Notes on the financial Statements

MYTILINEOS Group is active in four main operating business segments: a) Metallurgy, b) Sustainable Engineering Solutions, c) International Renewables and Storage Development and d) Power & Gas. In accordance with the requirements of IFRS 8, management generally follows the Group's service lines, which represent the main products and services provided by the Group, in identifying its operating segments. Each of these operating segments is managed separately as each of these service lines requires different technologies and other resources as well as marketing approaches.

The Group’s service lines that do not fulfil the quantitative and qualitative thresholds of IFRS 8, in order to be considered as separate segments, are presented cumulatively under the category "Others". The Group has applied IFRS 5 "Non-Current Assets Available for Sale & Discontinued Operations" and present separately the results of the discontinued operations of the subsidiary company SOMETRA S.A.

The totals that are presented in the following tables, reconcile to the related accounts of the consolidated financial statements.

Income and results per operating segment are presented as follows:

Assets and liabilities per operating segment are presented as follows:

The Group’s Sales and its Non-current assets (other than financial instruments, investments, deferred tax assets and postemployment benefit plan assets) are divided into the following geographical areas:

Group’s sales per activity:

It should be noted that the backlog of projects already undertaken for the group (Sectors SES & RSD) amounts to € 1,015 mio. The backlog of Deir Azzur project amounted € 420 mio is not included in this amount:

Leases are recognized in the statement of financial position as a right to use an asset and a lease obligation, the date on which the leased fixed asset becomes available for use.

The recognized rights to use assets are related to the following categories of assets and are presented in the "Right-of-use-Assets":

The group reflects the lease liabilities on the "long term lease liabilities" and "current portion of lease liabilities" in the statement of financial position.

The Group recognized in 31/12/2021 € 47.65 mio Rights of use and €50.70 mio Lease obligations, while the Company € 34.76 mio and €36.88 mio respectively.

Additionally, the Group recognized (for the twelve-month period ended on 31/12/2021) €7.74 mio depreciation and € 2.21 mio financial expenses, while the company recognized € 5.82 mio and € 1.52 mio respectively, in relation to the above leases.

The following tables show the aging of lease liabilities for the following years, as well as the recognized rights of use of assets by asset category:

Tangible assets presented in the financial statements are analyzed as follows:

During 2021, the Group recognized an impairment loss of €2.8 million for Renewable Energy Assets and Thermal Energy Assets due to the fact that Regulatory Authority for Energy rejected the production license.

Depreciation charged in profit and loss is analyzed in notes 20 and 21.

1 Changes in goodwill

Goodwill is allocated to the group’s cash-generating units identified according to business segment for 2021 and 2020.

2 Impairment test on goodwill

Goodwill arising from acquisition, has been allocated in the following Cash Generating Units (CGU) per business operating sector:

For the annual impairment test on goodwill, the recoverable amount of each segment is as follows:

The Group performs annually impairment tests for goodwill.

The recoverable amount of the recognized goodwill, related with the separate CGU’s, was assessed using value in use and calculated using the DCF method. The "value in use" was determined based on management’s assumptions, which management deems reasonable and are based on estimates from international rating agencies on Financial Statement’s issue date. No need for impairment arose from impairment tests.

3 Assumptions used in calculation of Value in Use

The recoverable amount of each CGU is determined according to the calculation of the value in use. The calculations for the CGU’s recoverable amount were based on the present value of the expected future cash flows. The basic estimates the Group uses to determine the value in use divide in:

• Market prices estimations:

— Metal/Mineral prices at LME for the metallurgy sector

— Exchange rate between $/€ for the metallurgy/constructions/energy sectors

— CO₂ prices for the metallurgy and energy sector

— Gas and BRENT prices for the metallurgy/energy sectors

• Operating estimations:

— Raw material prices and equipment for the metallurgy/constructions sectors

— Technical KPI’s for the production plants of metallurgy and energy sectors

— Project milestones and completion percentage of construction sector

— Cost and time of major inspections for the metallurgy/energy sectors

— Capacity rate and total demand of energy system for the energy sector

• Business plan per CGU:

— Business plans are drawn up over a maximum of 5 years. Cash flows over 5 years are deduced using the estimates of growth rates listed below.

— Business plans are based on recently prepared budgets and estimates.

— Business plans use operating profit margins and EBITDA, as well as future estimates using reasonable assumptions.

— Concerning projects in the electricity and natural gas sector, these projects extend over a period equal to the duration of the relevant licences.

