ANNUAL REPORT 2021

Annual report 2021 Železiarne Podbrezová a.s. 36 BUSINESS PLAN Železiarne Podbrezová a.s. has supplied its customers on European markets with steel products for more than 180 years. Company management seeks to ensure that the Company remains viable and profitable over the long term and its activities meet the needs of its customers. For more than forty years, the Company has focused on the production of steel seamless rolled tubes and drawn precision tubes. Thirty years ago, the Company was transformed into a joint-stock company, and the management has consolidated all important parts of the tube production and sales process by acquisitions and organic growth. The Group integrates the purchase of scrap metal, as the main raw material, production of heat-resistant materials and steel and seamless steel tubes, research into steel production and metal forming and sale of products by its trading companies, including logistics. The Company also owns a group of ancillary companies that provide IT, security, catering, advertising and social responsibility services. The Board of Directors is also analysing suitable acquisition opportunities and is aware of the importance of well-directed investments given increasing pressure on the renewable functioning of the economy and stricter green targets for industry and countries as a whole. 2021 was a year of strong recovery of demand and product prices] on the European market for metallurgical producers, following an almost two- year downturn. From the beginning of the year, there was strong growth in demand and overall economic activity. Sales increased significantly, surpassing the last economic peak of 2018. Sales exceeded EUR 310million (+58%). Nevertheless, the reported operating profit is considered low due to significant, sometimes even extreme, increases in input and energy prices. The Company ended the year with positive operating and financial results, but significant growth in the volume of working capital caused an increase in credit exposure by approximately EUR 13.7 million at the end of the year. In 2021, the world economy experienced solid growth. However, continued constraints, particularly in Asia, disrupted global logistics and a shortage of raw materials and components prevented a stronger recovery and caused long- term production restrictions in some sectors and thus inefficient use of invested capital and human resources. In recent months, the global economy has been adversely affected by the war between Ukraine and Russia. This has directly affected millions of people and has an indirect impact on the entire global population in the form of increasing inflation and great uncertainty about the availability of energy sources and basic foodstuffs. In this regard, Slovakia is also heavily exposed to the direct consequences of the war, such as the influx of refugees and sanctions against Russia and Belarus. Their long-term impact is currently difficult to estimate. Neither the Company nor the group have a significant concentration of customers on the affected markets. Without a proper analysis and preparation of the economy, the current, and particularly the additional planned sanctions targeting oil and gas from Russia, could have an extremely adverse impact on the Slovak economy that is difficult to model in advance. Central banks in neighbouring countries have already considerably increased their basic interest rates. The US Fed is taking a similar approach and the ECB is likely to follow, althoughmore cautiously, in the near future. Governments are taking these steps to slow inflation, but it is largely imported and relates to global concerns about sufficient availability of energy and key raw materials for a number of sectors, i.e. food, chemical, metallurgical and engineering. It is extremely difficult to predict developments in the second half of 2022. It will be crucial whether or not the governments of the relevant countries are able to negotiate and agree on conditions for ending the war in Ukraine, agree a long-term ceasefire, and resume economic cooperation. Thus relying on the global steel consumption forecasts of the World Steel Association for 2022 or the European Commission’s economic forecasts does not seem reasonable in our opinion. The current unprecedented situation will also have a significant impact on the European Commission’s plans to reduce emissions by 2030. Due to a threat to the security of energy supplies, energy production from less clean sources is likely to increase. However, this could also have a positive effect, for example, by increasing investments REPORT BY THE BOARD OF DIRECTORS ON BUSINESS ACTIVITIES, ASSETS AND FINANCIAL PERFORMANCE IN 2021 AND INFORMATION ON THE BUSINESS PLAN