NOS SGPS

Annual Report • Nov 26, 2021

onsolidated lanagement port 9M21

9M21 HIGHLIGHTS

3Q21 Highlights	9M20	9M21	9M21 / 9M20
Operating Highlights
Homes Passed	4.796,0	5.078,5	5,9%
% FttH	37,8%	49,6%	11,8pp
Total RGUs	9.871,8	10.147,1	2,8%
Pay TV RGUs	1.642,4	1.643,5	0,1%
Convergent + Integrated Customers	967,6	1.005,8	3,9%
Fixed Convergent + Integrated Customers as % of Fixed Access
Customers	62,0%	63,8%	1,8pp
Mobile RGUs	4.972,0	5.209,9	4,8%
Residential ARPU / Unique Subscriber With Fixed Access (Euros)	43,4	44,4	2,3%
Financial Highlights
Consolidated Revenues	1.013,6	1.044,9	3,1%
Consolidated EBITDA	471,2	477,7	1,4%
Consolidated EBITDA Marqin	46,5%	45,7%	(0,8pp)
Consolidated EBITDA - Consolidated CAPEX Excluding Leasings & Other Contractual Rights	201,6	167,7	(16,8%)
Telco Revenues	995,5	1.029,2	3,4%
Telco EBITDA	449,9	447,6	(0,5%)
Telco EBITDA Marqin	45,2%	43,5%	(1,7pp)
Telco EBITDA - Telco CAPEX Excluding Leasings & Other Contractual Rights	196,6	147,6	(25,0%)

• •
• •
• •
• •

• •

• •

• •

• •
• •
• •

GOVERNING BODIES

Board of Directors
Chairman of the Board of Directors _________________________
Chairman of the Executive Committee ________________________
Members of the Executive Committee _________________________ Members	Daniel Beato Filipa Santos Carvalho Jorge Graça Luis Nascimento Manuel Ramalho Eanes Ana Rita Rodrigues António Domingues António Lobo Xavier Catarina Tavira Cristina Marques João Torres Dolores Joaquim de Oliveira José Carvalho de Freitas Maria Cláudia de Azevedo
Fiscal Board
Chairman of the Fiscal Board _________________________
Members	Paulo Mota Pinto
Alternate
Officials of the General Meeting of Shareholders
Chairman
Secretary
Statutory Auditor
In Office __________________________	S.A., (ROC number 178 and registered at CMVM with the number 9011, represented by Sandra e Sousa Amorim (ROC number 1213);
Alternate __________________________	(ROC n.º 1258)

BUSINESS REVIEW

mobile network infrastructure-sharing agreement was signed in 2020 and the first sites with shared RAN are already operational, promoting a sustainable technological evolution towards 5G.

To exploit the full potential of 5G technology for the consumer market, we have several exclusive partnerships in place with internationally renowned companies, leaders in their field. Among others, we have teamed up with "Blacknut" (http://blacknut.com) for cloud gaming solutions and "MelodyVR" (https://melodyvr.com/) for the transmission of virtual reality concerts.

We continue to push the sale and promotion of equipment that is prepared for 5G, and this now accounts for over 50% of new equipment sales. At the beginning of this year, we were the first to launch a 5G Hotspot in Portugal.

Following our active investment in the mobile network, for the second time running NOS was recognised by Ookla as providing the Best Mobile Coverage in the first six months of 2021. Ookla is a global leader in the analysis and testing of fixed and mobile broadband.

In 9M21 we also exceeded one million customers using VoLTE technology, which gives users better call quality and allows for simultaneous voice and data transmission over the 4G network.

Television

Pay-TV continues to be the main source of information, education, sports and entertainment for consumers. Set-top boxes provided by NOS and other OTT platforms play a pivotal role in providing this content. We have also seen a greater desire to view different content on several different screens, as well as higher expectations for mobility.

In response to this demand, we have included several new apps in our latest version of the UMA set-top box, including "Amazon Prime" and "Netflix" - the most popular OTT video providers. We have also upgraded and redesigned the remote control to give the user direct access to these apps, with the added benefit of being produced from 100% recycled plastic. Up to 9M21 we have sold over 500 thousand of the latest generation of set-top boxes, which guarantee our customers superior image quality, speed of navigation and access to content.

With our continued focus on innovation, the NOS TV app has been updated to include new features and greater customisation of the "My TV" area, with thematic zapping and a revamp of the PC experience. Since its launch in 2016, the NOS TV app has been downloaded over 1.4 million time on iOS and Android, receiving high customer approval ratings in the App Stores (4.6 and 4.2 respectively).

Digitisation, streamlining and sustainability

We are the first operator in Portugal to provide Plug&Play equipment to our customers, allowing for autonomous installation of TV and Internet services. P&P was first available for UMA and Apple TV set-top boxes, as well as some Wi-Fi extender solutions, and through the year we rolled out the same functionality in internet routers. As well as being a more sustainable solution for NOS, reducing the need for call-out technicians, our customers have welcomed the concept for its simplicity and speed of installation.

In response to our more digitally-minded customers, and following an increased demand during the pandemic, we offered our customers a convenient, fast, and secure solution: a 2-hour home delivery service for smartphones and other devices purchased online.

As the younger generation's interest in wellness and healthy nutrition has developed, our mobile service brand for youth, WTF, has partnered up with Prozis, Europe's largest sport nutrition supplier. All WTF subscribers can now enjoy, among other benefits, a 10% discount on purchases from Prozis, once a month.

In recognition of its pioneering spirit, and as the first 100% digital telecommunications brand in Portugal, customers voted "WOO" as the "Product of the Year".

With the aim of both enhancing customer loyalty and contributing to a global purpose, NOS and EDP signed an agreement that allows both companies, in line with their strategic priorities, to offer customers benefits aligned with sustainability. Through this offer, NOS convergent customers can double their mobile data allocation, benefit from 100% green energy, and receive additional (up to 2%) discounts on their electricity bill.

Business

In our business segment we have continued to pursue initiatives with Portuguese companies, from large and state-owned enterprises to SMEs, reinforcing our position as the partner of choice for digital transformation. There has been a high demand for tools and platforms to facilitate the digitalisation process, including migration to Cloud solutions. However, this has also presented organisations with new challenges in terms of cybersecurity and systems stability. As a result, VPN, multi-factor authentication, boundary defences, secure storage and sharing, Cloud-based data recovery, and remote access and surveillance are our most soughtafter solutions.

We continue to drive innovation with our IT service and data solution offerings, focussing primarily on Cloud services and solutions (SaaS) and project consultancy. Smart City solutions that have been set up by NOS in partnership with Portuguese municipalities such as Lagoa, Moita, and Vila Nova de Famalicão are an example of such projects. Residents can report issues directly through a dedicated online platform, and by combining these reports with data collected by sensors and monitoring devices across the city, the relevant municipal services can respond appropriately. Through the same platform the municipality can also control and manage a number of infrastructure and functional aspects of the city. The most recent Smart City project was implemented in Albufeira in June.

NOS also launched "Analytics Pro", an innovative analysis tool aimed at companies and municipalities. The tool tracks dynamics and movement of groups of people and provides analytical data such as population count and demographic data, per location and timeframe. All data is collated and processed by NOS and provides the user with an intuitive dashboard and the tools to manage their businesses and facilities according to population flow, whilst safeguarding citizens' privacy rights.

As an excellent means to facilitate digital transformation, Cloud services are increasingly important to NOS and our customers. NOS teamed up with Portuguese start-up Vawlt to launch "NOS Multicloud Storage". This allows companies of all sizes to access the main Cloud service providers (Microsoft Azure, Google Cloud and Amazon Web Services) through a simple and secure process. The innovative software developed by Vawlt grants user access and file

storage via a unique interface and login, without any specific knowledge of Cloud technology.

Our growth in the Business seqment has been driven by project consulting projects and boosted by a network of compatible and strategic partnerships. NOS has become a Cisco Gold Partner and as such is qualified to sell, install, and support Cisco solutions in Portugal – a clear signal to our business partners of the benefits that can be passed through to their customers. Through the process of recertification for ISO 20000:2018 (Information Technology - Service Management) most of NOS' processes and platforms were upgraded to meet the latest standards, with the benefits extended to all Business Services customers.

In 2021, Deutsche Telecom recognised NOS as a multinational wholesale operator maintaining the highest standards of quality, in terms of stability of supply and delivery of services in Southern Europe. NOS was consequently awarded "Zero Outage Supplier" status by DT.

We have strengthened our network of strategic partnerships through several agreements with key players operating in the telecommunications and IT sector. Through a partnership with the Kaizen Institute, we can provide consulting services and innovative 5G solutions to Portuguese companies, with the aim of improving their efficiencies and competitiveness. This new partnership model is an integral part of our 5G strategy in the B2B segment, and pilot projects are already in place with several other trail-blazing companies.

We have also joined forces with Microsoft to develop improved working processes, based on their technology. Three main areas are targeted: Shared co-creation and innovation (particularly in 5G), a Cloud strategy, and integrated solutions for the B2B market. Through this partnership, NOS has become the first entity in Portugal to be able to provide edge computing capabilities with its three main Cloud partners (AWS, Azure, Google). Microsoft's Azure Stack Edge delivers computer power and intelligence to exactly where it is needed: a company's data centre, a branch office, or a remote location. NOS also joined the Microsoft Partner Alliance in Portugal, which aims to ensure that skills and opportunities are channelled to create diversified environments, prioritise sustainable business decisions, and develop responsible and ethical technologies. Alliance members are ambassadors for Portugal Digital Skills initiatives and the Activar Portugal programmes.

In partnership with Amazon Web Services, we launched the 5G Accelerator programme, a competition to encourage innovation and business opportunities in the 5G sphere, targeted at start-ups. First prize was won by KIT-AR for their solution to continually improve and reduce errors in industrial processes, using augmented reality and artificial intelligence. This project, among others, underpins our reputation at the cutting edge of technological innovation, and as a preferred partner, spearheading digital transformation.

NOS has partnered with LTPlabs and Porto Business School to promote another edition of EUREKATHON. This competition challenges students and professionals from Enqineering, Science, Business Analytics and Data Science to generate innovative solutions for real problems, in line with the UN Sustainable Development Goals (SDGs). Projects designed by the participants will address community development, using critical skills quintessential for a digitised society. The theme of this year's EUREKATHON is "Challenging Data for Sustainable Cities". Participants will analyse available data and provide solutions to optimise urban spaces, in the quest for smarter and more sustainable cities.

As part of our innovation strategy for telecommunications, we signed an agreement with

Lledia.NET to market Electronic Delivery Registration Services (EDRS). Through "Registered SMS" and "Registered SMS Contract" our clients receive legally valid proof of delivery of messages sent to their customers, as well as improved efficiency through cutting costs and administrative tasks. This initiative has put NOS on the list of Trusted Operators at the National Security Office, and as a Delegated Registration Authority, NOS is recognised as a trusted operator for electronic transactions.

Joining forces with Sonae Financial Services, we launched "TPA Pro", an automatic payment terminal system that accepts payments made with any credit or debit card. TPA Pro can also be used to schedule customer visits and to manage loyalty or payment plans and will play a fundamental part in the digital transformation of businesses in the retail sector.

NOS also completed the Advanced Data Center Architecture Specialisation certification, issued by Cisco. This certification demonstrates expertise in Converged Infrastructure, Multicloud Hybrid Computing, Application or Infrastructure as a Service, and Analytics.

Hospital da Luz Lisboa is the first 5G hospital established in Portugal, in partnership with Group Luz Saúde. Using some cutting-edge 5G technological applications such as virtual and augmented reality, sensoring, monitoring and robotics, the hospital represents an important advance in the healthcare and medical research sector. With Benfica, we also inaugurated the first 5G football stadium in Portugal. Offering an increased network capacity and higher speeds, and using virtual and augmented technologies, allows for a much more immersive experience for all stakeholders.

Focusing on 5G, NOS launched a new campaign with the motto "Quem faz leva o mundo atrás", aiming to inspire innovation and change, as we return to daily routines, work and school. During the summer, the first 5G beach in the country was inaugurated in partnership with the Municipality of Almada. At the beginning of the academic year in September, the first 5G school in the country was launched, with full access to digital tools, combined with gamechanging teaching and learning methods. The NOS 5G fund also made its first investment in a technology start-up Reckon.ai, who develop artificial intelligence for cashier-free sales solutions in the retail sector.

For the second consecutive year, NOS was ranked No.1 in the list of the top 100 companies that invest in R&D in Portugal, in recognition of its commitment to accelerating digital transformation in Portugal. In 2020 NOS invested 67 million euros into developing latestgeneration networks and preparing for 5G, as well as a substantial push into areas related to digital transformation and development of Smart Cities.

On the infrastructure front, NOS Madeira Data Centre was inaugurated in 3Q21. Equipped with state-of-the-art technology, the centre will offer improved support for Cloud services and solutions for businesses on the island. The Data Centre provides high-security and more sustainable solutions and supports up-to-date technologies, including the most innovative features of 5G. Duplication of network systems and optimisation of the energy and cooling systems make this centre 28% more efficient than its predecessor.

We continue to roll out our FttH network at a good pace. In the first nine months of the year, 619 thousand new homes were added to the FttH network, bringing our fixed coverage of Next Generation Networks to a total of 5.080 million homes. 2.519 million (49.6%) of these homes have FttH.

In line with our strategy to lead the field in 5G services and coverage, we started our technology upgrade well before the results of the 5G auction were announced, so that we would be prepared to launch 5G services commercially as soon as the frequencies became available. Our mobile network infrastructure-sharing agreement was signed in 2020 and the first sites with shared RAN are already operational, promoting a sustainable technological evolution towards 5G.

Following our active investment in the mobile network, for the second time running NOS was recognised by Ookla as providing the Best Mobile Coverage in the first six months of 2021. Ookla is a global leader in the analysis and testing of fixed and mobile broadband. By investing in 5G technology, we have ensured that we are ready to offer our customers the best and most extensive 5G coverage from the start.

Media and Entertainment

Operating Indicators ('000)	9M20	9M21 - -	9M21 / 9M20
Cinema (1)
Revenue per Ticket (Euros	5,3	5,3	0,7%
Tickets Sold - NOS	2.003.8	1.819,6	(9,2%)
Tickets Sold - Total Portuguese Market (4)	3.297,7	2.866,0	(13,1%)
Screens (units)	208	208	0,0%
(1) Dortuguoco Operations

(1) Portuguese Operations
(2) Source: ICA - Portuguese Institute For Cinema and Audiovisuals

Cinemas had a difficult start to the year with theatres shut until April, and strict lockdown measures in place until the summer. Restrictions were gradually eased and by implementing proactive initiatives to ensure a safe return to theatres we have been able to gradually increase audience capacity and number of screenings. In the first nine months of the year 1,819.6 thousand tickets were sold, only 9.2% fewer than in the same period of 2020. In 3Q21 box office sales bucked the trend with registered sales up by over 160% compared to the previous year and representing almost 70% of sales YTD. The most popular films in 9M21 were "F9 - The Fast Saga", "The Suicide Squad", "Shang-Chi and the Legend of the Ten Rings", "Black Widow" and "Dogtanian and the Three Muskehounds". As distributor of five of the 10 most watched films of the year, our Audiovisual segment also benefitted from the return to cinemas.

A more sustainable future

We continue to make progress in key areas of our ESG strategy and have reinforced our commitment to meeting the SDGs and the Ten Principles of the UN Global Compact. In March NOS became a founding member of "Digital with Purpose", an international movement of over 40 leading technology companies, driven by GeSI. The DWP movement aims to address the SDG agenda through a positive deployment of technology along five "digital impact themes": Climate Action, Circular Economy, Supply Chain, Digital Inclusion and Digital Trust. Each year, members and partners will be evaluated on their performance against the DWP scorecard (in the final stages of development at the time of writing), and subsequently certified.

NOS asserted its commitment to a sustainable future by signing the Declaration of the European Green Digital Coalition (EGDC), which was launched on Digital Day 2021, and which

promotes a green and digital transformation in the EU. As signatories, technology companies from several EU states have committed to reduce their greenhouse gas emissions and become carbon neutral (net-zero) no later than 2040, thus contributing to efforts to limit global warming to 1.5℃ above pre-industrial levels. NOS is the only Portuguese member to sign up to this coalition, which was an initiative promoted by the European Commission and the Portuguese Presidency of the European Council.

We have renewed an important pledge for digital and social inclusion in Portugal by teaming up with one of the main voluntary service organisations in Portugal, the União das Misericórdias Portuguesas (UMP). NOS provides nearly 390 care homes and facilities across the country with a wide range of mobile and fixed connections and digital devices. Via innovative technological solutions, the organisation can now provide support and systems to monitor elderly and vulnerable citizens.

Wishing to address the under-representation of women in STEM-related careers, we recently joined the "Portuguese Women in Tech Association" (PWIT). Through this association we will support and encourage initiatives that promote gender diversity across all professions.

Major progress has been made towards achieving our renewable energy targets. In April 2021, NOS signed a long-term Power Purchase Agreement with EDP which will guarantee 62 GWh per year of renewable energy supply. As part of this contract, a new wind farm will be completed in the coming years, and by 2023 we expect to derive 40% of the energy we consume through certified 'green' electricity sources. This is an important step towards achieving our target of 85% by 2030, which will allow us to support our entire 5G network with energy from certified renewable sources.

On July 1, we announced the issue of three sustainability-linked loans valued at over 150 million euros. These loans link our ESG performance with the cost of financing and as such are an important aspect of our sustainability strategy. One of the loans is linked to our CDP rating (currently A-, "Leadership Level"). The other two loans are linked to our operational targets of reducing our carbon footprint (Scope 1 and 2 emissions) by 50% between 2015 and 2025, and to hitting our objective of deriving 65% of our energy from renewable sources by 2025.

NOS has set a clear target to be carbon neutral by 2022, using only electricity from certified renewable sources for our own direct operations. We approved a roadmap for our own fleet of vehicles, aiming to reduce our Scope 1 emissions by attaining full electrification by 2030. As a voluntary measure, we will offset our unavoidable emissions through a reforestation project (maritime pine and European oak) with a 30-year carbon sequestration objective reflecting our own fleet consumption profile. This project will run in parallel with our other energy efficiency projects, all with the common intent to cut total direct emissions. As an added benefit, the plantation project will also provide a platform for voluntary and social initiatives, aimed at raising our stakeholders' awareness of the importance of environmental action.

We are committed to providing our customers with a wide range of products and services that are produced responsibly, both from an environmental and social point of view, and as such continue to target efficiency and carbon neutrality, by promoting the circular economy in Portugal. A specific initiative is an equipment return scheme which is widely available, not only for existing NOS clients. This scheme allows members of the public to exchange old but functioning smartphones for a voucher of up to 600 euros, which can be used for the purchase of new equipment. The used equipment will be recycled or reused, depending on its value and

CONSOLIDATED FINANCIAL REVIEW

Profit and Loss Statement (Millions of Euros)	9M20	9M21	9M21 / 9M20
Operating Revenues	1.013,6	1.044,9	3,1%
Telco	995,5	1.029,2	3,4%
Consumer Revenues	728,6	743,8	2,1%
Business Revenues	209,6	225,7	7.7%
Wholesale and Others	57,3	59,6	4,1%
Audiovisuals & Cinema (1)	41,8	42,2	0,8%
Others and Eliminations	(23,8)	(26,4)	11,2%
Operating Costs Excluding D&A	(542,4)	(567,2)	4,6%
Direct Costs	(274,9)	(308,5)	12,3%
Non-Direct Costs (2)	(267,5)	(258,6)	(3,3%)
FRITDA (3)	471,2	477,7	1,4%
EBITDA Margin	46,5%	45,7%	(0,8pp)
Telco	449,9	447,6	(0,5%)
EBITDA Margin	45,2%	43,5%	(1,7pp)
Cinema Exhibition and Audiovisuals	21,3	30,1	41,5%
EBITDA Margin	50,9%	71,4%	20,6pp
Depreciation and Amortization	(305,2)	(312,8)	2,5%
(Other Expenses) / Income	(53,9)	(7,4)	(86,3%)
Operating Profit (EBIT) (4)	112,1	157,5	40,5%
Share of profits (losses) of associates and joint ventures	(9,1)	4,7	(151,9%)
(Financial Expenses) / Income	(16,6)	(26,7)	61,5%
Leases Financial Expenses	(4,8)	(19,3)	303,4%
Funding & Other Financial Expenses	(11,8)	(7,4)	(36,8%)
Income Before Income Taxes	86,4	135,5	56,9%
Income Taxes	(14,3)	(15,7)	10,0%
Net Income Before Associates & Non-Controlling Interests	81,3	115,1	41,6%
Income From Continued Operations	72,1	119,8	66,1%
o.w. Attributable to Non-Controlling Interests	0,6	0,2	(68,3%)
Discontinued Operations	6,4	0,0	(100,0%)
Net Income	79,1	120,0	51,7%

Revenues

In 9M21 the consolidated revenues amounted to 1,044.9 million which is a 3.1% increase YOY for the same period. This growth can be attributed to good performance in the telecommunications segment and recovery of the Audiovisuals and Cinema segment in 3Q21. The Telco segment grew by 3.4% to 1,029.2 million euros, and the Consumer segment by 2.1% to 743.8 million euros, and both more than offset losses of revenues in the residential wireless segment (DTH satellite). We expect DTH satellite demand to continue to decline as coverage by Next Generation fixed networks becomes increasingly available across the country, prompting consumers to upgrade to newer options. An increase in revenues for the Business segment to 225.7 million euros (+7.7%) in 9M21 largely relates to a rise in data management and IT contracts. As expected, due to restrictions on international travel, roaming revenues fell YOY, however it should be noted that in 3Q21 the trend reversed, with annual growth of 25%, reflecting easing of these restrictions.

Revenues from the Audiovisual and Cinema segment grew to 42.2 million euros in 9M21 (+0.8% YOY) with 3Q21 revenues showing a strong recovery, up by 71.9% to 19.1 million euros. As noted, revenues from distribution in the Audiovisual segment also benefitted from the public's return to cinemas.

EBITDA and Net Results

EBITDA also followed a positive trend throughout the year, increasing to 477.7 million euros (+1.4%) in 9M21, with a substantial contribution of 171.1 million euros in 3Q21 (+6.6%).

The greatest contributor to the 3Q21 results was the significant recovery of the Audiovisuals and Cinemas EBITDA margin (+134%), resulting in an accumulated increase of 41.5% in 9M21 to 30.1 million euros. The Telco segment EBITDA decreased by 0.5% YOY to 447.6 million euros in 9M21. This was primarily due to higher costs associated with premium sports content in 2021 (compared to 2020, when these channels suspended invoicing during the peak of the pandemic in March-May). In 3Q21 Telco EBITDA reverted to an annual growth rate of 2.4% to 159.2 million euros. Except for programming costs, costs of cinema management, and cost of sales of IT projects and licencing in the Business segment, all other costs evolved in line with expectations for normal operating activity.

Net income increased by 51.7% to 120 million euros in 9M21 compared to last year. This improvement can largely be explained by a difference of around 42 million euros which had been posted in 1Q20, pertaining to non-recurring pandemic-related items (e.g. provisions for bad debt, cumbersome contracts and purchase of PPE). With regard to other costs below EBITDA, of note are the costs of leasing contracts which increased following the sale of NOS Towering at the end of 3Q20. The capital component of these leases is posted under Depreciation and Amortisation.

CAPEX (Millions of Euros) ""	9M20	9M21	9M21 / 9M20
TelcoTechnical CAPEX	148,0	184,6	24,7%
Baseline Telco	102,0	103,2	1,2%
Network Expansion / Substitution and Integration Projects and Others	46,0	81,4	76,9%
Telco Customer Related CAPEX	105,3	115,4	9,7%
Audiovisuals and Cinema Exhibition	16,3	10,0	(38,5%)
Total CAPEX Excluding Leasing Contracts & Other Contractual Rights	269,6	310,1	15,0%
Leasing Contracts & Other Contractual Rights	35,4	25,2	(28,8%)
Total Group CAPEX	305.0	335,3	9,9%

Cash Flow (Millions of Euros)	9M20	9M21	9M21 / 9M20
FRITDA	471,2	477,7	1,4%
Total CAPEX Excluding Leasings & Other Contractual Rights	(269,6)	(310,1)	15,0%
EBITDA - Total CAPEX Excluding Leasings & Other Contractual Rights	201,6	167,7	(16,8%)
% of Revenues	19,9%	16,0%	(3,8pp)
Non-Cash Items Included in EBITDA - CAPEX and Change in Working Capital	(14,7)	(4,4)	(70,3%)
Leasings (Capital & Interest) (1)	(49,3)	(70,6)	43,1%
Operating Cash Flow	137,6	92,7	(32,6%)
Interest Paid	(10,8)	(10,2)	(5,9%)
Income Taxes Paid	(20,7)	(15,2)	(26,2%)
Disposals	374,3	1,5	(99,6%)
Other Cash Movements (2)	(10,2)	(8,3)	(18,5%)
Total Free Cash-Flow Before Dividends, Financial Investments and Own Shares Acquisition	470,2	60,5	(87,1%)
Financial Investments	1,8	0,2	(86,9%)
Acquisition of Own Shares	(3,3)	(2,1)	(38,0%)
Dividends	(142,5)	(142,4)	(0,1%)
Free Cash Flow	326,2	(83,7)	(125,7%)
Debt Variation Through Financial Leasing, Accruals & Deferrals & Others	(4,3)	(2,1)	(51,0%)
Change in Net Financial Debt	(321,9)	85,8	(126,7%)

In 9M21 NOS generated an Operating Cash Flow of 92.7 million euros. This YOY increase can be attributed to a combination of: the increase of 1.4% in EBITDA; the increase in total CAPEX of 40.5 million euros (35.4 of which relate to network expansion); and an increase in lease contract payments driven by the tower sale at the end of 3Q20.

FCF before dividends, financial investments, and acquisition of own shares, amounted to 60.5 million euros in 9M21. The difference in FCF compared to last year (470.2 million euros in 9M20) is due to the allocation of some of the proceeds from the tower sale (374.2 million euros) in 3Q20.

Balance Sheet (Millions of Euros)	9M20	2020	9M21	9M21 / 9M20
Non-current Assets	2.488,9	2.557,5	2.584,1	3,8%
Current Assets	621,5	615,2	518,7	(16,5%)
Total Assets	3.110,4	3.172,6	3.102,8	(0,2%)
Total Shareholders' Equity	944,3	956,2	937,4	(0,7%)
Non-current Liabilities	1.456.9	1.487.8	1.367,9	(6,1%)
Current Liabilities	709,1	728,6	797,5	12,5%
Total Liabilities	2.166,1	2.216,4	2.165,4	(0,0%)
Total Liabilities and Shareholders' Equity	3.110,4	3.172,6	3.102,8	(0,2%)

Consolidated Balance Sheet

Capital Structure

At the end of 9M21, Total Net Debt, including Leasing and Long-term Contracts (as per IFRS16 standards) amounted to 1,431.3 million euros. Net Financial Debt was 887.8 million euros with Cash and Cash Equivalents in the Consolidated Balance Sheet amounting to 43.4 million euros. In addition, NOS held 312.5 million euros in unissued commercial paper programmes.

The ratio of Net Financial Debt / EBITDA after Lease payments (past 4 quarters) now stands at 1.7x. NOS is committed to maintaining a solid and conservative capital structure and as such aims to maintain a financial leverage (Net Financial Debt / EBITDA after Lease payments) ratio of around 2x.

The all-in average Cost of Debt in 9M21 was 1.5%, and that for 3Q21 was 1.3%. The average debt maturity at the end of 9M21 was 2.4 years. Considering loans issued at a fixed rate, as well as hedging activity, as of 30 September 2021, approximately 100% of debt was issued at a fixed rate.

