ANNUAL REPORT 2020

Železiarne Podbrezová a.s. ANNUAL REPORT 2020 30 TRANSMESA & TAP The product portfolios of TRANSMESA and TAP (Spanish companies) strengthen and complement the international market position of the ŽP GROUP as regards production and sales of precision cold- drawn steel tubes. The situation on the market of metallurgical products and precision seamless tubes in 2020 was difficult, as many of the companies’ customers were hit by the pandemic and demand fluctuated greatly. The two-week lockdown of Spanish industrial companies and anti-pandemic measures across countries significantly affected the situation on the sales markets. The decline in orders led to a significant reduction in production volumes, especially in Q2 and Q3 2020, during which both companies had to reduce working hours. In Q3 2020, the situation stabilised and a significant improvement at the end of the year again allowed the full utilisation of production capacity. In 2020, both TRANSMESA and the subsidiary TAP produced 6 752 tonnes of precision steel tubes and profiles, a significant 21% y/y decrease. Given the product mix and a decrease in orders in the automotive industry, the total length of produced tubes decreased by 41% y/y to 14 846 thousand meters. Of the total volume, 1 701 tonnes of tubes were finalised by electrolytic galvanising and 2 069 tonnes by mechanical division. In 2020, both manufacturing companies supplied their customers with tubes in a total amount of 10 316 tonnes (of which 7 310 tonnes were of own production) and the consolidated revenues from the sale of merchandise, products and services totalled EUR 29.9 million. The 14% y/y decrease in revenues was driven by a 15% decrease in the sale of own products, and a decrease in the sale of merchandise of ŽP GROUP by 9% (amounting to EUR 4.7 million). In 2020, the companies posted a consolidated profit after tax of EUR 469 thousand (TRANSMESA: EUR 453 thousand and TAP: EUR 16 thousand). Total assets as at 31 December 2020 amounted to EUR 41 118 thousand. Current assets amounted to EUR 18 839 thousand and equity amounting to EUR 19 772 thousand covered 48% of total assets. In 2020, TRANSMESA shipped its products and merchandise to 39 countries, and the Spanish market comprised 32.5% of its total revenues. EU Member States, North America and Australia continued to be the main export markets. In 2020, the companies implemented investment projects totalling EUR 772 thousand. The companies invested mainly in the modification and improvement of production lines and a new dividing centre. In 2021, the management of both companies keeps optimising production processes. The investment plan totalling approx. EUR 2.3 million focuses on quality control of products, expansion of storage facilities for finished products and automation of production processes to reduce costs and improve the quality of their products. The companies plan that invoicing and production volume in 2021 will be higher than in 2020. If the situation does not change significantly, 2021 should surpass 2020 in revenues, profit and investments. ŽP EKO QELET a.s. The company’s main activities are purchasing and selling new and collected scrap metal and automobile wrecks, and waste metal processing. The company has a dominant position on the steel waste market in western and central Slovakia and has been a leader in the collection, sorting and processing of steel waste in Slovakia in recent years. ŽP EKO QELET a.s. is the most important supplier of scrap steel to Železiarne Podbrezová a.s., and supplied 67% of total scrap steel purchases last year. Fluctuations in scrap steel prices on the regional and European markets have been the company’s biggest problem for operations and economic results in recent years. There is certain risk connected with the economic development and the stability of strategic scrap steel buyers in the region` however, as the main customer is the parent company, the purchase of merchandise and products is relatively stable. The company retained its position in 2020. Investments were made in the expansion of the headquarters in Hliník nad Hronomand in themodernisation of machinery and handling facilities. The company has 47 collection REPORT BY THE BOARD OF DIRECTORS ON BUSINESS ACTIVITIES, ASSETS AND FINANCIAL PERFORMANCE IN 2020 AND INFORMATION ON THE BUSINESS PLAN