233 286,783 b)Financial investments 69,039 200,685 1,549,811 1,918,917 In local currency: 69,039 200,685 1,483,551 1,870,749 Bank Certificate of Deposit (CDB) and Repurchase Operations 69,039 200,685 1,483,551 1,870,749 In foreign currency: - - 66,260 48,168 TOTAL 69,046 200,693 1,946,044 2,205,700

Investments in Brazil: Investments in Brazil refer mainly to funds invested in private securities with first tier financial institutions and repurchase agreements. They yield average rate of 100.35% of the Interbank Deposit Rate - CDI (100.18% of the CDI as at December 31, 2018).

5 FINANCIAL INVESTMENTS

PARENT CONSOLIDATED 12/31/19 12/31/18 12/31/19 12/31/18 Bank Certificate of Deposit (CDB), Repurchase Agreements and Funds 817,630 978,627 1,444,227 1,886,970 TOTAL 817,630 978,627 1,444,227 1,886,970 Current assets 817,630 978,627 1,444,227 1,324,188 Floating rate 817,630 978,627 1,393,944 1,243,861 Fixed rate - - 50,283 80,327 Noncurrent assets - - - 562,782 Floating rate - - - 516,138 Fixed rate - - - 46,644

Financial investments yield fixed average interest rate of 15.41% p.a. (15.88% p.a. as at December 31, 2018) as well as variable average interest rate of 102.77% of the CDI (102.56% of the CDI as at December 31, 2018).

6 TRADE RECEIVABLES CONSOLIDATED 22

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

12/31/19 12/31/18 a)Breakdown of balances: Domestic market 1,119,107 1,017,925 External market 1,681,495 1,473,715 SUBTOTAL 2,800,602 2,491,640 Allowance for doubtful debts (53,518) (50,796) TOTAL 2,747,084 2,440,844

b)Losses on trade receivables in the period 13,144 8,639

c)Maturity of trade notes: Not past due 2,426,922 2,129,256 Past due: 373,680 362,384 Up to 30 days 206,483 214,301 From 31 to 90 days 75,735 75,102 From 91 to 180 days 29,234 24,048 Over 180 days 62,228 48,933 TOTAL 2,800,602 2,491,640

The movement in the allowance for doubtful debts is as follows: Balance at 1/1/2018 (43,972) Losses written off in the year 8,639 Recognition of provision in the year (33,987) Reversal of provision in the year 18,524 Balance at 12/31/2018 (50,796) Losses written off in the year 13,144 Recognition of provision in the year (25,500) Reversal of provision in the year 9,634 Balance at 12/31/19 (53,518)

7 INVENTORIES CONSOLIDATED 12/31/19 12/31/18 Finished goods 411,427 377,506 Work in progress 421,598 412,954 Raw materials and others 521,760 407,373 Imports in transit 61,638 74,543 Provision for slow-moving inventory losses (33,150) (33,262) Total inventories - domestic market 1,383,273 1,239,114

Finished goods 828,787 744,153 Work in progress 317,816 246,507 Raw materials and others 368,374 305,842 Provision for slow-moving inventory losses (81,121) (77,206) Total inventories – external market 1,433,856 1,219,296

GRAND TOTAL 2,817,129 2,458,410

The movement in the provision for slow-moving inventory losses is as follows: Balance at 1/1/2018 (95,124) Recognition of provision in the year (70,734) Reversal of provision in the year 55,390 Balance at 12/31/2018 (110,468) Recognition of provision in the year (43,852) Reversal of provision in the year 40,049 Balance at 12/31/19 (114,271)

Inventories are insured and their coverage is determined considering the values and level of risk involved. The recognition and reversal of provision for slow-moving inventory losses are recorded in cost of sales. 23

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

8 RECOVERABLE TAXES PARENT CONSOLIDATED 12/31/19 12/31/18 12/31/19 12/31/18 BRASIL 6,063 17,083 319,271 467,289 IRPJ (Corporate Income Tax) /CSLL (Social Contribution on Net Income) 3,607 17,083 81,006 153,436 IRRF (Withholding Income Tax) on financial investments 2,456 - 22,878 - ICMS (State VAT) - - 90,509 103,471 ICMS on purchases of property, plant and equipment - - 22,271 20,297 IPI (Federal VAT) - - 57,624 98,576 PIS/COFINS (Taxes on Revenue) - - 24,890 54,868 REINTEGRA - - 14,932 30,488 Others - - 5,161 6,153 EXTERIOR - - 154,276 122,338 Income tax - - 52,078 60,486 IVA / VAT - - 98,907 58,870 Others - - 3,291 2,982 TOTAL 6,063 17,083 473,547 589,627 Current assets 6,063 17,083 394,839 421,938 Noncurrent assets - - 78,708 167,689

The credits will be realized by the Company and its subsidiaries during the normal process of tax calculation and there are also credits subject to refund and/or offsetting.

9 RELATED PARTIES The Company carried out trading transactions involving purchase and sale of goods and raw materials and contracting of services as well as financial transactions relating to loans and fundraising among Group companies, which are eliminated on consolidation, and Management compensation.

Amount of existing balances: PARENT CONSOLIDATED

12/31/19 12/31/18 12/31/19 12/31/18 BALANCE SHEET ACCOUNTS Noncurrent assets 3 15 - - Management of funds WEG Equipamentos Elétricos S.A. (*) 3 15 - -

Current liabilities 1,525 1,455 22,053 20,449 Contracts with Management - - 4,857 4,851 Profit sharing - Management 1,525 1,455 17,196 15,598 ______

PARENT CONSOLIDATED PROFIT & LOSS ACCOUNTS PARENT CONSOLIDATED 12/31/19 12/31/18 12/31/19 12/31/18 Management compensation: a) Fixed (fees) 2,715 2,535 26,609 25,374 Board of Directors 1,366 1,214 2,733 2,428 Board of Executive Officers 1,349 1,321 23,876 22,946

b) Variable (profit sharing) 2,715 2,526 25,986 24,680 Board of Directors 1,366 1,214 2,733 2,428 Board of Executive Officers 1,349 1,312 23,253 22,252 24

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

Additional Information: a) Trading transactions The purchase and sale of inputs and goods are conducted under conditions established between the parties; b) Management of funds The financial and trading transactions conducted among the Group companies are recorded and supported by the Group's policies. The credit/debit agreements entered into with Management are subject to interest of 95% of the CDI variation; c) Sureties and guarantees WEG SA has sureties and guarantees for foreign subsidiaries in the amount of US$ 88.8 million (US$ 50.3 million at December 31, 2018); d) Management compensation The members of the Board of Directors received compensation in the amount of R$ 2,733 (R$ 2,428 as at December 31, 2018) and the executive officers received R$ 23,876 (R$ 22,946 as at December 31, 2018) for their services, corresponding to a total amount of R$ 26,609 (R$ 25,374 as at December 31, 2018). It is expected the participation of 0% to 2.5% of the consolidated profit for the year is expected to be paid to Management as long as they achieve the minimum operating performance targets. The performance targets refer to the return on Invested Capital (weight of 85%), with minimum attainment of targets of 10% and Ebitda (weight of 15%), with minimum attainment of targets of 1.3%. The corresponding provision is recognized in profit or loss for the year in the amount of R$ 25,986 (R$ 24,680 as at December 31, 2018), in line item other operating income (expenses). Directors receive benefits for the performance of their function.

10 DEFERRED TAXES The deferred tax assets and liabilities were determined in accordance with CVM Resolution 599/09, which approved Technical Pronouncement CPC 32 – Income Taxes. a) Breakdown of amounts: PARENT CONSOLIDATED 12/31/19 12/31/18 12/31/19 12/31/18 Income tax losses - 46 84,907 96,719 Social contribution losses 246 140 15,625 16,340 Temporary differences: Provisions: Labor and civil contingencies - - 93,274 107,217 Taxes under litigation 1,608 1,608 50,955 42,432 Losses on trade receivables - - 13,348 13,794 Losses on slow-moving inventories - - 21,244 16,358 Indemnities on labor and contractual terminations - - 23,471 18,024 Freight and sales commissions - - 10,555 13,571 Third-party services - - 72,642 62,036 Employee profit sharing - - 64,413 49,587 Unrealized gains(losses) on derivatives - - 4,868 (21,825) Derivatives - Hedge Accounting - - 5,596 9,611 Unearned revenue - - 8,980 6,270 Accelerated depreciation - - (7,008) (7,306) Difference between tax and accounting amortization of goodwill (2) - (35,933) (32,739) Difference between tax and accounting depreciation (useful life) (13) (14) (204,259) (194,042) Others 4,367 2,914 49,115 38,084 Deemed cost of property, plant and equipment (1,343) (1,372) (164,894) (177,999) TOTAL 4,863 3,322 106,899 56,132 Noncurrent assets 4,863 3,322 182,042 142,669 Noncurrent liabilities - - (75,143) (86,537)

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

b) Estimated realization period Management estimates that the deferred taxes arising from temporary differences will be realized in proportion to the materialization of the contingencies, losses and forecast obligations. In regard to deferred tax assets, recognized on income tax and social contribution losses, Management estimates that they will be realized within the next 5 years, taking into consideration the projection of future profits.

