ANNUAL REPORT 2021

Annual report 2021 Železiarne Podbrezová a.s. 62 10 - Has power over an investee; - Has an exposure or rights to variable returns from its involvement with the investee; and - Has the ability to use its power over the investee to affect its returns. The subsidiaries’ financial statements are included in the consolidated financial statements from the date that control commences until the date when control ceases. The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the subsidiary. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair values at the acquisition date, except for non - current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 “Non - current assets held for sale and discontinued operations”, which are recognised and measured at fair value less costs to sell. Goodwill arising on an acquisition is measured as the excess of the sum of the consideration transferred, the amount of any non - controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net amount of the acquired identifiable assets as at the acquisition date net of the liabilities assumed. If, after reassessment, the assets acquired net of the liabilities assumed exceed the sum of the referred consideration, the amount of any non - controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain. Goodwill is initially recognised as an asset and is subsequently measured at cost less any accumulated impairment loss. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash - generating units expected to benefit from the synergies of the business combination. The impairment of goodwill is tested annually or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of thecash - generating unit is lessthanthecarrying amount ofthe unit,the impairment loss isallocatedfirsttoreduce thecarrying amountofthe goodwill and then to other assets of the unit pro - rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. On disposal of a subsidiary, the attributable amount of goodwill is included in the profit or loss on disposal. All intra - group transactions, balances, unrealised profits or losses from transactions have been eliminated on consolidation. Minority interest of other investors in the net assets of consolidated subsidiaries is identified separately from the Group’s equity therein. Minority interestsrepresentthe other investors’proportionateshareofthefairvalue attheacquisitiondate oftheassetsand liabilities oftherelevantsubsidiary, adjusted for the minorities’ share of subsequent profits and losses. Loss applicable to minority interests in excess of the minorities’ interest in the subsidiary’s equity is accounted for along with the Group’s interest except for the amount that represents contractual liability of minority shareholders andmay represent an additional investment to cover losses. The acquisition of shares in subsidiaries from entities under common control is recognised using the Pooling of Interests method. The difference between the cost of investment and the Group’s share in the book value of assets and liabilities of the acquiree as of the acquisition date is recognised immediately in equity, i.e. in“RetainedEarnings”.Theminority interestreferstothe proportionofthe bookvalue ofassetsand liabilitiesoftheacquiree as of the date of its acquisition net of theminority interest in gains/losses after the aforementioned date. The list of the consolidated subsidiaries in the Group is as follows: Name Country of incorporation Effective ownership % Voting rights % Principal activity 2021 2020 2021 2020 PIPEX ITALIA S.p.A., Arona (Novara) Italy 85.00 % 85.00 % 85.00 % 85.00 % Trading activities Pipex Deutschland GmbH, Munich Germany 88.50 % 88.50 % 88.50 % 88.50 % Trading activities SLOVRUR Sp. z o.o., Stalowa Wola Poland 90.00 % 90.00 % 90.00 % 90.00 % Trading activities ŽP Trade Bohemia, a.s., Prague Czech Republic 100.00 % 100.00 % 100.00 % 100.00 % Trading activities Tále, a.s., Tále Slovakia 92.87 % 94.66 % 92.87 % 94.66 % Tourism ŽP - Gastroservis, s.r.o., Valaská Slovakia 100.00 % 100.00 % 100.00 % 100.00 % Catering services Nadácia Železiarne Podbrezová, Podbrezová Slovakia 100.00 % 100.00 % 100.00 % 100.00 % Foundation ŽIAROMAT a.s., Kalinovo Slovakia 100.00 % 100.00 % 100.00 % 100.00 % Production of refractory products ŽP Informatika s.r.o., Podbrezová Slovakia 100.00 % 100.00 % 100.00 % 100.00 % IT services ŽP EKO QELET a.s., Martin Slovakia 66.27 % 66.27 % 66.27 % 66.27 % Purchase and sale of scrap Transformaciones Metalurgicas S.A.U., Arenys de Mar Spain 100.00 % 100.00 % 100.00 % 100.00 % Production of steel pipes TAP Tubos de Acero de Precisión, S.L.U., Arenys de Mar Spain 100.00 % 100.00 % 100.00 % 100.00 % Production of steel pipes Transmesa USA, Inc., Englewood Cliffs, NJ USA 100.00 % 100.00 % 100.00 % 100.00 % Trading activities ŽP VVC s.r.o., Podbrezová Slovakia 100.00 % 100.00 % 100.00 % 100.00 % Research and development KBZ s.r.o., Košice Slovakia 70.00 % 70.00 % 70.00 % 70.00 % Purchase and sale of scrap ŽP Bezpečnostné služby s.r.o., Podbrezová Slovakia 100.00 % 100.00 % 100.00 % 100.00 % Operation of security guards ŽP Rehabilitácia s.r.o., Podbrezová Slovakia 100.00 % 100.00 % 100.00 % 100.00 % Operation of a health - care facility ZANINONI SLOVAKIA, s.r.o., Valaská Slovakia 100.00 % 100.00 % 100.00 % 100.00 % Transportation services ŠK Železiarne Podbrezová a.s., Podbrezová Slovakia 99.50 % 99.50 % 99.50 % 99.50 % Sport, advertising and promotion FK Železiarne Podbrezová a.s., Podbrezová Slovakia 55.00 % 35.02 % 55.00 % 35.02 % Sport, advertising and promotion UHL, s.r.o., Podbrezová Slovakia 100.00 % 100.00 % 100.00 % 100.00 % Trading activities UHL Holding, a.s., Podbrezová Slovakia 0.00 % 100.00 % 0.00 % 100.00 % Trading activities For details on changes in the Group during the current reporting period, see Note 5. (ii) Associates Associatesarecompanies inwhichtheGrouphasasubstantialbutnotcontrolling influence.A substantial influence isthepowertoparticipate indecisions onthefinancialandoperating plansofanassociate,but itdoesnotmeancontrolor jointcontroloversuchplans. Investments inassociatesarerecognised using the equity method from the date such a substantial influence originated until the date of its termination. Under the equity method, investments in associates are recognised in the consolidated statement of financial position at cost adjusted for the Group’s shares in changes in equity of an associate after the acquisition date, less any impairment of individual investments. Losses of an associate exceeding the Group’s share in the associate are not recognised. The Group’s associatesare listed in Note 5. Any amount by which a cost exceeds the Group’s share in the net fair value of identifiable assets, liabilities and contingent liabilities of an associate recognisedasattheacquisitiondate isrecognisedasgoodwill.Goodwill is included inthecarrying amount ofan investmentand isconsideredto bea part ofthe investmentwhenassessing an impairment.AlloftheGroup’sshare inthenetfairvalueof identifiableassets, liabilitiesandcontingent liabilitiesthat exceed the cost after the reassessment are reported directly in the statement of comprehensive income. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (IN EUROS)