NOS SGPS

Quarterly Report • Sep 4, 2023

1H23 Highlights

Table 1.
1H23 Highlights	1H22	1H23	1H23 / 1H22
Operating Highlights ('000)
Convergent + Integrated Customers	1,052.1	1,114.0	5.9%
Fixed Convergent + Integrated Customers as % of Fixed Access Customers	65.8%	68.4%	2.6pp
Broadband RGUs	1,501.5	1,534.5	2.2%
Fixed Pay TV RGUs	1,411.3	1,447.3	2.5%
Post-Paid mobile RGUs	3,432.5	3,740.0	9.0%
Residential ARPU / Unique Subscriber With Fixed Access (Euros)	47.5	49.8	4.9%
Homes Passed	5,176.4	5,424.8	4.8%
% FttH	56.0%	69.3%	13.3pp
Financial Highlights (Millions of Euros)
Consolidated Revenues	742.0	775.2	4.5%
Consolidated EBITDA	322.3	352.6	9.4%
Consolidated EBITDA Margin	43.4%	45.5%	2.0pp
Consolidated EBITDA AL	275.1	297.0	8.0%
Consolidated EBITDA AL Margin	37.1%	38.3%	1.2pp
Consolidated EBITDA AL - Consolidated CAPEX Excluding Leasings & Other Contractual Rights	31.1	101.9	227.6%
Telco Revenues	721.4	746.6	3.5%
Telco EBITDA	300.9	331.3	10.1%
Telco EBITDA Margin	41.7%	44.4%	2.7pp
Telco EBITDA AL	259.6	280.6	8.1%
Telco EBITDA Margin AL	36.0%	37.6%	1.6pp
Telco EBITDA AL - Telco CAPEX Excluding Leasings & Other Contractual Rights	26.3	94.4	258.6%

Positive momentum in our core Telco business reflected in robust operational performance, driving a strong start to 2023 with particular focus on convergent and mobile service growth.

• NOS' 5G network is the most advanced in Portugal, being recognized for the third time in a row by Ookla® as the fastest 5G network, reinforcing once again independent recognition of NOS' 5G leadership.
• We delivered another semester of positive RGU growth across all businesses and with particular strength in post paid mobile. Core value post-paid mobile subscriptions maintained a very positive trajectory with 118.4 thousand net adds in 1H23, representing 64.3% of total mobile RGUs.
• Preference for convergence remains very strong among customers, with an incremental 24.9 thousand subscribing to integrated bundles in 1H23, accounting for 68.4% of the fixed customer base at the end of June.

• Cinema operations kept on a path of recovery, with ticket sales rising to 2,033.7 thousand, increasing yoy by 36.8%, and decreasing only 13.7% vs 1H19, the best semester post pandemic, benefiting from the success of blockbusters on show in theatres.

Strong operating momentum and lower investment requirements driving solid financial results

• Consolidated revenues grew by 4.5% YoY, reaching 775.2 million euros in 1H23, driving 9.4% growth in EBITDA, to 352.6 million euros. Adjusted EBITDA AL rose by 8.0% to 297.0 million euros.
• Telco Revenues increased by 3.5% to 746.6 million euros impacted by the high volume of resale revenues booked in 1H22. Adjusting for low margin resale revenues, Telco Revenues would have grown by 4.8%. Telco EBITDA experienced yoy growth of 10.1% to 331.3 million euros. Telco EBITDA AL increased by 8.1% YoY, reaching 280.6 million euros.
• Audiovisual and Cinema Revenues posted substantial growth of 15.2%, reaching 45.0 million euros. Audiovisual and Cinema EBITDA AL increased by 6.1% to 16.4 million euros.
• Total CAPEX, excluding lease contracts and other contractual rights decreased by 20.0% yoy to 195.1 million euros in 1H23, reflecting an anticipated deceleration of 5G deployment, which is already close to conclusion with 90% coverage of the population by the end of 1H23.
• Total Free Cash Flow Before Dividends, Financial Investments, and Own Shares Acquisition amounted to 64.6 million euros in 1H23, positively impacted by the EBITDA AL uplift and lower CAPEX requirements.

ESG highlights

• In January, NOS secured 350 millions in sustainable financing lines, through bank loans, structured as bond issues and commercial paper programmes with maturity in 2028. These bank loans are supported by NOS' Sustainability-Linked Financing Framework and are linked to the Sustainability Performance Targets of the Group's Greenhouse gas (GHG) emission (Scope 1 and 2), establishing a reduction of at least 80% by 2025, compared to 2019. With these transactions, NOS continues to strengthen the link between its financing costs and sustainability performance, highlighting and demonstrating its strategic relevance and commitment, at every organizational level, to achieve best-in-class targets in ESG (Environmental, Social and Corporate Governance) indicators, namely through new sustainable financing lines.

• In April, NOS launched the international sustainability label "ECO rating" in stores which helps customers and operators to compare equipment and make more informed choices, encourages suppliers to develop more sustainable products, and mobilizes all agents to increase transparency and reduce the sector's environmental footprint. The Eco Rating system evaluates the environmental impact of the entire process of production, transportation, use and disposal of mobile phones. As a member of the Eco Rating consortium, NOS believes that this evaluation system will improve transparency and help raise awareness of the environmental impact of the mobile phones.

• In June, NOS together with other 11 leading global operators and GSMA, the international organization of mobile operators, signed up to a new set of targets to help reduce e-waste and boost circularity of mobile industry. Operators are committing to two strategic targets: by 2030, the number of used mobile devices collected through operator take-back schemes amounts to at least 20% of the number of new mobile devices distributed directly to customers; also by 2030, 100% of used mobile devices collected through operator take-back schemes will be repaired, reused or transferred to controlled recycling organisations. These commitments are aligned with NOS' sustainability strategy and its goal to consistently increase the level of circularity of the business between 2022 and 2025.

Operating and Financial Review

The Consolidated Financial Statements for 1H23 have been subject to a limited review.

Table 2.
Profit and Loss Statement (Millions of Euros)	1H22	1H23	1H23 / 1H22
Operating Revenues	742.0	775.2	4.5%
Telco	721.4	746.6	3.5%
Consumer Revenues	500.9	536.6	7.1%
Business Revenues	176.4	160.9	(8.8%)
Wholesale and Others	44.1	49.2	11.5%
Audiovisuals & Cinema	39.1	45.0	15.2%
Others and Eliminations	(18.5)	(16.5)	(11.0%)
Operating Costs Excluding D&A	(419.7)	(422.6)	0.7%
Telco	(420.5)	(415.4)	(1.2%)
Audiovisuals & Cinema	(17.7)	(23.7)	34.1%
Others and Eliminations	18.5	16.5	(11.0%)
EBITDA (1)	322.3	352.6	9.4%
EBITDA Margin	43.4%	45.5%	2.0pp
Telco	300.9	331.3	10.1%
EBITDA Margin	41.7%	44.4%	2.7pp
Cinema Exhibition and Audiovisuals	21.4	21.3	(0.4%)
EBITDA Margin	54.8%	47.4%	(7.4pp)
Depreciation and Amortization	(221.3)	(237.0)	7.1%
(Other Expenses) / Income	2.2	(1.2)	155.5%
Operating Profit (EBIT) (2)	103.2	114.3	10.8%
Share of profits (losses) of associates and joint ventures	10.4	3.2	(68.9%)
(Financial Expenses) / Income	(17.9)	(29.5)	64.7%
Leases Financial Expenses	(12.5)	(15.0)	20.3%
Funding & Other Financial Expenses	(5.4)	(14.5)	166.4%
Income Before Income Taxes	95.7	88.1	(7.9%)
Income Taxes	(10.4)	(7.5)	(27.6%)
Net Income Before Associates & Non-Controlling Interests	74.9	77.4	3.3%
Net income	85.3	80.6	(5.5%)
Net income attributable to Non-controlling interests	(0.0)	0.1	(931.1%)
Net Income attributable to NOS shareholders	85.3	80.5	(5.7%)
Net Income attributable to NOS shareholders excluding gain from tower sale	85.3	80.5	(5.7%)

(1) EBITDA = Operating Profit + Depreciation and Amortization + Integration Costs + Net Losses/Gains on Disposal of Assets + Other Non-Recurrent Losses/Gains

(2) EBIT = Income Before Financials and Income Taxes.

Table 3.
EBITDA AL (Millions of Euros)	1H22	1H23	1H23 / 1H22
Leasings	(47.2)	(55.6)	17.8%
Telco	(41.2)	(50.7)	22.9%
Cinema Exhibition and Audiovisuals	(5.9)	(4.9)	(17.3%)
Operating costs Excluding D&A AL	(466.9)	(478.2)	2.4%
Telco	(461.8)	(466.0)	0.9%
Audiovisuals & Cinema	(23.6)	(28.6)	21.2%
Others and Eliminations	18.5	16.5	(11.0%)
EBITDA AL	275.1	297.0	8.0%
EBITDA AL margin	37.1%	38.3%	1.2pp
Telco	259.6	280.6	8.1%
EBITDA AL margin	36.0%	37.6%	1.6pp
Audiovisuals & Cinema	15.5	16.4	6.1%
EBITDA AL margin	34.4%	36.5%	2.1pp

Revenues

Consolidated revenues in 1H23 grew by 4.5% YoY to 775.2 million euros, driven by strong operational performance across all business segments. Telco revenues were 3.5% higher YoY, reaching 746.6 million euros. impacted by the high volume of resale revenues booked in 1H22. Adjusting for low margin resale revenues, Telco Revenues would have grown by 4.8% and consolidated revenues by 5.8%. The positive momentum was primarily driven by 7.1% growth in the B2C segment fueled by robust operational performance with positive trends across convergent offers and an improved value proposition. B2B revenues, adjusted for the impact of the low margin B2B resale revenues decreased by 1.9%. Wholesale and other revenues continued to perform well posting growth of 11.5% yoy, supported by ongoing recovery in roaming revenues and an increase in low-margin mass calling services.

Audiovisual & Cinema revenues grew by 15.2% yoy to 45.0 million euros led by strong growth in cinema revenues of 42% yoy, reflecting the ongoing recovery in cinema sales yoy thanks to movie blockbusters such as Fast X, The Super Mario Bros, The Little Mermaid, Guardians of the Galaxy 3 and finally "Avatar: The Way of Water" which became the highest Gross Box Office movie ever in Portugal. Tickets sold during 1H23 were almost the level of 2Q19, 13% below, with May 19% above, which is the the best result post pandemic. Audiovisuals' GBO distribution market share stood at 41% at the end of 1H23.

Table 4.
Operating Indicators ('000)	1H22	1H23	1H23 / 1H22
Cinema
Revenue per Ticket (Euros)	5.7	5.9	3.6%
Tickets Sold - NOS	2,584.2	3,535.5	36.8%
Tickets Sold - Total Portuguese Market (1)	4,019.8	5,396.2	34.2%
Screens (units) (1) Source: ICA - Portuguese Institute For Cinema and Audiovisuals	208	214	2.9%

OPEX, EBITDA, EBITDA AL and Net Results

As from 1Q23 we started to focus our review of operational profitability on EBITDA AL, equivalent to pre IFRS16 EBITDA. For reference and continuity, EBITDA will continue to be included in coming quarters in our reported financial tables.

Consolidated EBITDA maintained a positive trend in 1H23, increasing by 9.4% to 352.6 million euros and Consolidated EBITDA AL increased by 8.0% to 297.0 million euros. Telco EBITDA AL posted a yoy increase of 8.1% to 280.6 million euros, while Audiovisual and Cinema EBITDA AL increased by 6.1% to 16.4 million euros.

Consolidated OPEX after leases increased 2.4% yoy to 478.2 million euros mainly driven by Audiovisuals & Cinema costs, higher 21.2% yoy, due to increased royalty costs from strong ticket sales. Telco OPEX remained flat with an increase of 0.9% as we explore avenues to optimize our cost structure and mitigate global inflationary pressures. During the first half of the year, certain cost items were more adversely impacted by inflation related adjustments, namely wages and salaries, external services, particularly those entailing substantial labour related costs such as maintenance and suport services. Leasing costs increased as a reflection of the additional tower sale executed in 2022, with inflationary adjustments capped at 2%. On the positive side, we recorded a very significant decline in COGS due to lower sales in the period of low margin software and IT resale revenues in comparison with 1H22. Aso we continued to optimize energy costs which remained a tailwind to yoy EBITDA AL progression.

Consolidated Net Results for 2Q23 decreased 5.7% yoy totaling 80.5 million euros. EBITDA performance of 9.4% yoy was dampened by higher levels of D&A, up by 7.1% to 237.0 million euros, due to higher CAPEX levels over the past two years, and also due due to an accounting reduction in the useful life of TV set top boxes and Internet routers vs last year. Net financial costs increased to 29.5 million euros in 1H23 versus 17.9 million euros in 1H22, due to the maturity this last May of the 1.125% 2018 – 2023 DCM bond and the refinancing in the context of a more challenging interest rate environment. ZAP operations were negatively impacted by exchange rate variations, resulting in a negative impact of 6.8 million euros in 1H23 vs 1H22. Income Taxes were lower in 1H23 primarily due to incentives mainly for research and development related investments.