11 INVESTMENTS

11.1 Investments in subsidiaries

Share of profit Investment book Profit Equity interest (%) (loss) (loss) of investees value Company Country Equity for the 12/31/19 12/31/18 12/31/19 12/31/18 12/31/19 12/31/18 year Direct Indirect Direct Indirect WEG Equipamentos Elétricos S.A. (*) 6,863,221 1,547,285 100.00 - 100.00 - 1,443,145 1,217,338 6,863,221 5,669,794 RF Reflorestadora Ltda. 149,954 1,969 100.00 - 100.00 - 1,970 1,969 149,954 155,762 WEG Tintas Ltda. ------520 - - WEG Amazônia S.A. 56,726 20,012 0.02 99.98 0.02 99.98 3 1 9 8 WEG Administradora de Bens Ltda. 13,070 298 99.06 0.94 99.06 0.94 295 (1) 12,947 12,867 WEG Logística Ltda. 176,834 17,045 - 100.00 - 100.00 - - - - WEG Linhares Equips. Elétricos S.A. 318,905 117,069 - 100.00 - 100.00 1 1 1 2 WEG Drives & Controls Aut. Ltda. 644,920 132,416 100.00 - 100.00 - 132,416 81,504 644,930 545,540 WEG Partner Holding Ltda. 1 (6) 0.10 99.90 0.10 99.90 - - - - WEG-Cestari Redut. Motorredut. S.A. 80,329 4,328 - 50.01 - 50.01 - - - - Hidráulica Indl.- Ind. e Com. Ltda. 220,252 1,986 - 100.00 - 100.00 - - - - Agro Trafo Adm. de Bens Ltda. 1,069 1 91.75 8.25 91.75 8.25 1 170 980 1,101 Paumar S.A. Indústria e Comércio Brazil 384,940 32,332 38.87 61.13 38.87 61.13 12,568 4,755 149,627 141,056 WEG-Jelec Oil and Gas Sol. Aut. Ltda. 11 - - 100.00 - 100.00 - - - - Transformadores do Nordeste Ltda. 17,260 (525) 0.01 99.99 0.01 99.99 - - - - TGM Ind. e Com. de Turbinas e Trans. Ltda. - 19,782 - - 0.01 99.99 - - - - Geremia Redutores Ltda. 44,262 1,420 - 50.00 ------DJG Participações Ltda. 18,605 597 - 50.00 ------H. Geremia Participações Societárias Ltda. 3,830 40 - 50.00 ------W.R.G. Participações Societárias Ltda. 6,835 71 - 50.00 ------PPI Multitask Sistemas e Automação S.A. 987 285 - 51.00 ------Multitask Soluções em Automação S.A. 126 (50) - 51.00 ------Multitask Automação Industrial S.A. 889 (18) - 51.00 ------V2COM Participações S.A. 24,654 (1,115) - 51.00 ------V2 Tecnologia Ltda. (607) (1,607) - 51.00 ------V2 Ind. e Com. De Equip. Elet. Ltda. 16,087 409 - 51.00 ------Zest WEG Group Africa (Pty) Ltd. 245,875 3,465 - 100.00 - 100.00 - - - - Zest Energy (Pty) Ltd. 1,379 77 - 100.00 - 100.00 - - - - Zest WEG Manufacturing (Pty) Ltd. (44,911) (3,548) - 100.00 - 100.00 - - - - South Zest WEG Electric (Pty) Ltd. Africa 124,774 15,170 - 74.80 - 74.80 - - - - ENI Electric/Instrumentations Eng. Cont.(Pty) (6,870) 1,075 - 86.67 - 86.67 - - - - Zest WEG Group Namibia Ent. (Pty) Ltd. (420) (2,369) - 100.00 - 100.00 - - - - Zest WEG Investment Company (Pty) Ltd. 124,774 10,099 - 64.70 - 64.70 - - - - WEG Germany GmbH 51,116 6,633 - 100.00 - 100.00 - - - - Watt Drive GmbH 5,863 611 - 100.00 - 100.00 - - - - Germany Wurttembergische Elektromotoren GmbH 16,401 (188) - 100.00 - 100.00 - - - - Antriebstechnik KATT Hessen GmbH (6,553) (8,558) - 100.00 - 100.00 - - - - WEG Equipamientos Electricos S.A. 81,203 4,519 10.45 89.55 10.45 89.55 3,707 4,097 8,479 8,105 Argentina Pulverlux S.A. 7,974 (800) - 100.00 - 100.00 - - - - WEG Australia Pty Ltd. Australia 47,477 2,542 - 100.00 - 100.00 - - - - Watt Drive Antriebstechnik GmbH 92,217 5,545 - 100.00 - 100.00 - - - - WEG International Trade GmbH Austria 767,914 748,864 - 100.00 - 100.00 - - - - WEG Holding GmbH 3,437,467 981,822 - 100.00 - 100.00 - - - - WEG Benelux S.A. Belgium 56,536 7,314 - 100.00 - 100.00 - - - - WEG Central Asia LLP Kazakhstan 806 - - 100.00 ------WEG Chile S.A. Chile 42,137 3,567 8.00 92.00 8.00 92.00 373 122 3,371 3,150 WEG (Nantong) Electric Motor Co., Ltd. 249,936 25,626 - 100.00 - 100.00 - - - - Changzhou Sinya Electromotor Co., Ltd. China 20,262 (38,857) - 100.00 - 100.00 - - - - Changzhou Yatong Jiewei Elect., Ltd. (1,181) (16,086) - 100.00 - 100.00 - - - - 26

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

Share of profit Investment book Profit Equity interest (%) (loss) (loss) of investees value Company Country Equity for the 12/31/19 12/31/18 12/31/19 12/31/18 12/31/19 12/31/18 year Direct Indirect Direct Indirect Wuxi Ecovi Technology Co., Ltd. 4,750 (1,377) - 100.00 - 100.00 - - - - WEG (Changzhou) Aut. Equip. Co.,Ltd. (1,596) (6,029) - 100.00 - 100.00 - - - - The First Drive Technology Co., Ltd. 2,963 (5,463) - 100.00 - 100.00 - - - - WEG (Jiangsu) Electric Equip. Co., Ltd. 225,241 18,429 - 100.00 - 100.00 - - - - WEG Singapore Pte. Ltd. Singapore 380 71 - 100.00 - 100.00 - - - - WEG Colombia S.A.S. 122,886 10,515 - 100.00 - 100.00 - - - - FTC Energy Group S.A. Colombia - 118 - - - 100.00 - - - - WEG Transformadores Colombia S.A.S. - 66 - - - 100.00 - - - - Arab WEG Middle East Fze. (19,575) (4,985) Emirates - 100.00 - 100.00 - - - - WEG Iberia Industrial S.L. 65,958 10,078 - 100.00 - 100.00 - - - - Spain Autrial S.L. (7,312) 2,525 - 100.00 - 51.00 - - - - WEG Electric Corp. 728,427 92,889 - 100.00 - 100.00 - - - - Electric Machinery Company LLC 87,430 16,487 - 100.00 - 100.00 - - - - FTC Energy Group Inc. United 1,011 109 - 100.00 - 100.00 - - - - Bluffton Motor Works, LLC States 307,236 (1,515) - 100.00 - 100.00 - - - - WEG Transformers USA LLC 112,370 11,471 - 72.00 - 72.00 - - - - WEG Investment North America Inc 110,574 6,694 - 100.00 - 100.00 - - - - WEG France SAS France 37,615 2,311 - 100.00 - 100.00 - - - - Zest WEG Group Ghana Ltd. 10,829 3,901 - 100.00 - 100.00 - - - - Ghana E & I Electrical Ghana Ltd. (1,646) (165) - 90.00 - 90.00 - - - - WEG Industries (India) Private Ltd. India 209,576 11,442 - 100.00 - 100.00 - - - - WEG (UK) Ltd. England 25,061 (333) - 100.00 - 100.00 - - - - WEG Italia S.R.L. Italy 39,629 4,587 - 100.00 - 100.00 - - - - WEG Electric Motors Japan Co. Ltd. Japan 3,395 209 - 95.00 - 95.00 - - - - WEG South East Asia SDN BHD Malaysia (4,638) (1,400) - 100.00 - 100.00 - - - - WEG México S.A. de C.V. 738,031 (6,003) - 100.00 - 100.00 - (1) - - WEG Transform. México S.A. de C.V. 74,840 (3,418) - 72.00 - 72.00 - - - - Voltran S.A. de C.V. Mexico 109,495 16,436 - 72.00 - 72.00 - - - - WEG Equipos Eléctricos S.A. de C.V. 15,117 3,618 - 100.00 - 100.00 - - - - WEG Power Systems S.A. de C.V. 3,645 871 - 72.00 - 72.00 - - - - Zest WEG Group Mozambique, Lda Mozambique (354) (394) - 100.00 - 100.00 - - - - WEG Peru S.A. Peru 16,515 6,141 0.05 99.95 0.05 99.95 2 4 8 6 WEGEuro Ind. Eléctrica S.A. Portugal 120,916 26,692 - 100.00 - 100.00 - - - - WEG Electric CIS Russia 11,586 5,412 - 100.00 - 100.00 - - - - WEG Scandinavia AB Sweden 14,082 2,438 - 100.00 - 100.00 - - - - ENI Electrical Tanzania (Pty) Limited Tanzania (18) (173) - 100.00 - 100.00 - - - - WEG Industrias Venezuela C.A. Venezuela (4) (6) - 100.00 - 100.00 - - - - E & I Zambia Ltd. Zambia 975 3,005 - 50.00 - 50.00 - - - - TOTAL 1,594,481 1,310,479 7,833,527 6,537,391 (*) Share of profit (loss) of investees adjusted for unrealized profits on related-party transactions.