— Concerning projects in the field of integrated projects and infrastructures, these projects extend over a period of 9-10 years. The reasons are related to the characteristics of EPC thermal constructions, which (together with metal constructions) are the core business of the business sector. In particular, future projects are mainly located in African countries, regional countries of the former Soviet Union and Middle East countries. Management estimates that the market for EPC projects in these countries is changing, boosting interest in projects where the manufacturer takes a Partner role by participating in financing the construction and recovering the liquidity provided through the project's future operational cash flows. The total completion and repayment cycle of the projects has been set at 9-10 years.

— Finally, for projects executed in the form of BOT (build operate transfer) the provisions are based on the portfolio of projects under consideration that have already passed or are expected to pass by the Group's investment evaluation committee (Capital Allocation Committee).

Calculations to determine the recoverable amount of operating segments were based on business plans approved by the Management, which included the necessary revisions to capture the current economic situation and reflect past experience, sectoral projections and other available information from external sources.

• Weighted Average Cost of Capital (WACC):

The WACC method reflects the discount rate of future cash flows for each CGU, according to which the cost of equity and the cost of long-term debt and any grants are weighted, in order to calculate the cost of capital of the company. Since all cash flows of the business plans are denominated in euro, the yield of ten-year German government bond was used as the risk-free rate. Assumptions of independent sources were taken into account for the calculation of the risk premium.

Betas are evaluated annually based on published market data. The Company’s WACC was estimated at 3.80%.

Apart from the above considerations concerning the determination of the value in use of CGUs, no other changes that may affect the rest of the assumptions have come to the Management’s attention.

The Group analyzed the sensitivity of the recoverable amounts per CGU through change in a percentage point of 0.5% in the discount rate. From the relevant analysis there is no amount of impairment.

Intangible assets presented in the financial statements are analyzed as follows:

Amortization charged in profit and loss is analyzed in notes 20 and 21.

Below the investments of MYTILINEOS S.A. per subsidiary as at 31/12/2021 and 31/12/2020:

1 Important non-controlling interests

On the table below, the analysis of the non-controlling interests in Group’s Subsidiaries:

The summarized financial statements of the Group’s subsidiary companies before intragroup eliminations:

The Group participates in associate companies, which due to significant influence are classified as associates and consolidated by equity method in the consolidated financial statements (the activity and percentage of participation are presented in note 7.1). These associate companies are not listed in any Stock Exchange market and therefore there are no market values.

1 Interests in Associates

Group’s Financial Statements include, with the equity method, the following companies incorporated: THERMOREMA S.A. 40% (31.12.2020: 40%), FTHIOTIKI ENERGY S.A. 35% (31.12.2020: 35%), ELEMKA SAUDI 34% (31.12.2020: 34%), IONIA ENERGY S.A. (BUSINESS ENERGY TRIZINIA S.A. is included) 49% (31.12.2020: 49%) both companies incorporated till February 2021, IPS S.A. 10% (31.12.2020: 10%), J/V MITILINEOS-XANTHAKIS 50% (2019: 0%), J/V AVAX-INTRAKAT-MYTILINEOS-TERNA 25%. The Group based on the immaterial contribution of the above mentioned associate companies at earnings before taxes notifies below a summarized Income Statement:

Deferred tax assets / liabilities arising from the relevant temporary tax differences are as follows:

Inventories that are presented in the financial statements are analyzed as follows:

The increase in inventories is due to METKA’s EGN portfolio acquisition (METKA EGN is a 100% subsidiary company of the Group) as well as and the gas inventory in Revithousa station. (See Note 1.3).

Αt 31/12/2021, the category "Other Debtors" includes mainly amounts of 47 mio € as collateral for letters of guarantee as well as cash collaterals due to operation of Energy spot market under the new permitions of Target Model. Increase in accrued income is due to electricity and natural gas sales which have been be invoiced during January 2022.

"Other receivables" do not include overdue and non-impaired receivables.

The movement of the provision of doubtful other receivables is shown in the following table:

The Group’s financial instruments consist mainly of deposits with banks, bank overdrafts, FX spot and forwards, trade accounts receivable and payable, loans to and from subsidiaries, associates, joint ventures, investments in bonds, dividends payable and lease obligations.

The financial instruments presented in the financial statements are categorized in the tables below:

A description of the Group’s financial instruments risks, is given in Note 31.

1 Other Financial Assets

Regarding highly liquid assets, namely shares, bank bonds and mutual funds with long-term investment horizon that are traded in an active market.

2 Financial assets at fair value through profit or loss

3 Derivatives financial instruments

All derivatives open positions have been marked to market. Fair values of the "interest rate swaps", are confirmed by the financial institutions that the Group has as counterparties.