CAPEX

Total CAPEX, excluding leasing contracts and other contractual rights decreased 20.0% yoy to 195.1million euros, confirming the strong deceleration of 5G deployment. 5G coverage already reaches almost 90% of the population, reflecting our strategic commitment to lead in the delivery of exceptional connectivity solutions to all our customers, nationwide. Overall Telco Technical CAPEX amounted to 112.7 million euros, of which 43.5 million related to network expansion, substitution, and integration projects, down almost 50% yoy. During the period, customer-related CAPEX amounted to 73.5 million euros, an increase of 3.3% yoy, reflecting the mix effects of the inflation in unit costs of CPEs and in the labour component of sales commissions and installation as well as the marginal slowdown in commercial momentum.

Table 5.
CAPEX (Millions of Euros) (1)	1H22	1H23	1H23 / 1H22
Total CAPEX Excluding Leasing Contracts & Other Contractual Rights	244.0	195.1	(20.0%)
Telco	233.3	186.2	(20.2%)
% of Telco Revenues	32.3%	24.9%	(7.4pp)
o.w. Technical CAPEX	162.1	112.7	(30.5%)
% of Telco Revenues	22.5%	15.1%	(7.4pp)
Baseline Telco	79.1	69.3	(12.5%)
Network Expansion / Substitution and Integration Projects and Others	83.0	43.5	(47.6%)
o.w. Customer Related CAPEX	71.2	73.5	3.3%
% of Telco Revenues	9.9%	9.8%	(0.0pp)
Audiovisuals and Cinema Exhibition	10.7	8.9	(16.6%)
Leasing Contracts & Other Contractual Rights	32.8	55.7	69.8%
Total Group CAPEX	276.8	250.8	(9.4%)

(1) CAPEX = Increase in Tangible and Intangible Fixed Assets, Contract Costs and Rights of Use

Cash Flow

Table 6.
Cash Flow (Millions of Euros)	1H22	1H23	1H23 / 1H22
EBITDA AL	275.1	297.0	8.0%
Total CAPEX Excluding Leasings & Other Contractual Rights	(244.0)	(195.1)	(20.0%)
EBITDA AL - Total CAPEX Excluding Leasings & Other Contractual Rights	31.1	101.9	227.6%
% of Revenues	4.2%	13.1%	8.9pp
Non-Cash Items Included in EBITDA AL - CAPEX and Change in Working Capital	13.8	(3.0)	(121.4%)
Operating Cash Flow	44.9	98.9	120.2%
Interest Paid	(7.2)	(12.1)	67.9%
Income Taxes Paid	(0.9)	(10.5)	1053.1%
Disposals	0.8	0.5	(37.8%)
Other Cash Movements (1)	(2.8)	(12.2)	(330.4%)
Total Free Cash-Flow Before Dividends, Financial Investments and Own Shares Acquisition	34.7	64.6	85.9%
Financial Investments	(0.2)	(0.0)	(92.6%)
Acquisition of Own Shares	(6.3)	(5.2)	(17.7%)
Dividends	(142.3)	(220.0)	54.5%
Free Cash Flow	(114.1)	(160.6)	40.7%
Debt Variation Through Financial Leasing, Accruals & Deferrals & Others	0.6	(2.5)	(507.7%)
Change in Net Financial Debt	(113.5)	(163.1)	43.7%

(1) Includes Cash Restructuring Payments and Other Cash Movements.

In 1H23, EBITDA AL minus total CAPEX excluding leases and other contractual rights amounted to 157.5 million euros, representing a significant increase compared to 78.3 million euros in 1H22, reflecting the positive trend in EBITDA AL and reduction in investment following peak CAPEX levels recorded in 2022. During 1H23 Total Free Cash Flow before dividends, financial investments and own shares acquisition was 64.6 million euros, reflecting a yoy increase of 85.9%, impacted positively by Operating Cash Flow, with double digit growth, and negatively by interest paid given the higher interest rate environment and by inreased cash taxes due to a non recurrent payment related to the tower sale capital gain booked in 2022.

In 1H23 NOS paid 220 million euros in dividends to shareholders (43 cents per share), in respect of FY22 results distribution and as approved by the AGM held in April 2023. This distribution represented an increase of 54.5% in comparison with the previous year and was composed of an ordinary dividend of 27.8 cents per share and an extraordinary dividend of 15.2 cents per share linked to the capital gain and FCF generated by the completion of the tower sale transaction closed in 2022.

Consolidated Balance Sheet

Table 7.

Balance Sheet (Millions of Euros)	1H22	1H23	1H23 / 1H22
Non-current Assets	2,809.2	2,930.8	4.3%
Current Assets	527.3	528.5	0.2%
Total Assets	3,336.5	3,459.3	3.7%
Total Shareholders' Equity	911.7	899.5	(1.3%)
Non-current Liabilities	1,331.1	1,736.5	30.5%
Current Liabilities	1,093.6	823.3	(24.7%)
Total Liabilities	2,424.7	2,559.8	5.6%
Total Liabilities and Shareholders' Equity	3,336.5	3,459.3	3.7%

Capital Structure and Funding

Table 8.
Net Financial Debt (Millions of Euros)	1H22	1H23	1H23 / 1H22
Short Term	458.4	166.9	(63.6%)
Medium and Long Term	699.6	999.3	42.8%
Total Debt	1,158.0	1,166.2	0.7%
Cash and Short Term Investments	12.8	10.9	(14.6%)
Net Financial Debt (1)	1,145.2	1,155.3	0.9%
Net Financial Debt / EBITDA after lease payments (last 4 quarters) (2)	2.15x	2.03x	(0.06pp)
Leasings and Long Term Contracts	525.4	644.2	22.6%
Net Debt	1,670.6	1,799.5	7.7%
Net Debt / EBITDA	2.64x	2.64x	0.00pp
Net Financial Gearing (3)	64.7%	66.7%	3.1%

(1) Net Financial Debt = Borrowings – Leasings - Cash (2) EBITDA After Lease Payments = EBITDA - Lease Cash Payments (Capital & Interest)

(3) Net Financial Gearing = Net Debt / (Net Debt + Total Shareholders' Equity).

As of the end of 1H23, NOS' total net debt, including leasings and long-term contracts (according to IFRS16), amounted to 1,799.5 million euros. Net financial debt stood at 1,155.3 million euros.

NOS maintains a solid liquidity position, with available unissued commercial paper programmes totalling 275 million euros, and cash & equivalents totalling 10.9 million euros. Following the dividend payment in 2Q23, Net financial debt / EBITDA AL stood at 2.03x in 1H23, temporarily above NOS' target leverage ratio of around 2x Net Financial Debt / EBITDA AL.

The all-in average cost of debt for 1H23 was 3.3%, an increase versus last quarter reflecting the increasing interest rate context, as well as the refinancing of the 300 million euros DCM Bond, which was paying a 1.125% coupon and was redeemed in May.

As at 30 June 2023, the proportion of NOS' issued debt paying interest at a fixed rate was approximately 24%. Additionally, 33% of the issued debt had interest rate hedging collars in place.

At the end of 1H23, the average maturity of NOS debt stood at 3.1 years.

Shareholder Remuneration

On 5 April 2023, NOS' held its Annual General Meeting. All points on the agenda were approved and as a result, NOS' shareholders approved an ordinary dividend payment of 27.8c per share, in line with the previous year and an extraordinary dividend of 15.2c per share, linked to the capital gain and FCF generated by the tower sale transaction closed in 2022. Payment of the total dividend was made on 21 April 2023.

Upon payment of this dividend, NOS maintains a solid capital structure, and remains robustly positioned to meet future investments and committed to continuing to distribute an attractive level of dividends whilst maintaining a strategic focus on preserving a strong capital structure to support continued delivery of sustainable value creation for shareholders.

Governing Bodies

Following the approval of the election of the new Governing Bodies for the three-year period 2022/2024 at the Shareholders General Meeting held on the 21st of April 2022, as at the date of this report, 19th of July 2023, the Governing Bodies were made up as follows:

Board of Directors
Chairman of the Board of Directors _________________________
Chairman of the Executive Committee Committee e Committee Miguel Almeida
Members of the Executive Committee	Daniel Beato Filipa Santos Carvalho Jorge Graça Luis Nascimento Manuel Ramalho Eanes
Members ____________________________	Catarina Tavira Van-Dúnem Cláudia de Azevedo Cristina Marques Eduardo Verde Pinho João Torres Dolores Rita Rodrigues
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 __________________________	ERNST & YOUNG AUDIT & ASSOCIADOS, SROCIADOS, SROC, S.A., (ROC number 178 and registered at CMVM with the number 20161480, represented by Sandra e Sousa Amorim (ROC number 1213);
Alternate	(ROC nº 1258)

Capital Markets

Nos Share Performance

On 30 June 2023, the closing price of NOS shares was 3.256 €, representing a decrease of 14.0% since the beginning of the year, compared to an increase of 4.1% in the main Portuguese stock market index, the PSI.

With a dividend per share of 0.430 euros, paid on the 21 of April 2023, NOS' Total Shareholder Return in 1H23 was -2.6%. The dividend yield, at the date of the announcement of the dividend proposal to be approved at the General Shareholders' Meeting, was 10.31%

In 1H23, more than 52 million NOS shares were traded at Euronext, equal to an average daily volume of 411 thound shares for each market session. Thus, the NOS average daily volume in 1H23 is equal to 0.079% of the total number of shares issued.

The evolution of the market performance of NOS shares against the PSI and Eurostoxx Telco Index during 1H23 is shown in the chart below:

The highest value at which NOS shares were traded in the first half of the year was 4.442 euros (on 21 February) and the lowest was 3.254 euros (on 29 June).

As at 30 June 2023, NOS' market capitalization was €1.677 billion. The market capitalization is calculated taking into account the 515,161,380 shares admitted to trading on the capital markets.

NOS SGPS was covered by 17 research analysts from different national and international investment banks and research houses. All analysts that follow NOS SGPS, as well as their recommendations and price targets, can be found on NOS' website. Any opinion, estimate, projection or forecast made by these analysts regarding NOS' performance reflects their own interpretation only and does not represent the opinion, estimate, projection or forecast of NOS or its management team.

Qualified Shareholdings

Under the terms of paragraph c) of number 1 of article 9 of Regulation 5/2008 of the Portuguese Securities Commission (CMVM), NOS hereby informs on its qualified shareholdings held by third parties, which have been reported to the company.

The structure of the qualified shareholdings of NOS reported to the company was the following as at the 30th of June 2023:

A detailed record of the qualified shareholding announcements can be found on the company's website at www.nos.pt/ir.

Risks and Uncertainties for Future Periods

NOS Group companies are exposed to economic, financial and legal risks that are inherent to the business activities they perform.

The approach to corporate risk management, based on the Enterprise Risk Management (ERM) methodology, consists of incorporating risk management into NOS strategic planning activities. During the preparation of annual Action and Resources Plans, as part of the Strategic Plans, the business areas consider risks that may compromise their performance and objectives and define actions to manage those risks, within the levels of risk acceptance intended and established by the Executive Committee. The Plans are discussed and approved by the Executive Committee. The risk assessment exercises at corporate level are approved by the Executive Committee and subject to final approval by the Board of Directors. They are monitored by the Statutory Audit Board and, complementary, by the Audit and Finance Committee, so that they can assess and express their opinion prior to final approval, within the competences that each of these bodies has in supervising the internal control and risk management system in the organisation.

Based on the risks reported in the 2022 Annual Integrated Report, the risks that could potentially impact NOS during 2023 and in future periods are set out below, together with the strategies that have been adopted to manage them.

Economic Risks

Economic Environment - This risk relates to the fact that the company's activity may be constrained by the socio-economic environment (e.g. demographic factors, strikes, unemployment, etc.) and by changes in the economic situation (e.g. disposable income, purchasing power, inflation, investment capacity, cost of raw materials, etc.). Thus, NOS, like most companies, has been exposed to the adverse effects of the widespread rise in inflation that is impacting the cost structure, associated with the conflict in Ukraine, and in particular the rise in the cost of energy. NOS has responded positively to rising costs by renegotiating relevant supply contracts to optimise the structure of operating costs and by monitoring the prices of materials to assess the best timing of purchases. With specific regard to the rising cost of energy, NOS also has several initiatives underway to optimise energy consumption in office buildings, cinemas and telecoms network infrastructure, as well as actions to control and set the purchase price of energy.

Competition – This risk relates to the competitive intensity of the market, the potential reduction in market share and/or loss of customers, and the increasing difficulty of attracting and retaining customers. The entry of new competitors into the electronic communications sector, as a consequence of the auction for the acquisition of 5G frequencies, is also a risk factor. Over the last few years, the management of competition risk has been based on a strategy of constantly improving the quality, differentiation and innovation of the products and services provided, as well as on the protection and diversification of the offer, and combined offers between NOS businesses. One example of this strategy is enhancing the business portfolio through the launch of new services such as NOS Insurance and NOS Alarms, and consolidating the offer for specific segments such as the WOO brand (for digital adults and low price segments).