The Company’s consolidated financial statements include the individual financial statements of WEG S.A. and all its subsidiaries. The subsidiaries are fully consolidated from the date on which the control is obtained. Subsidiaries with negative equity are capitalized annually, in accordance with the legislation of each country.

11.2 Investment in associate

11.3 Other investments

The Company and its subsidiaries have recorded other investments in the amount of R$5 (R$381 as at December 31, 2018).

11.4 Acquisitions (i) Business of Energy Storage by Batteries of Northern Power Systems (“NPS”) 27

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

On February 13, 2019, the Company announced acquisition by R$ 5,422 of the assets of the energy storage by batteries business (Energy Storage System – ESS) from Northern Power Systems (“NPS”), which projects, develops and manufactures energy storage systems, in Barre, Vermont, USA.

WEG has become the sole owner of the assets, patents portfolio, know-how and related materials, including all designs, projects, specifications and software used in the projects and maintenance of the energy storage by batteries systems of NPS.

(ii) Geremia Redutores In February 2019, subsidiary WEG-Cestari Redutores e Motorredutores S.A. executed an agreement to acquire all the shares of interest of Geremia Redutores Ltda., DJG Participações Ltda., H.Geremia Participações Societárias Ltda. and W.R.G. Participações Societárias Ltda., for R$101,404. Goodwill thereon amounting to R$ 58,545 was preliminarily measured as the excess portion of consideration paid in relation to the net assets acquired. The company started to be consolidated as from the effective date of such acquisition; namely, November 2019.

(iii) Autrial S.L. In March 2019, subsidiary WEG Iberia Industrial S.L. acquired for R$ 6,835 the remaining equity interest of 49% in Autrial S.L. Goodwill thereon of R$11,477 was measured as the excess portion of consideration paid in relation to the net assets acquired, and recognized in equity as a capital transaction.

(iv) PPI Multitask In September 2019, the Company announced the execution of the agreement for acquisition of 51% equity interest in PPI Multitask Sistemas e Automação S.A., Multitask Soluções em Automação S.A. and Multitask Automação Industrial S.A. for R$7,487. Goodwill of R$6,683 was preliminarily measured as the excess portion of consideration paid in relation to the net assets acquired. The companies started to be consolidated as from the effective date of such acquisition; namely, October 2019.

(v) V2COM Participações S.A. In October 2019, the Company acquired 51% equity interest in V2COM Participações S.A., V2 Tecnologia Ltda. and V2 Indústria e Comércio de Equipamentos Elétricos Ltda. for R$45,619. Goodwill of R$20,514 and intangible assets (PPA) amounting to R$11,963 were allocated as being the excess portion of consideration paid in relation to the net assets acquired.

11.5 Corporate Events 2019 (i) FTC Energy Group S.A. and WEG Transformadores Colombia S.A.S. In March 2019, FTC Energy Group S.A. and WEG Transformadores Colombia S.A.S. were merged into their parent company WEG Colombia S.A.S. This restructuring aimed at simplifying as well as increasing synergy of technical and administrative services and reducing operating costs and administrative expenses.

(ii) TGM Indústria e Comércio de Turbinas e Transmissões Ltda. In September 2019, TGM Indústria e Comércio de Turbinas e Transmissões Ltda. was merged into its parent company WEG Equipamentos Elétricos S.A. This restructuring aimed at simplifying as well as increasing synergy of technical and administrative services and reducing operating costs and administrative expenses.

12 PROPERTY, PLANT AND EQUIPMENT

PARENT CONSOLIDATED

12/31/19 12/31/18 12/31/19 12/31/18 Land 1,440 1,440 423,895 404,019 Constructions and facilities 5,639 5,639 1,531,699 1,469,714 Equipment - - 4,301,142 4,139,915 Furniture and fixtures - - 150,004 148,236 Hardware - - 141,694 127,383 Construction in progress - - 616,969 385,711 Reforestation - - 59,006 57,899 Others - - 97,196 113,962 Total property, plant and equipment 7,079 7,079 7,321,605 6,846,839

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

Annual Accumulated depreciation/depletion depreciation (2,860) (2,774) (3,545,044) (3,304,885)

rate (%) Constructions and facilities 02 to 03 (2,860) (2,774) (492,477) (444,132) Equipment 05 to 20 - - (2,795,652) (2,609,041) Furniture and fixtures 07 to 10 - - (102,538) (101,616) Hardware 20 to 50 - - (103,028) (100,026) Reforestation - - - (26,739) (25,745) Others - - - (24,610) (24,325) TOTAL PROPERTY, PLANT AND EQUIPMENT 4,219 4,305 3,776,561 3,541,954

a) Summary of the movement in property, plant and equipment - consolidated:

Transfer between Depreciation Effect of Class of share 12/31/18 Acquisitions Write-offs 12/31/19 classes and depletion exchange rate Land 404,019 - 8,457 (2,720) - 14,139 423,895 Constructions and facilities 1,025,582 18,045 34,431 (18,880) (40,697) 20,741 1,039,222 Equipment 1,530,874 43,712 171,834 (24,185) (221,414) 4,669 1,505,490 Furniture and fixtures 46,620 (1,573) 11,865 (2,145) (7,782) 481 47,466 Hardware 27,357 217 23,019 (1,369) (11,034) 476 38,666 Construction in progress 385,711 (59,576) 279,580 - - 11,254 616,969 Reforestation 32,154 - 1,107 - (994) - 32,267 Advances to suppliers 67,920 (875) (23,055) - - 3,802 47,792 Others 21,717 50 8,709 (1,489) (4,580) 387 24,794 TOTAL 3,541,954 - 515,947 (50,788) (286,501) 55,949 3,776,561

b) Construction in progress - the Company has investments in progress in property, plant and equipment items as at December 31, 2019 amounting to R$ 616,969 (R$ 385,711 as at December 31, 2018), and the most significant investments are in Mexico unit, which amount to R$ 501,255 (R$ 303,232 as at December 31, 2018).

c) Amount offered as guarantee – PP&E items were offered as guarantee of borrowings, financing, labor claims and tax lawsuits in the consolidated amount of R$ 31,166 (R$ 31,166 as at December 31, 2018).

13 RIGHT OF USE OF LEASED ASSETS The Company and its subsidiaries have adopted Technical Pronouncement CPC 06(R2) (IFRS 16) Leases beginning January 1, 2019, which introduced a single model for lease accounting in the balance sheet of lessees.