The Group manages the exposure to currency risk through the use of currency forwards and options and thus by "locking" at exchange rates that provide sufficient cash flows and profit margins. Furthermore, the Group manages the exposure to commodity risk through the use of: a) commodity futures that hedge the risk from the change at fair value of commodities and b) commodity swaps that hedge fluctuations in cash flows from the volatility in aluminum prices.

4 Other long-term receivables

Other long-term receivables of the Group and the Company are analyzed in the table below:

5 Loan liabilities

The effective weighted average borrowing rate for the group, as at the balance sheet date is 2.41%.

6 Loan liabilities movement

7 Other long-term liabilities

The increase in advances to suppliers is mainly due to advances for Slovenia's project in the Sustainable Engineering Solutions’ Business Unit. The increase in customers is due to non invoiced receivables of Sustainable Engineering Solutions’ Business Unit and International Renewables and Storage Development Business Unit as well as in increased sales of Power & Gas Business Unit which realized at the end of 2021 and will be collected in January 2022.

The movement in the provision for doubtful receivables related to Customers and Other Trade Receivables is analyzed below:

Cash and cash equivalent do not include blocked deposits.

Suppliers and other liabilities Group and the Company are analyzed in the table below

The increase in suplliers is due to purchases of natural gas for Power & Gas Business Unit., as well as in equipment deliveries of Sustainable Engineering Solutions & International Renewables and Storage Developments Business Units, which are realized at the end of 2021 and will be paid in 2022.

The increase in accrued expenses is due to purchases of electricity and gas which will be invoiced in January 2022.

The increase in other short-term liabilities is due to CO₂ licences of Metallurgy and Power & Gas Business Units.

1 Share capital

Mytilineos S.A., following the 27.03.2020 decision of the Extraordinary General Meeting of its shareholders and the relevant decision of the Board of Directors dated 01.06.2020, announced its intention to start implementing the Own Share Buyback Program. The purchases of the own shares will be made through the members of the Athens Stock Exchange, EUROBANK EQUITIES INVESTMENT FIRM S.A., PIRAEUS SECURITIES S.A. and EUROXX SECURITIES S.A. It is reminded that the purpose of the program is to reduce the share capital and / or the disposal of the same shares, which will be acquired, to the staff and / or members of the management of the Company and / or affiliated company, while the maximum number of shares to be acquired is expected to be 14,289,116 (up to 10% of the share capital), with a minimum purchase price of €0.97 per share and a maximum purchase price of €20 per share, and the program will last until 26.03.2022. The final amount that will be allocated for the program and the number of shares that will eventually be purchased, will depend on the current conditions of the company and the market. The share capital of Mytilineos S.A at 31.12.2021 amounts to one hundred thirty-eight millions six hundred four thousand four hundred twenty-six euros and seventeen cents (€ 138.604.426,17), divided into one hundred forty-two millions eight hundred ninety-one thousand one hundred sixty-one (142.891.161) registered shares with a nominal value of € 0,97 each.

The Shares of Mytilineos S.A. are freely traded on the Securities Market of the Athens Exchange.

Until 31/12/2021 7,672,494 Company’s shares have been bought back at an average price of €10.4837 and total cost of €80,436,049.

2 Reserves

Reserves in the financial statements are analysed as follows:

The majority of the above reserves relates to Parent Company and Greek subsidiaries. Under Greek corporate law, corporations are required to transfer a minimum of 5% of their annual net profit as reflected in their statutory books to a legal reserve, until such reserve equals one-third of the outstanding share capital. The above reserve cannot be distributed throughout the life of the company.

Tax free reserves represent non distributed profits that are exempt from income tax based on special provisions of development laws (under the condition that adequate profits exist for their allowance). These reserves mainly relate to investments and are not distributed.

Specially taxed reserves represent interest income and income from disposal of listed in the Stock Exchange and non listed companies and are tax free or tax has been withheld at source. Except for any tax prepayments, these reserves are exempted from taxes, provided they are not distributed to shareholders.

3 Translation reserves

This reserve is used to record the exchange differences arising from the translation of foreign subsidiaries’ financial statements. The balance of this reserve for the Group at 31/12/2021 was €-13,4 million (31/12/2020: €-38,3 million). The Group had a total net loss € 25,0 million which was reported in the statement of comprehensive income.

The above total net loss for 2020 comes mainly (€26,6 million) from change of the operating currency of the subsidiary Power Project during the year 2020. The losses amount for 2021 is € 6,4 mil. The main exchange rates of abroad subsidiaries financial statements conversion were:

4 Reserves for allocation of free shares to directors

As of December 31, 2021, the Group has in place two share-based payment plans, approved by the GMS on 15/06/2021.