Talent Recruitment and Retention - This risk relates to the possibility that the company does not have adequate recruitment, talent management or retention policies or practices. The current environment still raises new challenges such as the shortage of technological/digital profiles, due to the globalisation of the labour market and the greater demand for these types of profiles by companies. NOS has several initiatives to minimise this risk such as: improving recruitment processes, including strengthening the Talent Acquisition team and enhancing the online recruitment platform;

NOS Alfa programmes (e.g. Alfa Biz, Alfa Tech) for the selection and recruitment of highly talented recent graduates, including the approach to universities in technological areas; adapting the working model to a hybrid model for most employees, including existing and new flexibility mechanisms (e.g. more flexible working hours, remote days, scheduling days in the office through a booking application); the holding of sessions aimed at managers and employees on topics related to NOS' strategic axes, purpose and values; the launch of the "Leadershift" programme, which aims to enhance the development of the different levels of leadership at NOS, creating the conditions to accelerate the transformation of the organisation (with the motto "Whoever does it, takes the team along").

Product & Service Performance - There is a risk that products and services may potentially be subject to nonconformities, failures or performance and reliability problems, which may not meet customer expectations or result in complaints. In order to mitigate the risk of providing communications services of poor or lower than desired quality (e.g. network coverage and quality, speed of service execution/delivery, unsuitable equipment), NOS has implemented several actions such as: strengthening the capacity of mobile and fixed networks, to respond to changes in standards and the increased needs of residential and business customers in terms of remote work and digitalisation; reinforcing resilience measures in communications network infrastructures and systems; introducing new ranges of equipment that enable better quality of service (e.g. new TV boxes; smart Wi-Fi); reorganising the technical service teams focused on the residential segment; reinforcing the support model for critical customers in the business segment and public administration. There is also the growing application of analytical models that proactively identify the causes of service degradation, accelerate the process of detecting and resolving malfunctions and recommend to customers the best measures to resolve them. It should also be noted that, as additional risk mitigation measures, in the event of customer complaints related to physical damage caused by NOS or service failures involving breach of contract with proven impacts on the customer, NOS has civil liability and professional civil liability insurance.

Availability, Resilience, Business Continuity and Catastrophic Losses - These risks relate to the possibility that information or resources (systems, platforms, infrastructure and other assets) may become unavailable or lack the resilience capabilities necessary to withstand an incident and to continue to provide the company's information, products and services. These risks are also related to the possibility of the company not being able to maintain business continuity, including critical activities or the provision of priority products and services, as a result of a catastrophic event caused by a natural disaster or a critical technical-operational interruption/rupture (e.g. systems, network platforms, physical infrastructure or other assets), human resources (e.g. pandemics), financial resources or other key resources. As an integral part of managing this risk, NOS has a Business Continuity Management (BCM) Programme that includes Business Continuity Management processes covering facilities, network infrastructure, business activities and the most critical functions that support communications services. For these areas, the company develops and maintains plans/actions to improve the availability and resilience of services and incident/crisis management plans/procedures.

Privacy -There is a possibility that the legal and regulatory requirements on personal data protection common to all sectors of activity, and also those specific to the electronic communications sector, may be subject to failures in compliance. To address these risks, NOS is developing and maintaining an ongoing programme of initiatives in order to implement Personal Data Protection processes, and monitor and continually improve company compliance with the General Data Protection Regulation (GDPR) and with other regulations that have an impact on privacy. We highlight the existence of periodically updated Privacy Policies and Rules and disclosure via training, the enhancement of controls and monitoring on the processes for exercising the rights of personal data holders by customers under the GDPR, as well as the continuous strengthening of customer management processes (consent, authentication, etc.). NOS employees and partners assume obligations of confidentiality, secrecy and protection of personal data, by signing terms of responsibility and data processing agreements, as well as by participating in awareness-raising and training sessions on Security & Privacy. NOS has a Data Protection Officer (DPO) whose responsibilities include: (i) monitoring the compliance of data processing with applicable standards; (ii) acting on behalf of the Company in the interaction with the national regulatory authority for data protection (CNPD - Comissão Nacional de Proteção de Dados); (iii) being a point of contact with the holders of personal

data; (iv) providing information and advice to controllers or processors on their obligations in the field of privacy and data protection.

Cybersecurity - Critical resources (systems, network platforms, infrastructure and other assets) may potentially be exposed to security vulnerabilities that make them subject to attacks, intrusions, alterations, destruction or other threats, from internal or external sources (e.g. ransomware, malware, phishing). As with other operators, NOS is increasingly exposed to the widespread rise in cyber-attacks which are having a significant impact at national and international level in compromising the information security of individuals and companies and causing interruptions in essential services for the community. NOS has increased its training for the Cybersecurity team, with the strengthening of cyberstrategy, cyberarchitecture, cyberintelligence and cyberdefence skills (including the coordination of SOC - Security Operations Centre operation in the latter area). The company has developed several initiatives in this area, including the implementation of improvements in operational procedures, continuous monitoring, and technical cybersecurity protection and contingency measures. NOS has Information Security Policies and Rules which are periodically updated and promoted through training. It should also be noted that NOS has a Chief Information Security Officer (CISO).

Technological Innovation - This risk is associated with the possibility that the company will not be able to adequately harness or follow up on investment, or monetise technological advances to achieve or maintain a competitive advantage (e.g. 5G deployment, 5G use cases, cloud services, managed services). NOS has been implementing several technological innovation initiatives that provide the foundation for long-term competitive differentiation. We have managed this risk by introducing several initiatives to promote the application of 5G use cases, including the existence of the 5G Fund sponsored by NOS (the first fund exclusively aimed at actively investing in companies that have technologies and business models that are enhanced and leverage 5G technology) and the launch of NOS Hub 5G, a collaborative innovation centre, to empower companies, start-ups, universities and partners, bringing together and making available the most advanced technical capabilities, teams and resources relating to 5G. The portfolio of services for B2B customers (e.g. cloud, managed services and cybersecurity) was also strengthened.

Digital Transformation - This risk is associated with changes in customer profiles (from physical to virtual) and the potential inability of the company to carry through the digital transformation of traditional business processes which may jeopardise the sustainability of the company. As a consequence of the current situation, we are witnessing an acceleration in the digital transformation of society and the economy. This digitalisation has given rise to new habits that are now part of our future. The digital transformation of NOS has necessarily involved the implementation of several projects with intensive and massive data processing (e.g. Big Data, Advanced Analytics), supported by new technologies (e.g. Data Lake, Machine Learning, AI, RPA). The application of various analytical models has also enabled us to deepen our understanding of changes in consumer profiles. NOS has been investing in the digitalisation of various business processes with an impact on the customer: functional improvements in the NOS Apps, increasing promotion of electronic invoice adherence, automation of internal customer management processes, digitalisation of processes in NOS stores.

Revenue and Cost Assurance - Electronic communications businesses are subject to inherent operational risks associated with the assurance and monitoring of customer revenue and costs, from the viewpoint of revenue flows and platform integrity. NOS billing processes perform revenue controls, with regard to invoicing quality. NOS also has a dedicated Management and Revenue Assurance team that applies revenue integrity control processes (under-invoicing or overinvoicing) and processes for cost control to present a consistent chain of revenue and costs, from the moment the customer enters the provisioning systems, through the provision of the communications service and up to the moment of invoicing and charging.

Customer/Third-Party Fraud - Customer or third-party fraud is a common risk in the communications sector. Perpetrators of fraud can take advantage of potential vulnerabilities in business processes, in the network or in the communications services. In the light of this, NOS has teams dedicated to fraud control, including subscription fraud, consumption fraud and content fraud. Fraud controls are in place to prevent anomalous situations of fraudulent consumption or misuse of services, with a direct impact on customer satisfaction, and possible disruption of service and company revenues, such as fraud associated with the illegal provision of premium TV channel content or phishing via SMS directed at NOS customers.

Social Responsibility - This risk relates to possible failures to commit to principles of social responsibility and respect for human rights principles. NOS addresses this risk through its NOS Sustainability Policy, as well as through its social responsibility programme, with a focus on developing the digital skills of the more vulnerable segments of the population.

Corruption and Related Offences - This risk relates to possible failures in the mechanisms required for preventing and combating corruption and related offences and for protecting whistle-blowers. NOS addresses this risk through its Code of Ethics, the Code of Conduct on Prevention of Corruption and Related Offences and its Plan for the Prevention of Corruption Risks and Related Offences. There is a NOS Irregularity Reporting Regulation ("whistleblowing"), which establishes reporting channels and whistle-blower protection mechanisms. There is also a Compliance Officer at NOS.

Occupational Health and Safety - This risk relates to situations that may jeopardise the health or physical safety of individuals. NOS actions to address this risk include: the existence of structured contingency plans to ensure the protection of people in the workplace, in accordance with legal obligations in force; the continued reinforcement of employees' Personal Protective Equipment (PPE) for ergonomic, physical, mechanical and electrical risks; the existence of a hybrid working model (onsite and remote working days); initiatives to improve the well-being and professional/personal life balance of employees; and the annual questionnaire to employees on Health and Safety at Work.

Sustainable Products and Services - This risk is associated with the possibility that the company may not adopt practices that promote products and services perceived as sustainable, may not incorporate the need to develop innovative products and services with social and environmental benefits or may fail to develop networks responsibly. It is also associated with the potential inability of the company to generate positive impacts on society, in order to increase accessibility for the population, reducing information exclusion and enhancing diversity. NOS has been implementing several initiatives that demonstrate its past and future commitment to innovate and to provide the Portuguese with increasingly efficient products and services from an environmental and social point of view (e.g. SIM cards that are produced from 100% recycled plastic; innovative technological projects and solutions with a social impact, mainly aimed at senior home support).

Communication of Products and Services - This risk relates to possible failures to adopt responsible communication (e.g. clarity of information, transparency, etc.) about the characteristics, contractual conditions and tariffs of the products & services. To this end, NOS ensures compliance with agreed conditions and applicable legal and regulatory requirements. NOS also adheres to the Code of Conduct of the Advertising Self-Regulation Association.

Quality of the Customer Experience - This risk relates to the possibility of customer interaction processes (customer journeys) not meeting or not consistently exceeding their expectations. NOS has implemented several measures to mitigate this risk, such as: recurring monitoring and evaluation processes with indicators on the degree of customer satisfaction; introduction of new analytical models that have made it possible to improve knowledge of customer needs at the points of interaction with NOS (e.g. contact center for customer service, technical support andsales) and to trigger improvement measures in these interactions; initiatives aimed at increasing customer focus in various processes (e.g. sales,

service, technical support, customer service); the existence of ISO9001 Certification (Quality Management) through which an external entity audits and certifies that NOS consistently provides customers with processes and services that comply with quality standards.

Environmental Impacts - This risk relates to the possibility that the company's activities may cause harmful environmental impacts associated with the consumption of resources (energy, water, paper, etc.), the production of waste (electronic equipment, batteries, etc.) or the emission of greenhouse gases. To respond to this risk, NOS has: a programme to improve the energy efficiency of its operations, in communications infrastructures (e.g. intelligent management functionalities for network equipment) and in data centres (e.g. free cooling solutions, cold curtains); a programme to digitalise customer processes in store (e.g. paperless, digital labels, queue management system with digital passwords); collection, refurbishing and reuse of equipment used by residential customers for the fixed service (TV boxes, routers and hubs) and sale of reused smartphones; a Power Purchase Agreement between NOS and EDP for the purchase of renewable energy, a long-term agreement that involves the construction of a new wind farm and the supply of green electricity for NOS operations.

Climate Change - This risk relates to the possibility of the company not incorporating environmental sustainability and climate change as important factors for its long-term strategies. This also relates to possible flaws in the way the company addresses the resilience of its critical services (e.g., communications networks) in the locations where it has operations that may be affected by climate change or extreme weather conditions (e.g. fires, hurricanes or other adverse weather phenomena). NOS addresses climate change by: joining several global initiatives to reduce carbon emissions and promote sustainable development (e.g. United Nations Global Compact, European Green Digital Coalition, Digital with Purpose); external assessments and ratings on ESG practices (e.g. CDP, S&P Global Corporate Sustainability Assessment, Sustainalytics Moody's ESG Solutions, MSCI ESG ratings); participation in "CDP Climate Change" which includes an annual exercise to identify and describe risks and opportunities related to climate change; inclusion in the NOS Business Continuity Management programme for emergency situations caused by natural disasters (e.g. storms, floods and fires), including actions such as assessing various resilience scenarios for critical services, adoption of specific maintenance plans for technical sites classified as "high risk", adoption of alternative radio relay solutions to protect the most vulnerable communications, and permanent monitoring of IPMA weather alerts.

Financial Risks

Liquidity and Interest Rates - These risks arise as a result of the economic environment and the rise in interest rates, the uncertainty in the financial markets with the probability of increased costs in accessing finance, and debt costs exposed to high volatility, in future periods. It may also be related to possible shortfalls in expected cash flows or variations in their timing, possible inability to meet financial or operational obligations on time, or possible need to take out new loans. Faced with these challenges, NOS has a robust capital structure and the liquidity position of NOS was previously strengthened using refinancing operations with more stable market conditions. In addition, NOS has been extending its hedging of the cost of NOS debt. Also noteworthy was the issuance of sustainable financing lines, indexed to Sustainability performance, with NOS being the first communications' operator in Portugal to issue sustainable financing lines.

Credit and Collections – These risks are associated with a reduction in receipts from customers due to possible ineffective or deficient operation of collection procedures and/or changes in the legislation that regulates the provision of essential services and have an impact on the recovery of customer debts. These are mitigated by establishing a monthly plan of recovery actions, monitoring and validating them and evaluating the results. Where necessary, the procedure and the timings of these actions are adjusted to ensure the receipt of customer debts. The aim is to ensure that outstanding amounts are effectively collected within the negotiated periods without affecting the financial health of the Company.