CONSOLIDATED

12/31/19 12/31/18 Furniture 221,734 - Machinery and equipment 26,640 - Hardware 1,788 - Vehicles 15,493 - Total leased assets 265,655 - Accumulated depreciation (61,032) - Furniture (48,421) - Machinery and equipment (7,406) - Hardware (500) - Vehicles (4,705) - TOTAL NET 204,623 -

a) Summary of changes in right of use of leased assets: Effect of Classes 12/31/18 Leases Write-offs Depreciation 12/31/19 exchange rate Furniture - 220,019 (5,307) (48,160) 6,761 173,313 Machinery and equipment - 26,412 (658) (7,405) 885 19,234 Hardware - 1,842 (111) (500) 57 1,288 Vehicles - 15,357 (235) (4,705) 371 10,788 TOTAL - 263,630 (6,311) (60,770) 8,074 204,623

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

14 INTANGIBLE ASSETS - CONSOLIDATED

Amortization / No. of Cost Amortization 12/31/19 12/31/18 years Accumulated

Software license 5 174,147 (126,374) 47,773 45,324 Property right 30 – 80 87,455 (23,786) 63,669 63,342 Trademarks and patents 5 41,561 (25,697) 15,864 27,063 Others 5 148,946 (74,821) 74,125 89,431 Subtotal 452,109 (250,678) 201,431 225,160 Goodwill on acquisition of subsidiaries - 1,139,668 (21,353) 1,118,315 994,867 TOTAL 1,591,777 (272,031) 1,319,746 1,220,027 a) Summary of the movement in intangible assets: TGM’s purchase Effect of 12/31/18 Additions Write-offs Amortization 12/31/19 price allocation exchange rate Software license 45,324 16,536 - (828) (10,310) 468 47,773 Property right 63,342 - - (3,097) (1,322) 1,651 63,669 Trademarks and patents 27,063 1,261 (401) (1,874) (14,036) 293 15,864 Others 89,431 34,428 (20,475) (1,266) (23,844) (913) 74,125 Subtotal 225,160 52,225 (20,876) (7,065) (49,512) 1,499 201,431 Goodwill on acquisition of 994,867 79,672 14,275 - - 29,501 1,118,315 subsidiaries TOTAL 1,220,027 131,897 (6,601) (7,065) (49,512) 31,000 1,319,746 b) Purchase Price Allocation – PPA: In February 2019, the allocation of goodwill was finalized based on the purchase price allocation (PPA) report of the company TGM Indústria e Comércio de Turbinas e Transmissões Ltda. As a result from this PPA, the amount of R$ 125,186 initially recognized as goodwill was recorded in intangible assets (R$ 45,768) and in property, plant and equipment (R$ 79,418) due to its fair value. c) Breakdown of goodwill generated on acquisition of subsidiaries:

12/31/19 12/31/18 Electric Machinery Company LLC 197,312 189,680 Bluffton Motor Works, LLC 164,428 158,069 TGM Ind. e Com. De Turbinas e Transm. Ltda. (Merged) 116,516 102,240 Zest WEG Group Africa (Pty) Ltd. 86,704 81,368 Changzhou Sinya Electromotor Co., Ltd. 75,157 73,158 Trafo Equipamentos Elétricos S.A. (Merged) 62,827 62,827 Geremia Redutores Ltda. 58,545 - WEG Transformadores Colombia S.A.S. 52,494 50,787 WEG-Cestari Redutores e Motorredutores S.A. 48,139 48,139 Stardur Tintas Especiais Ltda. (Merged) 43,402 43,402 Watt Drive Antriebstechnik GmbH 30,751 30,130 Changzhou Machine Master Co., Ltd. (Merged) 17,466 17,001 Others 164,574 138,066 TOTAL 1,118,315 994,867

d) Amortization schedule of intangible assets (except goodwill): 12/31/19 2020 38,830 2021 26,667 2022 17,258 2023 16,225 2024 14,570 From 2025 onwards 87,881 TOTAL 201,431 30

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

e) Impairment testing: In 2019, the Company performed impairment tests of assets. The tests are annually performed, being anticipated if events or circumstances indicate the reason for that.

The calculation of the recoverable amount is made through the discounted cash flow method, according to the information available on the market of each business, which have specific goals and objectives based on conditions to reach the premises in a way that improves performance. The main assumptions used by the Company to calculate the value in use are described below:

- Valuation period: the evaluation of the cash-generating unit (CGU) is carried out for a period of 10 years due to the maturity of the acquisitions and strategic planning, and from then on, it is considered the perpetuity of the operation. For property, plant and equipment items and intangible assets, except for goodwill, the evaluation period is 5 years plus the residual value of the asset.

- Growth rate: the growth rate of revenues, costs and expenses was projected considering budged for the first year, and from the second year the budget plus the forecast of GDP and inflation specific to each market.

- Discount rate: the discount rate used, based on the WACC (Weighted Average Cost of Capital) of each country, of the average of companies in the same industry, being in the Americas a variation of 6.74% to 35.60%, Europe from 3.42% to 5.81%, Asia of 9.02% to 12.91% and Africa from 12.92%.

- Perpetuity: considered the same growth rates (GDP and inflation) used in the projection of revenues, costs and expenses.

- Investment: the investment estimates were prepared according to the realization (depreciation) of the assets in operation and aiming at maintaining the updated plant stock.

The impairment tests of assets in the Company and its subsidiaries did not result in the need to recognize loss in the year ended December 31, 2019.

15 TRADE PAYABLES CONSOLIDATED 12/31/19 12/31/18 Balance breakdown: Domestic market 356,307 325,527 External market 483,572 517,430 TOTAL 839,879 842,957

16 BORROWINGS AND FINANCING Direct borrowings from BNDES are guaranteed by the parent company WEG S.A.'s sureties. Direct borrowings from FINEP are guaranteed by sureties or bank guarantees. FINAME transactions are collateralized by sureties and chattel mortgage. Covenant clauses, which are exclusive to BNDES agreements, related to ratios of capitalization, current liquidity and net debt to EBITDA, are being complied with.

CONSOLIDATED Type Annual charges at 12/31/19 12/31/19 12/31/18 IN LOCAL CURRENCY CURRENT 87,566 175,475 In Reais, fixed rate Working capital 3.5% to 11.0% p.a. 79,512 121,819 Property, plant and equipment 2.5% to 8.7% p.a. 3,596 2,674 In Reais, floating rate 31

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

Working capital TJLP (+) 2.4% p.a. 981 47,543 Working capital UFIR (+) 1.0% to 4.0% p.a. 1,304 431 Working capital 116% do CDI 484 - Others Others Sundry 1,689 3,008

NONCURRENT 107,930 315,291 In Reais, fixed rate Working capital 3.5% to 6.0% p.a. 46,300 126,021 Property, plant and equipment 2.5% to 8.7% p.a. 8,362 8,947 In Reais, floating rate Working capital TJLP (+) 2.4% p.a. 4,904 173,567 Working capital UFIR (+) 4.0% p.a. 753 1,888 Working capital 116% do CDI 45,000 - Others Others Sundry 2,611 4,868

IN FOREIGN CURRENCY CURRENT 848,804 1,873,618 In US Dollar Working capital (ACCs) US$ variation (+) 2.35% to 3.12% p.a. 149,824 - Export prepayment (PPE) US$ variation (+) Libor (+) 0.95% to 1.2% p.a. 103,084 1,368,342 In US Dollar Working capital Libor (+) 0.55% to 1.4% p.a. 181,020 240,369 In Euros Working capital Euribor (+) 0.05% to 1.30% p.a. 230,696 74,169 Working capital (ACCs) EUR variation (+) 0.20% to 0.63% p.a. 85,225 - In Mexican Pesos Working capital TIIE (+) 0.90% p.a. 983 68,368 In Rand (South Africa) Working capital 8.00% to 9.25% p.a. 74,790 94,007 Other currencies Working capital Domestic market rates 23,182 28,363

NONCURRENT 1,240,669 1,407,730 In US Dollar Export prepayment (PPE) - 91,519 In US Dollar Working capital Libor (+) 1.40% p.a. 1,013,968 973,434 In Euros Working capital Euribor 7,359 37,571 In Mexican Pesos Working capital TIIE (+) 0.90% p.a. 185,353 302,086 In Pesos Colombianos Working capital 8.26% to 9.95% p.a. 31,198 570 Other currencies Working capital Domestic market rates 2,791 2,550

TOTAL BORROWINGS AND FINANCING 2,284,969 3,772,114 TOTAL CURRENT 936,370 2,049,093 TOTAL NONCURRENT 1,348,599 1,723,021

Maturity of noncurrent borrowings and financing: 12/31/19 12/31/18 2020 - 236,591 2021 410,843 416,441 2022 692,070 694,057 2023 3,902 28,764 2024 194,270 312,185 32