Net Financial Debt (Millions of Euros)	9M20	2020	9M21	9M21 / 9M20
Short Term	97,2	100,8	169,3	74,2%
Medium and Long Term	854,6	854,5	762,0	(10,8%)
Total Debt	951,8	955,3	931,2	(2,2%)
Cash and Short Term Investments	180,3	153,3	43,4	(75,9%)
Net Financial Debt (1)	771,5	802,0	887,8	15,1%
Net Financial Debt / EBITDA after lease payments (last 4 quarters) (4)	1,4x	1,5x	1,7x	n.a.
Leasings and Long Term Contracts	576,4	575,3	543,5	(5,7%)
Net Debt	1.347,9	1.377,4	1.431,3	6,2%
Net Debt / EBITDA	2,2x	2,3x	2,3x	n.a.
Net Financial Gearing (3)	58,8%	59,0%	60,4%	1,6pp

(1) Net Pinancial Debt – Bolfowlings – Leashigs - Cash
(2) EBITDA After Lease Payments = EBITDA - Lease Cash Payments (Capital & Interest)
(3) Net Financial Gearing = Net Deb

CONSOLIDATED FINANCIAL STATEMENTS

	NOTES	30-09-2020	31-12-2020	30-09-2021
ASSETS
NON - CURRENT ASSETS:
Tangible assets	7	968,165	991,613	1,031,337
Investment property		641	637	625
Intangible assets	8	1,002,703	1,041,087	1,043,648
Contract costs	9	160,712	162,123	162,797
Rights of use	10	253,578	260,097	239,329
Investments in jointly controlled companies and associated companies	11	10,742	10,897	18,378
Accounts receivable - other	12	7,744	7,504	6,186
Tax receivable	13	149	149	149
Other financial assets non-current	14	526	579	1,156
Deferred income tax assets	15	83,927	82,782	80,185
Derivative financial instruments	20	-	-	336
TOTAL NON - CURRENT ASSETS		2,488,888	2,557,468	2,584,126
CURRENT ASSETS:
Inventories	16	50,638	43,628	43,060
Accounts receivable - trade	17	258,710	290,652	302,068
Contract assets	18	64,901	61,602	62,921
Accounts receivable - other	12	22,560	28,610	20,919
Tax receivable	13	7,360	2,894	3,315
Prepaid expenses	19	36,577	34,054	42,963
Non-current assets held-for-sale		450	450	-
Derivative financial instruments	20	-	-	40
Cash and cash equivalents	21	180,268	153,285	43,380
TOTAL CURRENT ASSETS		621,465	615,175	518,666
TOTAL ASSETS		3,110,353	3,172,643	3,102,792
SHAREHOLDER'S EQUITY
Share capital	22.1	5,152	5,152	5,152
Capital issued premium	22.2	854,219	854,219	854,219
Own shares	22.3	(13,798)	(14,859)	(12,353)
Legal reserve	22.4	1,030	1,030	1,030
Other reserves and accumulated earnings	22.4	12,091	12,007	(37,200)
Net Income		79,121	92,000	120,021
EQUITY BEFORE NON - CONTROLLING INTERESTS		937,815	949,549	930,869
Non-controlling interests	23	6,467	6,685	6,502
TOTAL EQUITY		944,282	956,234	937,371
LIABILITIES
NON - CURRENT LIABILITIES:
Borrowings	24	1,366,397	1,363,514	1,239,706
Provisions	25	77,992	73,345	78,973
Accounts payable - other	29	1,554	40,050	39,266
Accrued expenses	26	386	505	454
Deferred income	27	4,828	4,729	4,349
Derivative financial instruments	20	610	655	-
Deferred income tax liabilities	15	5,165	5,025	5,149
TOTAL NON - CURRENT LIABILITIES		1,456,932	1,487,823	1,367,897
CURRENT LIABILITIES:
Borrowings	24	161,758	167,126	234,992
Accounts payable - trade	28	242,795	252,607	258,594
Accounts payable - other	29	29,415	47,438	26,470
Tax payable	13	61,110	51,981	50,498
Accrued expenses	26	187,512	175,860	192,303
Deferred income	27	26,098	33,228	34,329
Derivative financial instruments	20	451	346	338
TOTAL CURRENT LIABILITIES		709,139	728,586	797,524
TOTAL LIABILITIES		2,166,071	2,216,409	2,165,421
TOTAL LIABILITIES AND SHAREHOLDER´S EQUITY		3,110,353	3,172,643	3,102,792

CONDENSED CONSOLIDATED STATEMENT OF INCOME BY NATURE FOR THE NINE MONTHS ENDED ON 30

SEPTEMBER 2020 AND 2021

(Amounts stated in thousands of euros)

	NOTES	3º QUARTER 20	9M 20	3º QUARTER 21	9M 21
REVENUES:
Services rendered		320,407	944,369	332,251	959.15
Sales		21,788	57,099	27,892	66,891
Other operating revenues		4,747	12,109	6,322	18,875
	30	346,942	1,013,577	366,465	1,044,917
COSTS, LOSSES AND GAINS:
Wages and salaries	31	21,308	63,455	20,793	61,080
Direct costs	32	87,492	248,696	91,472	274,773
Costs of products sold	33	18,952	49,480	24,538	59,224
Marketing and advertising		4,135	14,459	3,576	11,818
Support services	34	19,464	61,226	19,428	61,120
Supplies and external services	34	22,532	73,329	24,606	70,904
Other operating losses / (gains)		102	388	142	366
Taxes		8,114	24,492	7,210	23,490
Provisions and adjustments	35	4,255	6,858	3,570	4,417
Depreciation, amortisation and impairment losses	7,8,9,10 and 37	103,579	305,245	107,978	312,804
Reestructuring costs	38	3,492	4,490	බිදිහ	6,740
Losses / (gains) on sale of assets, net		(169)	(290)	(29)	(242)
Other losses / (gains) non recurrent net	રૂપ્ર	094	49,660	460	89.
		294,250	901,488	304,702	887,385
INCOME BEFORE LOSSES / (GAINS) PARTICIPATED COMPANIES, FINANCIAL RESULTS AND TAXES		52,693	112,090	61,763	157,532
Net losses / (gains) of affiliated companies	11 and 36	(634)	9,128	(2,415)	(4,741
Financial costs	40	4,059	13,310	8,184	24,946
Net foreign exchange losses / (gains)		252	458	(51	(୧୦୮୮)
Net losses / (gains) on financial assets		(4)	51	(21	C
Net other financial expenses / (income)	40	ರಿಕೆ3	2,733	764	2,385
		4,636	25,680	6,461	21,994
INCOME BEFORE TAXES		48,058	86,411	55,302	135,538
Income taxes	15	3,961	14,269	9,171	15,698
NET CONSOLIDATED INCOME FROM CONTINUING OPERATIONS		44,097	72,142	46,131	119,840
Net consolidated income from discontinued operadtions	46
NET CONSOLIDATED INCOME		44,097	78,549	46,131	119,840
ATTRIBUTABLE TO:
NOS Group Shareholders		44,135	79,121	46,147	120,02
Non-controlling interests	23	(За)	(573)	(17)	(182
EARNINGS PER SHARES
Basic - euros	41	0.09	0.15	0.09	0.23
Diluted - euros	41	0.09	0.15	0.09	0.23
EARNINGS PER SHARES FROM CONTINUING OPERATIONS
Basic - euros	41	0.09	0.14	0.09	0.23
Diluted - euros	41	0.09	0.14	0.09	0.23

As a standard practice, only the annual accounts are audited, therefore the quarterly amounts were not audited autonomously.

The Notes to the Financial Statements form an integral part of the consolidated statement of income by nature for the nine months ended on 30 September 2021.

The Chief Accountant

The Board of Directors

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE NINE MONTHS ENDED ON 30 SEPTEMBER 2020 AND 2021

(Amounts stated in thousands of euros)

	NOTES	3º QUARTER 20	9M 20	3º QUARTER 21	9M 21
NET CONSOLIDATED INCOME		44,097	78,549	46,131	119,840
OTHER INCOME
ITENS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO THE INCOME STATEMENT:
Accounting for equity method	11	(809)	(2,776)	1,111	1,550
Fair value of interest rate swap	20	(117)	(130)	11	30
Deferred income tax - interest rate swap	20	26	29	(2)	(6)
Fair value of equity swaps	20	88	(36)	136	434
Deferred income tax - equity swap	20	(20)	8	(31	(98)
Fair value of exchange rate forward	20		-	101	228
Deferred income tax - exchange rate forward	20			(29)	(୧୧)
Currency translation differences and others		(73)	(320)	80	(34)
INCOME RECOGNISED DIRECTLY IN EQUITY		(905)	(3,225)	1,377	2,038
TOTAL COMPREHENSIVE INCOME		43,192	75,323	47,508	121,878
ATTRIBUTABLE TO:
NOS Group Shareholders		43,231	75,896	47,525	122,060
Non-controlling interests		(39)	(573)	(17)	(182)
		43,192	75,323	47,508	121,878

As a standard practice, only the annual accounts are audited, therefore the quarterly amounts were not audited autonomously.

The Notes to the Financial Statements form an integral part of the consolidated statement of comprehensive income for the nine months ended on 30 September 2021.

The Chief Accountant

The Board of Directors

-

		ATTRIBUTABLE TO NOS GROUP SHAREHOLDERS
	NOTES	SHARE CAPITAL	CAPITAL ISSUED PREMIUM	OWN SHARES DISCOUNTS AND PREMIUMS	LEGAL RESERVE	OTHER RESERVES AND ACCUMULATED EARNINGS	NET INCOME	NON - CONTROLLING INTERESTS	TOTAL
BALANCE AS AT 1 JANUARY 2020		5,152	854,219	(14,655)	1,030	16,041	143,494	7,042	1,012,322
Result appropriation
Transfers to reserves		-	-	-	-	143,494	(143,494)	-	-
Dividends paid		-	-	-	-	(142,516)	-	-	(142,516)
Aquisition of own shares	22.3	-	-	(4,584)	-	-	-	-	(4,584)
Distribution of own shares - share incentive scheme	22.3	-	-	4,931	-	(4,931)	-	-	-
Distribuition of own shares - other remunerations	22.3	-	-	510	-	(276)	-	-	234
Share Plan - costs incurred in the period and others		-	-	-	-	3,504	-	(2)	3,502
Comprehensive Income		-	-	-	-	(3,225)	79,121	(573)	75,323
BALANCE AS AT 30 SEPTEMBER 2020		5,152	854,219	(13,798)	1,030	12,091	79,121	6,467	944,282
BALANCE AS AT 1 JANUARY 2021		5,152	854,219	(14,859)	1,030	12,007	92,000	6,685	956,234
Result appropriation
Transfers to reserves		-	-	-	-	92,000	(92,000)	-	-
Dividends paid		-	-	-	-	(142,376)	-	-	(142,376)
Aquisition of own shares	22.3	-	-	(2,069)	-	-	-	-	(2,069)
Distribution of own shares - share incentive scheme	22.3	-	-	3,976	-	(3,976)	-	-	-
Distribuition of own shares - other remunerations	22.3	-	-	599	-	(139)	-	-	460
Share Plan - costs incurred in the period and others	45	-	-	-	-	3,246	-	-	3,246
Comprehensive Income		-	-	-	-	2,038	120,021	(182)	121,878
BALANCE AS AT 30 SEPTEMBER 2021		5,152	854,219	(12,353)	1,030	(37,200)	120,021	6,502	937,371

	NOTES	9M 20	9M 21
OPERATING ACTIVITIES
Collections from clients		1,234,658	1,210,811
Payments to suppliers		(567,234)	(578,333)
Payments to employees		(80,475)	(84,837)
Receipts / (Payments) relating to income taxes		(20,669)	(15,248)
Other cash receipts / (payments) related with operating activities		(46,417)	(26,098)
CASH FLOW FROM OPERATING ACTIVITIES (1)		519,863	506,295
INVESTING ACTIVITIES
CASH RECEIPTS RESULTING FROM
Financial investments		-	797
Disposal of discontinued operating unit	46	2,103	-
Tangible assets		374,649	1,197
Interest and related income		2,087	2,865
		378,839	4,859
PAYMENTS RESULTING FROM
Financial investments		-	(557)
Tangible assets		(173,449)	(201,037)
Intangible assets and contract costs		(145,103)	(165,041)
		(318,552)	(366,635)
CASH FLOW FROM INVESTING ACTIVITIES (2)		60,287	(361,776)
FINANCING ACTIVITIES
CASH RECEIPTS RESULTING FROM
Borrowings		268,503	127,000
		268,503	127,000
PAYMENTS RESULTING FROM
Borrowings		(414,827)	(147,833)
Lease rentals (principal)		(49,014)	(55,617)
Interest and related expenses		(18,023)	(31,752)
Dividends	22.4	(142,516)	(142,376)
Aquisition of own shares	22.3	(3,338)	(2,069)
		(627,718)	(379,647)
CASH FLOW FROM FINANCING ACTIVITIES (3)		(359,215)	(252,647)
Change in cash and cash equivalents (4)=(1)+(2)+(3)		220,935	(108,128)
Effect of exchange differences		(95)	79
Cash and cash equivalents at the beginning of the year		(41,772)	151,014
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD		179,068	42,965
Cash and cash equivalents	21	180,268	43,380
Bank overdrafts	24	(1,200)	(415)
		179,068	42,965

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 SEPTEMBER 2021

(Amounts stated in thousands of euros, unless otherwise stated)

1. Introductory Note

NOS, SGPS, S.A. ("NOS", "NOS SGPS" or "Company"), formerly named ZON OPTIMUS, SGPS, S.A. ("ZON OPTIMUS") and until 27 August 2013, named ZON Multimédia -Serviços de Telecomunicações e Multimédia, SGPS, S.A. ("ZON"), with Company headquarters registered at Rua Actor António Silva, nº9, Campo Grande, was established by Portugal Telecom, SGPS, S.A. ("Portugal Telecom") on 15 July 1999 for the purpose of implementing its multimedia business strategy.

During the 2007 financial year, Portugal Telecom proceeded with the spin-off of ZON through the attribution of its participation in the company to their shareholders, which become fully independent from Portugal Telecom.

During the 2013 financial year, ZON and Optimus, SGPS, S.A. ("Optimus SGPS") have merged through the incorporation of Optimus SGPS into ZON. Thereafter, the Company adopted the designation of ZON OPTIMUS, SGPS, S.A..

On 20 June 2014, because of the launch of the new brand "NOS" on 16 May 2014, the General Meeting of Shareholders approved the change of the Company's name to NOS, SGPS, S.A..

The businesses operated by NOS and its associated companies, form the "NOS Group" or "Group", which includes cable and satellite television services, voice and Internet access services, video production and sale, advertising on Pay TV channels, cinema exhibition and distribution, the production of channels for Pay TV, management of datacentres and consulting services in IT.

NOS shares are listed on the Euronext Lisbon market. The shareholders' structure of the Group as at 30 September 2021 is shown in Note 22.

The business of NOS Comunicações, S.A. ("NOS SA") and its subsidiaries, NOS Açores, NOS Madeira and NOS wholesale comprehends: a) cable and satellite television distribution; b) the operation of the latest generation mobile communication network, GSM/UMTS/LTE; c) the operation of electronic communications services, including data and multimedia communication services in general; d) IP voice services ("VOIP" - Voice over IP); e) Mobile Virtual Network Operator ("MVNO"), and f) the provision of consultancy and similar services directly or indirectly related to the above mentioned activities and services. The business of these companies is regulated by Law no. 5/2004 (Electronic Communications Law), which establishes the legal regime governing electronic communications networks and services.

The main activity of NOS Audio – Sales and Distribution, S.A., previously designated NOS Lusomundo TV, S.A. and the result of the merger of NOSPUB with NOS Lusomundo TV on December 2020, is the negotiation, acquisition and distribution of content rights and other multimedia products to television and other platforms of distribution, currently

producing films and series channels through the compilation of the acquired contents, which are distributed, among other operators, by NOS SA and its subsidiaries. This company also manages the advertising space on Pay TV channels and in the cinemas of NOS Cinemas.

NOS Audiovisuais and NOS Cinemas, together with their associated companies, operate in the audiovisual sector, which includes video production and sale, cinema exhibition and distribution, and the acquisition/negotiation of Pay TV and VOD (video-on-demand) rights.

NOS Sistemas is a company dedicated to datacentre management and consulting services in IT.

NOS Inovação main activities are conducting and stimulating scientific activities of R&D (it owns all the intellectual property developed within the NOS Group, intending to guarantee the return of the initial investment through the commercialization of patents and concessions regarding commercial operation, as a result of the creation of new products and services), the demonstration, disclosure, technology and training transfers in the services and information management domains as well as fixed and mobile solutions of the latest generation of TV, internet, voice and data solutions.

These notes to the Financial Statements follow the order in which the items are shown in the consolidated financial statements.

The consolidated financial statements for the nine months ended on 30 September 2021 were approved by the Board of Directors and their issue authorised on 3 November 2021.

The Board of Directors believes that these financial statements give a true and fair view of the Group's operations, financial performance, and consolidated cash flows.

2. Accounting policies

The principal accounting policies adopted in the preparation of the financial statements are described below. These policies were consistently applied to all the financial years presented, unless otherwise stated.

2.1. Principles of presentation

The consolidated financial statements were prepared in accordance with IAS 34 Interim Financial Reporting ("IAS 34"). Therefore, these financial statements do not include all the information required by IFRS, so they must be read in conjunction with the consolidated financial statements for the quarter ended on 31 December 2020.

The consolidated financial statements are presented in euros as this is the main currency of the Group's operations and all amounts are presented in thousands of euros, except when referred to the financial statements of subsidiaries located abroad were converted into euros in accordance with the accounting policies described in Note 2.3.21.

The consolidated financial statements were prepared on a going concern basis from the ledgers and accounting records of the companies included in the consolidation (Annex A)), using the historical cost convention, adjusted when necessary for the valuation of financial assets and liabilities (including derivatives) at their fair value (Note 2.3.24).

In preparing the consolidated financial statements in accordance with IFRS, the Board used estimates, assumptions, and critical judgments with impact on the value of assets and liabilities and the recognition of income and costs in each reporting period. Although these estimates were based on the best information available at the date of preparation of the consolidated financial statements, current and future results may differ from these estimates. The areas involving a higher element of judgment and estimates are described in Note 3.

The Board of Directors is convinced that there are no material uncertainties that might question this assumption. An analysis was made that the Group has the necessary resources to continue its operations into the future, for a period of no less than 12 months from the reporting date.

In the preparation and presentation of the consolidated financial statements, the NOS Group declares that it complies explicitly and without reservation with IAS/IFRS reporting standards and related SIC/IFRIC interpretations as approved by the European Union.

Changes in accounting policies and disclosures

The standards and interpretations that became effective in between 1 January 2021 and the date approval of these financial statements are as follows:

• · IFRS 4 (amendment), "Insurance Contracts" (issued on 25 June 2020). This amendment aims to solve concerns raised by the application of IFRS 9, before the new IFRS 17.
• · Update of the interest rate reference (issued on 27 August 2020). This reform complements the one issued on 26 September 2019, and aims to change the standards of financial instruments provided in IFRS 9 Financial Instruments, IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures, IFRS 4 Insurance Contracts and IFRS 16 Leases.
• · · IFRS 16 (amendment), "Leases" (issued in March 2021, to be applied for periods beginning on or after 1 April 2021). This amendment seeks to extend for one year (as of 30 June 2021) the May 2020 amendment that allowed lessees, as a practical expedient, to not treat alterations/concessions related to COVID-19 as a modification to the lease agreement. In the first amendment to IFRS 16 (issued on 28 May 2020), the practical expedient was limited to concessions related to the reduction in lease payments due on or before 30 June 2021.

No material impacts are estimated on the group's financial statements from the application of these standards.

The standards and interpretations with mandatory application in future financial years and already endorsed by the European Union are as follows:

• Improvements to international financial reporting standards 2018-2020 (issued on 14 May 2020, to be applied to annual periods beginning on or after 1 January 2022). These improvements involve the revision of several standards, such as IFRS 3 Business Combinations, IAS 16 Tangible Assets and IAS 37 Provisions.

The following standards, interpretations, amendments and revisions, with mandatory application in future financial years, have not been endorsed by the European Union, until the date of approval of these financial statements:

· IFRS 17 (new), "Insurance Contracts" (effective for periods beginning on or after

1 January 2023). The general objective of IFRS 17 is to provide a more useful and consistent accounting model for insurance contracts between entities that issue them globally.

• · IAS 1 (amendment), "Presentation of financial statements" (issued in January 2020, to be applied in periods beginning on or after 1 January 2023). The change of is standard is intended to clarify the classification of liabilities as current or non-current.
• · IAS 1 (amendment), "Presentation of the financial statements" (issued in February 2021, to be applied in annual periods beginning on or after January 1, 2023). This amendment provides information and examples for entities to make appropriate use of materiality in judgments about accounting policy disclosures. When determining the materiality of the information included in the accounting policy, both quantitative and qualitative aspects should be considered.
• · IAS 8 (amendment), "Accounting Policies, Changes in Accounting Estimates and Errors" (issued in February 2021, to be applied to years beginning on or after January 1, 2023). This change is intended to help entities distinguish between accounting policies and accounting estimates and clarifies that a change in an accounting estimate that results from new information or new developments is not the correction of an error.
• · IAS 12 (amendment), "Income Taxes" (issued in May 2021, to be applied in financial periods beginning on or after 1 April 2023). This amendment establishes that the exemption to the initial recognition of deferred taxes (IAS 12.15 (b) and IAS 12.24) does not apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition of a single transaction.

The Group has been evaluating the impact of these amendments. It will apply this standard once it becomes effective or when earlier application is permitted.

2.2. Bases of Consolidation

Controlled companies

Controlled companies were consolidated by the full consolidation method. Control is deemed to exist when the Group is exposed or has rights, because of their involvement, to a variable return of the entity's activities, and has capacity to affect this return through the power over the entity. Namely, when the Company directly or indirectly holds a majority of the voting rights at a General Meeting of Shareholders or has the power to determine the financial and operating policies. In situations where the Company has, in substance, control of other entities created for a specific purpose, although it does not directly hold equity in them, such entities are consolidated by the full consolidation method. The entities in these situations are listed in Annex A).

The interest of third parties in the equity and net profit of such companies' income presented separately in the consolidated statement of financial position and in the consolidated statement, respectively, under the item "Non-controlling Interests" (Note 23).

The identifiable acquired assets and the liabilities and contingent liabilities assumed in a business combination are measured initially at fair value at the acquisition date, irrespective of the existence of non-controlled interests. The excess of acquisition cost over the fair value of the Group's share of identifiable acquired assets and liabilities is stated in Goodwill. When the acquisition cost is less than the fair value of the identified net assets, the difference is recorded as a gain in the income statement in the period in which the acquisition occurs.

The non-controlling interests are initially recognised as their proportion of the fair value of the identifiable assets and liabilities.

On the acquisition of additional equity shares in companies already controlled by the Group, the difference between the share of capital acquired and the corresponding acquisition value is recognised directly in equity.

When an increase in position in the capital of an associated company results in the acquisition of control, with the latter being included in the consolidated financial statements by the full consolidation method, the share of the fair values assigned to the assets and liabilities, corresponding to the percentages previously held, is stated in the income statement.

The directly attributable transaction costs are recognised immediately in profit or loss.

The results of companies acquired or sold during the year are included in the income statements as from the date of obtaining control or until the date of their disposal, respectively.

Intercompany transactions, balances, unrealised gains on transactions and dividends distributed between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction shows evidence of impairment of the transferred asset.

When necessary, adjustments are made to the financial statements of controlled companies in order to align their accounting policies with those of the Group.

Jointly controlled companies

The classification of investments as jointly controlled companies is determined based on the existence of shareholder agreements, which show and regulate the joint control. Financial investments of jointly controlled companies (Annex C)) are stated by the equity method. Under this method, financial investments are adjusted periodically by an amount corresponding to the share in the net profits of jointly controlled companies, as a contra entry in "Losses / (gains) of affiliated companies" in the income statement before financial results and taxes. Direct changes in the post-acquisition equity of jointly controlled companies are recognised as the value of the shareholding as a contra entry in reserves, in equity.

Additionally, financial investments may also be adjusted for recognition of impairment losses

Any excess of acquisition cost over the fair value of identifiable net assets and liabilities (goodwill) is recorded as part of the financial investment of jointly controlled companies and subject to impairment testing when there are indicators of loss of value. When the acquisition cost is less than the fair value of the identified net assets, the difference is recorded as a gain in the income statement in the period in which the acquisition occurs.

Losses in jointly controlled companies, which exceed the investment made in them, are not recognised, except when the Group has entered into undertakings with that entity.

Dividends received from these companies are recorded as a reduction in the value of the financial investments.

Associated companies

An associated company is a company in which the Group exercises significant influence through participation in decisions about its financial and operating policies, but in which does not have control or joint control.

Any excess of the acquisition cost of a financial investment over the fair value of the identifiable net assets is recorded as goodwill and is added to the value of the financial investment and its recovery is reviewed annually or whenever there are indications of possible loss of value. When the acquisition cost is less than the fair value of the identified net assets, the difference is recorded as a gain in the statement of comprehensive income in the period in which the acquisition occurs.

Financial investments in associated companies (Annex B)) are stated by the equity method. Under this method, financial investments are adjusted periodically by an amount corresponding to the share in the net profits of associated companies, as a contra entry in "Losses / (gains) of affiliated companies" in the income statement. Direct changes in the post-acquisition equity of associated companies are recognised as the value of the shareholding as a contra entry in reserves, in equity. Additionally, financial investments may also be adjusted for recognition of impairment losses.

Losses in associated companies, which exceed the investment made in them, are not recognised, except when the Group has entered into undertakings with that associated company.

Dividends received from these companies are recorded as a reduction in the value of the financial investments.

Holdings in entities without significant influence

Investments made by the Group in entities where it does not have significant influence are initially recorded at cost and subsequently measured at fair value through profit or loss.

These investments are presented under "Other financial assets non-current" in the statement of financial position and changes in fair value are recorded against "Net losses / (gains) of affiliated companies" in the income statement.

Balances and transactions between group companies

Balances and transactions as well as unrealised gains between Group companies, and between them and the parent company, are eliminated in the consolidation.

The part of unrealised gains arising from transactions with associated companies or jointly controlled companies attributable to the Group is eliminated in the consolidation. Unrealised losses are similarly eliminated except when they show evidence of impairment of the transferred asset.

• •
• •
• •

• •

• •

• •
• •
• •

and which are not expected to occur once the crisis has subsided and operations have returned to normal; and b) clearly separable from the Group's current operations. Namely, a) expenses with expected credit losses resulting from the prospect of significant worsening of bad debt, as a result of the economic downturn and increased unemployment, b) losses with contracts that became onerous due to the pandemic, c) charges with PPE and the purchase and more complete and / or more frequent use of cleaning and disinfection products in the facilities, d) temporary premium payments to compensate employees for the performance of their normal tasks at high exposure to coronavirus, among others.

2.3.3. Tangible Assets

Tangible assets are stated at acquisition cost, less accumulated depreciation and impairment losses, when applicable. Acquisition cost includes, in addition to the purchase price of the asset: (i) costs directly attributable to the purchase; and (ii) the estimated costs of decommissioning and removal of the assets and restoration of the site, which in Group applies to the cinema operation business, telecommunication towers and offices (Note 7).

Estimated losses resulting from the replacement of equipment before the end of its useful life due to technological obsolescence are recognised by a deduction, from the corresponding asset as a contra entry in profit and loss. The costs of current maintenance and repairs are recognised as a cost when they are incurred. Significant costs incurred on renovations or improvements to the asset are capitalised and depreciated over the corresponding estimated payback period when it is probable that there will be future economic benefits associated with the asset and when these can be measured reliably.

The gains and losses from the disposal of tangible assets, determined by the difference between the sale value and the net book value, are recognised in the item "Losses/ (gains) on disposal of assets".

Depreciation

Tangible assets are depreciated from the time they are completed or ready to be used. These assets, less their residual value, are depreciated by the straight-line method, in twelfths, from the month in which they become available for use, according to the useful life of the assets defined as their estimated utility.

The depreciation rates used correspond to the following estimated useful lives:

	2020 (YEARS)	2021 (YEARS)
Buildings and other constructions	2 - 50	2 - 50
Technical equipment:
Network Installations and equipment	7 - 40	7 - 40
Terminal equipment	2 - 8	2 - 8
Other technical equipment	1 - 16	1 - 16
Transportation equipment	3 - 4	3 - 4
Administrative equipment	2 - 10	2 - 10
Other tangible assets	4 - 8	4 - 8

2.3.4.

The non-current assets (or discontinued operations) are classified as held for sale if the respective value is realizable through a sale transaction instead of its continued use.

This situation is considered to happen only when: i) the sale is very likely to happen and the asset is immediately available to be sold in its current conditions, ii) the Company made the commitment to sell, and iii) the sale is expected to take place in a period of 12 months. In this case, the non-current assets are measured by the lower amount between accounting value or the respective fair value deducted from the costs of the sale.

The non-current assets held for sale and discontinued operations are measured at the lower of two: i) the accounting value and, ii) the fair value deducted from the costs of the sale. The costs of the sale are the incremental costs directly assigned to the disposal of the asset (or group to be disposed), excluding financial costs and income tax expenses.

From the moment that tangible assets are considered to be "held for sale" the inherent depreciation of those assets ceases, and the assets are determined as non-current asset held for sale.

A discontinued operation unit is a component of and entity that was disposed or is classified as held for sale and:

• a) Represents an important line of business or geographical area separated from the operational units;
• b) It is an integrant part of a single coordinated plan to dispose an important line of business or geographical area separated from the operational units or;
• c) It is a subsidiary acquired exclusively for resale.

Discontinued operations are excluded from the continued operations results and are presented in separate as an amount of net income after taxes from discontinued operations on the financial statement of income by nature.

2.3.5. Intangible Assets

Intangible assets are stated at acquisition cost, less accumulated amortisation and impairment losses, when applicable. Recognised only when they generate future economic benefits for the Group and when they can be measured reliably.

Intangible assets consist mainly of goodwill, telecom and software licenses, content utilisation rights and other contractual rights.