NOS has specific areas for Credit Control, Collections and Litigation Management and, for certain business segments, it also underwrites credit insurance.

Taxation – The NOS Group is exposed to changes in tax legislation and varied interpretations of the application of tax and tax related regulations in several ways. The management of this risk relies on specific tax teams that monitor all tax regulations and seek to ensure maximum tax efficiency. These teams may be supported by external consultancy where the issues under consideration may be more critical and therefore require interpretation by an independent body.

Legal Risks

Legal and Regulatory - Changes in specific Portuguese or European legislation or regulations may have an impact on the company's operations (e.g. the new European Electronic Communications Code and the updated Portuguese Electronic Communications Law with impacts on customer loyalty periods in certain situations, applicability of the Net Neutrality Regulation to zero rating offers). NOS companies are subject to supervision and possible proceedings and fines from sectorspecific regulators: the Portuguese Regulatory Authority for the Communications (ANACOM) for the electronic communications business, and the Portuguese Regulatory Authority for the Media (ERC) for television services and provision of audiovisual content. NOS companies are also subject to horizontal legislation and may be subject to intervention and fines, from entities including the Competition Authority (AdC), the National Data Protection Commission (CNPD) and the National Cybersecurity Centre (CNCS). The management of legal and regulatory risks at NOS is supported by the Legal department and the Regulation department, which monitor developments in the applicable legal and regulatory framework, including interaction with regulators, participation in public consultations, responding to lawsuits and challenging fines. There are also projects and initiatives to address and ensure compliance with changes in legislation and regulations that impact NOS, involving the corporate, business, and technological areas necessary to implement them.

CONDENSED CONSOLIDATED STATEMENT OF THE FINANCIAL POSITION

AT 30 JUNE 2022, 31 DECEMBER 2022 AND 30 JUNE 2023

(Amounts stated in thousands of euros)

	NOTES	30-06-2022	31-12-2022	30-06-2023
ASSETS
NON - CURRENT ASSETS:
Tangible assets	7	1,075,846	1,107,052	1,100,488
Investment property		612	514	507
Intangible assets	8	1,208,012	1,209,558	1,210,062
Contract costs	9	161,110	160,594	160,762
Rights of use	10	234,585	297,723	317,344
Investments in jointly controlled companies and associated companies	11	35,514	38,961	28,435
Accounts receivable - other	12	5,308	4,758	4,822
Tax receivable	13	5	369	257
Other financial assets non-current	14	2,812	5,248	5,674
Deferred income tax assets	15	82,556	89,554	89,342
Derivative financial instruments	20	2,811	11,249	13,060
TOTAL NON - CURRENT ASSETS		2,809,171	2,925,580	2,930,753
CURRENT ASSETS:
Inventories	16	60,648	67,223	68,788
Accounts receivable - trade	17	301,595	319,441	298,011
Contract assets	18	60,160	60,095	60,415
Accounts receivable - other	12	19,955	16,632	21,036
Tax receivable	13	6,700	6,906	6,011
Prepaid expenses	19	44,901	52,232	63,328
Derivative financial instruments	20	773	-	30
Cash and cash equivalents	21	12,791	15,215	10,919
Assets held for sale		19,787	-	-
TOTAL CURRENT ASSETS		527,310	537,744	528,538
TOTAL ASSETS		3,336,481	3,463,324	3,459,291

CONDENSED CONSOLIDATED STATEMENT OF THE FINANCIAL POSITION

AT 30 JUNE 2022, 31 DECEMBER 2022 AND 30 JUNE 2023

(Amounts stated in thousands of euros)

	NOTES	30-06-2022	31-12-2022	30-06-2023
SHAREHOLDER'S EQUITY
Share capital	22.1	855,168	855,168	855,168
Capital issued premium	22.2	4,202	4,202	4,202
Own shares	22.3	(15,163)	(15,968)	(15,109)
Legal reserve	22.4	1,030	1,030	4,374
Other reserves and accumulated earnings	22.4	(25,176)	(22,914)	(35,945)
Net Income		85,319	224,574	80,461
EQUITY BEFORE NON - CONTROLLING INTERESTS		905,380	1,046,092	893,151
Non-controlling interests	23	6,362	6,251	6,370
TOTAL EQUITY		911,742	1,052,343	899,521
LIABILITIES
NON - CURRENT LIABILITIES:
Borrowings	24	1,160,380	1,210,181	1,561,500
Provisions	25	79,902	81,267	82,621
Accounts payable - other	29	38,836	42,128	41,691
Deferred income	27	3,628	2,824	-
Derivative financial instruments	20	-	-	16
Deferred income tax liabilities	3.2 & 15	48,348	50,125	50,629
TOTAL NON - CURRENT LIABILITIES		1,331,094	1,386,525	1,736,457
CURRENT LIABILITIES:
Borrowings	24	523,046	427,453	248,946
Accounts payable - trade	28	235,625	253,355	233,290
Accounts payable - other	29	31,900	53,789	35,095
Tax payable	3.2 & 13	40,587	38,842	35,628
Accrued expenses	26	227,947	212,430	234,561
Deferred income	27	28,002	38,190	35,242
Derivative financial instruments	20	32	397	551
Liabilities directly associated with the assets held for sale		6,506	-	-
TOTAL CURRENT LIABILITIES		1,093,645	1,024,456	823,313
TOTAL LIABILITIES		2,424,739	2,410,981	2,559,770
TOTAL LIABILITIES AND SHAREHOLDER´S EQUITY		3,336,481	3,463,324	3,459,291

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

The Notes to the Financial Statements form an integral part of the consolidated statement of financial position as at 30 June 2023.

CONDENSED CONSOLIDATED STATEMENT OF INCOME BY NATURE

FOR THE QUARTERS AND SEMESTERS ENDED ON 30 JUNE 2022 AND 2023

(Amounts stated in thousands of euros)

	NOTES	2º QUARTER 22	6M 22	2º QUARTER 23	6M 23
REVENUES:
Services rendered		338,457	666,427	359,420	708,756
Sales		23,363	61,288	26,719	52,129
Other operating revenues		6,779	14,251	7,652	14,310
	30	368,599	741,966	393,791	775,195
COSTS, LOSSES AND GAINS:
Wages and salaries	31	20,570	40,862	23,542	45,509
Direct costs	32	87,661	168,182	89,024	170,623
Costs of products sold	33	20,890	55,963	22,210	43,990
Marketing and advertising		5,922	11,196	5,949	15,129
Support services	34	19,508	40,138	22,602	46,635
Supplies and external services	34	38,627	76,800	38,660	74,444
Other operating losses / (gains)		215	549	266	555
Taxes		8,818	17,606	8,945	17,961
Provisions and adjustments	35	3,553	8,394	3,535	7,747
Depreciation, amortisation and impairment losses	7,8,9,10 & 37	110,912	221,317	116,611	237,016
Reestructuring costs	38	242	1,248	736	1,095
Losses / (gains) on sale of assets, net	7 & 8	33	18	(256)	(336)
Other losses / (gains) non recurrent net	39	228	(3,490)	258	476
		317,179	638,783	332,082	660,844
INCOME BEFORE LOSSES / (GAINS) PARTICIPATED COMPANIES, FINANCIAL		51,420	103,183	61,709	114,351
RESULTS AND TAXES
Net losses / (gains) of affiliated companies	11 & 36	(5,082)	(10,389)	(704)	(3,234)
Financial costs	40	8,064	16,202	15,504	27,384
Net foreign exchange losses / (gains)		(137)	(45)	85	206
Net losses / (gains) on financial assets		22	56	1	5
Net other financial expenses / (income)	40	908	1,694	932	1,905
		3,775	7,518	15,818	26,266
INCOME BEFORE TAXES		47,645	95,665	45,891	88,085
Income taxes	15	3,418	10,361	351	7,497
NET CONSOLIDATED INCOME		44,227	85,304	45,540	80,588
ATTRIBUTABLE TO:
NOS Group Shareholders		44,211	85,319	45,546	80,461
Non-controlling interests	23	16	(15)	(6)	127
EARNINGS PER SHARES
Basic - euros	41	0.09	0.17	0.09	0.16
Diluted - euros	41	0.09	0.17	0.09	0.16

As a standard practice, only the annual accounts are audited, therefore the semester 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 semester ended on 30 June 2023.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE QUARTERS AND SEMESTERS ENDED ON 30 JUNE 2022 AND 2023

(Amounts stated in thousands of euros)

	NOTES	2º QUARTER 22	6M 22	2º QUARTER 23	6M 23
NET CONSOLIDATED INCOME		44,227	85,304	45,540	80,588
OTHER INCOME
ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO THE INCOME STATEMENT:
Accounting for equity method	11	2,764	7,034	(11,873)	(12,053)
Fair value of interest rate swap	20	2,015	2,025	2,931	1,952
Deferred income tax - interest rate swap	20	(454)	(456)	(659)	(439)
Fair value of equity swaps	20	(320)	(39)	-	-
Deferred income tax - equity swap	20	72	9	-	-
Fair value of exchange rate forward	20	804	886	169	(343)
Deferred income tax - exchange rate forward	20	(232)	(256)	(51)	98
Currency translation differences and others		(48)	(62)	(350)	(335)
INCOME RECOGNISED DIRECTLY IN EQUITY		4,601	9,141	(9,833)	(11,120)
TOTAL COMPREHENSIVE INCOME		48,828	94,445	35,707	69,468
ATTRIBUTABLE TO:
NOS Group Shareholders		48,812	94,460	35,713	69,341
Non-controlling interests		16	(15)	(6)	127
		48,828	94,445	35,707	69,468

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

The Notes to the Financial Statements form an integral part of the consolidated statement of comprehensive income for the semester ended on 30 June 2023.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY

FOR THE SEMESTERS ENDED ON 30 JUNE 2022 AND 2023

(Amounts stated in thousands of euros)

		ATTRIBUTABLE TO NOS GROUP SHAREHOLDERS
	NOTES	SHARE CAPITAL	CAPITAL ISSUED PREMIUM	OWN SHARES	LEGAL RESERVE	OTHER RESERVES	NET INCOME	NON - CONTROLLING INTERESTS	TOTAL
BALANCE AS AT 1 JANUARY 2022		5,152	854,219	(12,353)	1,030	(35,586)	144,159	6,379	963,000
Result appropriation
Transfers to reserves		-	-	-	-		144,159 (144,159)	-	-
Dividends paid	22.4	-	-	-	-	(142,357)	-	-	(142,357)
Share capital increase by incorporation of share premium	22.4	850.016							-
Aquisition of own shares	22.3	-	-	(6,281)	-	-	-	-	(6,281)
Distribution of own shares:
Distribution of own shares - share incentive scheme	22.3	-	-	3,185	-	(3,185)	-	-	-
Distribuition of own shares - other remunerations	22.3	-	-	286	-	(14)	-	-	272
Share Plan - costs incurred in the period and others		-	-	-	-	2,666	-	(2)	2,664
Comprehensive Income		-	-	-	-	9,141	85,319	(15)	94,445
Others		-	(1)	-	-	-	-	-	(1)
BALANCE AS AT 30 JUNE 2022		855,168	4,202	(15,163)	1,030	(25,176)	85,319	6,362	911,742
BALANCE AS AT 1 JANUARY 2023		855,168		4,202 (15,968)	1,030	(22,914)	224,574		6,251 1,052,343
Result appropriation
Transfers to reserves		-	-	-	3,344		221,230 (224,574)	-	-
Dividends paid	22.4	-	-	-	-	(219,987)	-	-	(219,987)
Aquisition of own shares	22.3	-	-	(5,171)	-	-	-	-	(5,171)
Distribution of own shares:
Distribution of own shares - share incentive scheme	22.3	-	-	5,919	-	(5,919)	-	-	-
Distribuition of own shares - other remunerations	22.3	-	-	111	-	6	-	-	117
Share Plan - costs incurred in the period and others	45	-	-	-	-	2,759	-	(8)	2,751
Comprehensive Income		-	-	-	-	(11,120)	80,461	127	69,468
BALANCE AS AT 30 JUNE 2023		855,168		4,202 (15,109)	4,374	(35,945)	80,461	6,370	899,521
									-

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

The Notes to the Financial Statements form an integral part of the consolidated statement of changes in shareholders equity for the semester ended on 30 June 2023.