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

From 2025 onwards 47,514 34,983 TOTAL 1,348,599 1,723,021

17 PROVISION FOR CONTINGENCIES The Company and its subsidiaries are parties to administrative and judicial proceedings involving tax, labor and civil matters arising from the normal activities of their businesses. The corresponding provisions were recorded for proceedings the likelihood of loss of which was rated as “probable” based on the estimate of value at risk determined by the Company’s legal counsel. The Company's management estimates that the provision for contingencies recognized is sufficient to cover any losses on ongoing proceedings.

a) Balance of provision for contingencies: PARENT CONSOLIDATED 12/31/19 12/31/18 12/31/19 12/31/18 (i) Tax: 4,730 4,730 234,351 203,493 - IRPJ and CSLL (a,1) - - 99,937 80,889 - INSS (a,2) 4,730 4,730 56,890 52,146 - PIS and COFINS (a,3) - - 67,492 60,113 - Others - - 10,032 10,345

(ii) Labor - - 214,094 260,689

(iii) Civil - - 98,529 81,081

(iv) Others - - 4,604 2,374

TOTAL 4,730 4,730 551,578 547,637

b) Statement of the movement for the year - consolidated: 12/31/18 Additions Interest Write-offs Reversals 12/31/19 a) Tax 203,493 27,822 8,493 - (5,457) 234,351 b) Labor 260,689 40,394 10,434 (20,705) (76,718) 214,094 c) Civil 81,081 46,898 2,204 (25,832) (5,822) 98,529 d) Others 2,374 2,777 - (117) (430) 4,604 TOTAL 547,637 117,891 21,131 (46,654) (88,427) 551,578

c) The provisions recognized refer mainly to:

(i) Tax contingencies (a,1) Refers to the proceeding regarding the difference of the IPC (Consumer Price Index) for January 1989 (“Plano Verão”) on the 16.24% inflation adjustment and the proceeding on the deduction from the calculation basis of 2011 RD&I Project expenditures ("Lei do Bem" – Innovation Tax Incentive Law). (a,2) Refers to contribution due to the Social Security. The litigation refers to social security charges levied on private pension plan, profit sharing, education allowance, among others. (a,3) Refers to non-approval by the Brazilian Federal Revenue Office of the request for offset of the credit balance of PIS and COFINS against federal tax debts.

(ii) Labor contingencies The Company and its subsidiaries are defendants in labor claims primarily involving discussions about health and risk exposure, among others. (iii) Civil contingencies Refer mainly to civil lawsuits, including pain and suffering, aesthetic damage, occupational diseases and indemnities arising from occupational accidents. d) Escrow deposits: PARENT CONSOLIDATED 12/31/19 12/31/18 12/31/19 12/31/18 Tax 4,657 4,657 37,858 37,844 Labor and civil - - 26,095 16,398 Others - - 150 1,221 TOTAL RESTRICTED DEPOSITS 4,657 4,657 64,103 55,463 - Non-restricted escrow deposits - - 4,403 2,905 TOTAL ESCROW DEPOSITS 4,657 4,657 68,506 58,368 33

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

The escrow deposits not restricted to contingencies are awaiting court authorization for withdrawal.

e)Contingencies assessed as possible losses: The Company and its subsidiaries are parties to other lawsuits for which the likelihood of loss is classified as "possible", and for which no provision for contingencies was recognized. As at December 31, 2019, the estimated amount of these lawsuits amounted to R$ 256,942 (R$ 165,275 as at December 31, 2018).

(i) Tax - Taxation on profits earned abroad in the total estimated amount of R$ 100.5 million (R$ 43.2 million as at December 31, 2018); - Levy of ICMS-ST on purchases of raw materials in the amount of R$ 26.0 million (R$ 25.3 million as at December 31, 2018); - Levy of social security contribution on dental care, education allowance, technical courses and salary allowance in the amount of R$ 23.4 million (R$ 23.4 million as at December 31, 2018); - Non-approval of IPI credits in the amount of R$ 14.6 million (R$ 14.2 million as at December 31, 2018); - Other tax contingencies of R$ 41.2 million (R$ 36.5 million as at December 31, 2018).

(ii) Civil - 3Z Movimentação Inteligente Ltda. in the estimated amount of R$ 29.2 million; - Saraiva Equipamentos Ltda. e Saraiva Engenharia Ltda. in the estimated amount of R$ 17.1 million; - Other civil contingencies of R$ 4.9 million (R$ 7.8 million as at December 31, 2018)

18 PRIVATE PENSION PLAN The Company and its subsidiaries are sponsors of WEG Seguridade Social, which has as main purpose to supplement the retirement benefits offered by the official social security system. The Plan, administered by WEG Seguridade Social, includes monthly income benefits (retirement), annual bonus, supplemental sickness benefit, supplemental disability retirement, supplemental pension, supplemental annual bonus and death benefit. The number of participants is 20,408 (19,547 as at December 31, 2018). The Company and its subsidiaries made contributions in the amount of R$ 35,425 (R$ 32,241 as at December 31, 2018). Based on the actuarial calculations made by independent actuaries, in order to define the net liability between the defined benefit liability and fair value of plan assets, pursuant to the procedures established by CVM Rule No. 695/12 – CPC 33 (R1) Employee Benefits, we have not identified material post-employment liabilities to be recognized by the Company.

19 EQUITY a) Issued capital The Company's capital is R$ 5,504,517 (R$ 5,504,517 as at December 31, 2018), represented by 2,098,658,999 registered book-entry common shares with no par value, all with voting rights, including the 1,118,168 shares held in treasury pursuant to item "d". b) Dividends and interest on capital The Bylaws establish the allocation of at least 25% of the adjusted profit, and Management proposed the following:

12/31/19 12/31/18 PROFIT FOR THE YEAR ATTRIBUTABLE TO THE COMPANY'S SHAREHOLDERS. 1,614,581 1,338,319 ( - ) Legal reserve (80,729) (66,916) ( - ) Reversal/(Recognition) of provision for stock option plan (989) (579) (+) Reversal of dividends from prior years 938 836 (+) Realization of revaluation reserve (1989) and deemed cost (2010) 25,482 25,461 CALCULATION BASIS FOR DIVIDENDS 1,559,283 1,297,121

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

Dividends for the 1st. semester = R$ 0.08910/share (R$ 0.08239/share in 2018) 186,888 172,788 Interest on capital for the 1st semester R$ 0.07590/share (R$ 0.07793/share in 2018), IRRF R$ 28,093 (R$ 25,019 in 2018) 187,284 166,794 Dividends for the 2nd semester = R$ 0.16776/share (R$ 0.08291/share in 2018) 351,892 173,867 Interest on capital for the 2nd semester R$ 0.06725/share (R$ 0.07710/share in 2018), IRRF R$ 24,893 (R$ 28,534 in 2018) 165,951 190,225 Total dividends and interest on capital 892,015 703,674

Under Article 37 of the Company's Bylaws and Article 9 of Law 9949/95 interest on capital will be charged from mandatory dividends and will be paid as from March 11, 2020. c) Recording of profit reserves: - Statutory reserve - it was recorded in the amount of R$ 80,729 (R$ 66,916 as at December 31, 2018) equivalent to 5% of the profit for the year, in compliance with the 20% limit of capital; - Reserve for capital budget - it corresponds to the amount remaining from the profit for the year R$ 641,837, plus the balance of retained earnings of R$ 25,431 (deriving from the realization of the deemed cost (2010), reversal of exercised shares of the provision for stock options and reversal of prior year dividends) aimed at the reserve for capital budget for the 2020 investment plan. d) Treasury shares The shares acquired by the Company are held in treasury to be used by the beneficiaries of the Company’s Stock Option Plan and Long-Term Incentive Plan for subsequent cancelation or disposal.

Until December 31, 2019, the beneficiaries of the Company’s Stock Option Plan and ILP Plan had exercised 376,115 shares. The Company holds in treasury 1,118,168 shares at the average cost of R$ 10.21 per share, in the total amount of R$ 11,419 (R$ 15,261 as at December 31, 2018).

20 LONG-TERM INCENTIVE PLAN (LTIP) The Extraordinary General Meeting (EGM) held on June 28, 2016 approved the share-based compensation plan called Long-term incentive plan (LTIP Plan) for its Management and officers.

(i) Plan The Plan is managed by the Board of Directors and is aimed at granting shares issued by WEG S.A. (Company), classified as “WEGE3” on B3, to its management and officers in order to attract, motivate and retain them, as well as align their interests to those of the Company and its shareholders.

For the LIP Plan application in each year, and the consequent granting of shares, an essential condition (trigger) is that the Company has obtained, in the immediately preceding year, at least 10% of Return on Invested Capital (ROIC).