Group companies periodically carry out an impairment assessment of intangible assets in-progress. This impairment assessment is also carried out whenever events or changes in circumstances indicate that the amount at which the asset is recorded may not be recoverable. When such indications exist, the Group calculates the recoverable value of the asset in order to determine the existence and extent of the impairment loss.

Goodwill

Goodwill represents the excess of acquisition cost over the net fair value of the assets, liabilities, and contingent liabilities of a subsidiary, jointly controlled company or associated company at the acquisition date, in accordance with IFRS 3.

Goodwill is recorded as an asset and included in "Intangible assets" (Note 8) in the case

of a controlled company or in the case in which the excess of cost has been originated by a merger, and in "Financial investments in group companies" (Note 11) in the case of a jointly controlled company or an associated company.

Goodwill is not amortised and is subject to impairment tests at least once a year, on a specified date, and whenever there are changes in the test's underlying assumptions at the date of the statement of financial position which may result in a possible loss of value. Any impairment loss is recorded immediately in the income statement in "Impairment losses" and is not liable to subsequent reversal.

For the purposes of impairment tests, goodwill is attributed to the cash-generating units to which it is related (Note 8), which may correspond to the business segments in which the Group operates, or a lower level.

Internally generated intangible assets

Internally generated intangible assets, including expenditure on research, are expensed when they are incurred. Research and development costs are only recognised as assets when the technical capability to complete the intangible asset is demonstrated and when it is available for use or sale.

Industrial property and other rights

Assets classified under this item relate to the rights and licenses acquired under contract by the Group to third parties and used in realising the Group's activities, and include:

• Telecom licenses;
• Software licenses; ●
• Content utilisation rights; .
• Other contractual rights.

The content exploration rights are recorded in the consolidated statement of financial position, as intangible assets, when the following conditions are fulfilled: (i) there is control over the content, (ii) the Company has the right to choose the way to explore the content, and (iii) it is available for exhibition.

The conclusion of contracts relating to sports contents, which are not immediately available, originates rights that are initially classified as contractual commitments.

In the specific case of broadcasting rights of sports competitions, these are recognised as assets when the necessary conditions to organise each sports competition are present, which occurs in the homologation date of the participating teams in the competition that is being held in the sports season to be initiated, by the organizing entity, taking into consideration that it is from that date that the conditions for the recognition of an asset are present, namely, the unequivocal attainment of the exploration rights of the games of the stated season. In this situation, the stated rights are recognised in the income statement in "Depreciation, amortisation, and impairment losses", by the linear method, by twelfths, starting from the beginning of the month in which they are available for use.

Resulting from agreements concluded for the cession of the exclusive rights to exploit sports content, and as it is permitted by IAS 1, since 2017, NOS presents the net assets and liabilities of the values ceded to other operators, considering that this compensation

best reflects the substance of the transactions.

When the recognised intangible assets involve payments in periods above 1 year, the intangible asset corresponds to the present value of those payments.

Amortisation

The useful lives of the intangible assets are classified as finite or indefinite.

Intangible assets with finite useful lives are amortised over their useful lives, with an impairment analysis carried out whenever there are indications that the amount at which the intangible asset is mentioned in the financial statements may not be recovered. The amortisation period and the amortisation method of an intangible asset with a finite useful life are reviewed periodically. Any changes in the expected useful life or in the expected pattern of future consumption of the economic benefits incorporated in the asset, are considered in the modification over the period or method of amortisation and, if verified, are treated as changes in accounting estimates. The amortisation costs of intangible assets with finite lives are recognised in the income statement.

The assets with finite useful life are amortised by the straight-line method, in twelfths, from the beginning of the month in which they become available for use.

The amortisation rates used correspond to the following estimated useful lives:

	2021
(YEARS)	(YEARS)
30 - 33	30 - 33
1 - 8	1 - 8
Period of the contract	Period of the contract
1 to 20	1 to 20
	2020

The intangible assets with indefinite useful lives are not amortised, and impairment assessments are performed annually.

Accordingly, the useful life of an intangible asset that is not being amortised is periodically reviewed to determine whether events and circumstances continue to support an indefinite useful life assessment for that asset. If not, the change in the assessment of the useful life from indefinite to finite is accounted for as a change in an accounting estimate.

An intangible asset is unrecognised in its disposal moment, or when no future economic benefits from its use or disposal are expected. The gain or loss related with an unrecognised intangible asset (determined as the difference between the net income of its disposal, if there is any, and the carrying amount of that same asset) is recognized in the financial statement of income by nature.

2.3.6. Contract Costs

This item corresponds to costs incurred in attracting customers and costs associated with fulfilling a contract that are capitalized whenever they meet all of the following criteria:

• i)
• ii) generate or increase resources that will be used in the future;
• iii)

iv) they are not already covered by the scope of another standard, such as inventories, tangible or intangible assets.

These costs are recognised for the period expected to fulfill the contract (2 to 4 years).

The costs of attracting customers are essentially:

• i) Commissions paid to third parties with the acquisition of new contracts / new customers;
• ii) Commissions paid to third parties for upgrading the services provided;
• iii) Commissions paid to third parties for renewal of loyalty of services and offers to customers; and
• iv) Several commissions with revenue collection.

The costs associated with fulfilling the contracts are essentially:

• i)
• ii) Variable costs, variables, incurred with the activation of services contracted by customers.

2.3.7.

Group companies periodically carry out an impairment assessment of non-current assets. This impairment assessment is also carried out whenever events or changes in circumstances indicate that the amount at which the asset is recorded may not be recoverable. When such indications exist, the Group calculates the recoverable value of the asset to determine the existence and extent of the impairment loss.

The recoverable value is estimated for each asset individually or, if that is not possible, assets are grouped at the lowest levels for which there are identifiable cash flows to the cash-generating unit to which the asset belongs. Each of the Group's businesses is a cashgenerating unit, except for the assets allocated to the cinema exhibition business, which are grouped into regional cash-generating units.

The recoverable amount is calculated as the higher of the net sale price and the current use value. The net sale price is the amount that would be obtained from the sale of the asset in a transaction between independent and knowledgeable entities, less the costs directly attributable to the sale. The current use value is the current value of the estimated future cash flows resulting from continued use of the asset or of the cash-generating unit. When the amount at which the asset is recorded exceeds its recoverable value, it is recognised as an impairment loss.

The reversal of impairment losses recognised in previous years is recorded when there are indications that these losses no longer exist or have decreased. The reversal of impairment losses is recognised in the statement of comprehensive income in the year in which it occurs. However, an impairment loss can only be reversed up to the amount that would be recognised (net of amortisation or depreciation) if no impairment loss had been recorded in previous years.

2.3.8. Financial Assets

Financial assets are recognised in the statement of financial position of the Group on the trade or contract date, which is the date on which the Group undertakes to purchase or sell the asset.

Initially, apart from commercial accounts receivable, financial assets are recognised at fair value plus directly attributable transaction costs, except for assets at fair value through income in which transaction costs are immediately recognised in income. Trade accounts receivable, at the initial time, are recognised at their transaction price, as defined in IFRS 15.

The financial assets are derecognised when: (i) the Group's contractual rights to receive their cash flows expire; (ii) the Group has substantially transferred all the risks and benefits associated with their ownership; or (iii) although it retains part but not substantially all of the risks and benefits associated with their ownership, the Group has transferred control of the assets.

The financial assets and liabilities are offset and shown as a net value when, and only when, the Group has the right to offset the recognised amounts and intends to settle for the net value.

The Group classifies its financial assets into the following categories: financial assets at fair value through profit or loss, financial assets measured at amortised cost, financial assets at fair value through other comprehensive income. Its classification depends on the entity's business model to manage the financial assets and the contractual characteristics in terms of the cash flows of the financial asset.

Financial assets at fair value through profit and loss

This category includes financial derivatives and equity instruments that the Group has not classified as financial assets through other comprehensive income at the time of initial recognition. This category also includes all financial instruments whose contractual cash flows are not exclusively capital and interest.

Financial assets at fair value through results are presented in the financial statements at fair value, the net changes being known in the income statement. This category of assets includes derivative instruments and investments in listed companies for which the Company has not classified them as financial assets at fair value through other comprehensive income. Dividends from investments in listed companies are recognised as income in the income statement when the respective right of receipt is formalized.

Gains and losses resulting from changes in the fair value of assets measured at fair value through profit or loss are recognised in results in the year in which they occur under "Losses / (gains) on financial assets", including the income from interest and dividends.

Financial assets at fair value through other comprehensive income

Financial assets measured at fair value through other comprehensive income are those that are part of a business model whose objective is achieved through the collection of contractual cash flows and the sale of financial assets, being that these contractual cash flows are only capital and interest reimbursement on the capital in debt.

Financial assets measured at amortised cost

Financial assets measured at amortised cost are those that are included in a business model whose purpose is to hold financial assets in order to receive the contractual cashflows, being that these contractual cash flows are only capital reimbursement and interest payments on the capital in debt.

Financial assets measured at amortised cost are subsequently measured using the effective tax rate method and subject to impairment. Income and costs are recognised in the income statement when the asset is derecognised, updated or an impairment is recognised over it. Financial assets measured at the Company's amortised cost include accounts receivable and loans granted to related parties.

Cash and cash equivalents

The amounts included in "Cash and cash equivalents" correspond to the amounts of cash, bank deposits, term deposits and other investments with maturities of less than three months which may be immediately realisable and with a negligible risk of change of value.

For the purposes of the statement of cash flows, "Cash and cash equivalents" also includes bank overdrafts included in the statement of financial position under "Borrowings" (when applicable).

2.3.9. Financial liabilities and equity instruments

Financial liabilities and equity instruments are classified according to their contractual substance irrespective of their legal form. Equity instruments are contracts that show a residual interest in the Group's assets after deducting the liabilities. The equity instruments issued by Group companies are recorded at the amount received, net of the costs incurred in their issue. Financial liabilities are recognised only when extinguished, i.e. when the obligation is settled, cancelled, or extinguished.

In accordance with IFRS 9, financial liabilities are classified as subsequently measured at amortised cost, except for:

• a) Financial liabilities at fair value through profit or loss. These liabilities, including derivatives that are liabilities, should subsequently be measured at fair value;
• b) Financial liabilities that arise when a transfer of a financial asset does not meet the conditions for derecognition or when it is applied the continued involvement approach;
• c) Financial guarantee contracts;
• d) The commitments to grant a loan at a lower interest rate than the market;
• e) The recognised contingent consideration by a buyer in a concentration of business activities to which IFRS 3 applies. Such contingent consideration shall be subsequently measured at fair value, with changes recognised in profit or loss.

Financial liabilities of the Group include borrowings, accounts payable and derivative financial instruments.

2.3.10.

At the date of each financial position statement, the Group analyses and recognises expected losses on its debt securities, loans and accounts receivable. The expected loss results from the difference between all contractual cash flows that are due to an entity in accordance with the contract and all the cash flows that the entity expects to receive, discounted at the original effective interest rate.

The objective of this impairment policy is to recognise expected credit losses over the respective duration of financial instruments that have undergone significant increases in

credit risk since initial recognition, assessed on an individual or collective basis, taking into account all reasonable and sustainable information, including prospects. If, at the reporting date, the credit risk associated with a financial instrument has not increased significantly since the initial recognition, the Group measures the provision for losses relating to that financial instrument by an amount equivalent to the expected credit losses within a period of 12 months.

For receivables and assets resulting from contracts under IFRS 15, the Group adopts the simplified approach when calculating expected credit losses. As a result, the Group does not monitor changes in credit risk, recognising instead impairment losses based on the expected credit loss on each reporting date. The Group established a provisions' matrix where it presents an impairment loss criterion based on the history of credit losses, adjusted by specific prospective factors for the clients and the economic environment.

2.3.11.

Initial and subsequent recognition

The Group uses derivative financial instruments, such as exchange rate forward contracts, interest rate swaps, to cover its exchange rate risks, interest, respectively. Such derivative financial instruments are initially recorded at fair value on the date the derivative is contracted and are subsequently measured at fair value. Derivatives are presented in assets when their fair value is positive and in liabilities when their fair value is negative.

In terms of hedge accounting, hedges are classified as:

• Fair value hedge when the purpose is to hedge the exposure to fair value changes of . a registered asset or liability or an unregistered Groups' commitment;
• · Cash flow hedge when the purpose is to hedge the exposure to cash flow variability arising from a specific risk associated with the whole or a component of a registered asset or liability or an anticipated highly probable occurrence or exchange risk associated with an unregistered Groups' commitment;
• Coverage of a net investment in a foreign operational unit.

NOS Group uses derivative financial instruments with fair value and cash flow hedges.

At the beginning of the hedge relationship, the Group formally designates and documents the hedging relationship for which hedge accounting is intended to apply as well as the management and strategy purpose of such hedge.

The documentation includes the identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all the following effectiveness requirements:

• i) There is an economic relationship' between the hedged item and the hedging instrument;
• ii) The effect of credit risk does not "dominate the value changes" that result from that economic relationship; and

iii) The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group hedges and the quantity of the hedging instrument that the Group actually uses to hedges that quantity of hedged item.

Hedges that meet all the quantifying criteria for hedge accounting are accounted for, as described below:

Fair value hedges

The change in the fair value of a hedging instrument is recognised in the statement of profit or loss. The change in the fair value of the hedged item attributable to the risk hedged is recorded as part of the carrying value of the hedged item and is also recognised in the statement of profit or loss.

For fair value hedges relating to items carried at amortised cost, any adjustment to carrying value is amortised through profit or loss over the remaining term of the hedge using the EIR method. The EIR amortisation may begin as soon as an adjustment exists and no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.

If the hedged item is derecognised, the unamortised fair value is recognised immediately in profit or loss.

When an unrecognised firm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the firm commitment attributable to the hedged risk is recognised as an asset or liability with a corresponding gain or loss recognised in profit or loss.

Cash flow hedges

The effective portion of the gain or loss on the hedging instrument is recognised in OCI in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the statement of profit or loss. The cash flow hedge reserve is adjusted to the lower of the cumulative gain or loss on the hedging instrument and the cumulative change in fair value of the hedged item.

The Group uses forward contracts of: i) currency contracts for its exposure to foreign currency risk in forecast transactions and firm commitments; ii) interest rates to cover the risk of volatility of the interest rates; iii) own shares contracts for its exposure to volatility in own shares to be distributed within the scope of share incentive scheme. The ineffective portion relating to foreign currency contracts is recognised as "Net foreign exchange losses/(gains)", the ineffective portion relating to interest rates is recognised as "Financial costs" and the ineffective portion relating to own shares contracts is recognised as "Wages and salaries".

In the nine months ended on 30 September 2021, the Group did not change the recognition method.

The amounts accumulated in OCI are accounted for, depending on the nature of the underlying hedged transaction. If the hedged transaction subsequently results in the recognition of a non-financial item, the amount accumulated in equity is removed from the separate component of equity and included in the initial cost or other carrying amount of the hedged asset or liability. This is not a reclassification adjustment and will not be recognised in OCI for the period. This also applies where the hedged forecast transaction

of a non-financial asset or non-financial liability subsequently becomes a Group's commitment for which fair value hedge accounting is applied.

For any other cash flow hedges, the amount accumulated in OCI is reclassified to profit or loss as a reclassification adjustment in the same periods during which the hedged cash flows affect profit or loss.

If cash flow hedge accounting is discontinued, the amount that has been accumulated in OCI must remain in accumulated OCI if the hedged future cash flows are still expected to occur. Otherwise, the amount will be immediately reclassified to profit or loss as a reclassification adjustment. After discontinuation, once the hedged cash flow occurs, any amount remaining in accumulated OCI must be accounted for depending on the nature of the underlying transaction as described above.

2.3.12. Inventories

Inventories, which mainly include mobile phones, customer terminal equipment, DVDs, and content broadcasting rights, are valued at the lower of their cost or net realisable value.

The acquisition cost includes the invoice price, freight, and insurance costs, using the weighted average cost as the method of costing goods sold.

Inventories are adjusted for technological obsolescence, as well as for the difference between the purchase cost and the net realisable value, whichever is the lower, and this reduction is recognised directly in the income statement.

The net realisable value corresponds to the normal sale price less restocking costs and selling costs.

The differences between the cost and the corresponding net realisable value of inventories, when this is less than the cost, are recorded as operating costs in "Cost of goods sold".

Inventories in transit, since they are not available for consumption or sale, are separated out from other inventories and are valued at their specific acquisition cost.

The signing of contracts related with sports content originates rights that are initially classified as contractual commitments.

The content broadcasting rights are recorded in the consolidated statement of financial position, as Inventories, in the event of the nonexistence of full right over the way of exploration of the asset, by the respective value of cost or net realisable value, whenever it is lower, when programmatic content has been received and is available for exhibition or use, according to contractual conditions, without any production or change, given that the necessary conditions for the organization of each sports competition are present, which occurs in the homologation date of the participating teams in the competition that is being held in the sports season to be initiated, by the organizing entity. The stated rights are recognised in the income statement in "Direct costs: Exhibition costs", on a systematic basis given the pattern of economic benefits obtained through their commercial exploration. No balances of content rights are registered in the Inventories caption.

Due to the agreement between the three national operators of reciprocal availability, for several sports seasons "collaborative arrangement", of sports content (national and

international) owned by them, (Note 42), NOS considered the recognition of the costs, excluding those divided by the remaining operators, on a systematic basis, given the pattern of economic benefits obtained through their commercial exploration.

2.3.13. Subsidies

Subsidies are recognised at their fair value when there is a reasonable assurance that they will be received and Group companies will meet the requirements for their award.

Operating subsidies, mainly for employee training, are recognised in the statement of comprehensive income by deduction from the corresponding costs incurred.

Investment subsidies are recognised in the statement of financial position as deferred income.

If the subsidy is considered as deferred income, it is recognised as income on a systematic and rational basis during the useful life of the asset.

2.3.14. Provisions and contingent liabilities

Provisions are recognised when: (i) there is a present obligation arising from past events and it is likely that in settling that obligation, the expenditure of internal resources will be necessary; and (ii) the amount or value of such obligation can be reasonably estimated. When one of the above conditions is not met, the Group discloses the events as a contingent liability unless the likelihood of an outflow of funds resulting from this contingency is remote, in which case they are not disclosed.

Provisions for legal procedures taking place against the Group are made in accordance with the risk assessments carried out by the Group and by their legal advisers, based on success rates.

Provisions for restructuring are only recognised when the Group has a detailed, formal plan, which identify the main features of the restructuring programme, and after these facts have been reported to the entities involved.

Provisions for dismantling costs, removal of assets and restoration of the site are recognised when the assets are installed, in line with the best estimates available at that date. The amount of the provisioned liability reflects of the passage of time and the corresponding financial indexing is recognised in results as a financial cost.

Obligations that result from onerous contracts are registered and measured as provisions. There is an onerous contract when the Company is an integral part of a contract, which entail costs exceed the economic future economic benefits.

Provisions for potential future operating losses are not covered.

Contingent liabilities are not recognised in the financial statements, unless the exception provided under IFRS 3 business combination, and are disclosed whenever there is a good chance to shed resources including economic benefits. Contingent assets are not recognised in the financial statements, being disclosed when there is a likelihood of a future influx of financial resources.

Provisions are reviewed and brought up to date at the date of the statement of financial position to reflect the best estimate at that time of the obligation concerned.

2.3.15. Rights of use and Leases

A lease is defined as a contract, or part of a contract, that transfers the right to use a good (the underlying asset) for a period in exchange for a value.

At the beginning of each contract, it is evaluated and identified if it is or contains a lease. This assessment involves an exercise of judgement as to whether each contract depends on a specific asset if NOS obtains substantially all the economic benefits from the use of that asset and whether NOS has the right to control the use of the asset.

All contracts that constitute a lease are accounted for based on the on-balance model in a similar way with the treatment that IAS 17 establishes for financial leases.

At the commencement date of the lease, NOS recognises the liability related to lease payments (lease liability) and the asset representing the right to use the underlying asset during the lease period (the right of use or "ROU").

The cost of interest on the lease liability and the depreciation of the ROU are recognised separately.

Lease liability is remeasured at the occurrence of certain events (such as a change in the lease period, a change in future payments that result from a change in the reference rate or rate used to determine such payments). This remeasurement of the lease liability is recognised as an adjustment in the ROU.

The estimated costs of dismantling, removal of assets and restoration of the site related with leases are recognised in tangible assets with works carried out (Note 2.3.3).

2.3.15.1 Rights of use of assets

The Group recognises the right to use the assets at the start date of the lease (that is, the date on which the underlying asset is available for use).

The right to use the assets is recorded at acquisition cost, deducted from accumulated depreciation and impairment losses and adjusted for any new measurement of lease liabilities. The cost of the ROU of the assets includes the recognised amount of the lease liability, any direct costs incurred initially and payments already made prior to the initial rental date, less any incentives received.

Unless it is reasonably certain that the Group obtains ownership of the leased asset at the end of the lease term, the recognised right of use of the assets is depreciated on a straight-line basis over the shorter of its estimated useful life and the term of the lease.

Rights of use are subject to impairment.

The rights of used of assets are depreciated using the straight-line method by the shortest period between length of the contract and its expected useful life.

If at the end of the leasing contract the asset is transferred to the company, or if the cost reflects the possibility of exercising the call option, the depreciation is calculated according to the estimated useful life of the asset.

2.3.15.2 Liabilities with leases

At the start date of the lease, the Group recognises the liabilities measured at the present value of the future payments to be made until the end of the lease.

Lease payments include fixed payments (including fixed payments on the substance),

deducted of any incentives to be received, variable payments, dependent on an index or rate, and expected amounts to be paid under residual value guarantees. The lease payments also include the exercise price of a call option if it is reasonably certain that the Group will exercise the option, and penalties for termination of the lease if it is reasonably certain that the Group will terminate the lease.

Variable payments that do not depend on an index or a rate are recognised as an expense in the period in which the event giving rise to them occurs.

To calculate the present value of the lease payments, the Group uses the incremental loan rate at the start date of the lease if the implied interest rate is not readily determinable.

After the start date of the lease, the value of the lease liability is increased to reflect the increase in interest and reduces by the payments made. In addition, the book value of the lease liability is remeasured if there is a change, such as a change in the lease term, fixed payments or the purchase decision of the underlying asset.

2.3.16 Income Tax

NOS is covered by the special tax regime for groups of companies, which covers all the companies in which it directly or indirectly owns at least 75% of the share capital and which simultaneously are resident in Portugal and subject to Corporate Income Tax (IRC).

The remaining subsidiaries not covered by the special tax regime for groups of companies are taxed individually based on their respective taxable incomes and the applicable tax rates.

Income tax is stated in accordance with the IAS 12 criteria. In calculating the cost relating to income tax for the period, in addition to current tax, allowance is also made for the effect of deferred tax calculated in accordance with the liability method, taking into account the temporary differences resulting from the difference between the tax basis of assets and liabilities and their values as stated in the consolidated financial statements, and the tax losses carried forward at the date of the statement of financial position. The deferred income tax assets and liabilities were calculated based on the tax legislation currently in force or of legislation already published for future application.

Deferred income tax assets are recognised for all the deductible temporary differences until it is likely that a taxable profit is obtained to which the deductible temporary difference may be used, unless the deferred income tax asset results from the initial recognition of an asset or liability in a transaction which:

• a) Is not a concentration of business activities;
• b) At the moment of the transaction, it does not affect neither the accounting profit nor the taxable profit (fiscal loss);
• c) With respect to deductible temporary differences arising from investments in subsidiaries, branches and associates and interests in joint arrangements, deferred income tax assets are recognised only to the extent that the temporary difference will revert in the foreseeable future and taxable profit against which the temporary difference can be used will be available.

As stipulated in the above standard, deferred income tax assets are recognised only when there is reasonable assurance that these may be used to reduce future taxable profit, or

when there are deferred income tax liabilities whose reversal is expected to occur in the same period in which the deferred income tax assets are reversed. At the end of each period an assessment is made of deferred income tax assets, and these are adjusted in line with the likelihood of their future use.

The amount of tax to be included, either in current tax or in deferred tax resulting from transactions or events recognised in equity accounts, is recorded directly under those items and does not affect the results for the period.

In a business combination, the deferred tax benefits acquired are recognised as follows:

• a) The deferred tax benefits acquired recognised in the measurement period of one year after the date of merger and that result from new information about facts and circumstances that existed at the date of acquisition are recorded against the goodwill-carrying amount related to the acquisition. If the goodwill-carrying amount is null, any remaining deferred tax benefits are recognised in the income statement.
• b) All the other acquired deferred tax benefits performed are recognised in the income statement (when applicable, directly in shareholders' equity).

Payment based in shares 2.3.17

The benefits granted to employees under share purchase or share option incentive plans are recorded in accordance with the requirements of IFRS 2 - Share-based payments.

In accordance with IFRS 2, since it is not possible to reliably estimate the fair value of the services received from employees, their value is measured by reference to the fair value of equity instruments in accordance with their share price at the grant date.

The cost is recognised, linearly over the period in which the service is provided by employees, under the caption "Wages and salaries" in the income statement, with the corresponding increase in "Other reserves" in equity.

The accumulated cost recognised at the date of each statement of financial position up to the vesting reflects the best estimate of the number of own shares that will be vested, weighted by the tire elapse between the grant and the vesting. The impact on the income statement each year corresponds to the accumulated cost valuation between the beginning and the end of the year.

In turn, benefits granted based on shares but paid in cash lead to the recognition of a liability valued at fair value at the date of the statement of financial position.

2.3.18 Equity

Legal reserve

Portuguese commercial legislation requires that at least 5% of annual net profit must be appropriated to a legal reserve until it represents at least 20% of the share capital. This reserve is not distributable, except in case of liquidation, but can be used to absorb losses, after having exhausted all other reserves and to increase share capital.

Share premium reserves

Issue of shares corresponds to premiums from the issuance or capital increases. According to Portuguese law, share premiums follow the treatment given to the "Legal

reserve", that is, the values are not distributable, except in case of liquidation, but can be used to absorb losses after having exhausted all other reserves and to increase share capital.

Reserves for plans of medium term incentive

According to IFRS 2 - "Share-based payments", the responsibility with the medium-term incentive plans settled by delivery of own shares is recorded as credit under "Reservations for mid-term incentive plans" and such reserve is not likely to be distributed or used to absorb losses.

Hedging reserves

Hedging reserve reflects the changes in fair value of derivative financial instruments as cash flow hedges that are considered effective, and they are not likely to be distributed or be used to absorb losses.

Own shares reserves

The "Own shares reserves" reflect the value of the shares acquired and follows the same legal regime as the legal reserve. Under Portuguese law, the amount of distributable reserves is determined according to the individual financial statements of the company prepared in accordance with IFRS. In addition, the increases resulting from the application of fair value through equity components, including its application through the net profit can only be distributed when the elements that originated them are sold, exercised liquidated or when the end their use, in the case of tangible assets or intangible assets.

Own shares

The own shares are recorded at acquisition cost as a deduction from equity. Gains or losses on the sale of own shares are recorded under "Other reserves".

Other reserves and Retained results

This item includes the results available for distribution to shareholders and earnings per fair value in financial instruments increases, financial investments and investment properties, which, in accordance with paragraph 2 of article 32 of the CSC, will only be available for distribution when the elements or rights that originated them are sold, exercised, terminated, or settled.

Dividends

The company recognizes the liability, as well as its impact over the equity, associated with the responsibility to distribute dividends when it is approved by the shareholders

2.3.19 Revenue

The main types of revenue of NOS subsidiaries are as follows:

i) Revenues of Communications Services:

Cable television, fixed broadband and fixed voice: The revenues from services provided using the fibre optic cable network result from: (a) basic channel subscription packages that can be sold in a bundle with fixed broadband/fixed voice services; (b) premium channel subscription packages and S-VOD; (c) terminal equipment rental; (d)

consumption of content (VOD); (e) traffic and voice termination; (f) service activation; (g) sale of equipment; and (h) other additional services (ex: firewall, antivirus).

Satellite television: Revenues from the satellite television service mainly result from: (a) basic and premium channel subscription packages; (b) equipment rental; (c) consumption of content (VOD); (d) service activation; and (e) sale of equipment.

Mobile broadband and voice services: Revenues from mobile broadband Internet access services and mobile voice services result mainly from monthly subscriptions and/or usage of the Internet and voice service, as well as the traffic associated with the type chosen by the client.

• ii) Advertising revenue: Advertising revenues mainly derive from the attraction of advertising for Pay TV channels to which the Group has publicity rights and in cinemas. These revenues are recognised from when they are received, taken off any discounts given.
• iii) Film showings and distribution revenue pertains to the distribution of films to film exhibitors not distributed by the Group, that are included in the film showings, whilst income from film showings mostly derive from cinema ticket sales and the product sales in the bars; the film showings revenue includes the revenue from ticket sales and bar sales respectively.
• iv) Revenue from distributing channel content: Revenue from distribution essentially includes the sale of DVDs, the sale of content and the distribution of television channels subscriptions to third parties and count from the time at which they are sold, shown, and made available for distribution to telecommunications operators, respectively. The television channels distribution by subscription to third parties consists in the transmission and retransmission of information, including, namely, the distribution of television emissions and radio broadcasting, owned and third partied owned, codified or not, as well as the addressed nature rendered services and data transmission. NOS is leading these activities since it: controls the channel exhibition, in its package of products disposes the power of pricing, the retribution corresponds to the service price and not to a mere commission and it is exposed to the credit risk of its customers.
• v) Consultancy and datacentre management: information systems consultancy and datacentre management are the major services rendered by NOS Sistemas.
• vi) Insurance brokerage commissions: income from insurance sales commissions is obtained by NOS Mediação de Seguros.