CONDENSED CONSOLIDATED STATEMENT OF CASHFLOWS

FOR THE SEMESTERS ENDED ON 30 JUNE 2022 AND 2023

(Amounts stated in thousands of euros)

	NOTES	6M 22	6M 23
OPERATING ACTIVITIES
Collections from clients		889,599	912,223
Payments to suppliers		(468,945)	(453,797)
Payments to employees		(55,136)	(57,955)
Receipts / (Payments) relating to income taxes		(909)	(10,477)
Other cash receipts / (payments) related with operating activities		(14,099)	(12,332)
CASH FLOW FROM OPERATING ACTIVITIES (1)		350,510	377,662
INVESTING ACTIVITIES
CASH RECEIPTS RESULTING FROM
Financial investments		550	600
Tangible assets		2,095	470
Interest and related income		2,009	3,640
		4,654	4,710
PAYMENTS RESULTING FROM
Financial investments	4 & 14	(749)	(617)
Tangible assets		(140,129)	(130,467)
Intangible assets and contract costs		(124,408)	(115,613)
		(265,286)	(246,697)
CASH FLOW FROM INVESTING ACTIVITIES (2)		(260,632)	(241,987)
FINANCING ACTIVITIES
CASH RECEIPTS RESULTING FROM
Borrowings		365,996	584,800
		365,996	584,800
PAYMENTS RESULTING FROM
Borrowings		(253,333)	(425,800)
Lease rentals (principal)		(34,656)	(40,312)
Interest and related expenses		(22,196)	(30,989)
Dividends	22.4	(142,357)	(219,987)
Aquisition of own shares	22.3	(6,281)	(5,171)
		(458,823)	(722,259)
CASH FLOW FROM FINANCING ACTIVITIES (3)		(92,827)	(137,459)
Change in cash and cash equivalents (4)=(1)+(2)+(3)		(2,949)	(1,784)
Effect of exchange differences		11	(2)
Cash and cash equivalents at the beginning of the year		10,170	8,079
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD		7,232	6,293
Cash and cash equivalents	21	12,791	10,919
Bank overdrafts	24	(5,559)	(4,626)

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

The Notes to the Financial Statements form an integral part of the consolidated statement of cash flows for the semester ended on 30 June 2023.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS AT 30 JUNE 2023

(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 datacenters and consulting services in IT, mainly in the Portuguese market.

NOS shares are listed on the Euronext Lisbon market. The shareholders' structure of the Group as at 30 June 2023 is shown in Note 22.

The business of NOS Comunicações, S.A. ("NOS SA") and its subsidiaries, NOS Technology, NOS Açores, NOS Madeira, NOS Wholesale and NOS Sistemas comprehends: a) cable and satellite television distribution; b) the operation of the latest generation mobile communication network, GSM/UMTS/LTE/5G; 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"), f) the provision of consultancy and similar services directly or indirectly related to the above mentioned activities and services, and g) datacentre management and consulting services in IT. 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 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 semester ended on 30 June 2023 were approved by the Board of Directors and their issue authorised on 19 July 2023.

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 year ended on 31 December 2022.

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 following standards, interpretations, amendments and revisions adopted ("endorsed") by the European Union were mandatory for the first time on the financial year beginning 1 January 2023:

• IFRS 17 Insurance Contracts. IFRS 17 applies to all insurance contracts (i.e. life, non-life, direct insurance and reinsurance) regardless of the type of entity that issues them, as well as some guarantees and some financial instruments with discretionary participation features. Overall, IFRS 17 provides an accounting model for insurance contracts that is more useful and more consistent for issuers. In contrast to the requirements of IFRS 4, which are based on previously adopted local accounting policies, IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects.
• Amendments to IFRS 17 Insurance contracts Initial application of IFRS 17 and IFRS 9 Comparative information. This amendment to IFRS 17 relates to the presentation of comparative information for financial assets in initial application of IFRS 17. The amendment adds a transition option that permits an entity to apply an 'overlay' in classifying a financial asset in the comparative period(s) presented in initial application of IFRS 17. The overlay permits all financial assets, including those held in relation to non-contractual activities within the scope of IFRS 17, to be classified, instrument by instrument, in the comparative period(s) in a manner aligned with how the entity expects those assets to be classified on initial application of IFRS 9.

• Amendments to IAS 1 Disclosure of accounting policies. These amendments are intended to assist the entity in disclosing 'material' accounting policies, previously referred to as 'significant' policies. However, due to the absence of this concept in the IFRS standards, it was decided to replace it by the concept 'materiality', a concept already known to users of financial statements. In assessing the materiality of accounting policies, the entity has to consider not only the size of transactions but also other events or conditions and the nature of these.
• Amendments to IAS 8 Definition of accounting estimates. The amendment clarifies the distinction between change in accounting estimate, change in accounting policy and correction of errors. In addition, it clarifies how an entity uses measurement techniques and inputs to develop accounting estimates.
• Amendments to IAS 12 Deferred tax related to assets and liabilities arising from a single transaction. The amendment clarifies that payments that settle a liability are tax deductible, however it is a matter of professional judgement whether such deductions are attributable to the liability that is recognised in the financial statements or the related asset. This judgment is important in determining whether there are temporary differences in the initial recognition of the asset or liability. Thus, the initial recognition exception is not applicable to transactions that gave rise to equal taxable and deductible temporary differences. It is only applicable if the recognition of a leasing asset and a leasing liability gives rise to taxable and deductible temporary differences that are not equal.
• Amendments to IAS 12 Income taxes: International Tax Reform Pillar Two Model Rules clarify the treatment to income taxes arising from the application of the Pillar Two model rules published by the Organisation for Economic Co-operation and Development (OECD). The Amendments introduce a mandatory temporary exception to the accounting for deferred taxes arising from the jurisdictional implementation of the Pillar Two model rules; and disclosure requirements for affected entities to help users of the financial statements better understand an entity's exposure to Pillar Two income taxes arising from that legislation, particularly before its effective date. The mandatory temporary exception – the use of which is required to be disclosed – applies immediately. The remaining disclosure requirements apply for annual reporting periods beginning on or after 1 January 2023, but not for any interim periods ending on or before 31 December 2023.

These standards and amendments had no material impacts on the consolidated financial statements of the Group.

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:

• Amendments to IAS 1 Disclosure of accounting policies. Classification of current and non-current liabilities. This amendment intends to clarify the classification of liabilities as current or non-current balances depending on the rights that an entity has to defer its payment, at the end of each reporting period. The classification of liabilities is not affected by the entity's expectations (the assessment should determine whether a right exists, but should not consider whether the entity will or will not exercise that right), or by events that occur after the reporting date, such as non-compliance with a covenant. However, if the right to defer settlement for at least twelve months is subject to the fulfilment of certain conditions after the reporting date, those criteria do not affect the right to defer settlement for the purpose of classifying a liability as current or non-current. This amendment also includes a new definition of "settlement" of a liability and is applicable retrospectively.
• Amendments to IFRS 16 Leasings Responsibility of a lease in a sale and leaseback transaction. This amendment specifies the requirements regarding the subsequent measurement of lease liabilities, related to sale and leaseback transactions that qualify as "sale" in accordance with the principles of IFRS 15, focusing on variable lease payments that do not depend on an index or rate. In subsequently measuring lease liabilities, seller-lessees shall determine "lease payments" and "revised lease payments" in a manner that does not recognise any gain or loss related to the retained right-of-use. Applying these requirements does not prevent a seller-lessee from recognising, in the income statement, any gain or loss relating to the partial or total "sale" as required by paragraph 46(a) of IFRS 16. This amendment is retrospective.

The Group did not apply any of these standards in advance in the financial statements in the semester ended on 30 June 2023. No significant impacts on the financial statements resulting from their adoption are estimated.

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 recognized 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 recognized 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 recognized immediately in profit or loss.

When the Group loses control over a controlled entity, the assets and liabilities of that entity, and any non-controlling interests and other components recognised in equity, are derecognised. Any resulting gain or loss is recognised in the income statement. Any interest retained in the entity is measured at fair value when control is lost.

Intercompany transactions, balances, unrealized gains on transactions and dividends distributed between Group companies are eliminated. Unrealized 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 recognized 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 recognized, 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 recognized 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 recognized, except when the Group has entered 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 unrealized gains between Group companies, and between them and the parent company, are eliminated in the consolidation.

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

2.3. Accounting Policies

2.3.1. Segment Reporting

As stipulated in IFRS 8, the Group presents operating segments based on internally produced management information (Note 5).

Operating segments are reported consistently with the internal management information model provided to the chief operating decision maker of the Group, who is responsible for allocating resources to the segment and for assessing its performance, and for taking strategic decisions.

2.3.2. Classification of the statement of financial position and income statement

The Group presents assets and liabilities in the financial statements based in the current and non-current classification. An asset is classified as current when:

• The asset is expected to be realized, sold or consumed in its normal operational cycle;
• If the asset is held, essentially, for negotiation purposes;
• The asset is expected to be realized 12 months after reported;
• The asset is a cash or a cash equivalent, unless its trade or use is limited to settle a liability during, at least, 12 months after reporting.

A liability is classified as current when:

• The liability is expected to be settled in its normal operational cycle;
• The liability is held, essentially, for negotiation purposes;
• The liability is expected to be settled in a 12 month period after reported;
• There is no unconditional right to differ the liability settlement during, at least, 12 months after reported;

The remaining assets and liabilities of the Group are classified as non-current.

Realizable assets and liabilities due in less than one year from the date of the statement of financial position are classified as current in assets and liabilities, respectively.

In accordance with IAS 1, "Integration costs", "Losses / (gains) on disposal of assets" and "Other non-recurring costs / (gains)"reflect unusual costs and revenues, that should be disclosed separately from the usual cost and revenues lines, in order to avoid distortion of the financial information from regular operations, and be consistent with the way the group's financial performance is analyzed and monitored by management. These unusual costs and revenues may not be comparable to similarly titled measures used by other companies. When determining whether an event or transaction is unusual, management considers both quantitative and qualitative factors. Examples of unusual costs and revenues are: business restructuring programs and respective compensation; regulatory affairs and lawsuits; extraordinary impairment of assets due to the reduction of their recoverable amount, sale of non current assets, among others. If costs and revenues meet these criteria, which are applied consistently from year to year, they are treated as unusual and presented in the specific lines above.

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 recognized by a deduction, from the corresponding asset as a contra entry in profit and loss. The costs of current maintenance and repairs are recognized as a cost when they are incurred. Significant costs incurred on renovations or improvements to the asset are capitalized 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 recognized 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:

	2022 (YEARS)	2023 (YEARS)
Buildings and other constructions	2 - 50	2 - 50
Technical equipment:
Network Installations and equipment	7 - 40	7 - 40
Terminal equipment	2 - 8	1 - 5
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. Non-current assets held for sale and discontinued operations

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:

• Represents an important line of business or geographical area separated from the operational units;
• 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;
• 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 amortization and impairment losses, when applicable. Recognized 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 utilization 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 recognized 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 realizing the Group's activities, and include:

• Telecom licenses;
• Software licenses;
• Content utilization 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 recognized as assets when the necessary conditions to organize 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 recognized in the income statement in "Depreciation, amortization, 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 recognized intangible assets involve payments in periods above 1 year, the intangible asset corresponds to the present value of those payments.

Amortization

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 amortization period and the amortization 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 amortization and, if verified, are treated as changes in accounting estimates. The amortization costs of intangible assets with finite lives are recognized 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 amortization rates used correspond to the following estimated useful lives:

	2022	2023
	(YEARS)	(YEARS)
Telecom licences	20 - 33	20 - 33
Software licences	1 - 8	1 - 8
	Period of the	Period of the
Content utilization rights	contract	contract
Other	1 to 20	1 to 20

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 unrecognized in its disposal moment, or when no future economic benefits from its use or disposal are expected. The gain or loss related with an unrecognized 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 recognised 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:

• they are related to an existing contract or a specific future contract;
• generate or increase resources that will be used in the future;
• costs are expected to be recovered; and
• they are not already covered by the scope of another standard, such as inventories, tangible or intangible assets.

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

The costs of attracting customers are essentially:

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

The costs associated with fulfilling the contracts are essentially:

• Costs incurred with the portability of mobile / fixed numbers of other operators;
• Variable costs, variables, incurred with the activation of services contracted by customers.

2.3.7. Impairment of non-current assets, excluding goodwill

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 cash-generating 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 amortization 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:

• the Group's contractual rights to receive their cash flows expire;
• the Group has substantially transferred all the risks and benefits associated with their ownership; or
• 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 realizable 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:

• Financial liabilities at fair value through profit or loss. These liabilities, including derivatives that are liabilities, should subsequently be measured at fair value;
• 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;
• Financial guarantee contracts;
• The commitments to grant a loan at a lower interest rate than the market;
• 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.Impairment of financial assets

At the date of each financial position statement, the Group analyses and recognizes 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 recognize 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, considering 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, recognizing 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.Derivative financial instruments

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:

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

• currency contracts for its exposure to foreign currency risk in forecast transactions and firm commitments;
• interest rates to cover the risk of volatility of the interest rates;
• 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".

On the semester ended on 30 June 2023, 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 period or 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 realizable 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 realizable value, whichever is the lower, and this reduction is recognised directly in the income statement.

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

The differences between the cost and the corresponding net realizable 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 realizable 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 42.2), 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 recognized at fair value when there is reasonable assurance that they will be received and that the Group companies will comply with the requirements for their award.

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

Investment subsidies, which were recorded as deferred income and recognized as income, from 2023 onwards, are deducted from tangible and intangible fixed assets to the extent of the associated expenses and are recognized in the income statement (depreciation and amortization) on a systematic and rational basis over the useful life of the asset.

2.3.14.Provisions and contingent liabilities

Provisions are recognised when:

• 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
• 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 program, 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 the effects of the passage of time and the corresponding financial indexing is recognised in results as a financial cost.

Obligations arising from onerous contracts are recorded and measured as provisions. An onerous contract exists when the Company is an integral part of a contract, whose compliance has associated costs directly associated with the contract (both incremental costs and an allocation of costs directly related to the contract) that exceed 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 recognizes 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 recognizes 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:

• Is not a concentration of business activities;
• At the moment of the transaction, it does not affect neither the accounting profit nor the taxable profit (fiscal loss);
• 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:

• 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.
• All the other acquired deferred tax benefits performed are recognised in the income statement (when applicable, directly in shareholders' equity).