The shares to be granted under LIP Plan are limited to a maximum of 2% (two percent) of the total shares representing the Company’s capital.

The number of shares granted to the participants is included in clauses 7 and 8 of the LIP Plan, which establishes the criteria for the number of shares to be granted and the vesting period to be complied with.

The Plan may be discontinued, suspended or altered at any time, upon a proposal approved by the Company's Board of Directors.

(ii) Program The Board of Directors may approve, annually, Long-Term Incentive Programs ("Programs") in which the participants, number of shares, value of share, and other rules specific to each Program will be defined.

Programs The program participants are the officers of the Company and of its subsidiaries based in Brazil, excluding the officers of subsidiaries with third party participation. The weighted average fair value was determined based on the Black-Scholes-Merton method:

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

The programs were updated on April 24, 2018, due to the bonus of 30% on the number of shares, including the new market values in the strike price and the increase in shares for the number of shares granted. This update does not represent an impact in the calculation performed at the beginning of the program.

Shares Granted Average calculation - Black-Scholes-Merton Method

Expected Expense to be Program Installment Current share Share volatility in Share recognized during Number lifespan - in value at grant value (R$) share value value (R$) the plan period days date (R$) (%) (R$ thousand) 2016 354,167 11.95 520 – 1,022 25.6 13.15 16.75 5,932

2017 297,062 19.25 525 – 1,025 29.0 18.01 24.18 7,183

2018 331,010 18.72 522 – 1,027 27.9 18.79 24.19 8,008

Summary changes in program shares:

Quantity of shares Program 12/31/18 Granted Exercised 31/12/19 2016 354,167 - (99,706) 254,461 2017 297,069 - (7,948) 289,121 2018 - 331,010 (8,717) 322,293 TOTAL 651,236 331,010 (116,371) 865,875

In December 31, 2019, expenses in the amount of R$ 7,140 (R$ 5,324 in December 31, 2018) were recognized in line item Other income (expenses) in the statement of profit and loss against Capital reserve in Equity.

The shares whose rights were exercised as at December 31, 2019 amounted to R$ 2,489, being recorded in capital reserve line item in equity in the amount of R$ 2,908 and R$ 419 recorded as reversal of the accrued amount in Other income (expenses) in the statement of profit and loss for the year.

21 STOCK OPTION PLAN The EGM held on June 28, 2016 approved the discontinuance of the Company's Stock Option Plan which had been approved at the EGM of February 22, 2011, and subsequent amendments, complying with the agreements that had already been entered into and not yet completed.

The programs were updated on April 24, 2018, due to the bonus of 30% on the number of shares, increasing the number of shares granted. This update does not represent an impact in the calculation performed at the beginning of the program.

Summary of the movement of the plan's shares: Number of shares Program 12/31/18 Exercised 12/31/19 April/13 14,266 (14,266) - September/13 7,007 (7,007) - March/14 113,299 (60,565) 52,734 August/14 28,598 (16,638) 11,960 March/15 115,106 (59,382) 55,724 August/15 149,897 (80,706) 69,191 March/16 201,080 (53,040) 148,040 TOTAL 629,253 (291,604) 337,649

The expenses on stock options are recognized over the vesting period.

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

In December 31, 2019, expenses in the amount of R$ 219 (R$ 606 as at December 31, 2018) were recognized in line item Other income (expenses) in the statement of profit and loss against Capital reserve in Equity.

The options exercised in December 31, 2019 amounted to R$ 2,198 (R$ 1,331 as at December 31, 2018). The amount of R$ 1,209 (R$ 752 as at December 31, 2018) was recognized in line item capital reserve, in equity, and the amount of R$ 989 (R$ 579 as at December 31, 2018) related to the complement of the accrued amount was recorded in the retained earnings account.

22 NET REVENUE CONSOLIDATED BREAKDOWN OF NET REVENUE 12/31/19 12/31/18

Gross revenue 15,229,088 13,645,976 Domestic market 7,039,525 6,367,822 External market 8,189,563 7,278,154

Deductions (1,881,654) (1,675,886) Taxes (1,553,324) (1,416,825) Returns and rebates (328,330) (259,061)

Net revenue 13,347,434 11,970,090 Domestic market 5,563,048 5,082,638 External market 7,784,386 6,887,452

23 CONSTRUCTION CONTRACTS The revenues and costs from construction contracts are recognized according to the percentage of completion method, based on the costs incurred, considering the legal possibility of requiring the payment by the customer or delivery of the product to the customer (transfer of control). CONSOLIDATED 12/31/19 12/31/18 Gross operating revenues recognized 986,684 1,419,671 Costs incurred (753,815) (1,184,249)

12/31/19 12/31/18 Advances received 119,386 63,974

24 OPERATING EXPENSES BY NATURE AND FUNCTION

CONSOLIDATED 12/31/19 12/31/18 EXPENSES BY NATURE (11,510,135) (10,466,488) Depreciation, amortization and depletion (396,783) (317,023) Personnel expenses (2,997,621) (2,622,333) Raw materials and consumables (6,014,101) (5,680,419) Freight and insurance expenses (434,625) (315,969) Other expenses (1,667,005) (1,530,744)

EXPENSE BY FUNCTION (11,510,135) (10,466,488) Cost of sales and services (9,394,166) (8,500,816) Selling expenses (1,253,165) (1,139,413) General and administrative expenses (521,798) (541,257) Management fees (26,609) (25,374) Other operating income (expenses) (314,397) (259,628)

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

25 OTHER OPERATING INCOME (EXPENSES) The amounts recorded refer to profit sharing, reversal of/provision for tax lawsuits and others, as shown below: CONSOLIDATED 12/31/19 12/31/18 OTHER OPERATING INCOME 30,278 22,656 OTHER OPERATING EXPENSES (344,675) (282,284) Profit sharing - employees (233,177) (195,249) Profit sharing – foreign subsidiaries (49,054) (30,050) Profit sharing - management (25,986) (24,680) Share-based plan (6,940) (6,067) Others (29,518) (26,238) TOTAL, NET (314,397) (259,628)

26 FINANCE INCOME (COSTS), NET

PARENT CONSOLIDATED 12/31/19 12/31/18 12/31/19 12/31/18 FINANCE INCOME 33,189 41,431 917,382 877,674 Income from financial investments 66,048 73,584 196,230 350,414 Exchange rate changes - - 511,473 467,046 Exchange rate changes - Trade payables - - 54,509 61,007 Exchange rate changes - Trade receivables - - 152,564 187,296 Exchange rate changes - Borrowings - - 229,470 174,097 Exchange rate changes - Others - - 74,930 44,646 PIS/COFINS on interest on capital (30,585) (30,114) (30,585) (30,114) PIS/COFINS on finance income (3,107) (3,480) (12,273) (19,388) Derivatives - - 173,211 30,367 PROEX - Equaliz. Interest rate - - 25,530 17,096 Other income 833 1,441 53,796 62,253

FINANCE COSTS (820) (6) (960,665) (887,163) Interest on borrowings and financing Exchange rate - - (162,537) (230,173) changes Exchange rate changes - - (662,761) (515,858) Exchange rate changes - Trade payables - - (71,936) (83,429) Exchange rate changes - Trade receivables - - (124,672) (138,585) Exchange rate changes - Borrowings - - (376,831) (230,316) Exchange rate changes - Others - - (89,322) (63,528) Derivatives - - (66,942) (73,453) Other expenses (820) (6) (68,425) (67,679)

FINANCE INCOME (COSTS), NET 32,369 41,425 (43,283) (9,489)

27 PROVISION FOR INCOME TAX AND SOCIAL CONTRIBUTION The Company and its subsidiaries in Brazil calculate income tax and social contribution based on taxable income, except for WEG Administradora de Bens Ltda, and Agro Trafo Miner., Agric., Pec. e Administradora de Bens Ltda., which adopt the calculation based on the deemed income. The provision for income tax was recognized at a 15% rate, plus a 10% surtax, and the social contribution at a 9% rate. The taxes of foreign subsidiaries are recognized according to the legislation of each country.