The Group's revenue is based on the five-step model established by IFRS 15:

• 1) Identification of the contract with the customer;
• 2) Identification of performance obligations;
• 3) Determining the price of the transaction;
• 4) Allocation of the price of the transaction to the performance obligations; and
• 5) Recognition of revenue.

Thus, at the beginning of each contract, the NOS Group evaluates the promised goods or services and identifies, as a performance obligation, every promise of transfer to the customer of any distinct good or service (or package of goods or services). These promises in customer contracts may be express or implied, provided such promises

create a valid expectation in the client that the entity will transfer a good or service to the customer, based on the entity's published policies, specific statements or usual business practices.

The NOS Group has internally defined that a performance obligation corresponds to the promise of delivery of a good or service that can be used in an isolated/separated way by the customer and on which there is a clear perception of this good or service by the customer among the available in each contract.

The main performance obligations are summarized as Sales of Mobile Phones, Telephones, Hotspots, DVD's, Movie Tickets and Other Equipment and the Services Rendered of Mobile Internet Services, Fixed Internet, Mobile Phone, Landline Phone, Television, Consulting, Cloud/ IT Services, distribution of audio-visual rights among others

The provision of Set-top-boxes, routers, modems and other terminal equipment at the customers' home and respective installation and activation services were considered by the group as not corresponding to a performance obligation, since they are necessary actions to fulfil the promised performance obligation.

In determining and allocating the transaction price of each performance obligation, NOS used stand-alone prices of the promised products and services at the time of entering into the agreement with the customer to distribute the amount expected to be received under the contract.

The recognition of revenue occurs at the time of performance of each performance obligation.

Revenue from selling equipment is included when the buyer takes on the risks and advantages of taking possession of goods and the value of the benefits are reasonably quantified.

Revenue from telecom services subscriptions (TV, internet, mobile and fixed voice services bundle subscription, individually or as a bundle) is recognised linearly over the subscription period.

Revenue from equipment rental is recognised linearly over the rental agreement, except in the case of instalment sales, which are accounted as credit sales.

The Group attributes to its customers loyalty points in each call or recharge, that might be exchanged, over a limited period, for discounts in equipment purchase.

In each reporting period, NOS recognises the current liability with discounts to be awarded in the future. This responsibility is calculated based on the amount of points awarded and not yet used, discounted from the estimate of points that will not be used (based on the history of use) and valued based on the offer available at each time for the use of points (specific catalog).

The recognition of liability configures a deferred income (until the date on which the points are definitively converted into benefits), which is recognised at the time of the use of the discount, as a revenue accrual.

Revenue related with traffic, roaming, data usage, audiovisual content, and others is recognised when the service is rendered. The Group also offers various personalised solutions, particularly to its corporate customers in telecom management, access, voice, and data transmission services. These personalised solutions are also recognised when

the service is rendered.

Unless demanded or allowed by IFRS, the compensation of revenues and costs is not performed, namely, when it reflects the nature of the transaction or other event.

The compensation of revenues and costs is performed in the following situations:

• (i) When the gross inflows from economic benefits do not result in equity increases to the Group, i.e., the amount charged to the customer is equal to the amount delivered to the partner. This situation is applicable to the revenue obtained by the invoicing special services operators, in these cases the amounts charged on account of the capital are not revenue; and,
• (ii) When the counterpart is not a "customer" but a partner who shares the risks and benefits of developing a product or services in order for it to be commercialised. Thus, a counterpart of a contract will not be a customer if, for instance, the counterpart has hired from NOS to participate in an activity or process in which the parties in the contract share the risks and benefits instead of obtaining the Group's ordinary activities result. These cases are designated collaborative arrangements. This situation is applicable to revenues from operators affected by the reciprocal availability agreement regarding broadcasting rights of sports content.

Discounts granted to customers related with loyalty programmes are allocated to the entire retention contract to which the customer is committed to. Therefore, the discount is recognised as the goods and services made available to the customer.

Amounts that have not been invoiced for are included based on estimates. The differences between the estimated amounts and the actual amounts, which are normally immaterial, are recorded in the next financial year.

The revenue from penalties is recognised in the "Other income" item upon receival.

Interest revenue is recognised using the effective interest method, only when they generate future economic benefits for the Group and when they can be measured reliably.

2.3.20 Accruals

Group's revenues and costs are recognised in accordance with the accrual's principle, under which they are recognised as they are generated or incurred, regardless of when they are received or paid.

The costs and revenues related to the current period and whose expenses and income will only occur in future periods are registered under "Accounts receivable – trade", "Accounts receivable - other", "Prepaid expenses", "Accrued expenses" and "Deferred income", as well as the expenses and income that have already occurred that relate to future periods, which will be recognised in each of those periods, for the corresponding amount.

The costs related to the current period and whose expenses will only occur in that future periods are registered under "Accrued expenses" when it is possible to estimate with certainty the related amount, as well as the timing of the expense's materialization. If uncertainty exists related to any of these aspects, the value is classified as Provisions (Note 2.3.14).

2.3.21

Transactions in foreign currencies are converted into the functional currency at the exchange rate on the transactions dates. On each accounting date, outstanding balances (monetary items) are updated by applying the exchange rate prevailing on that date. The exchange rate differences in this update are recognised in the income statement for the year in which they were calculated in the item "Losses / (gains) on exchange variations". Exchange rate variations generated on monetary items, which constitute enlargement of the investment denominated in the functional currency of the Group or of the subsidiary in question, are recognised in equity. Exchange rate differences on non-monetary items are classified in "Other reserves" in equity.

The financial statements of subsidiaries denominated in foreign currencies are converted at the following exchange rates:

• The exchange rate obtaining on the date of the statement of financial position for the conversion of assets and liabilities;
• · The average exchange rate in the period for the conversion of items in the income statement, apart from cases of affiliated companies that are in a hyperinflationary economy;
• The average exchange rate in the period, for the conversion of cash flows (in cases where the exchange rate approximates to the real rate, and for the remaining cash flows the rate of exchange at the date of the operations is used), apart from cases of affiliated companies that are in a hyperinflationary economy;
• · The historical exchange rate for the conversion of equity accounts.

Exchange differences arising from the conversion into euros of the financial statements of subsidiaries denominated in foreign currencies are included in equity under "Other reserves".

In the last quarter of 2017, the Angolan economy was considered a hyperinflationary economy according to IAS 29 - Financial Reporting in Hyperinflationary Economies.

This standard requires that the financial statements prepared in the currency of a hyperinflationary must be expressed in terms of the current measurement unit at the financial statements' preparation date.

In summary, the general aspects that must be considered for the restatement of the individual financial statements are the following ones:

• The monetary assets and liabilities are not amended because they are already updated to the current unit at the financial statements date;

• The non-monetary assets and liabilities (that are still not expressed in terms of the current unit at the financial statements) are restated by the application of an index;

• The effect of the inflation on the net monetary position of the subsidiaries companies is reflected in the income statement as a loss in the net monetary position.

Additionally, according to IAS 21, the restatement of the consolidated financial statements is prohibited when the parent company does not operate in a hyperinflationary economy.

	Basis 100	CPI	Converted CPI (Basis 100 Year 2010)
dec/10	Year 2010	100.0	100.0
dec/11	Year 2010	111.4	111.4
dec/12	Year 2011	109.0	121.4
dec/13	Year 2014	93.0	130.8
dec/14	Year 2014	100.0	140.5
dec/15	Year 2014	114.3	160.6
dec/16	Year 2014	162.2	227.9
dec/17	Year 2014	204.8	287.8
dec/18	Year 2014	241.1	338.8
sept/19	Year 2014	270.2	379.7

	31-12-2020	30-09-2021
Angolan Kwanza	797.1291	694.7400
British Pound	0.8990	0.8605
Mozambican Metical	91.0500	73.1800
Canadian Dollar	1.5633	1.4750
Swiss Franc	1.0802	1.0830
Real	6.3735	6.2631

US Dollar 1.2271 1.1579

	9M 20	9M 21
Angolan Kwanza	626.8895	758.4909
Mozambican Metical	77.0656	77.6960

acquisition cost of that asset. Costs from capitalized borrowings are determined having in consideration the amount of borrowing costs obtained that can be capitalized, according to the application of a capitalization rate over the expenses associated with that asset. The capitalization rate (aligned with NOS' average financing rate) as well as with the costs to be capitalized are determined monthly, taking into consideration the monthly balance of eligible borrowings and the monthly amount of the asset in progress that qualifies.

2.3.23 Investment property

Investment property mainly includes buildings held to generate rents rather than for use in the production or supply of goods or services, or for administrative purposes, or for sale in the ordinary course of business. These are measured initially at cost.

Subsequently, the Group uses the cost model for the valuation of investment property since use of the fair value model would not result in material differences.

An investment property is eliminated from the statement of financial position on disposal or when the investment property is taken permanently out of use and no financial benefit is expected from its disposal.

2374 Fair value measurement

The Group measures part of the financial assets, such as financial assets available for sale, and some of its non-financial assets, at fair value on the date of the financial statements.

The fair value measurement assumes that the asset or liability is exchanged in an orderly transaction among market participants to sell the asset or transfer the liability at the measurement date under current market conditions. The fair value measurement is based on the assumption that the transaction to sell the asset or transfer the liability may occur:

• On the main market of the assets and liabilities, or

• In the absence of a primary market, it is assumed that the transaction occurs in the most advantageous market. This is what maximises the amount that would be received for selling asset or minimises the amount that would be paid to transfer the liability, after considering transaction costs and transport costs.

Since different entities and businesses within a single entity can have access to different markets, the main or most advantageous market for the same asset or liability can vary from one entity to another, or even between businesses within the same entity, but it is assumed that they are accessible to the Group.

The fair value measurement uses assumptions that market participant's use in defining price of the asset or liability, assuming that market participants would use the asset to maximise its value.

The Group uses valuation techniques appropriate to the circumstances whenever there is information to measure the fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities measured at fair value or of which disclosure is mandatory, are rated on a fair value hierarchy, which ranks data in three levels to be used in the measurement at fair value, and detailed below:

Level 1 - Listed and unadjusted market prices, in active markets for identical assets or

liabilities that the entity can access at the measurement date;

Level 2 - valuation techniques using inputs that aren't quoted, but which are directly or indirectly observable;

Level 3 - valuation techniques using inputs not based on observable market data, based on unobservable inputs.

The fair value measurement is classified in the same fair value hierarchy level at the lowest level of input, which is significant to the measurement as a whole.

2.3.25

Financial assets and liabilities are offset and presented at the net amount when, and only when, the Group has the right to offset the recognised amounts and intends to settle for the net amount.

Employee benefits 2.3.26

Personnel expenses are recognised when the service is rendered by employees independently of their date of payment. Here are some specificities:

• a) Termination of employment. The benefits for termination of employment are due for payment when there is cessation of employment before the normal retirement date or when an employee voluntarily accepts to leave in exchange of these benefits. The Group recognises these benefits when it can be shown to be committed to a termination of current employees according to a detailed formal plan for termination and there is no realistic possibility of withdrawal or these benefits are granted to encourage voluntary redundancy. When the benefits of cessation of employment are due more than 12 months after the balance sheet date, they are updated to their present value.
• b) Holiday, holiday allowances, and bonuses. According to the labour law, employees are entitled to 22 days annual leave, as well as one month of holiday allowances, rights acquired in the year preceding payment. These liabilities of the Group are recorded when incurred, independently of the moment of payment, and are reflected under the item "Accounts payable and other".

• c) Labour Compensation Fund (FCT) and the Labour Compensation Guarantee Fund (FGCT). Based on the publication of Law No. 70/2013 and subsequent regulation by Order No. 294-A / 2013, entered into force on 1 October the Labour Compensation Fund schemes (FCT) and the Guarantee Fund Compensation of Labour (FGCT). In this context, companies that hire a new employee are required to deduct a percentage of the respective salary for these two new funds (0.925% to 0.075% and the FCT for FGCT), in order to ensure, in the future, the partial payment the compensation for dismissal. Considering the characteristics of each Fund, the following is considered:

• The monthly deliveries to FGCT, made by the employer are recognised as expense in the period to which they relate.

• The monthly deliveries to FCT, made by the employer are recognised as a financial asset, in the caption "Other non-current financial assets" of the entity, measured at fair value with changes recognised in the respective results.

2.3.27 Statement of cash flows

The statement of cash flows is prepared in accordance with the direct method. The Group classifies under "Cash and cash equivalents" the assets with maturities of less than three months and for which the risk of change in value is negligible. For purposes of the statement of cash flows, the balance of cash and cash equivalents also include bank overdrafts included in the statement of financial position under "Borrowings".

The statement of cash flows is divided into operating, and financing activities.

Operating activities include cash received from customers and payments to suppliers, staff and others related to operating activities. Under "Other cash receipts / (payments) related with operating activity" includes the amount received and subsequent payments related to assignments without recourse, coordinated by the Banco Comercial Português and Caixa Geral de Depósitos, and these operations do not involve any change in the accounting treatment of the underlying receivables or in the relationship with their clients.

The cash flows included in investing activities include acquisitions and disposals of investments in subsidiaries and cash received and payments arising from the purchase and sale of tangible and intangible assets, amongst others.

Financing activities include cash received and payments relating to borrowings, the payment of interest and similar costs, finance leases, the purchase and sale of own shares and the payment of dividends.

2.3.28

Events occurring after the date of the statement of financial position, which provide additional information about conditions that existed at that date, are considered in the preparation of financial statements of the quarter.

Events occurring after the date of the statement of financial position, which provide information on conditions that occur after that date, are disclosed in the notes to the financial statements, when they are materially relevant.

3. Judgements and estimates

3.1. Relevant accounting estimates

The preparation of consolidated financial statements requires the Group's management to make judgments and estimates that affect the statement of financial position and the reported results. These estimates are based on the best information and knowledge about past and/or present events and on the operations that the Company considers it may implement in the future. However, at the date of completion of such operations, their results may differ from these estimates.

Changes to these estimates that occur after the date of approval of the consolidated financial statements will be corrected in the income statement in a prospective manner, in accordance with IAS 8 - "Accounting Policies, Changes in Accounting Estimates and Errors".

The estimates and assumptions that imply a greater risk of giving rise to a material

adjustment in assets and liabilities are described below:

Entities included in the consolidation perimeter

To determine the entities to be included in the consolidation perimeter, the Group assesses the extent to which it is exposed, or has rights, to variability in return from its involvement with that entity and can take possession of them through the power it holds over this entity.

The decision that an entity must be consolidated by the Group requires the use of judgment, estimates, and assumptions to determine the extent to which the Group is exposed to return variability and the ability to take possession of them through its power.

Other assumptions and estimates could lead to the Group's consolidation perimeter being different, with direct impact on the consolidated financial statements.

Impairment of non-current assets, excluding goodwill

The determination of a possible impairment loss can be triggered by the occurrence of various events, such as the availability of future financing, the cost of capital or other market, economic and legal changes or changes with an adverse effect on the technological environment, many of which are beyond the Group's control.

The identification and assessment of impairment indicators, the estimation of future cash flows, and the calculation of the recoverable value of assets involve a high degree of judgment by the Board.

Impairment of goodwill

Goodwill is annually subject to impairment tests or whenever there are indications of a possible loss of value, according to the criteria referred on Note 8. The recoverable values of the cash-generating units to which goodwill is allocated are determined based on the calculation of current use values. These calculations require the use of estimates by management.

Intangible and tangible assets

The life of an asset is the period during which the Company expects that an asset will be available for use and this should be reviewed at least at the end of each financial year.

The determination of the useful lives of assets, the amortisation/depreciation method to be applied, and the estimated losses resulting from the replacement of equipment before the end of its useful life due to technological obsolescence is crucial in determining the amount of amortisation/depreciation to be recognised in the consolidated income statement each period.

These three parameters are defined using management's best estimates for the assets and businesses concerned and taking account of the practices adopted by companies in the sectors in which the Group operates.

The capitalised costs with the audiovisual content distribution rights acquired for commercialisation in the various windows of exhibition are amortised over the period of exploration of the respective contracts. Additionally, these assets are subject to impairment tests whenever there are indications of changes in the pattern generation of future revenue underlying each contract.

The residual value, the useful life and the depreciation methods are periodically revised by the various companies of the Group and prospectively adjusted, if appropriated.

Rights of use

The Group determines the end of the lease as the non-cancelable part of the lease term, together with any periods covered by an option to extend the lease if it is reasonably certain that it will be exercised, or any periods covered by an option to terminate the lease agreement, if it is reasonably certain that it will not be exercised.

The Group has the option, under some of its lease agreements, to lease its assets for additional periods. NOS assesses the reasonableness of exercising the option to renew the contract. That is, NOS considers all the relevant factors that create an economic incentive for exercising the renewal. After the start date, the Group re-evaluates the termination of the contract if there is a significant event or changes in circumstances that are under control and affect its ability to exercise (or not exercise) the renewal option (a change in strategy of business).

Provisions

The Group periodically reviews any obligations arising from past events, which should be recognised or disclosed. The subjectivity involved in determining the probability and amount of internal resources required to meet obligations may give rise to significant adjustments, either due to changes in the assumptions made, or due to the future recognition of provisions previously disclosed as contingent liabilities.

Deferred income tax assets

Deferred income tax assets are recognised only when there is strong assurance that there will be future taxable income available to use the temporary differences or when there are deferred tax liabilities whose reversal is expected in the same period in which the deferred tax assets are reversed. The assessment of deferred income tax assets is undertaken by management at the end of each period taking account of the expected future performance of the Group.

Expected credit losses

The credit risk on the balances of accounts receivable is assessed at each reporting date, using a collection matrix based on the historical past collections adjusted from the future expectation of collections evolution, to determine the uncollectibility rate. The expected credit losses of the accounts receivable are thus adjusted for the assessment made, which may differ from the effective risk that will incurred in the future.

Fair value of financial assets and liabilities

When the fair value of an asset or liabilities is calculated, on an active market, the respective market price is used. When there is no active market, which is the case with some of the Group's financial assets and liabilities, valuation techniques generally accepted in the market, based on market assumptions, are used.

The Group applies evaluation techniques for unlisted financial instruments, such as derivatives, financial instruments at fair value and instruments measured at amortised

cost. The most frequently used valorisation models of discounted cash flows and option models, which incorporate, for example, interest rate and market volatility curves.

For certain types of more complex derivatives, more advanced valuation models are used containing assumptions and data that are not directly observable in the market, for which the Group uses internal estimates and assumptions.

3.2.

During the nine months ended on 30 September 2020 and 2021, errors, estimates and changes in material accounting policies relating to prior years were not recognised.

4. Change in the perimeter

The changes in the consolidation perimeter, during the nine months ended on 30 September 2021, were:

· Constitution, in July 2021, of NOS Mediação Seguros, S.A. This company's corporate purpose is to distribute insurance and related activities.

5. Segment Reporting

The business segments are as follows:

• · Telco TV, Internet (fixed and mobile) and voice (fixed and mobile) services rendered and includes the following companies: NOS Technology, Per-mar, Sontária, NOS SGPS, NOS Acores, NOS Property, NOS Madeira, NOS SA, NOS Audio-Sales and Distribution, Teliz Holding, NOS Sistemas, NOS Sistemas España, NOS Inovação, NOS Internacional SGPS, NOS Corporate Center, NOS Wholesale , Fundo NOS 5G, Dualgrid and NOS Mediação Seguros
• · and distribution and the acquisition/negotiation of Pay TV and VOD (video-ondemand) rights and includes the following companies: NOS Audiovisuais, NOS Cinemas, Lusomundo Moçambique, Lda ("Lusomundo Moçambique"), Lusomundo lmobiliária 2, S.A. ("Lusomundo Imobiliária 2"), Lusomundo Sociedade de lnvestimentos Imobiliários, SGPS, S.A. ("Lusomundo SII"), Empracine - Empresa Promotora de Atividades Cinematográficas, Lda ("Empracine"), NOS Audio SGPS and Dreamia S.L.

	TELCO		AUDIOVISUALS ELIMINATIONS	GROUP
ASSETS
NON - CURRENT ASSETS:
Tangible assets	980,752	10,861	-	991,613
Intangible assets	952,107	88,980	-	1,041,087
Contract costs	162,123	-	-	162,123
Rights of use	226,530	33,567	-	260,097
Investments in jointly controlled companies and associated companies	115,484	47,610	(152,197)	10,897
Accounts receivable - other	39,586	2,917	(34,999)	7,504
Deferred income tax assets	70,794	11,988	-	82,782
Other non-current assets	703	662	-	1,365
TOTAL NON - CURRENT ASSETS	2,548,080	196,585	(187,197)	2,557,468
CURRENT ASSETS:
Inventories	43,223	405	-	43,628
Account receivables	373,073	48,400	(40,609)	380,864
Prepaid expenses	33,342	1,496	(784)	34,054
Other current assets	1,937	1,407	-	3,344
Cash and cash equivalents	152,687	598	-	153,285
TOTAL CURRENT ASSETS	604,262	52,306	(41,393)	615,175
TOTAL ASSETS	3,152,342	248,891	(228,590)	3,172,643
SHAREHOLDER'S EQUITY
Share capital	5,152	40,810	(40,810)	5,152
Capital issued premium	854,219	-	-	854,219
Own shares	(14,859)	-	-	(14,859)
Legal reserve	1,030	1,374	(1,374)	1,030
Other reserves and accumulated earnings	33,793	61,279	(83,065)	12,007
Net income	117,498	993	(26,491)	92,000
EQUITY BEFORE NON - CONTROLLING INTERESTS	996,833	104,456	(151,740)	949,549
Non-controlling interests	6,685	-	-	6,685
TOTAL EQUITY	1,003,518	104,456	(151,740)	956,234
LIABILITIES
NON - CURRENT LIABILITIES:
Borrowings	1,332,524	65,990	(35,000)	1,363,514
Provisions	65,995	7,350	-	73,345
Accrued expenses	505	-	-	505
Other non-current liabilities	45,434	-	-	45,434
Deferred income tax liabilities	4,709	316	-	5,025
TOTAL NON - CURRENT LIABILITIES	1,449,167	73,656	(35,000)	1,487,823
CURRENT LIABILITIES:
Borrowings	162,270	32,612	(27,756)	167,126
Accounts payable	298,000	10,866	(8,821)	300,045
Tax payable	50,363	1,618	-	51,981
Accrued expenses	163,869	16,897	(4,906)	175,860
Other current liabilities	25,155	8,786	(367)	33,574
TOTAL CURRENT LIABILITIES	699,657	70,779	(41,850)	728,586
TOTAL LIABILITIES	2,148,824	144,435	(76,850)	2,216,409
TOTAL LIABILITIES AND SHAREHOLDER´S EQUITY	3,152,342	248,891	(228,590)	3,172,643

31-12-2020

TELCO AUDIOVISUALS ELIMINATIONS GROUP ASSETS NON - CURRENT ASSETS: Tangible assets 1,021,899 9,438 1,031,337 - Intangible assets 955,659 87,989 1,043,648 - Contract costs 162,797 162,797 - - Rights of use 209,704 29,625 239,329 - (156,249) Investments in jointly controlled companies and associated companies 126,865 47,762 18,378 Accounts receivable - other 49,131 3,003 (45,948) 6,186 Deferred income tax assets 69,725 10,460 80,185 - Other non-current assets 1,618 648 2,266 - TOTAL NON - CURRENT ASSETS 2,597,398 188,925 (202,197) 2,584,126 CURRENT ASSETS: - - - Inventories 42,690 370 43,060 - Account receivables 373,911 59,941 (47,944) 385,908 Prepaid expenses 41,757 1,625 (419) 42,963 Other current assets 2,566 789 3,355 - Cash and cash equivalents 40,829 2,551 43,380 - TOTAL CURRENT ASSETS 501,753 65,276 (48,363) 518,666 TOTAL ASSETS 3,099,151 254,201 (250,560) 3,102,792
SHAREHOLDER'S EQUITY
Share capital 5,152 44,863 (44,863) 5,152
Capital issued premium 854,219 854,219 - -
Own shares (12,353) (12,353) - -
Legal reserve 1,030 1,796 (1,796) 1,030
Other reserves and accumulated earnings (98,886) (37,200) 7,957 53,729
Net income 113,559 16,711 (10,249) 120,021
EQUITY BEFORE NON - CONTROLLING INTERESTS 969,564 117,099 (155,794) 930,869
Non-controlling interests 6,502 6,502 - -
TOTAL EQUITY 976,066 117,099 (155,794) 937,371
LIABILITIES
NON - CURRENT LIABILITIES:
Borrowings 1,214,225 71,428 (45,947) 1,239,706
Provisions 70,537 8,436 78,973 -
Accrued expenses 454 454 - -
Other non-current liabilities 43,615 43,615 - -
Deferred income tax liabilities 4,775 374 5,149 - TOTAL NON - CURRENT LIABILITIES (45,947) 1,333,606 80,238 1,367,897
CURRENT LIABILITIES:
Borrowings 259,294 12,027 (36,329) 234,992
Accounts payable 278,355 13,357 (6,648) 285,064
Tax payable 48,909 1,589 50,498 -
Accrued expenses 177,982 19,743 (5,422) 192,303
Other current liabilities 24,939 10,148 (420) 34,667 TOTAL CURRENT LIABILITIES (48,819) 789,479 56,864 797,524
TOTAL LIABILITIES 2,123,085 137,102 (94,766) 2,165,421
TOTAL LIABILITIES AND SHAREHOLDER´S EQUITY (250,560) 3,099,151 254,201 3,102,792

							GROUP
REVENUES:
COSTS, LOSSES AND GAINS:
EBITDA	150,616	444,197	9,973	26,998	-	-	160,588	471,194
INCOME BEFORE TAXES	46,911	113,579	1,149	(676)	-	(26,492)	48,058	86,411
NET INCOME	42,857	104,886	1,241	155	-	(26,492)	44,097	78,549
CAPEX
EBITDA - CAPEX	47,327	160,284	4,179	5,920	-	-	51,505	166,203

	9M 21
	TELCO		AUDIOVISUALS		ELIMINATIONS		GROUP
	3° QUARTER 20	9M 20	3º QUARTER 20	9M 20	3° QUARTER 20	9M 20	3º QUARTER 20	9M 20
REVENUES:
Services rendered	324,656	946,766	16,706	38,296	(9,111)	(25,911)	332,251	959,151
Sales	25.784	64.256	2.147	2.699	(39)	(64)	27,892	66.891
Other operating revenues	6,237	18,157	234	1,168	(149)	(450)	6,322	18,875
	356,677	1,029,179	19,087	42,163	(9,299)	(26,425)	366,465	1,044,917
COSTS, LOSSES AND GAINS:
Wages and salaries	18,533	55,057	2,260	6,023			20,793	61,080
Direct costs	95.936	292.774	3,407	5,357	(7,871)	(23,358)	91,472	274.773
Costs of products sold	24,504	59,263	44	(8)	(10)	(30)	24,538	59,224
Marketing and advertising	5,577	19.319	1,022	1,479	(3,023)	(8,980)	3,576	11.818
Support services	19,500	61,298	539	1,710	(611)	(1,888)	19,428	61,120
Supplies and external services	24,182	71,863	(1,792)	(8,790)	2,216	7,831	24,606	70,904
Other operating losses / (gains)	132	329	10	37			142	366
Taxes	7,198	23,449	12	41			7,210	23,490
Provisions and adjustments	3,571	4,750	(1)	(333)			3,570	4,417
	199,133	588,102	5,501	5,515	(9,299)	(26,425)	195,335	567,192
FRITDA	157,544	441,077	13,586	36,648			171,130	477,725
Depreciation, amortisation and impairment losses	101,333	293,874	6,645	18,930			107,978	312,804
Other losses / (gains), net	1,371	6,980	18	409			1,389	7,389
INCOME BEFORE LOSSES / (GAINS) PARTICIPATED COMPANIES,	54,840	140,223	6,923	17,309			61,763	157,532
FINANCIAL RESULTS AND TAXES
Net losses / (gains) of affiliated companies	(2,330)	(4,589)	(85)	(152)			(2,415)	(4,741)
Financial costs	7,760	23,779	424	1,167			8,184	24,946
Net foreign exchange losses / {gains)	(30)	(265)	(21)	(340)			(21)	(605)
Net losses / (gains) on financial assets	(18)	(8,008)	(3)	(2,232)		10,249	(21)	ರಿ
Net other financial expenses / (income)	762	2,373	2	12			764	2,385
	6,144	13,290	317	(1,545)		10,249	6,461	21,994
INCOME BEFORE TAXES	48,696	126,933	6,606	18,854	-	(10,249)	55,302	135,538
Income taxes	7,711	13,556	1,460	2,142			9,171	15,698
IEARNINGS PER SHARES FROM CONTINUING OPERATIONS	40,985	113.377	5,146	16.712		(10,249)	46,131	119,840
Net consolidated income from discontinued operadtions
NET INCOME	40,985	113,377	5,146	16,712		(10,249)	46,131	119,840
CAPEX	116,805	322,860	5,656	12,414			122,461	335.274
EBITDA - CAPEX	40.739	118.217	7.930	24.234			48,669	142,451

EBITDA = Operational Result + Depreciation, amortisation and impairment losses + Restructuring costs + Losses / (gains) on sale of assets + Other losses / (gains) nonrecurrent

CAPEX = Increases in tangible and intangible assets, contract costs and rights of use

Transactions between segments are performed on market terms and conditions in a comparable way to transactions performed with third parties.