2.3.17 Payment based in shares

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

Share issue premiums

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.

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".

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.

Other reserves and accumulated earnings

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.

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.

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.

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:

• Revenues of Communications Services:

Cable/Satellite television, fixed broadband and fixed voice: The revenues from services provided using the fibre optic cable network result from:

• basic channel subscription packages that can be sold in a bundle with fixed broadband/fixed voice services;
• premium channel subscription packages and S-VOD;
• terminal equipment rental;
• consumption of content (VOD);
• traffic and voice termination;
• service activation;
• sale of equipment, licensing and others; and
• other additional services (ex: firewall, antivirus).
• 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.
• 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.
• Film showings and distribution: 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.
• 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.
• Consultancy and datacenter management: information systems consultancy and datacenter management are the major services rendered by NOS Sistemas.
• Insurance brokerage commissions: income from insurance sales commissions is obtained by NOS Mediação de Seguros.
• Intelligent Alarm: the revenues obtained with the NOS | Securitas Intelligent Alarm include security solutions for people and property, which combine the professional monitoring of the Securitas Alarm Center with NOS latest technology.

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

• Identification of the contract with the customer;
• Identification of performance obligations;
• Determining the price of the transaction;

• Allocation of the price of the transaction to the performance obligations; and
• 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, Licensing 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 recognizes 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:

• 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

• 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.

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 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 Assets, liabilities and transactions in foreign currencies

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.

The conversion coefficient that was used for the restatement of the individual financial statements of the subsidiaries in Angola was the Consumer Price Index (CPI), issued by the National Bank of Angola.

In the last quarter of 2019, the Angolan economy was no longer considered a hyperinflationary economy.

IAS 29 - Financial Reporting in Hyperinflationary Economies provides that "when an economy ceases to be hyperinflationary, the company should treat the amounts expressed in the current unit of measurement at the end of the previous reporting period, as the basis for the carrying amounts in its statements subsequent financial statements". In this way, the adjustments / revaluations, carried out until the end of the classification as a hyperinflationary economy, are treated as a deemed cost and recognised in the same proportion as the assets that gave rise to it.

At 31 December 2022 and 30 June 2023, assets and liabilities expressed in foreign currencies were converted into euros using the following exchange rates of such currencies against the euro, as published by the Bank of Portugal:

	31-12-2022	30-06-2023
US Dollar	1.0666	1.0866
Angolan Kwanza	537.5664	896.4450
British Pound	0.8869	0.8583
Mozambican Metical	67.4500	68.6900
Canadian Dollar	1.4440	1.4415
Swiss Franc	0.9847	0.9788
Real	5.6386	5.2788

In the semesters ended on 30 June 2022 and 2023, the income statements of subsidiaries expressed in foreign currencies were converted to euros at the average exchange rates of the currencies of their countries of origin against the euro. The average exchange rates used are as follows:

	6M 22	6M 23
Angolan Kwanza	506.5327	615.2039
Mozambican Metical	68.5700	68.4067

2.3.22 Financial charges and borrowings

Financial charges related to borrowings are recognised as costs in accordance with the accrual's principle, except in the case of loans incurred (whether these are generic or specific) for the acquisition, construction or production of an asset that takes a substantial period (over one year) to be ready for use, which are capitalized in the 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.

2.3.24 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 maximizes the amount that would be received for selling asset or minimizes 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 maximize 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 Assets and liabilities offsetting

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.

2.3.26 Employee benefits

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

• 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 recognizes 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.
• Holiday, holiday allowances, and bonuses. According to the labor 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".
• Labor Compensation Fund (FCT) and the Labor 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 Labor Compensation Fund schemes (FCT) and the Guarantee Fund Compensation of Labor (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, investing, 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 Subsequent events

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 semester.

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 amortization/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 amortization/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 capitalized costs with the audiovisual content distribution rights acquired for commercialization 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 valorization models are 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. Errors, estimates, and changes to accounting policies

During the semesters ended 30 June 2022 and 2023 no material errors, estimates or changes in accounting policies were recognised in relation to prior years. On 31 December 2022, a reclassification of estimates to address uncertainties regarding the acceptance of a particular tax treatment by the Tax Administration was made from Taxes payable to deferred tax liabilities, with restatement of the period ended on 30 June 2022, for comparability purposes, in the amount of €42.5 million (Note 15).

4. Changes in the perimeter

During the semester ended on 30 June 2022, there were no changes in the perimeter.

During the semester ended on 30 June 2023, the following changes in perimeter occurred:

• Incorporation of the company Ten Twenty One, S.A., in February 2023, whose main activity is the provision of engineering and consulting services in the area of information technologies, communications and electronics;
• Disposal of the stake held in Big Picture 2 Films (20%), in June 2023, for the amount of 50 thousand euros (Note 11);
• Acquisition of the company BLU, S.A., in March 2023, whose main activity is the provision of telecommunications services, establishment, management and operation of telecommunications networks, and subsequent merger into NOS Comunicações in May 2023. This merger did not originate any material impacts on the Group's consolidated financial statements.

Following the acquisition of BLU, S.A., NOS made a preliminary assessment of the fair value of assets acquired and liabilities assumed through this operation, so the purchase price allocation is still subject to changes until the conclusion of the period of one year from the control date, as permitted by IFRS 3 - Business Combinations. Nevertheless, NOS does not estimate material changes as a result of any changes to the allocation made.

The detail of net assets acquired and goodwill arising on this transaction is as follows:

	BOOK VALUE	ADJUSMENTS TO FAIR VALUE	FAIR VALUE
ACQUIRED ASSETS
Contract costs - customer portfolio	-	183	183
Accounts receivable	141	-	141
Prepaid expenses	21	-	21
Cash and cash equivalents	158	-	158
	320	183	503
ACQUIRED LIABILITIES
Accounts payable	120	-	120
Tax payable	7	-	7
Deferred income	26	-	26
	153	-	153
TOTAL NET ASSETS ACQUIRED	167	183	350
GOODWILL			-
ACQUISITION PRICE			350

The difference between the amount paid and the net assets acquired was allocated in full to the company's client portfolio, taking into account the rationale behind the acquisition operation.

The contribution of BLU, S.A. to net income and revenues for the semester ended on 30 June 2023, was 72 thousand euros and 275 thousand euros respectively, corresponding to a period of three month.

The net cash flows with the acquisition of BLU, S.A., resulted in a payment of 192 thousand euros, included in the cash flows of Investment Activities (Price paid: 350 thousand euros; Cash and cash equivalents: 158 thousand euros).

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 Açores, 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, NOS Mediação de Seguros and Ten Twenty One.
• Audiovisual the supply of video production services and sales, cinema exhibition and distribution and the acquisition/negotiation of Pay TV and VOD (video-on-demand) rights and includes the following companies: NOS Audiovisuais, NOS Cinemas, Lusomundo Moçambique, Lda ("Lusomundo Moçambique"), Lusomundo Imobiliária 2, S.A. ("Lusomundo Imobiliária 2"), Lusomundo Sociedade de Investimentos Imobiliários, SGPS, S.A. ("Lusomundo SII"), Empracine – Empresa Promotora de Atividades Cinematográficas, Lda ("Empracine"), NOS Audio SGPS and Dreamia S.L.

Assets and liabilities by segment at 31 December 2022 and 30 June 2023 are shown below:

	TELCO	AUDIOVISUALS	ELIMINATIONS	GROUP
ASSETS
NON - CURRENT ASSETS:
Tangible assets	1,098,022	9,030	-	1,107,052
Intangible assets	1,117,022	92,536	-	1,209,558
Contract costs	160,594	-	-	160,594
Rights of use	270,493	27,230	-	297,723
Investments in jointly controlled companies
and associated companies	122,712	46,256	(130,007)	38,961
Accounts receivable - other	43,569	3,082	(41,893)	4,758
Deferred income tax assets	81,545	8,009	-	89,554
Other non-current assets	16,917	463	-	17,380
TOTAL NON - CURRENT ASSETS	2,910,874	186,606	(171,900)	2,925,580
CURRENT ASSETS:
Inventories	66,657	566	-	67,223
Account receivables	391,650	47,390	(42,872)	396,168
Prepaid expenses	50,891	1,721	(380)	52,232
Other current assets	4,788	2,118	-	6,906
Cash and cash equivalents	14,265	950	-	15,215
TOTAL CURRENT ASSETS	528,251	52,745	(43,252)	537,744
TOTAL ASSETS	3,439,125	239,351	(215,152)	3,463,324
SHAREHOLDER'S EQUITY
Share capital	855,168	48,917	(48,917)	855,168
Capital issued premium	4,202	-	-	4,202
Own shares	(15,968)	-	-	(15,968)
Legal reserve	1,030	1,989	(1,989)	1,030
Other reserves and accumulated earnings	7,998	37,897	(68,809)	(22,914)
Net income	216,203	18,207	(9,836)	224,574
EQUITY BEFORE NON - CONTROLLING	1,068,633	107,010	(129,551)	1,046,092
INTERESTS
Non-controlling interests	6,251	-	-	6,251
TOTAL EQUITY	1,074,884	107,010	(129,551)	1,052,343
LIABILITIES
NON - CURRENT LIABILITIES:
Borrowings	1,188,142	63,931	(41,892)	1,210,181
Provisions	73,656	7,611	-	81,267
Other non-current liabilities	44,952	-	-	44,952
Deferred income tax liabilities	49,296	829	-	50,125
TOTAL NON - CURRENT LIABILITIES	1,356,046	72,371	(41,892)	1,386,525
CURRENT LIABILITIES:
Borrowings	433,941	17,185	(23,673)	427,453
Accounts payable	305,870	17,086	(15,812)	307,144
Tax payable	37,485	1,357	-	38,842
Accrued expenses	199,001	17,274	(3,845)	212,430
Other current liabilities	31,898	7,068	(379)	38,587
TOTAL CURRENT LIABILITIES	1,008,195	59,970	(43,709)	1,024,456
TOTAL LIABILITIES	2,364,241	132,341	(85,601)	2,410,981
TOTAL LIABILITIES AND SHAREHOLDER´S EQUITY	3,439,125	239,351	(215,152)	3,463,324

	TELCO	AUDIOVISUALS	ELIMINATIONS	GROUP
ASSETS
NON - CURRENT ASSETS:
Tangible assets	1,091,290	9,198	-	1,100,488
Intangible assets	1,118,182	91,880	-	1,210,062
Contract costs	160,762	-	-	160,762
Rights of use	277,590	39,754	-	317,344
Investments in jointly controlled companies
and associated companies	112,383	46,059	(130,007)	28,435
Accounts receivable - other	43,542	3,173	(41,893)	4,822
Deferred income tax assets	81,856	7,486	-	89,342
Other non-current assets	19,039	459	-	19,498
TOTAL NON - CURRENT ASSETS	2,904,644	198,009	(171,900)	2,930,753
CURRENT ASSETS:	-	-	-	-
Inventories	68,216	572	-	68,788
Account receivables	377,895	36,279	(34,712)	379,462
Prepaid expenses	61,978	1,350	-	63,328
Other current assets	4,538	1,715	(212)	6,041
Cash and cash equivalents	9,967	952	-	10,919
TOTAL CURRENT ASSETS	522,594	40,868	(34,924)	528,538
TOTAL ASSETS	3,427,238	238,877	(206,824)	3,459,291
SHAREHOLDER'S EQUITY	-	-	-	-
Share capital	855,168	48,917	(48,917)	855,168
Capital issued premium	4,202	-	-	4,202
Own shares	(15,109)	-	-	(15,109)
Legal reserve	4,374	2,697	(2,697)	4,374
Other reserves and accumulated earnings	(13,300)	48,257	(70,902)	(35,945)
Net income	80,250	7,247	(7,036)	80,461
EQUITY BEFORE NON - CONTROLLING	915,585	107,118	(129,552)	893,151
INTERESTS
Non-controlling interests	6,370	-	-	6,370
TOTAL EQUITY	921,955	107,118	(129,552)	899,521
LIABILITIES	-	-	-	-
NON - CURRENT LIABILITIES:	-	-	-	-
Borrowings	1,528,866	74,527	(41,893)	1,561,500
Provisions	74,463	8,158	-	82,621
Other non-current liabilities	41,707	-	-	41,707
Deferred income tax liabilities	50,273	356	-	50,629
TOTAL NON - CURRENT LIABILITIES	1,695,309	83,041	(41,893)	1,736,457
CURRENT LIABILITIES:	-	-	-	-
Borrowings	252,700	13,235	(16,989)	248,946
Accounts payable	266,394	15,938	(13,947)	268,385
Tax payable	35,346	494	(212)	35,628
Accrued expenses	219,825	18,967	(4,231)	234,561
Other current liabilities	35,709	84	-	35,793
TOTAL CURRENT LIABILITIES	809,974	48,718	(35,379)	823,313
TOTAL LIABILITIES	2,505,283	131,759	(77,272)	2,559,770
TOTAL LIABILITIES AND SHAREHOLDER´S EQUITY	3,427,238	238,877	(206,824)	3,459,291

The results by segment and investments in tangible and intangible assets, contract costs and rights of use for the semesters ended on 30 June 2022 and 2023 are shown below:

	TELCO		AUDIOVISUALS		ELIMINATIONS		GROUP
	2º QUARTER 22	6M 22	2º QUARTER 22	6M 22	2º QUARTER 22	6M 22	2º QUARTER 22	6M 22
REVENUES:
Services rendered	328,643	651,100	16,823	33,466	(7,009)	(18.139)	338,457	666,427
Sales	20,359	56,339	3,043	5,020	(39)	(71)	23,363	61,288
Other operating revenues	6,609	13,952	321	600	(151)	(301)	6,779	14,251
	355,611	721,391	20,187	39,086	(7,199)	(18.511)	368,599	741,966
COSTS, LOSSES AND GAINS:
Wages and salaries	18,114	36,147	2,456	4,715	-	-	20,570	40,862
Direct costs	89,839	175,754	5,273	7,435	(7,451)	(15.007)	87,661	168,182
Costs of products sold	20,252	54,927	644	1,051	(6)	(15)	20,890	55,963
Marketing and advertising	8,124	15,773	793	1,387	(2,995)	(5.964)	5,922	11,196
Support services	19,579	40,285	733	1,435	(804)	(1.582)	19,508	40,138
Supplies and external services	36,424	73,412	(1,854)	(669)	4,057	4.057	38,627	76,800
Other operating losses / (gains)	159	438	56	111	-	-	215	549
Taxes	8,786	17,553	32	53	-	-	8,818	17,606
Provisions and adjustments	4,268	9,122	(715)	(728)	-	-	3,553	8,394
	205,545	423,411	7,418	14,790	(7,199)	(18.511)	205,764	419,690
EBITDA	150,066	297,980	12,769	24,296	-	-	162,835	322,276
Depreciation, amortisation and impairment losses	103,501	206,073	7,411	15,244	-	-	110,912	221,317
Other losses / (gains), net	432	(2,450)	71	226	-	-	503	(2,224)
INCOME BEFORE LOSSES / (GAINS)
PARTICIPATED COMPANIES, FINANCIAL	46,133	94,357	5,287	8,826	-	-	51,420	103,183
RESULTS AND TAXES
Net losses / (gains) of affiliated companies	(4,988)	(10,188)	(94)	(201)	-	-	(5,082)	(10,389)
Financial costs	7,745	15,520	319	682	-	-	8,064	16,202
Net foreign exchange losses / (gains)	(155)	(82)	18	37	-	-	(137)	(45)
Net losses / (gains) on financial assets	22	(7,322)	-	(2,754)	-	10.132	22	56
Net other financial expenses / (income)	898	1,681	10	13	-	-	908	1,694
	3,522	(391)	253	(2,223)	-	10.132	3,775	7,518
INCOME BEFORE TAXES	42,611	94,748	5,034	11,049	-	(10.132)	47,645	95,665
Income taxes	2,766	8,897	652	1,464	-	-	3,418	10,361
NET INCOME	39,845	85,851	4,382	9,585	-	(10.132)	44,227	85,304
CAPEX	128,651	261,339	4,899	15,462	-	-	133,550	276,801
EBITDA - CAPEX	21,415	36,641	7,870	8,834	-	-	29,285	45,475

	TELCO		AUDIOVISUALS		ELIMINATIONS		GROUP
	2º QUARTER 23	6M 23	2º QUARTER 23	6M 23	2º QUARTER 23	6M 23	2º QUARTER 23	6M 23
REVENUES:
Services rendered		347,471 687,673	20,068	37,120	(8,119)	(16.037)		359,420 708,756
Sales	22,539	44,854	4,239	7,417	(59)	(142)	26,719	52,129
Other operating revenues	7,478	14,116	325	494	(151)	(300)	7,652	14,310
		377,488 746,643	24,632	45,031	(8,329)	(16.479)		393,791 775,195
COSTS, LOSSES AND GAINS:
Wages and salaries	20,828	40,208	2,716	5,303	(2)	(2)	23,542	45,509
Direct costs		89,260 172,844	5,914	10,158	(6,150)	(12.379)		89,024 170,623
Costs of products sold	21,204	42,366	1,009	1,637	(3)	(13)	22,210	43,990
Marketing and advertising	7,870	19,424	1,049	1,675	(2,970)	(5.970)	5,949	15,129
Support services	22,695	46,742	614	1,318	(707)	(1.425)	22,602	46,635
Supplies and external services	36,098	69,560	1,059	1,574	1,503	3.310	38,660	74,444
Other operating losses / (gains)	224	473	42	82	-	-	266	555
Taxes	8,929	17,921	16	40	-	-	8,945	17,961
Provisions and adjustments	3,659	7,906	(124)	(159)	-	-	3,535	7,747
		210,767 417,444	12,295	21,628	(8,329)	(16.479)		214,733 422,593
EBITDA		166,721 329,199	12,337	23,403	-	-		179,058 352,602
Depreciation, amortisation and impairment losses		109,541 223,248	7,070	13,768	-	-		116,611 237,016
Other losses / (gains), net	418	850	320	385	-	-	738	1,235
INCOME BEFORE LOSSES / (GAINS)
PARTICIPATED COMPANIES, FINANCIAL		56,762 105,101	4,947	9,250	-	-		61,709 114,351
RESULTS AND TAXES
Net losses / (gains) of affiliated companies	(842)	(3,381)	138	147	-	-	(704)	(3,234)
Financial costs	15,306	26,696	198	688	-	-	15,504	27,384
Net foreign exchange losses / (gains)	87	238	(2)	(32)	-	-	85	206
Net losses / (gains) on financial assets	(4)	(7,035)	5	4	-	7.036	1	5
Net other financial expenses / (income)	929	1,896	3	9	-	-	932	1,905
	15,476	18,414	342	816	-	7.036	15,818	26,266
INCOME BEFORE TAXES	41,286	86,687	4,605	8,434	-	(7.036)	45,891	88,085
Income taxes	73	6,310	278	1,187	-	-	351	7,497
NET INCOME	41,213	80,377	4,327	7,247	-	(7.036)	45,540	80,588
CAPEX		114,911 225,032	9,836	25,814	-	-		124,747 250,846
EBITDA - CAPEX		51,810 104,167	2,501	(2,411)	-	-		54,311 101,756

EBITDA = Operational Result + Depreciation, amortization and impairment losses + Restructuring costs + Losses / (gains) on sale of assets + Other losses / (gains) non-recurrent

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 June 2023, fully consolidated foreign companies represent less than 1% of assets (at 30 June 2022: 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:

TOTAL
5,248
11,249
319,441
21,390
15,215
372,543
1,637,634
397
253,355
95,917
212,430
2,199,733

	30-06-2023
	FINANCIAL ASSETS	DERIVATIVES	FINANCIAL LIABILITIES	TOTAL FINANCIAL ASSETS AND LIABILITIES	NON FINANCIAL ASSETS AND LIABILITIES	TOTAL
ASSETS
Other financial assets non-current (Note 14)	5,674	-	-	5,674	-	5,674
Derivative financial instruments (Note 20)	-	13,090	-	13,090	-	13,090
Accounts receivable - trade (Note 17)	298,011	-	-	298,011	-	298,011
Accounts receivable - other (Note 12)	13,121	-	-	13,121	12,737	25,858
Cash and cash equivalents (Note 21)	10,919	-	-	10,919	-	10,919
TOTAL FINANCIAL ASSETS	327,725	13,090	-	340,815	12,737	353,552
LIABILITIES
Borrowings (Note 24)	-	-	1,810,446	1,810,446	-	1,810,446
Derivative financial instruments (Note 20)	-	567	-	567	-	567
Accounts payable - trade (Note 28)	-	-	233,290	233,290	-	233,290
Accounts payable - other (Note 29)	-	-	69,501	69,501	7,285	76,786
Accrued expenses (Note 26)	-	-	234,561	234,561	-	234,561
TOTAL FINANCIAL LIABILITIES	-	567	2,347,798	2,348,365	7,285	2,355,650

Considering its nature, the balances of the amounts to be paid and received to/from state and other public entities were considered outside the scope of IFRS 7. Also, the captions of "Prepaid expenses" and "Deferred income" were not included in this note, as the nature of such balances are not included in the scope of IFRS 7.

The Board of Directors believes that the fair value of the breakdown of financial instruments recorded at amortised cost or registered at the present value of the payments does not differ significantly from their book value. This decision is based in the contractual terms of each financial instrument.

7. Tangible Assets

In the semesters ended on 30 June 2022 and 2023, the movements in this item were as follows:

	31-12-2021	INCREASES	DISPOSALS AND WRITE OFFS	TRANSFERS AND OTHERS	30-06-2022
ACQUISITION COST
Lands	796	-	-	-	796
Buildings and other constructions	276,320	(22)	(429)	(5,752)	270,117
Basic equipment	2,765,157	24,181	(35,112)	87,106	2,841,332
Transportation equipment	514	-	-	-	514
Tools and dies	1,596	-	-	7	1,603
Administrative equipment	195,035	717	(861)	1,087	195,978
Other tangible assets	43,864	75	-	138	44,077
Tangible assets in-progress	41,226	111,757	-	(96,089)	56,894
	3,324,508	136,708	(36,402)	(13,503)	3,411,311
ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES
Buildings and other constructions	180,308	5,539	(431)	(3,520)	181,896
Basic equipment	1,872,564	83,902	(34,676)	(205)	1,921,585
Transportation equipment	513	-	-	1	514
Tools and dies	1,479	32	-	-	1,511
Administrative equipment	185,182	1,931	(865)	162	186,410
Other tangible assets	43,362	188	-	-	43,550
	2,283,408	91,592	(35,972)	(3,562)	2,335,466
	1,041,100	45,116	(430)	(9,941)	1,075,846

	31-12-2022	INCREASES	DISPOSALS AND WRITE OFFS	TRANSFERS AND OTHERS	30-06-2023
ACQUISITION COST
Land	519	-	-	-	519
Buildings and other constructions	264,259	(1,352)	(587)	6,442	268,762
Basic equipment	2,909,175	23,154	(38,748)	53,766	2,947,347
Transportation equipment	514	-	-	-	514
Tools and dies	1,607	-	-	102	1,709
Administrative equipment	195,921	699	(1,729)	878	195,769
Other tangible assets	44,162	78	(1)	139	44,378
Tangible assets in-progress	53,438	61,492	-	(54,946)	59,984
	3,469,595	84,071	(41,065)	6,381	3,518,982
ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES
Buildings and other constructions	159,518	6,909	(587)	-	165,840
Basic equipment	1,971,674	87,795	(38,681)	(74)	2,020,714
Transportation equipment	514	-	-	-	514
Tools and dies	1,528	24	-	-	1,552
Administrative equipment	185,650	1,931	(1,689)	-	185,892
Other tangible assets	43,659	324	(1)	-	43,982
	2,362,543	96,983	(40,958)	(74)	2,418,494
	1,107,052	(12,912)	(107)	6,455	1,100,488

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

At 30 June 2023, the net value of tangible assets is composed mainly by basic equipment, namely:

• Network and telecommunications infrastructure (fibre optic network and cabling, network equipment, and other equipment) in the amount of 824.9 million euros (31 December 2022: 831.8 million euros);
• Terminal equipment installed on client premises, included under Basic equipment, amounts to 101.7 million euros (31 December 2022: 105.7 million euros).

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

At 30 June 2023, total net value of these costs amounted to 12.6 million euros (31 December 2022: 13.6 million euros). The amount of interest capitalised in the semester ended on 30 June 2023 amounted to 1.2 million euros (31 December 2022: 1.1 million euros).

8. Intangible assets

In the semesters ended on 30 June 2022 and 2023, the movements in this item were as follows:

	31-12-2021	INCREASES	TRANSFERS AND OTHERS	30-06-2022
ACQUISITION COST
Industrial property and other rights	1,981,959	1,189	57,944	2,041,092
Goodwill	641,400	-	-	641,400
Intangible assets in-progress	39,861	58,066	(63,522)	34,405
	2,663,220	59,255	(5,578)	2,716,897
ACCUMULATED AMORTISATION AND IMPAIRMENT LOSSES
Industrial property and other rights	1,456,166	50,771	(118)	1,506,819
Other intangible assets	2,023	-	43	2,066
	1,458,189	50,771	(75)	1,508,885
	1,205,031	8,484	(5,503)	1,208,012

	31-12-2022	INCREASES	TRANSFERS AND OTHERS	30-06-2023
ACQUISITION COST
Industrial property and other rights	2,103,180	19,110	38,858	2,161,148
Goodwill	641,400	-	-	641,400
Intangible assets in-progress	27,217	42,787	(45,239)	24,765
	2,771,797	61,897	(6,381)	2,827,313
ACCUMULATED AMORTISATION AND IMPAIRMENT LOSSES
Industrial property and other rights	1,559,907	54,932	1,218	1,616,057
Intangible assets in-progress	2,332	-	(1,138)	1,194
	1,562,239	54,932	80	1,617,251
	1,209,558	6,965	(6,461)	1,210,062

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

At 30 June 2023, the item "Industrial property and other rights" includes mainly:

• A net amount of 139.4 million euros (31 December 2022: 143.2 million euros) corresponding to the acquisition of frequency usage rights in 5G bands and other relevant bands (100MHz in the 3.6GHz band and 2x10MHz in the 700MHz band, also acquiring 2x5MHz in the 2100MHz band and 2x2MHz in the 900MHz band);
• A net amount of 81.6 million euros (31 December 2022: 85.8 million euros) mainly related to the investment, net of amortization, made in the development of the UMTS network by NOS SA, including:
  • 25.8 million euros (31 December 2022: 27.2 million euros) related to the license,
  • 8.6 million euros (31 December 2022: 9.1 million euros) related to the agreement signed in 2002 between Oni Way and the other three mobile telecommunication operators with activity in Portugal,
  • 2.7 million euros (31 December 2022: 2.8 million euros) related to the Share Capital of "Fundação para as Comunicações Móveis'', established in 2007, under an agreement entered with "Ministério das Obras Públicas, Transportes e Comunicações" and the three mobile telecommunication operators in Portugal;
  • 37.8 million euros (31 December 2022: 39.7 million euros) related with the program "Initiatives E"; and
  • the net amount of 4.5 million euros (31 December 2022: 4.7 million euros) corresponding to the valuation of the license in the fair value allocation process resulting from the merger;
• A net amount of 69.6 million euros (31 December 2022: 71.4 million euros) corresponding to the current value of future payments related with the acquisition of rights of use for frequencies (spectrum) bands of 800 MHz, 1800 MHz, 2600 MHz, which will be used to develop 4th generation services (LTE - Long Term Evolution) and a net amount of 2.4 million euros (31 December 2022: 2.5 million euros) corresponding to the valuation of the license in the fair value allocation process resulting from the merger;
• A net amount of 171 million euros related with software development (31 December 2022: 173 million euros);
• A net amount of 15.0 million euros (31 December 2022: 15.7 million euros) corresponding to the future rights to use movies and series.