Reconciliation of income tax and social contribution: PARENT CONSOLIDATED 12/31/19 12/31/18 12/31/19 12/31/18 Profit before taxes on income 1,613,790 1,337,649 1,804,451 1,497,542 Statutory rate 34% 34% 34% 34%

IRPJ and CSLL calculated at statutory rate (548,689) (454,801) (613,513) (509,164)

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

Adjustments for calculation of income tax and social contribution at effective rate: Income from investments in subsidiaries 542,123 445,563 (477) 4,733 Difference in rates on income abroad - - 217,057 158,371 Tax incentives - - 113,129 89,903 REINTEGRA - - 804 10,306 Interest on capital 7,680 10,698 120,406 121,556 Other adjustments (323) (790) (9,402) (29,099)

IRPJ and CSLL in the income statement 791 670 (171,996) (153,394) Current tax (751) (707) (217,098) (188,185) Deferred tax 1,542 1,377 45,102 34,791

Effective rate - % -0.05% -0.05% 9.53% 10.24%

28 INSURANCE COVERAGE The Company and its subsidiaries have a Worldwide Insurance Program - WIP, in which the following world policies established stand out: Transport (Export, Import and Domestic), Civil Liability for Products, Civil Liability of Directors and Officers (D&O), Property/Operational Risks, Environment Pollution, Performance Bond and Engineering Risk (Construction, Installation, Assembly and Commissioning). The insurance policies are taken only with first-tier multinational insurance companies. Below we highlight the Indemnity Limits (LMI) of the policies comprising the WIP:

Insurance policy Maximum Insured Amount (MIA) Maturity Operational risks (Equity) US$ 36 million 3/31/2020 US$ 10.3 million (for Paint companies and newly acquired companies for the first 12 Loss of Profits 3/31/2020 months with an indemnity period of 6 months) General Civil liability US$ 10 million 9/12/2020 Civil Liability for Products US$ 40 million 9/12/2020 Domestic Transport R$ 12 million per shipment/accumulation/trip 11/1/2022 International Transport - US$ 6 million per shipment/accumulation/trip 11/1/2022 Export/Import Environmental Pollution US$ 20 million 9/12/2020 Contractual Performance As per the agreement / As stipulated in the contract Bond delivery Engineering, Installation According to the value at risk of the contracts, limited to R$ 200 million in Brazil, US$ As per the construction and Assembly Risk 30 million in Latin America (except Cuba) and US$ 5 million in the USA; schedule / supply Civil Liability of Directors US$ 30 million 3/12/2020 & Officers (D&O)

29 FINANCIAL INSTRUMENTS The Company and its subsidiaries performed the valuation of its financial instruments, including derivatives recorded in the financial statements, presenting the following values:

CARRYING AMOUNT 12/31/19 12/31/18 Cash and cash equivalents 1,946,044 2,205,700 Cash and banks 396,233 286,783 Financial investments: 1,549,811 1,918,917 - In local currency 1,483,551 1,870,749 - In foreign currency 66,260 48,168 Financial investments 1,444,227 1,886,970 Derivatives 191,171 390,696 - Non- Deliverable Forwards - NDF 846 9,192 - Hedge Accounting 190,325 381,504 Total - Assets 3,581,442 4,483,366

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

Borrowings and financing 2,284,969 3,772,114 - In local currency 195,496 490,766 - In foreign currency 2,089,473 3,281,348 Derivatives 20,558 20,194 - Non- Deliverable Forwards - NDF 4,429 9,201 - SWAP 6,637 8,124 - Hedge Accounting 9,492 2,869 Total - Liabilities 2,305,527 3,792,308

All financial instruments are recognized in the consolidated financial statements at their carrying amount, which approximates their fair value.

29.1 Risk factors The risk factors of the financial instruments are basically related to: a) Credit risks Arises from the possibility of the Company’s subsidiaries not receiving amounts from sales or credits held with financial institutions generated by financial investments. To mitigate the risk of the sales transactions, the Company's subsidiaries adopt a policy of analyzing the financial position of their customers, establishing a credit limit and performing an ongoing monitoring of their debt balance. As regards the financial investments, the Company and its subsidiaries invest with institutions with low credit risk. b) Foreign currency risks The Company and its subsidiaries conduct import and export transactions in various currencies, they manage and monitor the exchange exposure seeking to balance their financial assets and liabilities within the limits established by Management. The limit of exchange exposure sold/purchased (net) may be equivalent to up to one month of exports in foreign currencies as established by the Company's Board of Directors.

As at December 31, 2019, the Company and its subsidiaries made exports in the amount of US$ 718.6 million (US$ 681.5 million as at December 31, 2018), representing a natural hedge for part of the indebtedness and other costs associated to other currencies, mainly the US dollar. c) Debt charge risks These risks arise from the possibility that the subsidiaries may incur losses due to fluctuations in interest rates or other debt indexes, which would increase the finance costs related to borrowings and financing raised in the market, or decrease the finance income related to financial investments of subsidiaries. The Company and its subsidiaries perform an ongoing monitoring of the market interest rates aiming at assessing the need for hedging against the risk of volatility of these rates.

29.2 Derivative financial instruments The Company and its subsidiaries have the following derivative transactions: a) Non Deliverable Forwards - NDF, in the notional amount of: (i) USD 18.5 million, held by its subsidiary WEG International Trade GmbH, with the purpose of hedging its product export transactions against the risks of fluctuation in exchange rates; (ii) USD 15.5 million, held by its subsidiary WEG Equipamentos Elétricos S.A., with the purpose of partially hedging its exports against the risks of fluctuation in exchange rates; (iii) USD 9.3 million, held by its subsidiary Zest WEG Group Africa (Pty) Ltd, aiming at hedging its product imports against the risks of fluctuations in exchange rates; (iv) EUR 8.9 million, held by its subsidiary WEG Colombia S.A.S., with the purpose of hedging its financing transactions against the risk of appreciation in the Euro rate.

b) Swap transactions, in the notional amount of: EUR 10 million, held by subsidiary Watt Drive Antriebstechnik GmbH, with the purpose of protecting its financing from the Euribor fluctuation risks. 40

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

The management of the Company and its subsidiaries maintain, through their internal controls, an ongoing monitoring of the derivative financial instruments contracted.

The sensitivity analysis table (item 29,3) should be read jointly with the other financial assets and liabilities expressed in foreign currency as at December 31, 2019 since the estimated effects of the exchange rates on NDFs and SWAPs will be offset, if materialized, in whole or in part, against the devaluation of all assets and liabilities.

Management defined that, for the probable scenario (market value), the exchange rates used to mark to market the financial instruments, valid at December 31, 2019, should be considered. These rates represent the best estimate of the future behavior of their prices and represent the amount by which the positions could be settled on their maturity.

The Company and its subsidiaries made the recording based on their market price at December 31, 2019 at fair value and on the accrual basis. These transactions had a net positive impact of R$ 106,269 (negative R$ 43,086 as at December 31, 2018) which were recognized as finance income (cost). The Company and its subsidiaries have no margins given in guarantee for the derivative financial instruments outstanding at December 31, 2019. c) Derivative financial instruments designated for hedge accounting: The Company made the formal designation of its transactions subject to hedge accounting for hedging instruments related to purchase of inputs and expenses denominated in foreign currency, documenting: − Date of designation and identification of the hedging relationship; − Description of the purpose of hedging and risk management strategy; − Statement of compliance with respect to hedge and risk management; − Description and identification of the derivative instrument and the hedged item; − Description of the hedged risks and excluded risks; − Description of the method to evaluate the hedge effectiveness; − Frequency of prospective and retrospective effectiveness assessment; − Description of the hedge accounting policy.

A Companhia e suas controladas possuem as seguintes operações com instrumentos financeiros derivativos designados para contabilização de proteção (hedge accounting):

Non Deliverable Forwards – NDF, in the notional amount of: (i) USD 79.3 million, held by its subsidiary WEG Holding GmbH, in order to provide hedge against exchange rate variation on its intercompany financing transactions; (i) USD 7.2 million, held by its subsidiary WEG Equipamentos Elétricos S.A. to provide hedge against exchange rate variation on input imports; (i) EUR 2.1 million, held by its subsidiary WEG Equipamentos Elétricos S.A. to provide hedge against exchange rate variation on input imports; (i) AUD 10.9 million, held by its subsidiary WEG Holding GmbH, to provide hedge against exchange rate variation on its intercompany financing transactions. (v) GBP 8.6 million, held by its subsidiary WEG Holding GmbH, to provide hedge against exchange rate variation on its intercompany financing transactions.

SWAP operations, in the notional amount of: USD 285.0 million, held by its subsidiary WEG Equipamentos Elétricos S.A., to provide hedge to export financing (PPE’s) and Advance on Foreign Exchange Contracts (ACC) transactions;

The Company and its subsidiaries made the recording based on their fair value as at December 31, 2019 on the accrual basis. The accumulated value, net of taxes, recognized in equity is R$ 11,180 negative (R$ 18,657 negative at December 31, 2018).