At 30 September 2021, fully consolidated foreign companies represent less than 1% of assets (at 31 December 2020: less than 1%) and their turnover is less than 0.1% of consolidated turnover.

6. Financial assets and liabilities classified in accordance with the IFRS 9 financial instruments

The accounting policies set out in IFRS 9 for financial instruments were applied to the following items:

	31-12-2020
	FINANCIAL ASSETS	INVESTMENTS HELD-TO- MATURITY	FINANCIAL LIABILITIES	TOTAL FINANCIAL ASSETS AND LIABILITIES	NON FINANCIAL ASSETS AND LIABILITIES	TOTAL
ASSETS
Available-for-sale financial assets	579			579		579
Accounts receivable - trade (Note 17)	290.652			290,652		290,652
Accounts receivable - other (Note 12)	12,400			12,400	23,714	36.114
Cash and cash equivalents (Note 21)	153,285			153,285		153,285
TOTAL FINANCIAL ASSETS	456,916	1		456,916	23,714	480,630
LIABILITIES
Borrowings (Note 24)	1		1,530,640	1,530,640		1,530,640
Derivative financial instruments (Note 20)				1,001		1.001
Accounts payable - trade (Note 28)			252,607	252,607		252,607
Accounts payable - other (Note 29)			87,279	87,279	209	87.488
Accrued expenses (Note 26)			176,365	176.365		176.365
TOTAL FINANCIAL LIABILITIES	1		2,046,891	2,047,892	209	2,048,101

	30-09-2021
	FINANCIAL ASSETS	INVESTMENTS HELD-TO MATURITY	FINANCIAL LIABILITIES	TOTAL FINANCIAL ASSETS AND LIABILITIES	NON FINANCIAL ASSETS AND LIABILITIES	TOTAL
ASSETS
Available-for-sale financial assets	1,156	-	-	1,156	-	1,156
Derivative financial instruments (Note 20)	-	376	-	376	-	376
Accounts receivable - trade (Note 17)	302,068	-	-	302,068	-	302,068
Accounts receivable - other (Note 12)	10,056	-	-	10,056	17,049	27,105
Cash and cash equivalents (Note 21)	43,380	-	-	43,380	-	43,380
TOTAL FINANCIAL ASSETS	356,660	376	-	357,036	17,049	374,085
LIABILITIES
Borrowings (Note 24)	-	-	1,474,698	1,474,698	-	1,474,698
Derivative financial instruments (Note 20)	-	338	-	338	-	338
Accounts payable - trade (Note 28)	-	-	258,594	258,594	-	258,594
Accounts payable - other (Note 29)	-	-	65,513	65,513	223	65,736
Accrued expenses (Note 26)	-	-	192,757	192,757	-	192,757
TOTAL FINANCIAL LIABILITIES	-	338	1,991,562	1,991,900	223	1,992,123

	31-12-2019	INCREASES	DISPOSALS AND WRITE- OFFS	DISCONTINUED UNIT (NOTE 46)	TRANSFERS AND OTHERS	30-09-2020
ACQUISITION COST
Lands	838	-	-	-	-	838
Buildings and other constructions	404,434	320	(59)	(147,411)	5,698	262,982
Basic equipment	2,456,116	33,673	(16,375)	(2,143)	97,901	2,569,172
Transportation equipment	508	6	-	-	4	518
Tools and dies	1,487	-	-	(2)	3	1,488
Administrative equipment	189,992	1,806	(105)	(82)	1,935	193,546
Other tangible assets	43,125	109	-	-	291	43,525
Tangible assets in-progress	39,574	110,453	-	(1,477)	(111,280)	37,270
	3,136,074	146,367	(16,539)	(151,115)	(5,448)	3,109,339
ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES
Buildings and other constructions	222,826	5,820	(7)	(61,901)	(1,632)	165,106
Basic equipment	1,654,724	111,658	(16,183)	(2,067)	49	1,748,181
Transportation equipment	504	2	-	-	4	510
Tools and dies	1,369	34	-	(2)	3	1,404
Administrative equipment	179,235	3,412	(100)	(76)	465	182,936
Other tangible assets	42,603	432	(5)	-	7	43,037
	2,101,261	121,358	(16,295)	(64,046)	(1,104)	2,141,174
	1,034,813	25,009	(244)	(87,069)	(4,344)	968,165

	31-12-2020	INCREASES	DISPOSALS AND WRITE- OFFS	DISCONTINUED UNIT (NOTE 46)	TRANSFERS AND OTHERS	30-09-2021
ACQUISITION COST
Land	838	-	(34)	-	(1)	803
Buildings and other constructions	263,952	-	(568)	-	2,925	266,309
Basic equipment	2,599,495	41,787	(32,214)	-	85,502	2,694,570
Transportation equipment	512	-	-	-	2	514
Tools and dies	1,554	-	(1)	-	34	1,587
Administrative equipment	193,109	1,344	(1,167)	-	1,361	194,647
Other tangible assets	43,471	105	(18)	-	160	43,718
Tangible assets in-progress	39,349	114,824	-	-	(76,604)	77,569
	3,142,280	158,060	(34,002)	-	13,379	3,279,717
ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES
Buildings and other constructions	165,127	417	(430)	-	4,698	169,812
Basic equipment	1,758,042	127,043	(31,345)	-	(5,103)	1,848,637
Transportation equipment	510	1	-	-	1	512
Tools and dies	1,420	44	(1)	-	(1)	1,462
Administrative equipment	182,562	3,245	(1,157)	-	22	184,672
Other tangible assets	43,006	297	(18)	-	-	43,285
	2,150,667	131,047	(32,951)	-	(383)	2,248,380
	991,613	27,013	(1,051)	-	13,762	1,031,337

The net amount of "Transfers and Others" predominantly corresponds to the transfer of assets to "Intangible assets" (Note 8).

At 30 September 2021, the tangible assets net value is composed mainly by basic equipment, namely:

• i) Network and telecommunications infrastructure (fibre optic network and cabling, network equipment, and other equipment) in the amount of 735.1 million euros (31 December 2020: 736.0 million euros);
• ii) Terminal equipment installed on client premises, included under Basic equipment, amounts to 110.8 million euros (31 December 2020: 105.5 million euros).

Tangible and intangible assets include interests and other financial expenses incurred directly related to the construction of certain tangible assets in progress.

At 30 September 2021, total net value of these costs amounted to 12.6 million euros (31 December 2020: 13.0 million euros). The amount of interest capitalised in the nine months ended on 30 September 2021 amounted to 0.8 million euros (31 December 2020: 0.9 million euros).

8. Intangible assets

In the nine months ended on 30 September 2020 and 2021, the movements in this item were as follows:

	31-12-2019	INCREASES	DISPOSALS AND WRITE-OFFS	TRANSFERS AND OTHERS	30-09-2020
ACQUISITION COST
Industrial property and other rights	1,634,046	1.466	1	40,167	1,675,679
Goodwill	641,400		-		641,400
Intangible assets in-progress	23,201	49,437	-	(35.027)	37,611
	2,298,647	50,903	-	5,140	2,354,690
ACCUMULATED AMORTISATION AND IMPAIRMENT LOSSES
Industrial property and other rights	1,281,835	66.355	(19)	1.568	1,349,739
Other intangible assets	2.746			(498)	2,248
	1,284,581	66,355	(19)	1,070	1,351,987
	1,014,066	(15,452)	19	4,070	1,002,703

The amount of "Transfers and Others" corresponds, mainly, to the transfer of assets from "Tangible assets" (Note 7).

	31-12-2020	INCREASES	DISPOSALS AND WRITE-OFFS	TRANSFERS AND OTHERS	30-09-2021
ACQUISITION COST
Industrial property and other rights	1,739,434	3,414	(17)	62,401	1.805.232
Goodwill	641,400				641.400
Intangible assets in-progress	33,310	73.973	-	(75,504)	31,779
	2,414,144	77,387	(17)	(13,103)	2.478.411
ACCUMULATED AMORTISATION AND IMPAIRMENT LOSSES
Industrial property and other rights	1,370,986	61,723	(17)	264	1,432,956
Intangible assets in-progress	2,071			(264)	1,807
	1.373.057	61,723	(17)		1,434,763
	1,041,087	15,664		(13,103)	1,043,648

The amount of "Transfers and Others" corresponds, mainly, to the transfer of assets from "Tangible assets" (Note 7).

At 30 September 2021, the item "Industrial property and other rights" includes mainly:

(1) related to the investment, net of amortisation, made in the development of the

-

	31-12-2020	30-09-2021
Telco	564,799	564,799
Audiovisuals	76,601	76,601
	641,400	641,400

		AUDIOVISUALS SEGMENT
	TELCO	NOS	NOS
	SEGMENT	AUDIOVISUALS	CINEMAS
Discount rate (before taxes)	5.7%	7.7%	8.3%
Assessment period	5 years	5 years	5 years
EBITDA* Growth	2.5%	-1.4%	49.7%
Perpetuity growth rate	1.5%	1.5%	1.5%

* EBITDA = Operating Income + Depreciation, Amortization and Impairment Losses + Restructuring Costs + Losses / (Gains) on disposal of assets + Other Costs / (Gains) Non-Recurring (CAGR - average 5 years)

In the Telco segment, the assumptions used are based on past performance, evolution of the number of customers, expected development of regulated tariffs, current market conditions, and expectations of future development.

In the cinemas segment, the segment most affected segment by COVID-19, was considered a significant EBITDA increase, justified by the poor year observed in 2020 due to the pandemic situation, and so it is estimated a full recovery of the activity by 2023.

The number of years specified in the impairment tests depends on the degree of maturity of the several businesses and markets, and were determined based on the most appropriate criterion for the valuation of each cash-generating unit.

Sensitivity analyses were performed to variations in the discount rate and growth rate in the perpetuity of the various reported segments, of 1 percentage point and 0.4 percentage points, respectively.

In the telecommunications segment, sensitivity analysis were also performed to variations in the operational indicators RGU (Revenue Generating Unit), ARPU (Average Revenue per User), EBITDA and CAPEX, in perpetuity, of approximately 5%.

In the cinema segment, sensitivity analysis were conducted on variations in the projected number of tickets sold, average revenue per ticket, EBITDA and CAPEX, in perpetuity, of approximately 5%.

These simulations did not result in the need to reinforce impairment.

Sensitivity analyses were also performed for a scenario of permanent reduction of 50% in the business/margin of the cinemas, as well as reduction of 50% in the number of spectators, from which no impairment resulted as well.

On 30 September 2021 it was considered that the assumptions made in the impairment tests carried out in 2020 did not have material variations, including in the cinema segment, still heavily impacted by the pandemic, as it was only assumed that the activity would return to the prepandemic levels in 2023, so there is no evidence of any impairment.

9. Contract costs

In the nine months ended on 30 September 2020 and 2021, the movements in this item were as follows:

	31-12-2019	INCREASES	DISPOSALS AND WRITE-OFFS	30-09-2020
ACQUISITION COST
Cost of attracting customers	427,519	46,326	-	473,845
Costs of fulfilling customer contracts	189,594	25,968	-	215,562
	617,113	72,294	1	689,407
ACCUMULATED AMORTIZATIONS AND IMPAIRMENT
Cost of attracting customers	327.650	49,266	-	376,916
Costs of fulfilling customer contracts	126,362	25,417	-	151,779
	454,012	74,683	-	528,695
	163,101	(2,389)		160,712

	31-12-2020	INCREASES	DISPOSALS AND WRITE-OFFS	30-09-2021
ACQUISITION COST
Cost of attracting customers	491,490	49,371	-	540,861
Costs of fulfilling customer contracts	223,961	25,236	-	249,197
	715,451	74,607	-	790,058
ACCUMULATED AMORTIZATIONS AND IMPAIRMENT LOSSES
Cost of attracting customers	393,153	48,435	-	441,588
Costs of fulfilling customer contracts	160,175	25,498	-	185,673
	553,328	73,933	-	627,261
	162,123	674	-	162,797

	31-12-2019	INCREASES	DISCONTINUED UNIT (NOTE 46)	TRANSFERS AND OTHERS	30-09-2020
ACQUISITION COST
Telecommunications towers and rooftops	139,010	13,828	(88,012)	71,670	136,496
Movie theatres	108,681	4,756	-	-	113,437
Transponders	91,907	-	-	-	91,907
Equipments	118,564	9,227	-	-	127,791
Buildings	68,603	1,382	-	(16)	69,969
Fiber optic rental	33,065	-	-	-	33,065
Stores	17,838	636	-	-	18,474
Others	31,324	5,598	(238)	(26)	36,658
	608,992	35,427	(88,250)	71,628	627,797
ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES
Telecommunications towers and rooftops	93,237	8,697	(59,025)	-	42,909
Movie theatres	72,093	5,572	-	-	77,665
Transponders	56,671	4,404	-	-	61,075
Equipments	69,091	11,719	-	-	80,810
Buildings	45,043	5,212	-	(17)	50,238
Fiber optic rental	26,674	2,221	-	-	28,895
Stores	11,975	1,625	-	-	13,600
Others	15,825	3,387	(172)	(14)	19,026
	390,609	42,837	(59,197)	(31)	374,218
	218,383	(7,410)	(29,053)	71,658	253,578

	31-12-2020	INCREASES	DISCONTINUED UNIT (NOTE 46)	TRANSFERS AND OTHERS	30-09-2021
ACQUISITION COST
Telecommunications towers and rooftops	138,590	3,070	-	105	141,765
Movie theatres	114,332	2,176	-	222	116,730
Transponders	91,709	78	-	-	91,787
Equipments	132,737	13,024	-	-	145,761
Buildings	72,979	882	-	(222)	73,639
Fiber optic rental	40,337	(191)	-	-	40,146
Stores	19,596	764	-	-	20,360
Others	34,052	5,414	-	-	39,466
	644,332	25,217	-	105	669,654
ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES
Telecommunications towers and rooftops	45,575	7,974	-	-	53,549
Movie theatres	79,595	6,135	-	-	85,730
Transponders	62,540	4,377	-	-	66,917
Equipments	84,777	13,665	-	-	98,442
Buildings	52,119	5,548	-	1	57,668
Fiber optic rental	28,449	2,807	-	-	31,256
Stores	14,184	1,796	-	-	15,980
Others	16,996	3,787	-	-	20,783
	384,235	46,089	-	1	430,325
	260,097	(20,872)	-	104	239,329

11.

At 31 December 2020 and 30 September 2021, this item was composed as follows:

	31-12-2020	30-09-2021
INVESTMENTS - EQUITY METHOD
Finstar*	5,707	12,362
Dreamia	3.367	3,537
Mstar	1,315	1,971
Upstar	371	389
Big Picture 2 Films	110	92
Dualgrid	25	25
Dreamia S.L.	2	2
Sport TV		(1,075)
	10,897	17,303
ASSETS	10,897	18,378
LIABILITIES (NOTE 25)		(1,075)
* Consolidated from Finstar and 7AP Media

Movements in "Investments in jointly controlled companies and associated companies" in the nine months ended on 30 September 2020 and 2021 were as follows:

	9M 20	9M 21
AS AT JANUARY 1	18,244	10,897
Gains / (losses) of exercise (Note 35)	671	4.856
Impairment (Note 35)	(5,396)
Changes in equity i)	(2,776)	1.550
AS AT SEPTEMBER 30	10,742	17,303

i) method of consolidation are mainly related to foreign exchange impacts of the investment in currencies other than euro.

The assets, liabilities and results of the jointly controlled companies and associated companies in the periods ended on 31 December 2020 and 30 September 2021, are as follows:

				SIP ZATAL
ENTITY	NON-CURRENT ASSETS	CURRENT ASSETS	NON-CURRENT LIABILITIES	CURRENT LIABILITIES	EQUITY	REVENUE	NET INCOME	% HELD
Sport TV	96,566	79,853	6,294	158,961	11,164	189,673	(6.809)	25%
Dreamia	13,378	1,255	6.002	1,896	6,735	2,182	(4)	50%
Finstar	17,603	74,644		82,841	9,406	165,074	(2,306)	30%
Mstar	170	9,176	549	4,414	4,383	21,212	1.697	30%
Upstar	1,591	46,227	21,600	24,982	1,236	20,553	(67)	30%
Big Picture 2 Films	609	1,083	300	844	548	2,626	(222)	20%
Dualgrid		50			50			50%
Dreamia S.L.		3			3			50%
	129,917	212,291	34,745	273,938	33,525	401,319	(7,710)
				30-09-2021
ENTITY	NON-CURRENT ASSETS	CURRENT ASSETS	NON-CURRENT LIABILITIES	CURRENT LIABILITIES	EQUITY	REVENUE	NET INCOME	% HELD
Sport TV	130,223	82,253	6.022	192,808	13,646	175,327	2,481	25%
Dreamia	15,378	668	6.135	1,863	8,048	1,348	813	50%
Finstar	54,442	96,635		109,872	41,205	93,400	18,147	30%
Mstar	403	13.062		6,894	6,571	18,629	1.053	30%
Upstar	1,286	37,706	19,600	18,096	1,296	14,031	60	30%
Big Picture 2 Films	744	1.032	326	991	459	584	(89)	20%
Dualgrid		50			50			50%
Dreamia S.L.		3			3			50%
	202,476	231,409	32,083	330,524	71,278	303,319	22,464

* During the period of 2021, Sport TV changed the annual reporting period from 31 December to 30 June, hence, in the accounts presented in the table above, the net income of 2.5 million euros corresponds to the approved income from January to June 2021, added to the income from July to September 2021.

Indicators presented in the tables above do not include consolidated adjustments which were considered when determining the Group's interest in the results, assets and

liabilities of jointly controlled and associated companies.

In the nine months ended on 30 September 2021, the assets, liabilities and results of

			SU-U2-2021
ENTITY	NON-CURRENT ASSETS	CURRENT ASSETS	NON-CURRENT LIABILITIES	CURRENT LIABILITIES	EQUITY CON	REVENUE	NET INCOME
ZAP Media	19.493	5.581		23.610	1.464	19.862	689
jointly controlled company ZAP Media (100% held by Finstar) are:

The differences between the individual accounts (prepared in accordance with Angolan regulations) and the Finstar Group (Finstar + ZAP Media) correspond, predominantly, to the annulment of balances and transactions between the companies and the adjustment because the companies were in a hyperinflationary economy from 2017 to September 2019 (IAS 29).

The Group has several controls regarding the reporting process of its jointly controlled and associated companies. The amounts included in the reported financial statements are subject to audit in cases where it is legally required. In the remaining cases and in those where the audit has not been completed, specific review procedures are carried out by the Group.

The Board of Directors believes that the seizure of assets to Mrs. Isabel dos Santos, in the specific case of the shares held by her in Finstar and ZAP Media (where she holds 70% of the capital), does not change the control profile, in this case joint control as defined in IFRS 11, and thus relevant consequences for the operational management of companies and NOS are not expected, besides to restrictions on the distribution of dividends.

12. Accounts receivable - other

At 31 December 2020 and 30 September 2021, this item was composed as follows:

	31-12-2020		30-09-2021
	CURRENT	NON CURRENT	CURRENT	NON CURRENT
Accounts receivables i)	5.786	8.115	4.728	6.884
Advances to suppliers ii)	23.714		17.049
	29.500	8,115	21,777	6.884
Impairment of other receivable	(890)	(611)	(858)	(୧୨୫)
	28.610	7.504	20,919	6.186

• i) long-term loans from Group and interests' receivable, to associated companies and the amount receivable of 4.1 million euros from the sale of NOS International Carrier Services (Note 46).
• ii) payed values related with football rights' contracts and other operational costs.

The summary of movements in impairment of other receivable in other accounts receivable is as follows:

	9M 20	9M 21
AS AT JANUARY 1	3.000	1,501
Increases (Note 35)	343	175
Utilizations / Others	(691)	120)
AS AT SEPTEMBER 30	2,652	1,556

13. Taxes payable and receivable

At 31 December 2020 and 30 September2021, these items were composed as follows:

		31-12-2020		30-09-2021
	RECEIVABLE	PAYABLE	RECEIVABLE	PAYABLE
NON CURRENT
Debt regularization	149	-		-
	149	-	149
CURRENT
Value-added tax	2,473	6,006	2,893	13,418
Income taxes		42,224		33,667
Personnel income tax witholdings	1	1,823		1,536
Social Security contributions		1,819		1,810
Others	421	109	422	67
	2,894	51,981	3,315	50,498
	3,043	51,981	3,464	50,498

At 31 December 2020 and 30 September 2021, the amounts of IRC (Corporate Income Tax) receivable and payable were composed as follows:

	31-12-2020	30-09-2021
Estimated current tax on income	(31,612)	(30,110)
Tax processes	(44,286)	(42,196)
Payments on account	32.051	15,343
Withholding income taxes	476	559
Income taxes receivable from 2020	1	21.479
Others	1.147	1,258
	(42,224)	(33,667)

In the nine months ended on 30 September 2021, the item "Tax processes" includes liabilities, related to ongoing tax processes, of which highlights:

Future credits transferred: for the financial year ended at 31 December 2010, i) NOS SA was notified of the Report of Tax Inspection, when it is considered that the increase, when calculating the taxable profit for the year 2008, of the amount of 100 million euros, with respect to initial price of future credits transferred to securitization, is inappropriate. Given the principle of periodisation of taxable income, NOS SA was subsequently notified of the improper deduction of the amount of 20 million euros in the calculation of taxable income between 2009 and 2013. Given that the increase made in 2008 was not accepted due to not complying with Article 18 of the CIRC, also in the years following, the deduction corresponding to credits generated in that year, will eliminate the calculation of taxable income, to meet the annual amortisation hired as part of the operation (20 million per year for 5 years). NOS SA challenged the decisions regarding the 2009 to 2013 fiscal year and will appeal for the judicial review in due time the decision regarding the 2008 to 2013 fiscal year. Regarding the year 2008, the Administrative and Fiscal Court of Porto has already decided unfavourably, in March 2014. The company has appealed.

In March 2021, NOS SA was notified of the dismissal issued by the Court of Appeal. Not accepting the decision, NOS filed a Review Appeal with the Supreme Administrative Court, pending, in this regard, the issuance of the respective admissibility order;

ii) Supplementary Capital: the fiscal authorities believe that NOS SA has broken the principle of full competition under the terms of (1) of Article 58 of the Corporate Tax Code (CIRC) - currently Article 63 -, by granting supplementary capital to its subsidiary NOS Towering, without having been remunerated at a market interest

rate. In consequence, it has been notified, with regard to the years 2004, 2005, 2006 and 2007 of corrections to the determination of its taxable income in the total amount of 20.5 million euros. NOS SA contested the decision with regard to all the above-mentioned years. As for the year 2004, the Court has decided favourably. This decision is concluded (favourably), originating a reversal of provisions, in 2016, in the amount of 1.3 million euros plus interest. As for the years 2006 and 2007, the Porto Fiscal and Administrative Court has already decided unfavourably. As for the year 2005, the Court decided favourably, having been concretized by the Tax Authorities, which meant the provision reversal of one million euros, in 2018.

Other non-current financial assets 14.

On 30 September 2021, this caption corresponds mainly to investments in the TechTransfer Fund and in the company Reckon.ai (through the NOS 5G Fund), in the amounts of 524 thousand euros and 250 thousand euros, respectively (Appendix D)).

On the third quarter of 2021, the NOS 5G Venture Capital Fund, in which NOS owns 100% of the Participating Units (UP), invested, for the first time, in startups with business models supported by fifth generation mobile network, namely, Reckon.ai.

15. Income tax expense

NOS and its subsidiaries are subject to IRC - Corporate Income Tax - at the rate of 21% on taxable amount (taxable profit less eventual tax losses subject to deduction), plus IRC surcharge at the maximum rate of 1.5% on taxable profit, giving an aggregate rate of approximately 22.5%. Additionally, following the introduction of austerity measures approved by Law 66-B/2012 of 31 December, and respective addendum published by Law 2/2014 of 16 January, this rate was raised by 3% and will be applied to the company's taxable profit between 1.5 million euros and 7.5 million euros, by 5% to the company's taxable profit which exceeds 7.5 million euros, and by 9% to the company's taxable profit above 35 million euros.

In the calculation of taxable income, amounts, which are not fiscally allowable, are added to or subtracted from the book results. These differences between accounting income and taxable income may be of a temporary or permanent nature.

NOS is taxed in accordance with the Special Regime for Taxation of Corporate Groups, which covers the companies in which it directly or indirectly holds at least 75% of their share capital and which fulfil the requirements of Article 69 of the IRC Code.

The companies covered by the Special Regime for Taxation of Corporate Groups in 2021 are:

• NOS (parent company)
• Empracine
• Lusomundo Imobiliária
• Lusomundo SII
• NOS Açores
• NOS Audiovisuais
• NOS Audiovisuais SGPS

• NOS Cinemas .
• NOS Comunicações SA .
• NOS Inovação .
• NOS Internacional SGPS
• NOS Audio Sales and Distribution
• NOS Madeira
• . NOS Sistemas
• NOS Technology .
• NOS Wholesale
• NOS Corporate Center
• NOS Property
• Per-mar
• Sontária

Under current legislation, tax declarations are subject to review and correction by tax authorities for a period of four years, except when tax losses have occurred or tax benefits have been obtained, whose term, in these cases, matches the deadline to use them. It should be noted that in the event of inspections, appeals, or disputes in progress, these periods might be extended or suspended.

The Board of Directors of NOS, based on information from its tax advisers, believes that these and any other revisions and corrections to these tax declarations, as well as other contingencies of a fiscal nature, will not have a significant effect on the consolidated financial statements as at 30 September 2021.

Deferred tax A)

NOS and its associated companies have reported deferred tax relating to temporary differences between the taxable basis and the book amounts of assets and liabilities, and tax losses carried forward at the date of the statement of financial position.

The movements in deferred tax assets and liabilities for the nine months ended on 30 September 2020 and 2021 were as follows:

	31-12-2019	INCOME (NOTE B)	EQUITY	DISPOSAL OF NOS TOWERING (NOTE 48)	30-09-2020
DEFERRED INCOME TAX ASSETS
Impairment of other receivable	1,471	5,935			7,406
Inventories	1,871	214			2,085
Other provision and adjustments	51.825	(3,386)	1	(3,181)	45,258
Intragroup gains	20,091	3,142	1	(2,088)	21,145
Liabilities recorded as part of the allocation of fair value to the liabilities acquired in the merger	5,080				5,080
Assets recognised under application of IFRS 16		4,332		(1,618)	2,714
Derivatives	90	112	37		239
	80,428	10,349	37	(6,887)	83,927
DEFERRED INCOME TAX LIABILITIES
Revaluations of assets as part of the allocation of fair value to the assets acquired in the merger	2,799	(110)		1	2,689
Intra-group leases	6,324	(6,291)		1	33
Others	2,503	(60)	1	-	2,443
	11,626	(6,461)			5,165
NET DEFERRED TAX	68,802	16,810	37	(6,887)	78,762

	31-12-2020	INCOME (NOTE B)	EQUITY	DISPOSAL OF NOS TOWERING (NOTE 48)	30-09-2021
DEFERRED INCOME TAX ASSETS
Impairment of other receivable	8,221	(1,589)			6,632
Inventories	1,993	78			2,071
Other provision and adjustments	44.698	128			44,826
Intragroup gains	19,672	(2,387)			17,285
Liabilities recorded as part of the allocation of fair value to the liabilities acquired in the merger	4,979	(32)	1		4,944
Assets recognised under application of IFRS 16 (Note 2.1)	2,994	1,357			4,351
Derivatives	225	(45)	(104)		76
	82,782	(2,493)	(104)		80,185
DEFERRED INCOME TAX LIABILITIES
Revaluations of assets as part of the allocation of fair value to the assets acquired in the merger	2,592	(131)			2,461
Derivatives		33	66		රියි
Intra-group leases	36	(1)			35
Others	2,397	157			2,554
	5,025	58	66		5,149
NET DEFERRED TAX	77,757	(2,551)	(170)	-	75,036

At 30 September 2021, the deferred tax assets related to the other provisions and adjustments are mainly due: i) Impairments and acceleration of amortisations beyond the acceptable fiscally and other adjustments in fixed tangible assets and intangible assets, amounted to 35.9 million euros (31 December 2020: 34.8 million euros; and ii) Other provisions amounted to 8.7 million euros (31 December 2020: 9.5 million euros).