The first plan is of three-year maturity and involves free distribution of up to 700,000 treasury shares and will be settled in equity. The terms of the plan, defined by the Board of Directors on 22/12/2021 relate to meeting corporate and personal goals of the executive members of the Board of Directors (excluding the Chairman and CEO) of the Company and/or members of the Executive Committee — the Company’s senior executives. The beneficiaries should retain the aforementioned capacity as at 01/01/2021 while a change of status and/or retirement of a beneficiary does not affect the distribution.

The plan’s stock options and the weighted average exercise prices are for the reporting periods are presented below as follows:

The second first plan is of five-year maturity and involves distribution of up to 2,750,000 treasury shares and will be settled in equity. The Board of Directors of 22/12/2021 identified the beneficiaries as executive members of the Board of Directors of the Company, and/or senior executives of the Company and/or related companies within the meaning of article 32 of Law 4308/2014, as well as persons, rendering services to the Company on a regular basis. Shares are to be distributed to the beneficiaries primarily depending on meeting the Company's financial objectives and will be conducted in installments. In particular, regarding every stage, the return will be defined at the end of every third year based on the corporate return ratios: (a) Overall Return on Share Ration including Total Shareholder Return (TSR) to FTSE/ATHEX High Capitalization Ratio less banks; and (b) Earnings per Share (EPS) as an absolute amount, while the shares will be returned to the beneficiaries in installments from the fourth to the sixth year of every stage. The terms of this plan are to be further specified in terms of objectives and beneficiaries and therefore as at 31/12/2021, the plan has not yet been activated.

The Group’s present value of the liability at year end 2021 is € 9.474 k and accordingly for 2020 is € 10.207k.

The Entity’s present value of the liability at year end 2021 is € 7.673 k and accordingly for 2020 is € 8.597 k.

The assumptions used, are presented in the following table:

Provisions referring to Group and Company are recognized if the following are met: (a) legal or implied liabilities exist as a consequence of past events, (b) there is a possibility of settlement that will require the outflow if economic benefits and (c) the amount of the liability can be measured reliably. More specifically, the Group recognizes provisions for environmental restorations as a result of exploitation of mineral resources processed mainly for the production of Alumina and Aluminum. All provisions are reviewed at each balance-sheet date and are adjusted accordingly so that they reflect the present value of expenses that will be required for the restoration of the environment. Contingent receivables are not recognized in the financial statements but are disclosed if there is a possibility of an inflow of economic benefits.

Environmental Restoration. This provision represents the present value of the estimated costs to reclaim quarry sites and other similar post-closure obligations.

Tax Liabilities. This provision relates to future obligations that may result from tax audits.

Other provisions. Comprise other provisions relating to other risks none of which are individually material to the Group and to contingent liabilities arising from current commitments.

In 2021, the Management re-evaluated the way the Group's expenses are allocated into operations (cost of sales, administrative and distribution expenses) in order to better reflect allocation of expenses into every operation based on the Group’s activities. Therefore, as from 2021, the expenses are allocated into cost of sales and administrative expenses, while the administrative expenses will include mainly expenses related to the operation of the Group’s central services.

In 2021, the Management re-evaluated the way the Group's expenses are allocated into operations (cost of sales, administrative and distribution expenses) in order to better reflect allocation of expenses into every operation based on the Group’s activities. Therefore, as from 2021, the expenses are allocated into cost of sales and administrative expenses, while the administrative expenses will include mainly expenses related to the operation of the Group’s central services.

For 2021, the figure for Administrative expenses includes amount of € 0,12 mil., regarding auditor fees for the provision of services other than statutory audits.

In 2021, the Management re-evaluated the way the Group's expenses are allocated into operations (cost of sales, administrative and distribution expenses) in order to better reflect allocation of expenses into every operation based on the Group’s activities. Therefore, as from 2021, the expenses are allocated into cost of sales and administrative expenses, while the administrative expenses will include mainly expenses related to the operation of the Group’s central services.

The fluctuations of the foreign exchange currency rates in 2021 and 2020 and the respective effect in the financial statements are analysed in detail in the Annual Report of the B.o.D.

Income tax for the Group and Company differs from the theoretical amount that would result using the nominal tax rate prevailing at year end over the accounting profits. The reconciliation of this difference is analysed as follows:

See comments on income tax in Note 37.1.

Basic earnings per share are calculated by the weighted average number of ordinary shares.