ANNUAL REPORT 2021

Annual report 2021 Železiarne Podbrezová a.s. 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. In2021, thesituation inthesmall-diameterprecision seamless pipe market improved and demand for products exceeded production capacity. Many customers increased their production much faster than expected due to strong demand from their customers. Despite the ongoing problems due to the pandemic, following a challenging 2020, in which companies had to cope with production stoppages, lockdowns at Spanish industrial plants and strict anti-pandemic measures, last year saw a significant economic recovery. The companies also significantly increased production volumes compared to 2020, and made full and efficient use of their production capacities. In 2021, TRANSMESA and its subsidiary TAP produced 8 493 tonnes of precision steel tubes and profiles, a significant 26% increase compared to the previous year (2020: 6 752 tonnes). Due to the different product mix and higher production of small-diameter tubes, the total length of produced tubes increased by 56% y/y to 23 154 thousand metres (2020: 14 846 thousand metres). Of the total volume, 2 764 tonnes of tubes were finalised by electrolytic galvanising and 2 782 tonnes (13.8 million items) by mechanical division. In 2021, TRANSMESA and TAP supplied their customers with 13 879 tonnes of tubes (2020: 10 316 tonnes), of which 9 226 tonnes were of own production (2020: 7 310 tonnes). Consolidated revenues from the sale of merchandise, products and services totalled EUR 45.3 million (2020: EUR 29.9 million). The 52% y/y increase in revenues was driven by a 26% increase in the sale of own products, an increase in the sale of merchandise of the ŽP GROUP by 55% (EUR 8.0 million) and higher prices of products and merchandise. In 2021, the companies posted a consolidated profit after tax of EUR 4 283 thousand (2020: EUR 469 thousand), of which TRANSMESA: EUR 3 796 thousand and TAP: EUR 487 thousand. Total assets as at 31 December 2021 amounted to EUR 44 978 thousand. Current assets amounted to EUR 23 998 thousand and equity amounting to EUR 23 555 thousand covered 52% of total assets. In 2021, TRANSMESA shipped its products and merchandise to 39 countries, and the Spanish market comprised 31.5% of its total revenues. The EU, North America and Australia continued to be the main export markets. To maintain the volume and quality of production, the companies implemented investment projects totallingEUR 1 891 thousand in 2021. The companies invested in the extension of drawing benches, a new quality control line and began the extension of TAP’s halls, which will continue in 2022. In 2022, the management of both companies will focus on expanding production and streamlining production processes. The goals of the investment plan totalling EUR 6.57 million are: completion of the fourth production hall at Sant Ramon, construction of a new production line to expand production, optimisation of production processes, and improvement of quality and safety. The companies plan that sales and production volume in 2022 will be slightly higher than in 2021; however, the final result will depend mainly on external and global impacts on the market macroeconomic situation. 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 for a number of years has been the leader in the collection, sorting and processing of steel waste in Slovakia. ŽP EKO QELET a.s. is the most important supplier of scrap steel to Železiarne Podbrezová a.s., and supplied over 69% of scrap steel purchases last year. The company is significantly affected by the fluctuations in scrap steel prices on the Central European market, which have had a significant impact on its operations and financial results in recent years. There is a risk connected with the development of the economy 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 and corresponds to the economic cycle of the steel industry. Following a difficult 2020, ŽP EKO QELET a.s. benefited from its long- term investments in its operational and personnel capacities. Due to strong demand and a significant increase in scrap prices in 2021, the company significantly increased the volume of purchased and processed scrap, revenues and profitability. In 2021, the company invested primarily in the renovation of its machines, handling equipment, REPORT BY THE BOARD OF DIRECTORS ON BUSINESS ACTIVITIES, ASSETS AND FINANCIAL PERFORMANCE IN 2021 AND INFORMATION ON THE BUSINESS PLAN