29.3 Sensitivity analysis The tables below present in reads the effects of "cash and expense" relating to the results of the financial instruments in each of the scenarios. 41

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

a) Financing:

(*) Sensitivity analysis of the variations in financing: The Company's risk in the event of increase in interest rate, considering static the position of financing based on TJLP at December 31, 2019.

b) Non- Deliverable Forwards - NDF transactions:

c) SWAP transactions:

d) Hedge accounting transactions:

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

30 GOVERNMENT SUBSIDIES AND GRANTS The Company and its subsidiaries obtained subsidies in the amount of R$ 129,051 (R$ 99,936 as at December 31, 2018) arising from tax incentives, recognized in profit or loss for the period:

CONSOLIDATED 12/31/19 12/31/18 Total government subsidies and grants 129,051 99,936 a) WEG Linhares Equipamentos Elétricos S.A. 52,589 44,073 - ICMS (state VAT) incentive credit of 85.0% 36,762 31,936 - 75.0% reduction of IRPJ 15,682 11,327 - Reduction for Reinvestment of 30% of the IRPJ - 670 - Reduction of IPTU 120 115 - Municipal investment 25 25

b) WEG Drives & Controls – Automata Ltda. 54,917 38,628 - ICMS incentive credit 54,917 38,628

c) WEG Logística Ltda. 16,135 14,204 - ICMS incentive credit 16,135 14,204

d) WEG Amazônia S.A. 4,437 2,089 - ICMS (state VAT) incentive credit of 90.25% 378 331 - 75.0% reduction of IRPJ 4,059 1,758

e) WEG Equipamentos Elétricos S.A. 973 942 - Municipal investment 973 942

There are no contingencies related to the subsidies, and all the conditions for obtaining government subsidies have been met.

31 SEGMENT INFORMATION

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

Industry: single phase and triple phase motors with low and medium tension, drives and controls, equipment and services for industrial automation, paints and varnishes.

Energy: electric generators for thermal and hydraulic power plants (biomass), hydraulic turbines (PCHs), transformers, substations, wind power generators, control panels, integration services of renewable and distributed energy systems and solutions.

Foreign: comprised of operations carried out by subsidiaries located in various countries.

The column of eliminations and adjustments includes the eliminations applicable to the Company in the context of the Consolidated Financial Statements. All operating assets and liabilities are presented as identifiable assets and liabilities. The segment information is presented consistently with the reports used by Management to assess the performance of each segment of the Company.

32 EARNINGS PER SHARE a) Basic Basic earnings per share are calculated by dividing the profit for the year attributable to the holders of the Company's common shares by the weighted average number of common shares available during the year.

12/31/19 12/31/18 Profit attributable to the Company's shareholders 1,614,581 1,338,319 Weighted average number of potential diluting common shares (adjusted with bonus) held by 2,097,460 2,097,199 shareholders (shares/thousand) Basic earnings per share - R$ 0.76978 0.63815 b) Diluted Diluted earnings per share are calculated by dividing the profit attributable to the holders of the Company’s common shares by the weighted average number of common shares available during the year plus the weighted average number of common shares that would be issued upon the conversion of potential diluted common shares.

33 EVENTS AFTER THE REPORTING PERIOD Transformadores e Serviços de Energia das Américas S.A. On January 17, 2020, the Company announced the acquisition of one of the plants of Transformadores e Serviços de Energia das Américas S.A., a company specialized in the manufacture of power transformers, shunt reactors and power autotransformers. The operation is conditional upon approval by the Brazilian Antitrust Authority (CADE).

WEG S.A. NOTES TO THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 (Amounts in thousands of Reais, except otherwise stated)

Board of Directors Décio da Silva - Chairman Nildemar Secches - Vice Chairman Dan Ioschpe Martin Werninghaus Miguel Normando Abdalla Saad Sérgio Luiz Silva Schwartz Umberto Gobbato

Board of Executive Officers Harry Schmelzer Junior - Chief Executive Officer Alberto Yoshikazu Kuba – Chief Industrial Motors Officer André Luis Rodrigues - Chief Administrative and Financial Officer Carlos Diether Prinz - Chief Transmission and Distribution Officer Daniel Marteleto Godinho – Chief Corporate Strategies Officer Eduardo de Nóbrega – Officer - China Hilton José da Veiga Faria - Chief Human Resources and Institutional Relations Officer João Paulo Gualberto da Silva – Chief Energy Officer Julio Cesar Ramirez – Chief Commercial Motors Officer Luis Gustavo Lopes Iensen – Chief International Division Officer Manfred Peter Johann - Chief Automation Division Officer Paulo Geraldo Polezi – Chief Financial and Investor Relations Officer Reinaldo Richter – Chief Paints Division Officer Siegfried Kreutzfeld – Officer – South Africa Wilson José Watzko - Chief Controlling Officer

Accountant Homero Fabiano Michelli CRC/SC 025355/O-2

Supervisory Board Sitting members Deputy members Alidor Lueders – Chairman Ilário Bruch Adelino Dias Pinho José Luiz Ribeiro de Carvalho Vanderlei Dominguez da Rosa Paulo Roberto Franceschi

CAPITAL BUDGET PROPOSAL

We propose submitting to the analysis of the Annual General Meeting (AGM) the recognition of a Capital Budget Reserve in the amount of R$730,196 (article 196 of the Brazilian Corporate Law and article 202, § 6 of Law 10,303/01), pursuant to the Investment / Capital Budget Plan.

The 2020 Investment / Capital Budget Plan is broken down as follows:

a) Projected investments (Property, plant and equipment) – 2020 budget 690,887 - Machinery, equipment, tools and devices 194,642 - IT (hardware) 16,305 - Constructions and facilities 31,352 - Foreign subsidiaries 419,823 Producers 393,972 Commercial 25,851 - Other 28,765

b) Intangible assets 13,824

c) Projected investments (current) – 2020 budget 429,261

Total projected investments (a + b + c) 1,133,972

Sources of Funds 1,133,972 - Own (capital budget reserve) 667,268 - Third parties (financing) 466,704

WEG S.A. FINANCIAL STATEMENTS SUPERVISORY BOARD’S STATEMENT

The Supervisory Board of WEG S.A., in the performance of its legal duties, having examined the Management Report, the Financial Statements for the year ended 12/31/2019, and the proposals of the Board of Directors for: (a) the allocation of profit; and (b) the capital investment/ budget plan, and based on the examinations made and considering the explanations provided by the Company's Management, the Independent Auditor´s representatives and also based on the unqualified report issued by Deloitte Touche Tohmatsu Auditores on the Financial Statements, dated February 17, 2020, is of the opinion that these documents may be examined and voted on at the Annual General Meeting.

Jaraguá do Sul (Santa Catarina State), February 18, 2020.

ALIDOR LUEDERS ADELINO DIAS PINHO VANDERLEI DOMINGUEZ DA ROSA

BOARD OF DIRECTORS’ STATEMENT

By this instrument, the Chief Executive Officer and the other Executive Officers of WEG S.A., a publicly-held company, headquartered at Avenida Prefeito Waldemar Grubba, No. 3,300, enrolled with the National Register of Legal Entities (CNPJ) under No. 84.429.695/0001-11, for the purpose established in items V and VI of paragraph 1 of article 25 of CVM Ruling No. 480 dated December 7, 2009, state that:

(i) We have reviewed, discussed and agreed with the opinions expressed in the report of Deloitte Touche Tohmatsu Auditores Independentes, dated February 17, 2020 regarding the individual and consolidated financial statements of WEG S.A. for the year ended December 31, 2019; and

(ii) We have reviewed, discussed and agreed with the individual and consolidated financial statements for WEG S.A. for the year ended December 31, 2019.

Jaraguá do Sul (Santa Catarina State), February 17, 2020.

Harry Schmelzer Junior - Chief Executive Officer Alberto Yoshikazu Kuba – Chief Industrial Motors Officer André Luis Rodrigues - Chief Administrative and Financial Officer Carlos Diether Prinz - Chief Transmission and Distribution Officer Daniel Marteleto Godinho – Chief Corporate Strategies Officer Eduardo de Nóbrega – Officer - China Hilton José da Veiga Faria - Chief Human Resources and Institutional Relations Officer João Paulo Gualberto da Silva – Chief Energy Officer Julio Cesar Ramirez – Chief Commercial Motors Officer Luis Gustavo Lopes Iensen – Chief International Division Officer Manfred Peter Johann - Chief Automation Division Officer Paulo Geraldo Polezi – Chief Financial and Investor Relations Officer Reinaldo Richter – Chief Paints Division Officer Siegfried Kreutzfeld – Officer – South Africa Wilson José Watzko - Chief Controlling Officer