PHAROL SGPS S A : informs about 2022 Annual Report - Unofficial Version - Unaudited ESEF Format

PHAROL, SGPS S.A. - 2022

• PHAROL's net income in 2022 was negative at 2.5 million Euros, justified by: 1) recurring operating costs of 2.2 million Euros and 2) accounting for the fair value of treasury financial assets at 310 thousand euros.
• As a result of the 78% drop recorded in Oi's share price and the disposal of a portion of the portfolio in Oi, Pharol held a valued stake at the end of 2022 at 4.0 million euros, equivalent to 2.2% of its capital.
• Pharol's equity ended the year with a value of 69.7 million Euros - a reduction of 22.2 million euros compared to December 2021 - reflecting (1) the devaluation of 19.7 million euros in the holding held in Oi at the end of the year and (2) the negative net result in the amount of 2.5 million Euros.

MESSAGE FROM CEO

Luís Palha da Silva

"Several factors have conditioned the pace of economic recovery in 2022. The war initiated by the Russian invasion of Ukraine, volatility in energy prices, the scarcity of some raw materials and intermediate goods, inflationary tensions and rising interest rates have sparked the spectre of stagflation in this period.

Pharol's participation in Brazil, Oi, in addition to the vicissitudes of the Brazilian economy, also suffered from the advances and setbacks of its Judicial Recovery process, which would conclude only very recently. After this long process started 5 years ago, from the shareholder point of view, there were more setbacks and disappointments than advances, which, of course, did not fail to have repercussions on the evolution of the company's quotation.

In line with the prospects for the evolution of Oi's activity and quotation in the short and medium term, an active management process of the portfolio of shares held in that company has been put in place. During the year, the share was thus reduced from 5.38% to 2.20%, and the average selling price was 0.43 reais, which compared with the value of 0.17 reais, recorded at the end of the year. Meanwhile, the new request for judicial recovery, submitted on March 1, 2023, will be analyzed but it is certain that it will strongly condition Pharol's options in managing its por.

In an environment of strong uncertainties and dimensions in which its activity takes place, one of Pharol's priorities will continue to be the maintenance of the cost reduction trend achieved once again in 2022."

Highlights

PHAROL
(Euro million)	2022	2021
Recurrent EBITDA	(2,2)	(2,4)
Resultado líquido	(2,5)	(2,3)
(Euro million)	2022	2021
Assets	86,9	108,8
Liabilities	17,1	16,8
Equity	69,7	91,9

Contactos

Luís Sousa de Macedo Investor Relations

Tel: [phone] - Fax: [phone]

E-mail: [e-mail]

CONSOLIDATED ANNUAL REPORT

2022

PHAROL, SGPS S.A.

CONSOLIDATED ANNUAL REPORT

2022

01.	MESSAGE FROM THE CHAIRMAN	3
02.	FINANCIAL REVIEW	5
03.	MAIN EVENTS	10
04.	MAIN RISKS AND UNCERTAINTIES	17
05.	QUALIFIED HOLDINGS	19
06.	STRATEGIC PROFILE AND FUTURE OUTLOOK	21
07.	STATEMENT FROM THE BOARD OF DIRECTORS	24
08.	ACTIVITIES OF THE NON-EXECUTIVE DIRECTORS	25
09.	CONSOLIDATED FINANCIAL STATEMENTS	28

"PHAROL", "Group PHAROL", "Group" and "Company" is a reference to the companies that are part of PHAROL, SGPS S.A. or to one of them, depending on the context.

Consolidated Report │ 2022

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01. MESSAGE FROM THE CHAIRMAN

MESSAGE FROM THE CHAIRMAN

The easing of restrictions on economies, businesses and people by the Covid 19 pandemic marked the year 2022. Thus, looking at the basis of comparison with previous years, it was no surprise that some growth figures across the globe had already shown positive values, although some economies showed disappointing indicators in the last quarter.

Several factors have conditioned the pace of economic recovery in this period. The war initiated by the Russian invasion of Ukraine at the beginning of the year has been prolonged with no end in sight, generating, among others, an inflationary movement and high volatility in energy goods. This has contributed to the scarcity of some raw materials and intermediate goods, with consequent production delays in numerous sectors and on a global scale (further aggravated by the Chinese state's "zero tolerance" policy). Inflationary tensions have triggered a continued rise in interest rates, among others, from the Federal Reserve Bank and the ECB, with significant impacts on global consumption and investment.

In Brazil, an economy in which Pharol owns one of its assets, despite some favorable evolution in the price of most of the commodities in which the country is rich, there was a marked political instability, resulting from the presidential election process that Brazil has experienced practically throughout the year.

Pharol's stake in Oi, Brazil, in addition to the economic events, also suffered from the advances and setbacks of its Judicial Recovery process, which would only conclude on December 14, 2022.

After this long process started 5 years ago, from the shareholder point of view, there were more setbacks and disappointments than advances, which, of course, did not fail to have repercussions on the evolution of the company's quotation.

During 2022 there was a mismatches of information and figures relating to the different asset sales

• in particular and more relevant in V.Tal - and surprise in the resubmission of the debt size - Anatel and Globenet, among others - all of which unexpectedly weighed on Oi's solvency ratios. Also, in the operational field, Oi's promised recovery was being halted by the unsuccessful extinction of the losses of the "legacy" businesses. Reflecting the numerous difficulties inherent in a judicial recovery process of this size, which focused management's attention on complying with the plan approved by creditors, sales in current business and new segments disappointed and the cost reduction program ended up not having a substantial significance in the income account and in the cash drain verified in the year. In addition to operational failures, there is also an incomprehensible slowdown in the arbitration procedure relating to changes to the concession contract. As you would expect, the target prices indicated by the analysts have decreased considerably, following, moreover, the very evolution of the market price.

In line with Oi's business and listing prospects in the short and medium term, the Pharol Board of Directors decided to initiate an active management process of the portfolio of shares held in that company. During the year, the share was thus reduced from 5.38% to 2.20%, and the average

Consolidated Report │ 2022

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