The revaluations of assets refer to the appreciation of telecommunications licenses and other assets at the merger of Group companies.

At 30 September 2021, deferred tax assets were not recognised for an amount of 0.6 million euros, corresponding mainly to tax incentives.

Deferred tax assets were recognised when it is probable that taxable profits will occur in future that may be used to absorb tax losses or deductible tax differences. This assessment was based on the business plans of the Group's companies, which are regularly revised and updated.

At 30 September 2021, the tax rate used to calculate the deferred tax assets relating to tax losses carried forward was 21% (2020: 21%). In the case of temporary differences, the rate used was 22.5% (2020: 22.5%) increased to a maximum of 6.4% (2020: 6.4%) of state surcharge when the taxation of temporary differences in the estimated period of application of the state surcharge was perceived as likely. Tax benefits, related to deductions from taxable income, are considered 100%, and in some cases, their full acceptance is conditional upon the approval of the authorities that grants such tax benefits.

Under the terms of Article 88 of the IRC Code, the Company is subject to autonomous taxation on a series of charges at the rates set out in that Article.

Additionally, under the terms of current legislation in Portugal, tax losses generated from 2012 to 2013 and from 2014 to 2016 may be carried forward for a period of five years and twelve years, respectively, after their occurrence and may be deducted from taxable profits generated during that period, up to a limit of 75% of the taxable profit, in 2012 and 2013, and 70% of taxable profit from 2014 to 2016. For tax losses generated in taxation periods that begin on or after 1 January 2017, the carryover is over a five-year period up to the limit of 70% of the taxable profit.

In view of the Supplementary Budget for 2020, tax losses generated in the taxable periods of 2020 and 2021 are reportable over a period of twelve years with a limit of 80% of taxable profit, the period for counting of tax losses in force, calculated before 2020, being

3º QUARTER 20	9M 20	3º QUARTER 21	9M 21
48,058		55,302	135,538
22.5%		22.5%	22.5%
10,813		12,443	30,496
(60)		(634)	(1,485)
(5)		(8)	(9)
(7,014)	(10,789)	(3,158)	(13,404)
1,177		2,231	5,126
134		168	449
(1,083)	(378)	(1,871)	(5,475)
3,961		9,171	15,698
8.2%		16.6%	11.6%
14,791		10,162	13,147
(10,830)	(16,810)	(991)	2,551
3,961	14,269	9,171	15,698
			86,411 22.5% 19,442 2,468 40 2,974 512 14,269 16.5% 31,079

i)

	3º QUARTER 20	9M 20	3º QUARTER 21	9M 21
Equity method (Note 36)	(634)	9,128	(2,415)	(4,741)
Others	366	1,839	(405)	(1,860)
	(268)	10,967	(2,820)	(6,601)
	22.5%	22.5%	22.5%	22.5%
	(60)	2,468	(635)	(1,485)

	31-12-2020	30-09-2021
INVENTORIES
Telco	50,135	49,952
Audiovisuals	637	498
	50,772	50,450
IMPAIRMENT OF INVENTORIES
Telco	(6,913)	(7,262)
Audiovisuals	(231)	(128)
	(7,144)	(7,390)
	43,628	43,060

The movements occurred in impairment adjustments were as follows:

	9M 20	9M 21
AS AT JANUARY 1	6.673	7,144
Increase and decrease - Cost of products sold (Note 33)	1.945	1.493
Utilizations / Others	(1,210)	(1.247)
AS AT SEPTEMBER 30	7.408	7.390

17. Accounts receivable - trade

At 31 December 2020 and 30 September 2021, this item was as follows:

	31-12-2020	30-09-2021
Trade receivables	437,055	440,998
Unbilled revenues i)	48,762	56,765
	485,817	497,763
Impairment of trade receivable	(195,165)	(195,695)
	290,652	302,068

i) The amounts to be invoiced correspond mainly to the value of contractual obligations already met or partially met and whose invoicing will occur subsequently.

The movements occurred in impairment adjustments were as follows:

	9M 20	9M 21
AS AT JANUARY 1	154.128	195,165
Increases and decreases (Note 35)	10.704	5.579
Penalties - i)	16.517	20,810
Other losses / (gains) non-recurrent (Note 39)	27,897
Losses/ (Gains) in participated companies (Note 36)	4.135
Utilizations / Others	(25,014)	(25.859)
AS AT SEPTEMBER 30	188,367	195,695

i) Penalties correspond to the invoiced penalties, in the period, for which the full expected credit losses are registered, and the register was made by deduction from the respective revenue.

18. Contract assets

At 30 September 2021, the contract assets, in the amount of 62.9 million euros (31 December 2020: 61.6 million euros), correspond to discounts, attributed to customers at the time of the sale of equipment (included in the telecommunications packages) and which are allocated to monthly fees / services rendered, within the scope of the allocation of credits to different types of performance obligations, according to IFRS 15. These assets are deferred, at the time of sale of the equipment, and recognised over the contract period (service rendered).

19. Prepaid expenses

At 31 December 2020 and 30 September 2021, this item was composed as follow:

	31-12-2020	30-09-2021
Programming costs i)	15.462	16.478
Costs of litigation procedure activity ii)	2.499	4,222
Insurance	696	1,340
Advertising	348	1,140
Others iii)	15.049	19,783
	34,054	42,963

• i) Programming costs correspond to costs inherent to the availability of channels, namely fixed fees, billed in advance. This cost is recognised in the period in which the channel is made available and transmitted, and recognised as a programming cost, in the Consolidated Income Statement.
• ii) Deferred costs related to collection actions correspond to services paid in advance to external entities as part of the processes for recovering customer debts / collection actions. These costs are recognised as the service is provided.
• iii) "Others" includes deferred costs, mainly related to expenses to be recognised from various supplies and external services, such as specialised works, maintenance and repair work and others, billed in advance by suppliers (quarterly or annual billing), the respective expense being recognised in the income statement as the service is provided.

Derivated financial instruments วด

Interest rate derivatives

At 30 September 2021, NOS had contracted two interest rate swaps that ascend to a total of 150 million euros (31 December 2020: 150 million euros) whose swaps maturities expires in 2022. The fair value of interest rate swaps, in the negative amount of 21 thousand euros (31 December 2020: negative amount of 51 thousand euros), was recorded in liabilities, against shareholder's equity.

Own shares derivatives

At 30 September 2021, NOS had contracted three own shares derivatives, in the amount of 3.004 thousand euros (31 December 2020: 2.728 thousand euros), maturing in March 2022, 2023 and 2024, in order to cover the delivery of share plans liquidated in cash.

Exchange rate derivatives

At the date of the statement of the financial position there are foreign currency forwards open worth 5.307 thousand euros (2020: there were no foreign currency forwards open), whose fair value amounts to a negative net amount of 226 thousand euros.

			31-12-2020
		ASSETS		LIABILITIES
	NOTIONAL	CURRENT	NON CURRENT	CURRENT	NON CURRENT
Interest rate swaps	150,000	-	-	-	51
Equity Swaps	2,728	-	-	346	604
	152,728	-	-	346	655
			30-09-2021 ASSETS		LIABILITIES
	NOTIONAL	CURRENT	NON CURRENT	CURRENT	NON CURRENT
		-	-	21	-
Interest rate swaps	150,000	-	148	315	-
Equity swaps Exchange rate forward	3,004 5,307	40	188	2	-

	31-12-2019	RESULT	EQUITY	30-09-2020
Fair value interest rate swaps	(38)	-	(130)	(168)
Fair value exchange rate forward	(16)	(116)	-	(132)
Fair value equity swaps	(346)	(379)	(36)	(761)
DERIVATIVES	(400)	(495)	(166)	(1,061)
Deferred income tax assets	90	112	37	239
DEFERRED INCOME TAX	90	112	37	239
	(310)	(383)	(129)	(822)

	31-12-2020	RESULT	EQUITY	30-09-2021
Fair value interest rate swaps	(51)	-	30	(21)
Fair value exchange rate forward	-	(2)	228	226
Fair value equity swaps	(950)	349	434	(167)
DERIVATIVES	(1,001)	347	692	38
Deferred income tax liabilities	-	(33)	(66)	(99)
Deferred income tax assets	225	(45)	(104)	76
DEFERRED INCOME TAX	225	(78)	(170)	(23)
	(776)	269	522	15

31-12-2020	30-09-2021
Cash 566	565
15,000 Other deposits	15,000
Terms deposits i) 137,719	27,815
153,285	43,380

22. Shareholder's equity

22.1. Share capital

At 31 December 2020 and 30 September 2021, the share capital of NOS was 5,151,613.80 euros, represented by 515,161,380 shares registered book-entry shares, with a nominal value of 1 euro cent per share.

The main shareholders as of 31 December 2020 and 30 September 2021 are:

	31-12-2020		30-09-2021
	NUMBER OF SHARES	% SHARE CAPITAL	NUMBER OF SHARES	% SHARE CAPITAL
ZOPT. SGPS. SA (1)	268.644.537	52.15%	268.644.537	52.15%
Sonae, SGPS, S.A. (2)	38.000.000	7.38%	38.000.000	7.38%
Mubadala Investment Company			10.323.053
MFS Investment Management	11.049.477	2.14%		0.00%
Norges Bank	11,488,019	2.23%		0.00%
TOTAL	329,182,033	63.90%	316,967,590	61.53%

• (1) In accordance with subparagraphs 1.b) and 1.c) of Article 20 and Article 21 of the Portuguese Securities Code, a qualified shareholding of 52.15% of the share capital and voting rights of company, calculated in accordance with Article 20 of the Securities Code, is attributable to ZOPT SGPS, S.A., Sonaecom SGPS S.A. and the following entities:
  • a. Kento Holding Limited and Unitel International Holdings B.V., as well as Isabel dos Santos, being (i) Kento Holding Limited and Unitel International Holdings, B.V., companies directly and indirectly controlled by Isabel dos Santos, and (ii) ZOPT SGPS S.A., a jointly controlled company by its shareholders Kento Holding Limited, Unitel International Holdings B.V. and Sonaecom SGPS S.A., under the shareholder agreement signed between them;
  • b. Entities in a control relationship with Sonaecom SGPS S.A., namely, SONTEL, BV and SONAE, SGPS, S.A, companies directly and indirectly controlled by Efanor Investimentos, SGPS, S.A., also due of such control and of the shareholder agreement mentioned in a.;
• (2) According to the announcement disclosed to CMVM, on 19 August 2020.

22.2. Capital issued premium

On 27 August 2013, following the completion of the merger between ZON and Optimus SGPS, the Company's share capital was increased by 856,404,278 euros, corresponding to the total number of issued shares (206,064,552 shares), based on the closing market price of 27 August 2013. The capital increase is detailed as follows:

• i)
• ii)

Additionally, the premium for issue of shares was deducted for an amount of 125 thousand euros related to costs with the respective capital increase.

The capital issued premium is subject to the same rules as for legal reserves and can only be used:

a) To cover part of the losses on the balance of the year that cannot be covered by other reserves;

b) covered by the net income of the year or by other reserves;

To increase the share capital. c)

22.3. Own shares

Company law regarding own shares requires the establishment of a non-distributable reserve of an amount equal to the purchase price of such shares, which becomes frozen until the shares are disposed of or distributed. In addition, the applicable accounting rules determine that gains or losses on the disposal of own shares are stated in reserves.

At 30 September 2021 there were 3,002,427 own shares, representing 0.5828% of share capital (31 December 2020: 3,424,754 own shares, representing 0.6648% of the share capital).

Movements in the nine months ended on 30 September 2020 and 2021 were as follows:

	QUANTITY	VALUE
BALANCE AS AT 1 JANUARY 2020	2,595,541	14,655
Acquisition of own shares	1.440.000	4.584
Distribution of own shares - share incentive scheme	(875,646)	(4.931)
Distribution of own shares - other remunerations	(90.294)	(510)
BALANCE AS AT 30 SEPTEMBER 2020	3,069,601	13,798
BALANCE AS AT 1 JANUARY 2021	3,424,754	14.859
Acquisition of own shares	687,000	2.069
Distribution of own shares - share incentive scheme	(963,026)	(3.976)
Distribution of own shares - other remunerations	(146,301)	(599)
BALANCE AS AT 30 SEPTEMBER 2021	3,002,427	12,353

22.4. Reserves

Legal reserve

Company law and NOS Articles of Association establish that at least 5% of the Company's annual net profit must be used to build up the legal reserve until it corresponds to 20% of the share capital. This reserve cannot be distributed except in the event of liquidation of the company, but it may be used to absorb losses after all other reserves have been exhausted, or for incorporation in the share capital.

Other reserves

Under Portuguese law, the amount of distributable reserves is determined according to the individual financial statements of the company prepared in accordance with IAS / IFRS. Thus, on 30 September 2021, NOS had reserves, which by their nature are considered distributable for an amount of approximately 267.5 million euros, not including the net income.

Dividends

The General Meeting of Shareholders held on 19 June 2020 approved a proposal by the Board of Directors for payment of an ordinary dividend per share of 0.278 euros, totalling 143,215 thousand euros. The dividend attributable to own shares amounted to 699 thousand euros. The dividends were paid on 3 July 2020.

	2020
	DIVIDENDS
Dividends	143,215
Dividends of own shares	1699
DIVIDENDS PAID	142,516

The General Meeting of Shareholders held on 21 April 2021 approved a proposal by the Board of Directors for payment of an ordinary dividend per share of 0.278 euros, totalling 143,215 thousand euros. The dividend attributable to own shares amounted to 839 thousand euros. The dividends were paid on 6 May 2021.

	2011
	DIVIDENDS
Dividends	143,215
Dividends of own shares	(839)
DIVIDENDS PAID	142,376

23. Non-controlling interests

The movements of the non-controlling interests occurred during the nine months ended on 30 September 2020 and 2021 and the results attributable to non-controlling interests for the year are as follows:

	31-12-2019	ATTRIBUTABLE PROFITS	OTHERS	30-09-2020
NOS Madeira	5,502	(362)	(1)	5,139
NOS Acores	1.540	(211)	11	1.328
	7,042	(573)	(2)	6,467

	31-12-2020	ATTRIBUTABLE PROFITS	OTHERS	30-09-2021
NOS Madeira	5,320	16		5,336
NOS Acores	1.365	(199)		1,166
	6,685	(182)	I	6,502

24. Borrowings

At 31 December 2020 and 30 September 2021, the composition of borrowings was as follows:

	31-12-2020		30-09-2021
	CURRENT	NON-CURRENT	CURRENT	NON-CURRENT
LOANS - NOMINAL VALUE	98,103	855.833	168,748	762,500
Debenture loan		575.000	150,000	440,000
Commercial paper	77,500	262,500		322,500
Foreign loans	18,333	18,333	18,333
Bank overdrafts	2,270		415	1
LOANS - ACCRUALS AND DEFERRALS	2,680	(1,285)	528	(546)
LOANS - AMORTISED COST	100,783	854,548	169,276	761,954
I FASES	66,343	508,966	65,716	477,752
	167,126	1,363,514	234,992	1,239,706

During the nine months ended on 30 September 2021, the average cost of debt of the used lines was approximately 1.3% (2020: 1.2%).

At 30 September 2021 there is no default in terms of capital, interest, conditions for redemption on loans payable or other commitments.

24.1. Debenture loans

At 30 September 2021, NOS has a total amount of 590 million euros of bonds issued:

• i) A private placement in the amount of 150 million euros placed by BPI bank and Caixa - Banco de Investimento in March 2015 maturing in March 2022. The loan bears interest at variable rates, indexed to Euribor and paid semi-annually. The emission has been totally hedged by an interest rate swap.
• ii) A bond issue for an amount of 300 million euros in May 2018, whose maturity occurs in May 2023. The issue bears interest at a fix rate and it is paid annually.
• iii) A bond loan in the amount 50 million euros placed by BPI bank in June 2019 and maturing in June 2024. The loan bears interest at variable rates, indexed to Euribor and paid semi-annually.
• iv) A bond loan in the amount 50 million euros placed by Caixa Geral de Depósitos in July 2019 and maturing in July 2024. The loan bears interest at variable rates, indexed to Euribor and paid semi-annually.
• v) A bond loan in the amount 25 million euros placed by Medio Banca in July 2019 and maturing in July 2024. The loan bears interest at variable rates, indexed to Euribor and paid semi-annually.
• vi) A bond loan in the amount of 15 million euros placed by BPI in July 2021 and maturing in July 2026. The loan bears interest at a variable rate, indexed to the Euribor and paid on a quarterly basis.

At 30 September 2021, an amount of 387 thousand euros, corresponding to interest and commissions, was added to this amount and recorded in the item "Loans - accruals and deferrals".

24.2. Commercial paper

At 30 September 2021, the Company has borrowings of 322.5 million euros in the form of commercial paper. The total amount contracted, under underwriting securities, is of 635 million euros, corresponding to twelve programmes, with six banks, 460 million euros of which bear interest at market rates and 175 million euros are issued in fixed rate. Commercial paper programmes with maturities over one-year totalling 560 million euros (of which 322.5 million euros have been used as of 30 September 2021) are classified as non-current, since the Company can renew unilaterally current issues on or before the programmes' maturity dates and because they are underwritten by the organiser. As such, this amount, although having a current maturity, it was classified as non-current for presentation purposes in the financial position statement.

At 30 September 2021 an amount of 92 thousand euros, corresponding to interest and commissions, was deducted to this amount, and recorded in the item "Loans - accruals and deferrals".

24.3. Foreign loans

In November 2013, NOS signed a Finance Contract with the European Investment Bank for an amount of 110 million euros to support the development of the mobile broadband network in Portugal. In June 2014, the total amount of funds was used. This contract

matures in a maximum period of 8 years from the use of the funds, with partial amortisations of 18.3 million euros per year as of June 2017. At 30 September 2021, the amount in borrowings corresponds to 18.3 million euros.

At 30 September 2021, an amount of 313 thousand euros was deducted from this amount, corresponding to the benefit associated with the fact that the loan with BEI is at a subsidised rate.

All bank borrowings contracted (apart from BEI loan of 18.3 million euros, from public issuance of bonds of 300 million euros from two commercial paper program of 75 and 100 million euros issued in fixed rate, besides finance leases) are negotiated at variable short-term interest rates and their book value is therefore broadly similar to their fair value.

24.4. Leases

At 31 December 2020 and 30 September 2021, the leases refer mainly to rental agreements for telecommunications towers, movie theaters, equipment, shops and vehicles, exclusive acquisition of satellite capacity and rights to use distribution network capacity.

Leases - payments

	31-12-2020	30-09-2021
Until 1 year	91.347	89,721
Between 1 and 5 years	274.163	261,107
Over 5 years	413.997	378.836
	779.507	729,664
Future financial costs (lease)	(204.198)	(186,196)
PRESENT VALUE OF LEASE LIABILITIES	575,309	543,468

Leases - present value

	31-12-2019	30-09-2021
Until 1 year	66.343	65,716
Between 1 and 5 years	190.163	181.494
Over 5 years	318,803	296,258
	575,309	543.468

The maturities of the loans obtained are as follows:

	UNTIL 1 YEAR	31-12-2020 BETWEEN 1 AND 5 YEARS	OVER 5 YEARS	UNTIL 1 YEAR	30-09-2021 BETWEEN 1 AND 5 YEARS	OVER 5 YEARS
Debenture loan	2.343	574.007		150.907	439.480
Commercial paper	78.532	212.463	50,000	(66)	322.474
Foreign loans	17.638	18.078		18.020
Bank overdrafts	2.270			415
Leases	66.343	190,163	318.803	65.716	181.494	296.258
	167,126	994,711	368,803	234,992	943.448	296,258

25. Provisions

At 31 December 2020 and 30 September 2021, the provisions were as follows:

	31-12-2020	30-09-2021
Litigation and other - i)	24,756	29,920
Financial investments - ii)		1,075
Dismantling and removal of assets - iii)	21,604	21,922
Contingent liabilities - iv)	23,720	23,707
Contingencies - other - v)	3,265	2,349
	73,345	78,973

• i) At 30 September 2021, the amount under the item "Litigation and other" corresponds to provisions to cover the legal and others claims in-progress.
• ii) The amount presented in the "Financial Investments" caption corresponds to the responsibilities assumed by the Group towards the associated companies and jointly controlled entities, other than the investment made (Note 11);
• iii) The amount under the item "Dismantling and removal of assets "refers to the estimated future costs discounted to the present value, related with the termination of the use of the space where there are telecommunication towers and cinemas;
• iv) The amount in the item "Contingent liabilities" refers to several provisions recorded for present but not likely obligations, related to the merger by incorporation of Optimus SGPS, namely:
  • a. Extraordinary contribution toward the fund for the compensation of the net costs of the universal service of electronic communications (CLSU): The Extraordinary contribution toward the fund for the compensation of the net costs of the universal service of electronic communications (CLSU) is legislated in Articles 17 to 22 of Law no 35/2012, of 23 August. From 1995 until June 2014, MEO, SA (former PTC) was the sole provider for the universal service of electronic communications, having been designated administratively by the government, i.e. without a formal contest procedure led by the government for that effect, which constitutes an illegality, by the way acknowledged by the European Court of Justice who, through its decision taken in June 2014, condemned the Portuguese State to pay a fine of 3 million euros for illegally designating MEO. In accordance with Article 18 of the abovementioned Law 35/2012, of 23 August, the net costs incurred by the operator responsible for providing the universal service, approved by ANACOM, must be shared between other companies who provide, in national territory public communication networks and publicly accessible electronic communications services. NOS is therefore within the scope of this extraordinary contribution given that MEO has being requesting the payment of CLSU to the compensation fund of the several periods during which it was responsible for providing the services. In accordance with law, the compensation fund can be activated to compensate the net costs of the electronic communications universal service, relative to the period before the designation of the provider by tender, whenever, cumulatively (i) there are net costs, considered excessive, the amount of which is approved by ANACOM, following an audit to their preliminary calculation and support documents, which are provided by the universal service provider, and (ii) the universal service provider requester the

Government compensation for the net costs approved under the terms previously mentioned.

Therefore:

• In 2013, ANACOM deliberated to approve the final results of the CLSU audit presented by MEO, relative to the period from 2007 to 2009, in a total amount of 66.8 million euros, a decision that was contested by the Company. In January 2015, ANACOM issued the settlement notes in the amount of 18.6 million euros related to NOS, SA, NOS Madeira and NOS Açores which were contested by NOS and for which a bail was presented by NOS SGPS (Note 44) to avoid Tax Execution Proceedings. The guarantees have been accepted by ANACOM.

• In 2014, ANACOM deliberated to approve the final results of the CLSU audit by MEO, relative to the period from 2010 to 2011, in a total amount of 47.1 million euros, a decision also contested by NOS. In February 2016, ANACOM issued the settlement notes in the amount of 13 million euros, related to NOS, SA, NOS Madeira and NOS Acores which were also contested and for which it was before also presented bail by NOS SGPS in order to avoid the promotion of respective tax enforcement processes. The guarantees that have been accepted by ANACOM.

• In 2015, ANACOM deliberated to approve the final results of the audit to CLSU presented by MEO relative to the period from 2012 to 2013, in the amount of 26 million euros and 20 million euros, respectively, and as the others, it was contested by NOS. In December 2016, the notices of settlement were issued relating to NOS, SA, NOS Madeira and NOS Acores, corresponding to that period, totalling 13.6 million euros that were contested by NOS and for which guarantees have been already presented by NOS SGPS in order to avoid the promotion of the respective proceedings of tax execution. The guarantees were also accepted by ANACOM.

• In 2016, ANACOM approved the results of the audit to the CLSU presented by MEO related with the period between January and June 2014, for an amount of 7.7 million euros that was contested by NOS, in standard terms.

• In 2017, NOS, SA, NOS Madeira and NOS Acores were notified of the decision of ANACOM concerning the entities that are obliged to contribute toward the compensation fund and the setting of the values of contributions corresponding to CLSU that must be compensated and relating to the months of 2014 in which MEO still remained as provider of the Universal Service, which establishes for all these companies a contribution totalling close to 2.4 million euros. In December 2017, the settlement notes relating to NOS, SA, NOS Madeira and NOS Acores, concerning that period, were issued in the amount of approximately 2.4 million euros, which were challenged by NOS and for which guarantees have also been presented by NOS SGPS, in order to avoid the promotion of their tax enforcement procedures. The guarantees were also accepted by ANACOM.

It is the opinion of the Board of Directors of NOS that these extraordinary contributions to Universal Service (not designated through a tender procedure)

	31-12-2019	INCREASES	DECREASES	DESCONTINUE D UNIT (NOTE 46)	OTHERS	30-09-2020
Dismantling and removal of assets	39,032	597	(73)	-	(14,519)	25,037
Contingent liabilities	23,827	-	-	-	-	23,827
Contingencies - other	1,837	4,452	(31)	-	(2,883)	3,375
	94,959	6,972	(6,414)	-	(17,525)	77,992

Litigation and other 25,753 39,032 597 (73) (14,519) Dismantling and removal of assets 25,037 - 23,827 Contingent liabilities 23,827 - - - - (31) (2,883) Contingencies - other 1,837 4,452 3,375 - 94,959 6,972 (6,414) (17,525) 77,992 - DESCONTINUE 31-12-2020 INCREASES DECREASES D UNIT (NOTE OTHERS 30-09-2021 46) 24,756 3,271 (3,604) 5,497 Litigation and other 29,920 - 1,075 Financial investments 1,075 - - - -
21,604 318
Dismantling and removal of assets 21,922 - - -
23,720 (13) Contingent liabilities 23,707 - - -
3,265 6,822 (352) (7,386) Contingencies - other 2,349 -
73,345 11,486 (3,969) (1,889) 78,973 -

lawsuits.

The movements recorded in "Others", under the heading "Contingencies - other" correspond, predominantly, to compensations to employees.

The net movements for the nine months ended on 30 September 2020 and 2021 reflected in the income statement under Provisions were as follows:

	9M 20	9M 21
Provisions and adjustments (Note 35)	(4.180)	(1,326)
Losses / (gains) of affiliated companies, net (Note 36)	4.102	1.075
Other losses / (gains) non-recurrent (Note 38)	876	6,501
Interests - dismantling	(1,017)	318
Other	777	949
INCREASES AND DECREASES IN PROVISIONS	558	7,517

26. Accrued expenses

At 31 December 2020 and 30 September 2021, this item was composed as follows:

	31-12-2020	30-09-2021
NON-CURRENT
Others	505	454
	505	454
CURRENT
Invoices to be issued by operators i)	59,452	59,277
Investments in tangible and intangible assets	13,071	28.038
Vacation pay and bonuses	24,531	23,381
Taxes (ANACOM and Cinema Law) ii)		7,893
Programming services	8,535	12,876
Content and film rights	10,265	14,156
Professional services	12,960	8,261
Advertising	11,856	6.266
Comissions	6,294	6,044
Costs of litigation procedure activity	7,354	4,739
Energy and water	3,771	2,603
Maintenance and repair	1,694	2,247
Other accrued expenses	16.077	16,522
	175,860	192,303

i) Amounts related to invoices to be billed by operators, mainly international operators, regarding interconnection costs related with international traffic and roaming services.

ii) Amounts related to Anacom licenses and other ICA fees, the billing of which is issued annually in subsequent periods.

Deferred income 27.

At 31 December 2020 and 30 September 2021, this item was composed as follows:

		31-12-2020		30-09-2021
	CURRENT	NON-CURRENT	CURRENT	NON-CURRENT
Advanced billing i)	32.831		33.932
Investment subsidy ii)	397	4.729	397	4.349
	33.228	4.729	34,329	4.349

• i) This item relates mainly to the billing of Pay TV services regarding the following month to the report period and amounts received from NOS Comunicações' customers, related with the recharges of mobile phones and purchase of telecommunications minutes yet unused.
• ii) Deferred income related to the implicit subsidy when the BEI loans were obtained at interest rates below market value (Note 24).

28. Accounts payable - trade

At 31 December 2020 and 30 September 2021, this item was composed as follows:

	31-12-2020	30-09-2021
Suppliers current account	250,711	257,489
Invoices in reception and conference	1.896	1.105
	252,607	258,594

29. Accounts payable - other

At 31 December 2020 and 30 September 2021, this item was composed as follows:

	31-12-2020	30-09-2021
NON-CURRENT
Assignment of receivables without recourse i)	784
Contractual rights ii)	39,266	39,266
	40,050	39,266
CURRENT
Fixed assets suppliers	42,581	22,243
Assignment of receivables without recourse i)	2,319	775
Contractual rights ii)	350	350
Advances from customers	209	223
Others	1,979	2,879
	47,438	26,470
	87,488	65,736

• i) coordinated by Banco Comercial Português and Caixa Geral de Depósitos, which it ceded future credits, amounting 63.9 million euros, to be generated by a portfolio of Corporate customers. In the nine months ended on 30 September 2021, the balance amounts to 0.8 million euros. This does not imply any change in the accounting treatment of the receivables or in the relationship with their customers.
• ii) Liability to settle over the next 20 years, related with the contractual right acquired with the agreement celebration between NOS Comunicações, S.A., NOS Technology S.A., and Vodafone Portugal, Comunicações Pessoais, S.A with the aim of sharing mobile support network infrastructures (passive infrastructure such as towers and masts) and active mobile network (active radio equipment such as antennas, amplifiers and other equipment), as disclosed to the market on 22 October 2020.

30. Operating revenues

Consolidated operating revenues, for the nine months ended on 30 September 2020 and 2021, were as follows:

	3º QUARTER 20	9M 20	3º QUARTER 21	9M 21
SERVICES RENDERED:
Communications service revenues (i)	307,112	899,128	314.078	914,474
Revenue distribution and cinematographic exhibition (ii)	2,605	10,973	6.668	9.917
Advertising revenue (iii)	3,802	10.655	4,555	13,571
Production and distribution of content and channels (iv)	6,255	21,595	6,217	19.177
Others	633	2,018	733	2,012
	320,407	944,369	332,251	959,151
SALES:
Telco v)	20,744	52,827	25,770	64,215
Audiovisuals and cinema exhibition vi)	1,044	4,272	2,122	2,676
	21,788	57,099	27,892	66,891
OTHER OPERATING REVENUES:
Telco	4,501	11,561	6,238	18.158
Audiovisuals and cinema exhibition	246	548	84	717
	4,747	12,109	6,322	18,875
	346,942	1,013,577	366,465	1,044,917

These operating revenues are shown net of inter-company eliminations.

• i) This item mainly includes revenue relating to: (a) basic channel subscription packages that can be sold in a bundle with fixed broadband/fixed voice services; (b) premium channel subscription packages and S-VOD; (c) terminal equipment rental; (d) consumption of content (VOD); (e) traffic and mobile and fixed voice termination; (f) service activation; (g) mobile broadband access; and (h) other additional services (ex: firewall, antivirus) and services rendered related to datacentre management and consulting services in IT.
• ii) This item mainly includes (a) box office revenue at the NOS Cinemas, and (b) revenue relating to film distribution to other cinema exhibitors in Portugal.
• iii) This item includes advertising revenues on television channels and NOS cinemas.
• iv) This item includes revenues related to production of audiovisual content, thought the compilation of acquired contents, and distribution of channels, essentially TVCines.
• v) Revenue relating to the sale of terminal equipment, telephones, and mobile phones.
• vi) This item mainly includes sales of bar products by NOS Cinemas and DVD sales.

This item includes earned income related with non-compliances and contractual penalties, as well as other supplementary income of diverse natures.

31. Wages and salaries

In the nine months ended on 30 September 2020 and 2021, this item was composed as follows:

	3º QUARTER 20	9M 20	3º QUARTER 21	9M 21
Remuneration	16.473	48.622	16.313	46.821
Social taxes	4.185	12.568	4.215	12.516
Social benefits	519	1.506	503	1.540
Other	131	759	(238)	203
	21,308	63,455	20,793	61,080

In the nine months ended on 30 September 2020 and 2021, the average number of

employees of the companies included in the consolidation was 2,383 and 2,206, respectively. At 30 September 2021, the number of employees of the companies included in the consolidation was 2,284 employees.

The costs of compensations paid to employees, since they are non-recurring costs, are recorded in the item "Restructuring costs" (Note 38).

32. Direct Costs

In the nine months ended on 30 September 2020 and 2021, this item was composed as follows:

	3º QUARTER 20	9M 20	3º QUARTER 21	9M 21
Exhibition costs	46.559	124.252	46.460	144.903
Traffic costs	19.346	58.367	17,332	51.479
Capacity costs	11,734	36.683	13.368	37,632
Costs related to corporate customers services	6.971	21.985	11.251	31.358
Shared advertising revenues	2.882	7.409	3.061	9.4011
	87,492	248,696	91,472	274,773

33. Cost of products sold

In the nine months ended on 30 September 2020 and 2021, this item was composed as follows:

	3º QUARTER 20	9M 20	3º QUARTER 21	9M 21
Costs of products sold	18.315	47,535	23,889	57,731
Increases / (decreases) in inventories impairments (Note 16)	637	1.945	649	1.493
	18.952	49.480	24,538	59.224

34.

In the nine months ended on 30 September 2020 and 2021, this item was composed as follows:

	3º QUARTER 20	9M 20	3º QUARTER 21	9M 21
SUPPORT SERVICES
Call centers and customer support	8.689	26,836	8,048	27,274
Administrative support and others	7,775	24,832	7,446	23,101
Information systems	3.000	9.558	3,934	10,745
	19.464	61,226	19,428	61,120
SUPPLIES AND EXTERNAL SERVICES:
Maintenance and repair	10,421	31,520	10,604	31,679
Electricity	4,527	15.396	5,023	13,939
Professional services	2,900	8.163	2,896	8,439
Communications	982	3,031	887	3,203
Installation and removal of terminal equipment	774	2,280	1,195	3,583
Travel and accommodation	284	1,282	271	739
Other supplies and external services	2,644	11,657	3,730	9,322
	22,532	73,329	24,606	70,904

During the nine months ended on 30 September 2021, given the application of IFRS 16, (practical expedient to consider the changes / concessions related to COVID-19 as not being a modification to the lease) discounts from rents were recognised, on the item "Other Supplies and external services", in the amount of approximately 6.3 million euros (4 million euros in 2020).

	3º QUARTER 20	9M 20	3º QUARTER 21	9M 21
Provisions (Note 25)	342	(4,180)	529	(1,326)
Impairment of account receivables - trade (Note 17)	3,682	10,704	3,017	5,579
Impairment of account receivables - others (Note 12)	227	343	24	175
Others	4	(9)	-	(11)
	4,255	6,858	3,570	4,417

	3º QUARTER 20	9M 20	3º QUARTER 21	9M 21
EQUITY METHOD (NOTE 11)
Sport TV	(3,233)	(853)	-	1,075
Dreamia	(39)	(284)	(102)	(170)
Finstar	(289)	1,075	(2,307)	(5,444)
Mstar	(211)	(583)	(122)	(316)
Upstar	(26)	(39)	3	(18)
Others	14	13	(2)	17
	(3,784)	(671)	(2,530)	(4,856)
OTHERS i)	3,150	9,799	115	115
	(634)	9,128	(2,415)	(4,741)

37.

In the nine months ended on 30 September 2020 and 2021, this item was composed as follows:

	3º QUARTER 20	9M 20	3º QUARTER 21	9M 21
TANGIBLE ASSETS
Buildings and other constructions	535	5,820	137	417
Basic equipment	42,158	111,658	45,888	127,043
Transportation equipment		2		1
Tools and dies	10	34	16	44
Administrative equipment	1,048	3,412	1,071	3,245
Other tangible assets	134	432	81	297
	43,885	121,358	47,193	131,047
INTANGIBLE ASSETS
Industrial property and other rights	20,703	66,355	20,506	61,723
	20,703	66,355	20,506	61,723
CONTRACT COSTS
Contract costs	24,568	74,683	24,663	73,933
	24,568	74,683	24,663	73,933
RIGHTS OF USE
Rights of use	14.419	42,837	15,612	46,089
	14,419	42,837	15,612	46,089
INVESTIMENT PROPERTY
Investment property	4	12	4	12
	4	12	4	12
	103,579	305,245	107,978	312,804

38. Restructuring Costs

In the nine months ended on 30 September 2020 and 2021, this item was composed as follows:

	3º QUARTER 20	9M 20	3º QUARTER 21	9M 21
Personnel compensation (Note 25)	3,421	4.103	876	6.501
Personnel costs related to non-recurrent projects	71	387	82	239
	3.492	4.490	958	6,740

39.

In the nine months ended on 30 September 2020 and 2021, the other non-recurring costs / (gains) was composed as follows:

	3º QUARTER 20	9M 20	i 3º QUARTER 21	9M 21
COSTS:
Losses resulting from COVID-19 impacts (Note 48) i)	1.279	42,665
Others	(285)	6,995	460	891
TOTAL	994	49.660	460	891

• i) In the nine months ended on 30 September 2020, as a direct consequence of the slowdown in the Portuguese economy due to the measures adopted to combat the new coronavirus COVID-19, the company recognised the following extraordinary expenses:
  • a. reinforcement of expected credit losses from accounts receivable, in the amount of approximately 20.9 million euros, resulting from the incorporation, in the projection model of future collections, of the new projections released by the Bank of Portugal for the macroeconomic indicators for the next 3 years, and identification of customers particularly affected by the current crisis,

namely, in the cinema business;

• b. not provisioned, in the amount of approximately 7.0 million euros, as a consequence of the foreseeable sharp reduction in their collection;
• c. loss recognition for onerous contracts related to premium sports content, in the amount of 10.8 million euros;
• d. and losses related to the acquisition of various security materials to combat the spread of the new coronavirus COVID-19, in the amount of approximately 4.0 million euros.

In Note 48.1 additional disclosures about the impacts arising from COVID-19 are presented.

40.

In the nine months ended on 30 September 2020 and 2021, financing costs and other financial expenses / (income) were composed as follows:

	3º QUARTER 20	9M 20	3º QUARTER 21	9M 21
FINANCING COSTS:
INTEREST EXPENSE:
Borrowings	2,758	8,282	2,364	7,631
Finance leases	1,609	4,786	6.350	19,306
Derivatives	18	55	16	48
Others	486	2,243	463	732
	4,871	15,366	9,193	27,717
INTEREST EARNED	(812)	(2,056)	(1,009)	(2,771)
	4,059	13,310	8,184	24,946
NET OTHER FINANCIAL EXPENSES ((INCOME):
Comissions and guarantees	943	2,382	635	2,000
Others	20	351	129	385
	963	2,733	764	2,385

Interest earned mainly corresponds to default interests charged to customers.

The interest increase related with leases results, essentially, from the agreement celebrated with Cellnex (Note 47).

41. Net earnings per share

Earnings per share for the nine months ended on 30 September 2020 and 2021 were calculated as follow:

Consolidated net income attributable to shareholders Number of ordinary shares outstanding during the period (weighted average) Basic earnings per share - euros	3º QUARTER 20 44.135 512,466,203 0.09	9M 20 79,121 512,760,589 0.15	3º QUARTER 21 46,147 512,157,441 0.09	9M 21 120,021 512,075,187 0.23
Diluted earnings per share - euros	0.09	0.15	0.09	0.23
	3º QUARTER 20	9M 20	3º QUARTER 21	9M 21
Consolidated net income attributable to shareholders	44.135	72,714	46.147	120.021
Number of ordinary shares outstanding during the period (weighted average) Basic earnings per share - euros	512,466,203 0.09	512,760,589 0.14	512,157,441 0.09	512,075,187 0.23

In the above periods, there were no diluting effects on net earnings per share, so the diluted earnings per share are equal to the basic earnings per share.

42. Guarantees and financial undertakings

47 1 Guarantees

At 31 December 2020 and 30 September 2021, the Group had furnished sureties, guarantees, and comfort letters in favour of third parties corresponding to the following situations:

	31-12-2020	30-09-2021
Tax authorities i)	35,242	35,257
ANACOM ii)	15.000	15.000
Others iii)	10,814	10.820
	61,056	61,077

• i) demanded by the tax authorities in connection with tax proceedings contested by the Company and its subsidiaries (Note 44).
• ii) guarantees for the 5G auction.
• iii) guarantees provided in connection with Municipal Wayleave Tax proceedings and guarantees provided to cinema owners, and bank guarantees given to providers of satellite capacity renting services.

In connection with the finance obtained by Upstar from Banco Comercial Português, totalling 10 million euros, NOS signed a promissory note, proportional to the participation held, of 30% of the loan.

During the first quarterly of 2015, 2016, 2017 and 2018, and following the settlement notes to CLSU 2007-2009, 2010-2011, 2012-2013 and 2014, respectively, NOS constituted guarantees in favour of the Universal Service Compensation Fund in the amount of 23.6 million euros, 16.7 million euros, 17.5 million euros and 3.0 million euros, respectively, in order to prevent the introduction of tax enforcement proceedings in order to enforce recovery of the amounts paid.

In addition to the guarantees required by the tax authorities, sureties were set up for the current fiscal processes, which NOS was a surety for NOS SA for an amount of 14.1 million euros.

42.2. Other undertakings

Covenants

Of the loans obtained, in addition to being subject to the Group complying with its operating, legal and fiscal obligations, 100% are subject to cross-default, Pari Passu and Negative Pledge clauses and 87% to ownership clauses.

In addition, approximately 20% of the total loans obtained require that the consolidated net financial debt does not exceed 3 times consolidated EBITDA after leasing payment, approximately 4% of the total loans obtained require that the consolidated net financial debt does not exceed 3.5 times consolidated EBITDA after leasing payment, approximately 2% of the total loans obtained require that the consolidated net financial debt does not exceed 4 times consolidated EBITDA after leasing payment and approximately 12% require that the consolidated net financial debt does not exceed 5 times consolidated EBITDA.

Net Financial Debt = Loans - Leasings - Cash and Cash Equivalents

EBITDA = Operational Result + Depreciation, amortisation and impairment losses + restructuring costs + Losses / (gains) on sale of assets + Other losses / (gains) nonrecurrent

EBITDA after leasing payments = EBITDA - Leasing payments (Capital and Interest)

Assignment agreements football broadcast rights

In December 2015, NOS signed a contract with Sport Lisboa e Benfica - Futebol SAD and Benfica TV, SA of television rights of home matches of football NOS' league, broadcasting rights and distribution of Benfica TV Channel. The contract began in 2016/2017 sports season, had an initial duration of three years, and might be renewed by decision of either party up to a total of 10 sports seasons, with the overall financial consideration reaching the amount of 400 million euros, divided into progressive annual amounts.

Also in December 2015, NOS signed a contract with Sporting Clube de Portugal - Futebol SAD and Sporting and Communication Platforms, S.A. for the assignment of the following rights:

• 1)
• 2)
• 3) The right of transmission and distribution of Sporting TV Channel;
• 4) The right to be its main sponsor.

The contract will last 10 seasons, concerning the rights indicated in 1) and 2) above, starting in July 2018, 12 seasons in the case of the rights stated in 3) starting in July 2017 and 12 and a half seasons in the case of the rights mentioned in 4) beginning in January 2016, with the overall financial consideration amounting to 446 million euros, divided into progressive annual amounts.

Also in December 2015, NOS SA has signed contracts regarding the television rights of home senior team football games with the following sports clubs:

• 1)
• 2) Os Belenenses Sociedade Desportiva Futebol, SAD
• 3)
• 4)
• 5)
• 6)
• 7)
• 8)

The contracts began in the 2019/2020 sports season and last up to 7 seasons, apart from

the contract with Sporting Clube de Braga - Futebol, SAD which lasts 9 seasons.

During the year of 2016, NOS SA has signed contracts regarding the television rights of home senior team football games with the following sports clubs:

• 1)
• 2)
• 3)
• 4)
• 5)
• 6)
• 7)
• 8)
• 9)

The contracts began in the 2019/2020 sports season and last up to 3 seasons.

In May 2016, NOS and Vodafone have agreed on reciprocal availability, for several sports seasons, of sports content (national and international) owned by the companies, in order to assure to both companies, directly by the assigning party or indirectly through the transfer to third party content distribution channels or models, the availability of broadcasting rights of the sports clubs home football games, as well as the broadcasting and distribution rights of sports and sports clubs channels, whose rights are owned by each of the companies in each moment. The agreement came into force from the beginning of the sports season 16/17, assuring access to Benfica's channel and Benfica's home football games to NOS' and Vodafone's clients, independent from the channel where these football games are broadcast.

Considering that the contract signed allowed for the possibility of extending the agreement to the other operators, in July 2016 MEO and Cabovisão joined the agreement, ending the lack of availability of Porto Canal in the NOS's channel grid, assuring that every Pay TV client can have access to every relevant sports content, regardless of which operator they use.

Following the agreement signed with the remaining operators, which is being made directly in some cases and through channel yield to third parties in others, as a counterpart of the reciprocal provision of rights, the global costs are shared according with retailer telecommunications revenues and Pay TV market shares.

The estimated cash flows are estimated as follows:

Seasons	2021/22	Following
Estimated cash-flows with the contract signed by NOS with the sports entities*	123.8 ME	629.3 ME
NOS estimated cash-flows for the contracts signed by NOS (net amounts charged to the operators) and for the contracts signed by the remaining operators	52.1 ME	336.2 ME

* Includes direct broadcasts of games and channels, advertising and others.

Considering that, following the celebrated agreements with the remaining operators, the risks and benefits associated to contracts with teams are shared amongst the operators, the agreement was considered a collaborative agreement. For this reason, the revenue (with operators) is compensated with the expenses with teams.

Network sharing contract with Vodafone

NOS and Vodafone Portugal celebrated on 29 September 2017 an agreement of infrastructure development and sharing with a nationwide scope. This partnership allows the two Operators providing their commercial offers under a shared network at the beginning of 2018.

The agreement covers the reciprocal sharing of dark fibre in approximately 2.6 million of homes in which each of the entities shares with the other one an equivalent investment value, in other words, they share similar goods. It is assumed that both companies retain full autonomy, independence, and confidentiality concerning the design of the commercial offers, the management of the customers' database and the choice of technological solutions they might decide to implement, that did not originate any impact on the consolidated financial statements (according to IAS 16, this exchange of similar non-monetary assets will be presented on a net basis).

The partnership has also been extended to mobile infrastructure sharing where it is agreed a minimum sharing of 200 mobile towers.

Celebrated agreements regarding the sharing of mobile network support infrastructure

On 22 October 2020, NOS Comunicações S.A. and NOS Technology, on the one hand, and Vodafone Portugal, Comunicações Pessoais, S.A., on the other hand, celebrated a set of agreements regarding the sharing of mobile network support infrastructure (passive infrastructures such as towers and poles) and activemobile network elements (active radio equipment such as antennas, amplifiers and remaining equipment).These agreements have the following characteristics:

a) the agreements have a nationwide scope with diverse geographical application according to the higher or lower level of population density. In higher density geographies, typically larger urban areas, the parties will pursue synergies by sharing support infrastructure. In lower density areas, typically rural and interior locations, in addition to shared use of support infrastructure, the parties will also share active mobile network.

b) the agreements focus on assets currently held, or that may be held by each party in the future, and on existing 2G, 3G and 4G technology. Incorporation of 5G technology in these agreements will depend on eac to deploy this technology.

c) the agreements do not encompass spectrum sharing between the operators and each party will maintain exclusive strategic control of its networks, thus ensuring full competitive, strategic and commercial independence and the ability to differentiate in terms of customer service and provision.

Each party retains the ability to develop its mobile communications network independently.

These agreements will enable NOS to invest more efficiently by capturing value through synergies. NOS will also be able to deploy its mobile network faster and in a more environmentally responsible way, thus benefitting customers and remaining stakeholders.

Sharing of mobile infrastructure represents an important contribution towards greater geographical cohesion and digital inclusion, both of which are essential to the sustainable development of the country.

	Balances at 31 December 2020
	ACCOUNTS RECEIVABLES AND PREPAID EXPENSES	ACCOUNTS PAYABLE AND DEFERRED INCOME	BORROWINGS
ASSOCIATED COMPANIES	24,334	14,707	-
Big Picture 2 Films	16	28	-
Sport TV	24,318	14,679	-
JOINTLY CONTROLLED COMPANIES	13,235	2,561	2,917
Dreamia Holding BV	86	-	2,907
Dreamia SA	1,819	899	10
Finstar	9,510	71	-
Mstar	10	1,449	-
Upstar	873	142	-
ZAP Media	937	142	-
OTHER RELATED PARTIES	10,255	3,562	-
Digitmarket-Sistemas de Informação,SA	819	563
Banco BIC Português, S.A.	199	-	-
MDS Corretor de Seguros, SA	110	-	-
Modelo Continente Hipermercados,SA	1,550	48	-
S21SEC Portug-Cyber Security Services,SA	264	539	-
SC-Consultadoria,SA	168	-	-
SFS, Gestão e Consultoria, S.A.	1	223	-
Sierra Portugal, SA	489	(5)	-
Sonae MC – Serviços Partilhados, SA	1,373	-	-
UNITEL S.a.r.l.	2,364	1,853	-
Worten-Equipamento para o Lar,SA	1,165	135	-
Other related parties	1,753	206	-
	47,824	20,830	2,917

	30/09/2020
		SUPPLIES AND
	SERVICES RENDERED	EXTERNAL SERVICES	INTEREST GAINS	INTEREST LOSSES
ASSOCIATED COMPANIES	1,063	14,840	-	-
Big Picture 2 Films	63	1,355	-	-
Sport TV	1,000	13,485	-	-
JOINTLY CONTROLLED COMPANIES	10,906	210	58	-
Dreamia Holding BV	-	-	49	-
Dreamia SA	2,882	101	10	-
Finstar	7,397	(2)	-	-
MSTAR	9	-	-	-
Upstar	419	111	-	-
ZAP Media	199	-	-	-
OTHER RELATED PARTIES	20,798	12,582	-	-
Banco BIC Português, S.A.	1,317	-	-	-
BPI	700	-	-	-
Cascaishopping- Centro Comercial, S.A.	11	348	-	-
Centro Colombo- Centro Comercial, S.A.	13	836	-	-
Centro Vasco da Gama-Centro Comercial,SA	11	440	-	-
Continente Hipermercados, S.A.	279	32	-	-
Digitmarket-Sistemas de Informação,SA	10	5,186	-	-
EFACEC Engenharia e Sistemas	41	777	-	-
EFACEC Serviços Corporativos	1,314	-	-	-
Gaiashopping I- Centro Comercial, S.A.	11	203	-	-
Insco Insular de Hipermercados, S.A.	133	28	-	-
Maiashopping- Centro Comercial, S.A.	7	122	-	-
MDS Corretor de Seguros, SA	643	-	-	-
Modalfa-Comércio e Serviços,SA	119	-	-	-
Modelo - Dist.de Mat. de Construção,S.A.	102	-	-	-
Modelo Continente Hipermercados,SA	3,209	56	-	-
Norteshopping-Centro Comercial, S.A.	2,596	648	-	-
PHARMACONTINENTE - Saúde e Higiene, S.A.	230	-	-	-
S21SEC Portug-Cyber Security Services,SA	36	1,813	-	-
SC-Consultadoria,SA	713	-	-	-
SDSR - Sports Division SR, S.A.	219	-	-	-
SFS - Financial Services, IME, S.A.	109	-	-	-
SFS, Gestão e Consultoria, S.A.	5	221	-
Sierra Portugal, SA	1,797	73	-	-
Solinca - Health & Fitness, SA	241	-	-	-
Sonae Arauco Portugal, S.A.	271	-	-	-
Sonae MC – Serviços Partilhados, SA	2,306	-	-	-
Unitel S.a.r.l.	131	125	-	-
Unitel T+	213	274	-	-
Worten-Equipamento para o Lar,SA	2,410	835	-	-
Other related parties	1,599	563	-	-
	32,767	27,631	58	-

	Balances at 30 September 2021
	ACCOUNTS	ACCOUNTS
	RECEIVABLE	PAYABLE
	S AND	AND	BORROWINGS
	PREPAID	DEFERRED
	EXPENSES	INCOME
ASSOCIATED COMPANIES	20,886	13,864	-
Big Picture 2 Films	7	67	-
Sport TV	20,879	13,797	-
JOINTLY CONTROLLED COMPANIES	11,640	1,591	3,002
Dreamia Holding BV	67	-	2,993
Dreamia SA	1,288	450	9
Finstar	9,530	673	-
Mstar	10	-	-
Upstar	338	351	-
ZAP Media	407	142	-
DUALGRID	-	(25)	-
OTHER RELATED PARTIES	5,207	2,821	-
Banco BIC Português, S.A.	306	-	-
Cascaishopping- Centro Comercial, S.A.	9	280	-
Centro Colombo Centro Comercial, SA	89	478	-
Centro Vasco da Gama-Centro Comercial,SA	82	551	-
Maiashopping- Centro Comercial, S.A.	32	323	-
MDS Corretor de Seguros, SA	153	-	-
Modelo Continente Hipermercados,SA	1,051	111	-
Norteshopping-Centro Comercial, S.A.	76	420	-
S21SEC Portug-Cyber Security Services,SA	175	382	-
SC-Consultadoria,SA	163	-	-
Sierra Portugal, SA	474	7	-
Sonae MC – Serviços Partilhados, SA	338	-	-
UNITEL S.a.r.l.	158	234	-
Worten-Equipamento para o Lar,SA	843	(10)	-
Other related parties	1,258	45	-
	37,733	18,276	3,002

	SU/U9/2021
	SERVICES RENDERED	SUPPLIES AND EXTERNAL SERVICES	INTEREST GAINS	INTEREST LOSSES
ASSOCIATED COMPANIES	1,707	14,786
Big Picture 2 Films	6	245
Sport TV	1,701	14,541
JOINTLY CONTROLLED COMPANIES	8,633	(24)	67
Dreamia Holding BV			67
Dreamia SA	2,973	(168)
Finstar	5,436	(1)
Mstar	(2)
Upstar	226	54
DUALGRID		91
OTHER RELATED PARTIES	15,851	8,788		(4)
Banco Bic Português, S.A.	1,293
Capwatt Services, SA	102
Cascaishopping- Centro Comercial, S.A.	10	371
Centro Colombo- Centro Comercial, S.A.	13	910
Centro Vasco da Gama-Centro Comercial,SA	10	636
Continente Hipermercados, S.A.	364	26
Digitmarket-Sistemas de Informação,SA	(114)	1,397
Gaiashopping I- Centro Comercial, S.A.	8	114
Insco Insular de Hipermercados, S.A.	142	31
Maiashopping- Centro Comercial, S.A.	7	371
MDS Corretor de Seguros, SA	829
Modalfa-Comércio e Serviços,SA	269
Modelo Continente Hipermercados,SA	4,142	105
Modelo - Dist.de Mat. de Construção,S.A.	104
Norteshopping-Centro Comercial, S.A.	19	697
Olivedesportos- Publicidade Televisão e Media	11	2,181
PHARMACONTINENTE - Saúde e Higiene, S./	266
S21SEC Portug-Cyber Security Services,SA	40	1,801
SC-Consultadoria,SA	674
SDSR - Sports Division SR, S.A.	155
SFS - Financial Services, IME, S.A.	178
SFS, Gestão e Consultoria, S.A.	8	295
Sierra Portugal, SA	1,666	57
Solinca Classic, S.A.	204
Sonae Arauco Portugal, S.A.	224
Sonaecom - Serviços Partilhados, S.A	137
Sonae MC - Serviços Partilhados, SA	2,110
UNITEL S.a.r.l.	(1,313)	(1,417)
Worten-Equipamento para o Lar,SA	2,815	631
ZIPPY - Comércio e Distribuição, SA	125
Other related parties	1,353	582		(4)
	26,191	23,550	67	(4)

Transactions in the nine months ended on 30 September 2021

The Company regularly performs transactions and signs contracts with several parties within the NOS Group. Such transactions were performed on normal market terms for similar transactions, as part of the contracting companies' current activity.

Due to the large number of low value related parties' balances and transactions, it was grouped in the heading "Other related parties" the balances and transactions with entities whose amounts are less than 100 thousand euros

44.

44.1.

· NOS SA, NOS Acores and NOS Madeira brought actions for judicial review of ANACOM's decisions in respect of the payment of the Annual Fee of Activity (for 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019 and 2020) as Electronic Communications Services Networks Supplier, and furthermore the refund of the amounts that meanwhile were paid within the scope of the mentioned acts of

settlement was requested. Also NOS Wholesale brought action for judicial review of ANACOM's decision in respect of payment of the Annual Fee of Activity for 2020.

The settlement amounts are, respectively, as follows:

• thousand euros, 2012: 6,283 thousand euros, 2013: 7,270 thousand euros, 2014: 7,426 thousand euros, 2015: 7,253 thousand euros, 2016: 8,242 thousand euros, 2017: 9,099 thousand euros, 2018: 10,303 thousand euros, 2019: 10,169 thousand euros and 2020: 10,184 thousand euros;
• NOS Açores: 2009: 29 thousand euros, 2010: 60 thousand euros, 2011: 95 thousand euros, 2012: 95 thousand euros, 2013: 104 thousand euros, 2014: 107 thousand euros, 2015: 98 thousand euros, 2016: 105 thousand euros, 2017: 104 thousand euros, 2018: 111 thousand euros, 2019: 107 thousand euros and 2020: 120 thousand euros;
• thousand euros, 2012: 132 thousand euros, 2013: 149 thousand euros, 2014:165 thousand euros, 2015: 161 thousand euros, 2016: 177 thousand euros, 2017: 187 thousand euros, 2018: 205 thousand euros, 2019: 195 thousand euros and 2020: 202 thousand euros;
• NOS Wholesale: 2020: 36 thousand euros.

This fee is a percentage decided annually by ANACOM (in 2009 it was 0.5826%) of operators' electronic communications revenues. NOS SA, NOS Açores and NOS Madeira claim, namely: i) addition to defects of unconstitutionality and illegality, related to the inclusion in the cost accounting of ANACOM of the provisions made by the latter, due to judicial proceedings against the latter (including these appeals of the activity rate) and ii) that only revenues from the electronic communications business per se, subject to regulation by ANACOM, should be considered for the purposes of the application of the percentage and the calculation of the fee payable, and that revenues from television content should be excluded. Five sentences were handed down on the matter, of which ANACOM appealed to the Central Administrative Court. To date, no judgment has been issued by the TCA in any of these cases.

The remaining proceedings are awaiting trial and/or decision.

During the first quarter of 2017, NOS was notified by ANACOM of the initiation of an infraction process related to communications of prices update at the end of 2016, beginning of 2017. In the end of the last trimester of 2020, ANACOM notified NOS of the accusation, with the practice of 4 very severe offences and 1 severe offence related, respectively, with i) the non-communication to customers of the right to rescind the contract with no charges, with (ii and iii) the supposed non-communication of pricing update and with (iv) the adequate advance and, yet, (v) the lack of information to be communicated to ANACOM. However, ANACOM did not present any value for a fine, except in relation to the with severe offence. In this case, NOS is given the possibility to settle the fine by the minimum, in the amount of 13 thousand euros, which NOS did. NOS presented its written defense on 29 January 2021. The Group is awaiting for ANACOM to deliver a final decision.

·

45. Share incentive scheme

On 23 April 2014, the General Meeting approved the Regulation on Short and Medium-Term Variable Remuneration, which establishes the terms of the Share Incentive Scheme ("NOS Plan"). This plan aimed at more senior employees with the vesting taking place three years being awarded, assuming that the employee is still with the company during that period.

At 30 September 2021, the unvested plans are:

	NUMBER OF
	SHARES
NOS PLAN
Plan 2018	-
Plan 2019	762,969
Plan 2020	1,414,757
Plan 2021	1,280,688

During the nine months ended on 30 September 2021, the movements that occurred in the plans are detailed as follows:

	NOS PLAN 2018	NOS PLAN 2019	NOS PLAN 2020	NOS PLAN 2021	TOTAL
BALANCE AS AT 31 DECEMBER 2020:	912.727	784.163	1.454.680		3,151,570
MOVEMENTS IN THE PERIOD:
Awarded				1.184.127	1.184.127
Vested	(863,266)	(36.954)	(61.998)	(808)	(963,026)
Cancelled / elapsed / corrected (1)	(49.461)	15.760	22.075	97.369	85.743
BALANCE AS AT 30 SEPTEMBER 2021		762.969	1,414,757	1.280.688	3,458,414

(1) Refers mainly to correction made for dividends paid, exit of employees not entitled to the vesting of shares and other adjustments resulting from the way the shares are vested.

The share plans costs are recognised over the year between the awarding and vesting date of those shares. The responsibility is calculated taking into consideration the share price at award date of each plan, for plans settled in shares, or at the closing date, for plans settled in cash. As at 30 September 2021, the outstanding responsibility related to these plans is 5.194 thousand euros and is recorded in Reserves, for an amount of 4.122 thousand euros, for plans liquidated in shares and in Accrued expenses, for an amount of 1.072 thousand euros, for plans liquidated in cash.

The costs recognised in previous years and in the financial year, and its liabilities are as follows:

	ACCRUED EXPENSES	RESERVES	TOTAL
Costs recognised in previous years related to plans as at 31 December 2020	1.045	5.141	6.186
Costs of plans vested in the period		(4.265)	(4.265)
Costs incured in the period and others	27	3.246	3.273
TOTAL COST OF THE PLANS	1.072	4.122	5.194

Exceptionally, in the nine months ended on September of 2021, the plans to be settled in cash due in the year, were paid in shares.

46. Discontinued operations unit

On 1 April 2020, NOS had reached an agreement with Tofane Global, SAS ("TOFANE") and IBASIS PORTUGAL, SA ("iBasis"), to sell all of NOS Internacional Carrier Services, SA's ("NOS ICS") share capital to iBasis, TOFANE's fully owned subsidiary and to supply NOS group companies with wholesale international voice and SMS services, which were

previously provided by NOS ICS.

With this transaction NOS will increase its focus on its core telecom business whilst optimizing the underlying cost structure for international voice and SMS traffic.

Completion of this agreement occurred on 29 June 2020. The sale price amounted to 9.6 million euros and the receipt of 5.5 million euros will take place over 5 years. Currently 4.1 million euros are yet to be received (Note 12).

In the nine months ended on 30 September 2020, the contributions to the results of this discontinued operating unit are as follows:

	9M 20
REVENUES:	51,788
COSTS, LOSSES AND GAINS:
Wages and salaries	122
Direct costs	50,864
Supplies and external services	213
Taxes	242
Depreciation, amortisation and impairment losses	3
	51,444
INCOME BEFORE FINANCIAL RESULTS AND TAXES	344
Net foreign exchange losses / (gains)	(છ)
Net other financial expenses / (income)
	(8)
INCOME BEFORE TAXES	352
Capital gain on disposal of the discontinued unit	6.151
Income taxes	96
NET CONSOLIDATED INCOME FROM DISCONTINUED OPERATIONS	6.407
EARNINGS PER SHARES
Basic - euros	0.00
Diluted - euros	0.00

In the nine months ended on 30 September 2020, cash flows from operating activities amounted to 2.3 million euros.

In the period ended on 30 September 2020, the net cash flows generated from the sale of the company are:

· Cash received for the sale of the company: 4,359 thousand euros

Cash deducted from debt sold as part of the discontinued operation: 2,256 thousand euros

•

47. Disposal of NOS Towering

On 14 April 2020, NOS Comunicações, SA and Cellnex Telecom, SA entered into an agreement whose purpose is to transfer to Cellnex the shares representing the entire share capital of NOS Towering, SA, encompassing the sale of approximately 2,000 sites (towers and rooftops).

On the same date, the parties entered into a long-term agreement to whereby Cellnex will provide the NOS Group with active network hosting over the passive infrastructure acquired, for a period of 15 years, automatically renewed for equal periods. In addition, this agreement foresees a perimeter increase of up to 400 additional sites over the next 6 years.

The potential value of the agreements to be reached over a 6-year period is 600 million

euros, dependent on selling additional sites and changing site settings. The expected impact on pro forma operating cash flow for NOS in year 1 is approximately 22 million euros.

This agreement will enable NOS to continuously optimize and expand its state-of-the-art mobile network, while reinforcing its ability to invest in the long-term value of the company. By joining forces with Cellnex in Portugal, through this strategic partnership, NOS ensures the supply of current and future needs of its passive mobile infrastructure. In addition to this agreement, NOS will continue to pursue other investment efficiency opportunities. The approval of this transaction, which constitutes a sale and lease back, occurred after the date of the statement of financial position.

At 30 September 2020, the operation was materialized with Cellnex payment of 398.6 million euros. The received value for the sale of NOS Towering decomposes on the following way:

• Assets sale: 374 million euros;
• Cash deducted from the debt sold with the company: 45 million euros;
• · Working capital and others: 20.4 million euros.

The operation of the sale of NOS Towering configures, from an accounting point of view and for the purposes of consolidated accounts, a sale and lease back, on which, the asset under right of use, resulting from the lease, is equal to the carrying amount of the sold asset, so the operation, in the initial moment, did not generate impacts on the results.

48. Other matters

48.1. COVID-19

With the emergence, spread and infection of the new coronavirus COVID-19, several measures were taken to contain the virus with very significant estimated impacts on the Portuguese economy, as well as in other economies, namely, limitations on travel rights and closure of several facilities and establishments.

As a result of the population's confinement measures, people and companies were and are being forced to adapt to a new reality, transforming the way they work and the way we socialize.

In the uncertainty posed by this threat, it is essential that companies design and implement, in a timely manner, structured and efficient contingency plans that guarantee employee protection and business continuity or that, at least, mitigate the resulting effects.

Health and safety risk and business interruption

In this context, from the very first moment, NOS has a permanent COVID-19 Monitoring Office, whose mission is to provide the organization with the necessary conditions to manage this risk, as well as to analyse and monitor the evolution of the different phases. The main objectives of the COVID-19 Monitoring Office are to ensure that NOS, its Companies, its Employees and Partners are prepared to face the COVID-19 Pandemic, in order to:

i. Minimize the health impact to employees and to all those with whom they;

ii. Guarantee business continuity, ensuring the provision of services considered critical, for which it is necessary to certify the availability of key resources employees, suppliers, agents, partners, etc. - and the need to adapt to the specific requirements of clients.

Both objectives are supported by a coherent and structured communication on the topic with the different stakeholders and a high level articulation with official authorities, in particular with the General Health Directorate.

Our main concern is of course the health and well-being of all our employees. To ensure employee health and safety and business continuity, from an early stage we implemented a number of protective measures such as remote work practices, on site personal protection, travel restrictions to employees and visitors and also restrictions to participate in non-essential events and meetings and reinforced hygiene measures.

We are committed to support our customers during the current COVID-19 public health crisis. At a time when many Portugueses are changing their habits and routines and working remotely, keeping our customers connected is the main objective of NOS. To this end, during a determined period of time, we facilitate access to services, through data offers, temporary suspension of monthly payment of premium sports channels, reinforcement of the ability to implement business services and guaranteeing a safe and secure service in our stores, in order to safeguard our customers, employees and partners. The NOS Telecommunications Network supports a set of basic services of our society, which include our National Health System. In this context of global health emergency, the maintenance of Portuguese communications is a fundamental task.

Liquidity and interest rate risk

Prudent liquidity risk management implies maintaining an adequate level of cash and cash equivalents to meet assumed liabilities, associated with the negotiation of credit lines with financial institutions.

At 30 September 2021, the average maturity of the group's financing is 2.4 years, with no non-compliance with the covenants due to the reduction in results projected for this year, being expected.

Credit risk

Credit risk is essentially related to credit for services provided to customers, monitored on a regular business basis and for which expected credit losses are determined considering: i) the customer's risk profile; ii) the average receipt period; iii) the client's financial condition; and iv) future perspective of the evolution of the collections.

Impacts

This is a situation of uncertainty and very dynamic, which makes it extremely difficult to estimate impacts, which always have to consider several scenarios and countless variables. Evidence of this difficulty is the historical drops and sharp volatility of exchanges, all over the world; the great variations that occurred in the last quarters of the future projections of macroeconomic indicators, as well as the disparity of these projections between the various agencies.

The impacts on NOS were felt in the results of the financial year ended on 31 December 2020, with a drop in revenues, consolidated EBITDA and operational cash-flows of -6.2% (-90.5 million euros); -5.7% (-36.8 million euros) and -33.8% (-65.2 million euros),

respectively, which shows a reduction in activity in:

• i. Cinemas and Audiovisuals: complete closure of NOS' theatres from 16 March to 2 July, and postponement of a number of movie premieres, slightly offset by cinema rentals negotiations;
• ii. Roaming and international calls: traffic and revenues impacted by restrictions imposed on international travel;
• iii. Equipment sales: with the closure of shopping centers and travel restrictions, there was a reduction in the sale of mobile phones and equipment, which is partially offset by the increase in online sales (in the long run there may be a positive effect on the evolution customer take-up of digital channels);
• iv. Mobile data revenues: quarantine and isolations imply an increase in the use of wireless networks, reducing the use of mobile data; and,
• v. Drop in revenue related to premium sports during the period when the national championship was suspended and advertising content.

On the other hand, the projections made for the Portuguese economy, led to a reassessment of projections and estimates, which resulted in the reinforcement, in the first quarter, of impairments of accounts receivable (27.9 million euros) and other costs recognised, related to onerous contracts (10.8 million euros) (Note 39), as well as the recording of impairments in the item "Losses / (Gains) in subsidiaries", in the amount of 9.5 million euros (Note 36). In line with the current recommendations, the Group proceeded to sensitivity analysis to the assumptions used in the impairment tests to Goodwill conducted in the end of 2020, with no evidence of impairment being concluded (Note 8). The most affected segment by COVID-19 was the cinemas one, with a recovery estimation to pre-pandemic values in 2023.

In the nine months ended on 30 September of 2021, the impacts on NOS were felt particularly in the Cinemas and Audiovisuals activity with the closure of movie theaters between mid-January 2021 and April 2021 and in the Telco segment with impacts in terms of roaming revenues.

In terms of the projection of future impacts, these will depend on the extent, namely timing, of the spread of the virus and the respective containment measures, making it difficult to predict the scale of the impact, in the knowledge, however, that it will occur in the areas mentioned above. In spite of this uncertainty, and taking into account the most recent projections on the evolution of the pandemic and the Portuguese economy, an improvement in the activity of the various NOS business segments is projected in the coming quarters. Additionally, NOS 'capital structure is within the 2x Net Financial Debt / EBITDA After Leasings Payments (EBITDA - Leasings Payments (Capital and Interest)) threshold, so the Board of Directors believes that the company will overcome the negative impacts caused by this crisis, without jeopardizing business continuity, this conviction is demonstrated with the maintenance of the shareholders' remuneration policy.

48.2. Preventive seizure of 26.075% of the share capital of NOS SGPS, S.A.

On 4 April 2020, SONAECOM, SGPS, SA, holder of 50% of the capital of ZOPT, SGPS, SA (hereinafter "ZOPT"), was informed by this company of the communication received from the Central Criminal Investigation Court of Lisbon (hereinafter Tribunal) to proceed to the preventive seizure of 26.075% of the share capital of NOS, SGPS, SA, corresponding to half of the shareholding in NOS held by ZOPT and, indirectly, by the companies Unitel International Holdings, BV and Kento Holding Limited ", controlled by Eng. 1 Isabel dos Santos.

Under the terms of the aforementioned decision, the foreclosed shares are deprived of the exercise of voting rights and the right to receive dividends, the latter of which must be deposited with Caixa Geral de Depósitos, S.A. at the court's discretion.

The other half of ZOPT's participation in NOS share capital, corresponding to an identical percentage of 26.075% - and which, at least in line with the criterion used by the Court, embodies the 50% held in ZOPT by SONAECOM - was not subject to seizure, nor the rights attached to it were subject to any limitation.

On 12 June 2020, ZOPT was authorized by the Lisbon Central Criminal Investigation Court to exercise the voting right corresponding to the 26.075% of NOS share capital preventively seized under the aforementioned Court order.

Still in June 2020, the Investigating Judge rejected the third-party embargoes deducted by ZOPT based on the Portuguese courts' inability to assess and decide upon them. This decision, having been appealed by ZOPT, was revoked by the Court of Appeal already in 2021.

Developments are awaited, namely the judicial pronouncement on the seizures.

49. Subsequent events

On 27 October, the auction for the allocation of 5G frequencies ended and NOS was the company that invested the most and acquired the most spectrum, completely fulfilling all the objectives outlined in its strategy for the fifth generation of mobile networks. Total investment of NOS in the acquired spectrum bands represents a total value of approximately 165 million euros, with payment of 50% of this amount for a maximum period of 7 years, and NOS may anticipate the payment of deferred amounts benefiting from a financial update.

Up until this document' date of approval, no other relevant events that are worth being mentioned in this report took place.

These financial statements are a translation of financial statements originally issued in Portuguese in accordance with International Financial Reporting Standards (IAS / IFRS) as adopted by the European Union and the format and disclosures required by those Standards, some of which may not conform to or be required by generally accepted accounting principles in other countries. In the event of discrepancies, the Portuguese language version prevails.

			SHARE		PERCENTAGE OF OWNERSHIP
COMPANY	HEADQUARTERS	PRINCIPAL ACTIVITY	HOLDER	EFFECTIVE 30-09-2020	DIRECT 30-09-2021	EFFECTIVE 30-09-2021
NOS, SGPS, S.A. (Holding)	Lisbon	Management of investments	-	-	-	-
Fundo de Capital de Risco N5G (a)	Lisbon	Movies exhibition	NOS	100%	100%	100%
Empracine - Empresa Promotora de Atividades Cinematográficas, Lda.	Lisbon	Invest and support the development of companies that aim to commercialize technologies and products that result from scientific and technological research	Lusomundo SII	100%	100%	100%
Lusomundo - Sociedade de investimentos imobiliários SGPS, SA	Lisbon	Management of Real Estate	NOS	100%	100%	100%
Lusomundo Imobiliária 2, S.A.	Lisbon	Management of Real Estate	Lusomundo SII	100%	100%	100%
Lusomundo Moçambique, Lda. (b)	Maputo	Movies exhibition and commercialization of other public events	NOS + NOS Cinemas	100%	100%	100%
NOS Sistemas, S.A.	Lisbon	Rendering of consulting services in the area of information systems	NOS Comunicações	100%	100%	100%
NOS Sistemas España, S.L.	Madrid	Rendering of consulting services in the area of information systems	NOS Comunicações	100%	100%	100%
NOS Açores Comunicações, S.A.		Ponta Delgada Distribution of television by cable and satellite and operation of telecommunications services in the Azores area	NOS Comunicações	84%	84%	84%
NOS Audiovisuais, SGPS, S.A.	Lisbon	Management of social participations in other companies as an indirect form of economic activity	NOS	100%	100%	100%
NOS Property, S.A.	Luxembourg	Management of investments	NOS	100%	100%	100%
NOS Comunicações, S.A.	Lisbon	Implementation, operation, exploitation and offer of networks and rendering services of electronic comunications and related resources; offer and commercialisation of products and equipments of electronic communications	NOS	100%	100%	100%
NOS Corporate Center, S.A.	Lisbon	Service rendered of business support and management and administration consultancy services, including accounting, logistics, administrative, financial, tax, human resources services and any other services that are subsequent or related to previous activities. The company may also perform any other services. activities that are complementary, subsidiary or ancillary to those referred to in the preceding paragraph, directly or through participation in any other form of association, temporary or permanent, with other companies and / or other entities governed by public or private law.	NOS	100%	100%	100%
NOS Inovação, S.A.	Matosinhos	Achievement and promotion of scientific activities and research and development as well as the demonstration, dissemination, technology transfer and formation in the fields of services and information systems and fixed solutions and last generation mobile, television, internet, voice and data, and licensing and engineering services and consultancy	NOS	100%	100%	100%
NOS Internacional, SGPS, S.A.	Lisbon	Management of social participations in other companies as an indirect form of economic activity	NOS	100%	100%	100%
NOS Lusomundo Audiovisuais, S.A.	Lisbon	Import, distribution, commercialization and production of audiovisual products	NOS Audiovisuais SGPS	100%	100%	100%
NOS Lusomundo Cinemas , S.A.	Lisbon	Movies exhibition and commercialization of other public events	NOS	100%	100%	100%
NOS Audio - Sales and Distribution, S.A. (c)	Lisbon	Movies distribution, editing, distribution, commercialization and production of audiovisual products	NOS	100%	100%	100%
NOS Madeira Comunicações, S.A.	Funchal	Distribution of television by cable and satellite and operation of telecommunications services in the Madeira area	NOS Comunicações	78%	78%	78%
NOSPUB, Publicidade e Conteúdos, S.A. (c)	Lisbon	Comercialization of cable tv contents	NOS	100%	-	-
NOS TECHNOLOGY – Concepção, Construção e Gestão de Redes de Comunicações, S.A. ('Artis')	Matosinhos	Design, construction, management and exploitation of electronic communications networks and their equipment and infrastructure, management of technologic assets and rendering of related services	NOS Comunicações	100%	100%	100%
NOS TOWERING – Gestão de Torres de Telecomunicações, S.A. ('Be Towering') (e)	Lisbon	Implementation, installation and exploitation of towers and other sites for the instalment of telecommunications equipment	NOS SA	100%	-	-
NOS Wholesale, S.A.	Lisbon	Trade, service rendered and exploitation of wholesale offerings of national and international electronic communications services and related services, namely information and communication technology services Rendering of consulting services and support to contract management in roaming business. The organization of the material and human resources necessary for the commercialization, promotion and operation of electronic communications networks and circuits. The company may also perform any other activities that are complementary, subsidiary or ancillary to those referred to in the	NOS SA	0%	100%	100%
Per-Mar – Sociedade de Construções, S.A.		preceding paragraphs, directly or through participation in any other form of association, temporary or permanent, with other companies and / or other entities governed by public or private law. Purchase, sale, renting and operation of property and commercial
('Per-Mar')	Lisbon	establishments	NOS SA	100%	100%	100%
Sontária - Empreendimentos Imobiliários, S.A. ('Sontária')	Lisbon	Realisation of urbanisation and building construction, planning, urban management, studies, construction and property management, buy and sale of properties and resale of purchased for that purpose	NOS Comunicações	100%	100%	100%
Teliz Holding B.V.	Amsterdam	Management of group financing activities (a) NOS SGPS: 27,50%; NOS Sistemas: 20,00%; NOS Internacional SGPS: 20,00%; NOS Audiovisuais SGPS: 22,50%; NOS Cinemas: 10,00%	NOS	100%	100%	100%

(b) NOS SGPS: 90%; NOS Lusomundo Cinemas: 10%

(e) Company disposed of on 30 September 2020

(c) Company disposed of on 29 June 2020

(d) At 31 December 2020, NOSPUB was merged into NOS Lusomundo TV, whose name was changed to NOS Audio - Sales and Distribution, S.A.;

COMPANY		PRINCIPAL ACTIVITY	SHARE HOLDER	PERCENTAGE OF OWNERSHIP
	HEADQUARTERS			EFFECTIVE	DIRECT	EFFECTIVE
				30-09-2020	30-09-2021	30-09-2021
Big Picture 2 Films, S.A.	Oeiras	Import, distribution, commercialization and production of audiovisual products	NOS Audiovisuais	20.00%	20.00%	20.00%
Big Picture Films, S.L.	Madrid	Distribution and commercialization of movies	Big Picture 2 Films, S.A.	20.00%	100.00%	20.00%
Sport TV Portugal, S.A.	Lisbon	Conception, production, realization and commercialization of sports programs for telebroadcasting, purchase and resale of the rights to broadcast sports programs for television and provision of publicity services	NOS	25.00%	25.00%	25.00%

	HEADQUARTERS	PRINCIPAL ACTIVITY	SHARE HOLDER	PERCENTAGE OF OWNERSHIP
COMPANY				EFFECTIVE	DIRECT	EFFECTIVE
				30-09-2020	30-09-2021	30-09-2021
Dreamia Holding B.V. (a)	Amsterdam	Management of investments	NOS Audiovisuais	50.00%	0.00%	0.00%
Dreamia Servicios de Televisión, S.L. (b)	Amsterdam	Management of investments	NOS Audiovisuais	-	50.00%	50.00%
Dreamia - Serviços de Televisão, S.A.	Lisbon	Conception, production, realization and commercialization of audiovisual contents and provision of publicity services	Dreamia Holding BV	50.00%	100.00%	50.00%
FINSTAR - Sociedade de Investimentos e Participações, S.A.	Luanda	Distribution of television by satellite, operation of telecommunications services	Teliz Holding B.V.	30.00%	30.00%	30.00%
MSTAR, SA (c)	Maputo	Distribution of television by satellite, operation of telecommunications services	NOS	30.00%	30.00%	30.00%
Upstar Comunicações S.A.	Vendas Novas	Electronic communications services provider, production, commercialization, broadcasting and distribution of audiovisual contents	NOS	30.00%	30.00%	30.00%
ZAP Media S.A.	Luanda	Projects development and activities in the areas of entertainment, telecommunications and related technologies, the production and distribution of the contents and the design, implementation and operation of infrastructure and related facilities	FINSTAR	30.00%	100.00%	30.00%
Dualgrid - Gestão de Redes Partilhas, S.A. (d)	Luanda	Projects development and activities in the areas of entertainment, telecommunications and related technologies, the production and distribution of the contents and the design, implementation and operation of infrastructure and related facilities	FINSTAR	-	50.00%	50.00%

(a) Merged company in Dreamia Servicios de Televisión, S.L.

(b) At 3 October 2020, NOS Lusomundo Audiovisuais acquired 1,500 shares of Dreamia Servicios de Televisión, S.L.

(c) NOS SGPS: 29,40%; NOS Comunicações: 0,60%. (d) A joint venture was formed between NOS Comunicações, S.A. and Vodafone Portugal - Comunicações Pessoais, S.A, on November 24, 2020, in which each party holds 50% of the entity.

				PERCENTAGE OF OWNERSHIP
COMPANY	HEADQUARTERS	PRINCIPAL ACTIVITY	SHARE	EFFECTIVE	DIRECT	EFFECTIVE
			HOLDER	30-09-2020	30-09-2021	30-09-2021
Associação Laboratório Colaborativo em Transformação Digital - DTX	Guimarães	Research applied to different areas associated with digital transformation to encourage cooperation between R&D units, educational institutions and the productive sector	NOS Inovação	4.92%	4.92%	4.92%
Fundo TechTransfer	Lisboa	Invest and support the development of companies that aim to commercialize technologies and products that result from scientific and technological research	NOS Inovação	4.20%	3.90%	3.90%
RK. AI - Serviços de Processamento de Imagens e Análise de Dados, S.A. (Reckon.ai)	Porto	The Company's activities relate to information and computer technologies, images and data processing and analysis, hosting and related activities and IT consulting.	Fundo NOS 5G	0.00%	11.76%	11.76%
Turismo da Samba (Tusal), SARL (a)	Luanda	n.a.	NOS	30.00%	-	-
Filmes Mundáfrica, SARL (a)	Luanda	Movies exhibition	NOS	23.91%	-	-
Companhia de Pesca e Comércio de Angola (Cosal), SARL (a)	Luanda	n.a.	NOS	15.76%	-	-
Lusitânia Vida - Companhia de Seguros, S.A ("Lusitânia Vida")	Lisboa	Insurance services	NOS	0.03%	0.03%	0.03%
Lusitânia - Companhia de Seguros, S.A ("Lusitânia Seguros")	Lisboa	Insurance services	NOS	0.02%	0.02%	0.02%

(a) Derecognized companies in the first quarter of 2021, no impact on the results.

9M21 113

Ernst & Young Audit & Associados - SROC, S.A. Av. da Boavista, 36 - 3º, 4050-112 Porto Portugal

Tel: +351 217 912 000 Fax: +351 217 957 586 www.ey.com

(Translation from the original document in Portuguese language. In case of doubt, the Portuguese version prevails.)

Limited review report on the consolidated condensed financial statements

Introduction

We have performed a limited review on the consolidated condensed financial statements of NOS, S.G.P.S., S.A. (the Entity), which comprise the Consolidated Condensed Statement of Financial Position as at 30 September 2021 (which shows a total of 3,102,792 thousand Euros and a shareholders' equity total of 937,371 thousand Euros, including a consolidated net profit attributable to equity holders of the parent of 120,021 thousand Euros), the Consolidated Condensed Statement of Income by Nature, the Consolidated Condensed Statement of the Comprehensive Income, the Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows for the nine month period then ended, and the related notes to the consolidated condensed financial statements, including a summary of significant accounting policies.

Management responsibilities

Management is responsible for the preparation of the consolidated condensed financial statements in accordance with International Financial Reporting Standards as endorsed by the European Union, for the interim financial reporting (IAS 34), and for the design and maintenance of an appropriate system of internal control to enable the preparation of condensed consolidated financial statements which are free from material misstatement due to fraud or error.

Auditor's responsibilities

Our responsibility is to express a conclusion on these consolidated condensed financial statements based on our review. We conducted our review in accordance with the International Standard on Review Engagements 2410 – Review of Interim Financial Information Performed by the Independent Auditor of the Entity, and other rules and technical and ethical requirements issued by the Institute of Statutory Auditors. Those standards require that our work is performed in order to conclude that nothing has come to our attention that causes us to believe that the condensed consolidated financial statements have not been prepared in all material respects in accordance with International Financial Reporting Standards as endorsed by the European Union, for the interim financial reporting (IAS 34).

A review of financial statements is a limited assurance engagement. The procedures performed consisted primarily of making inquiries of management and others within the entity, as appropriate, and applying analytical procedures, and evaluating the evidence obtained.

The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards on Auditing (ISA). Accordingly, we do not express an audit opinion on these consolidated condensed financial statements.

Conclusion

Based on our review procedures, nothing has come to our attention that causes us to believe that the condensed consolidated financial statements of NOS, S.G.P.S., S.A., as at 30 September 2021, have not been prepared, in all material respects, in accordance with International Financial Reporting Standards as endorsed by the European Union, for the interim financial reporting (IAS 34).

NOS S.G.P.S., S.A. Limited review report on the consolidated condensed financial statements (Translation from the original document in Portuguese language. In case of doubt, the Portuguese version prevails) 30 th of September 2021

Oro

Emphasis of Matter

We draw attention to Note 48.2 included in the Notes to the condensed consolidated financial statements regarding the preventive seizure of 26,075% of the Entity's share capital. Our conclusion is not modified in respect to this matter.

Porto, 3 rd November 2021

Ernst & Young Audit & Associados – SROC, S.A. Sociedade de Revisores Oficiais de Contas (n.º 178) Represented by:

(Signed)

Sandra e Sousa Amorim - ROC nr. 1213 Registered with the Portuguese Securities Market Commission under license nr. 20160824

Rua Actor António Silva nº9, Campo Grande, 1600-404 Lisboa www.nos.pt/ir