Increases in the semester ended on 30 June 2023 correspond mainly to the acquisition of movies and television series usage rights, for an amount of 7.2 million euros, and acquisition and development of software and other assets, for an amount of 52.8 million euros.

Impairment tests on goodwill

Goodwill was allocated to the cash-generating units of each reportable segment, as follows:

	31-12-2022	30-06-2023
Telco	564,799	564,799
Audiovisuals	76,601	76,601
	641,400	641,400

In 2022 impairment tests were performed based on assessments in accordance with the discounted cash flow method, which corroborate the recoverability of the book value of the Goodwill. The amounts in these assessments are based on the historical performances and forecast growth of the businesses and their markets, incorporated in medium/long term approved plans.

These estimates are based on the following assumptions:

		AUDIOVISUALS SEGMENT
	TELCO SEGMENT	NOS	NOS
Discount rate (before taxes)	6.5%	AUDIOVISUALS 9.4%	CINEMAS 9.4%
Assessment period	5 years	5 years	5 years
EBITDA Growth (2022-27)*	3.0%	-6.2%	4.2%
Perpetuity growth rate	2.0%	2.0%	2.0%

* 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 cinema segment, the most affected segment by COVID-19, strong EBITDA growth is justified on the prospect of a recovery in activity to levels close to those pre-pandemic.

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.

In the six months ended on 30 June 2023, it was understood that the assumptions made in the impairment tests carried out in 2022 were conservative due the more recent developments, so there are no indications of the existence of any impairment.

9. Contract costs

In the semesters ended on 30 June 2022 and 2023, the movements in this item were as follows:

	31-12-2021	INCREASES	30-06-2022
ACQUISITION COST
Cost of attracting customers	556,967	32,909	589,876
Costs of fulfilling customer contracts	256,884	15,118	272,002
	813,851	48,027	861,878
ACCUMULATED AMORTIZATIONS AND IMPAIRMENT LOSSES
Cost of attracting customers	457,570	32,204	489,774
Costs of fulfilling customer contracts	194,163	16,831	210,994
	651,733	49,035	700,768
	162,118	(1,008)	161,110

	31-12-2022	INCREASES	30-06-2023
ACQUISITION COST
Cost of attracting customers	623,472	33,767	657,239
Costs of fulfilling customer contracts	286,840	15,400	302,240
	910,312	49,167	959,479
ACCUMULATED AMORTIZATIONS AND IMPAIRMENT LOSSES
Cost of attracting customers	522,150	32,666	554,816
Costs of fulfilling customer contracts	227,568	16,333	243,901
	749,718	48,999	798,717
	160,594	168	160,762

Contract costs refers to commissions paid to third parties and other costs related to raising customers' loyalty contracts, including portability costs. These costs are amortised, systematically and consistently, with the transfer to customers of goods or services to which the asset is related (between 2 and 4 years).

10. Rights of use

In the semesters ended on 30 June 2022 and 2023, the movements in this item were as follows:

	31-12-2021	INCREASES	DISPOSALS AND WRITE OFFS	TRANSFERS AND OTHERS	30-06-2022
ACQUISITION COST
Telecommunications towers and rooftops	142,921	15,592	-	(6,462)	152,051
Movie theatres	118,322	4,750	-	-	123,072
Transponders	91,787	1,965	-	-	93,752
Equipments	149,061	8,637	-	-	157,698
Buildings	77,480	(13)	(3)	-	77,464
Fiber optic rental	40,146	-	-	-	40,146
Stores	21,445	544	-	-	21,989
Others	41,321	1,333	(4)	-	42,650
	682,483	32,808	(7)	(6,462)	708,822
ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES
Telecommunications towers and rooftops	56,137	5,573	-	(2,087)	59,623
Movie theatres	89,550	4,486	-	-	94,036
Transponders	68,380	2,972	-	-	71,352
Equipments	102,784	7,928	-	-	110,712
Buildings	58,411	3,524	(3)	-	61,932
Fiber optic rental	32,019	1,526	-	-	33,545
Stores	16,585	1,280	-	-	17,865
Others	22,554	2,622	(4)	-	25,172
	446,420	29,911	(7)	(2,087)	474,237
	236,063	2,897	-	(4,375)	234,585

	31-12-2022	INCREASES	DISPOSALS AND WRITE OFFS	TRANSFERS AND OTHERS	30-06-2023
ACQUISITION COST
Telecommunications towers and rooftops	224,319	18,969	-	-	243,288
Movie theatres	124,323	16,904	-	-	141,227
Transponders	93,752	383	-	-	94,135
Equipments	165,910	10,188	-	-	176,098
Buildings	91,336	2,973	-	-	94,309
Fiber optic rental	40,137	-	-	-	40,137
Stores	24,547	5,647	-	-	30,194
Others	43,415	647	-	-	44,062
	807,739	55,711	-	-	863,450
ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES
Telecommunications towers and rooftops	69,950	10,188	-	(6)	80,132
Movie theatres	97,322	4,295	-	-	101,617
Transponders	74,552	3,254	-	-	77,806
Equipments	119,138	8,108	-	-	127,246
Buildings	66,151	4,282	-	-	70,433
Fiber optic rental	35,068	1,525	-	-	36,593
Stores	19,874	1,866	-	-	21,740
Others	27,961	2,578	-	-	30,539
	510,016	36,096	-	(6)	546,106
	297,723	19,615	-	6	317,344

The caption "Rights of Use" refers to assets associated with lease contracts. These assets are amortised according to the duration of the respective agreement, except for the lease of equipment with a purchase option that is amortised over the estimated period of use.

11. Investments in jointly controlled companies and associated companies

At 31 December 2022 and 30 June 2023, this item was composed as follows:

	31-12-2022	30-06-2023
INVESTMENTS - EQUITY METHOD
Finstar*	32,811	21,879
Dreamia	2,347	2,224
Mstar	3,023	3,107
Other companies	780	1,225
ASSETS	38,961	28,435
* Consolidated from Finstar and ZAP Media

Movements in "Investments in jointly controlled companies and associated companies" in the semesters ended on 30 June 2022 and 2023 were as follows:

	6M 22	6M 23
AS AT JANUARY 1	17,016	38,961
Constitution of new companies	10,389	2,380
Disposal of Big Picture 2 Films (Note 4)	-	(50)
Dividends distribution Mstar	-	(803)
Changes in equity	7,034	(12,053)
AS AT JUNE 30	34,439	28,435

Amounts related to changes in equity of the companies registered by the equity 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 2022 and 30 June 2023, are as follows:

31-12-2022
ENTITY	NON CURRENT ASSETS	CURRENT ASSETS	NON CURRENT LIABILITIES	CURRENT LIABILITIES	EQUITY	REVENUE	NET INCOME	% HELD
Sport TV*	84,507	99,229	71	159,280	24,385	208,331	12,080	25%
Dreamia	876	16,985	6,924	6,066	4,871	16,568	(1,272)	50%
Finstar	77,697	199,314	-	167,640	109,371	339,309	68,907	30%
Mstar	1,064	16,336	-	9,009	8,391	30,665	2,927	30%
Upstar	976	20,089	-	18,873	2,192	21,423	920	30%
Big Picture 2 Films (a)	770	893	522	780	361	3,270	(172)	20%
Dualgrid	6	267	-	176	97	516	38	50%
Dreamia S.L.	14,967	1,126	6,363	2,302	7,428	2,213	(9)	50%
	180,863	354,239	13,880	364,126	157,096	622,295	83,419

30-06-2023

ENTITY	NON CURRENT ASSETS	CURRENT ASSETS	NON CURRENT LIABILITIES	CURRENT LIABILITIES	EQUITY	REVENUE	NET INCOME	% HELD
Sport TV*	11,009	49,733	48	40,548	20,146	92,824	(4,239)	25%
Dreamia	1,064	14,257	7,034	3,759	4,528	8,477	(344)	50%
Finstar	45,888	129,326	-	100,573	74,641	125,055	5,252	30%
Mstar	837	18,462	-	9,475	9,824	12,380	2,673	30%
Upstar	919	22,134	-	19,154	3,899	9,967	1,113	30%
Big Picture 2 Films (a)	-	-	-	-	-	-	-	0%
Dualgrid	5	259	-	154	110	288	29	50%
Dreamia S.L.	15,078	1,218	6,456	2,394	7,446	1,124	17	50%
	74,800	235,389	13,538	176,057	120,594	250,115	4,501

(a) Company disposed in June 2023

* Sport TV annual reporting period is from 1 July to 30 June (aligned with the period of the football seasons), therefore, in the accounts presented in the table above, revenues and net income correspond to the values relating to the reported period of 12 months of 2022 and 6 months of 2023, respectively.

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 semester ended on 30 June 2023, the assets, liabilities and results of jointly controlled company ZAP Media (100% held by Finstar) are:

30-06-2023
ENTITY	NON CURRENT ASSETS	CURRENT ASSETS	NON CURRENT LIABILITIES	CURRENT LIABILITIES	EQUITY	REVENUE	NET INCOME
ZAP Media	17,650	6,299	-	12,548	11,401	21,220	2,683

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) and using different accounting plans from IAS/IFRS.

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.

12. Accounts receivable - other

At 31 December 2022 and 30 June 2023, this item was composed as follows:

		31-12-2022	30-06-2023
	CURRENT	NON CURRENT	CURRENT	NON CURRENT
Accounts receivables	5,646	5,640	9,222	4,850
Advances to suppliers	11,965	-	12,737	-
	17,611	5,640	21,959	4,850
Impairment of other receivable	(979)	(882)	(923)	(28)
	16,632	4,758	21,036	4,822

At 30 June 2023, this item corresponds predominantly to:

• short-term loans, medium and long-term loans from Group and interests' receivable; and
• associated companies, the amount receivable of 2.2 million euros from the sale of NOS International Carrier Services.

Additionally, as of 30 June 2023, advances to suppliers correspond predominantly to amounts paid under football rights contracts and other operating costs.

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

	6M 22	6M 23
AS AT JANUARY 1	1,524	1,861
Increases (Note 35)	127	63
Reductions (Note 36)	-	(854)
Utilizations / Others	272	(119)
AS AT JUNE 30	1,923	951

13. Taxes payable and receivable

At 31 December 2022 and 30 June 2023, these items were composed as follows:

	31-12-2022		30-06-2023
	RECEIVABLE	PAYABLE	RECEIVABLE	PAYABLE
NON CURRENT
Debt regularization	369	-	257	-
	369	-	257	-
CURRENT
Value-added tax (VAT)	6,484	21,891	5,996	20,538
Income taxes	-	13,070	-	8,907
Personnel income tax witholdings	-	1,883	-	2,624
Social Security contributions	-	1,865	-	3,475
Others	422	133	15	84
	6,906	38,842	6,011	35,628
	7,275	38,842	6,268	35,628

At 31 December 2022 and 30 June 2023, the amounts of CIT (Corporate Income Tax) receivable and payable were composed as follows:

	31-12-2022	30-06-2023
Estimated current tax on income	(45,776)	(12,029)
Payments on account	30,596	1,022
Withholding income taxes	966	313
Others	1,144	1,787
	(13,070)	(8,907)

14. Other non-current financial assets

On 31 December 2022 and 30 June 2023, this caption is composed as follows:

	31-12-2022	30-06-2023
Fundo TechTransfer	1,233	1,230
Didimo*	1,415	1,415
Seems Possible*	800	800
Reckon.ai*	500	854
MindProber*	500	500
SkillAugment*	300	300
Others	500	575
	5,248	5,674

During the financial year ended on 31 December 2022, NOS reinforced its investment in start-up Reckon.ai and invested in the start-up Didimo, which develops photo-based 3D digital avatars, in the start-up MindProber, which has developed a pioneering platform capable of measuring the emotional impact that multimedia content has on consumers, and in the start-up SkillAugment (KIT-AR), which develops solutions using emerging technologies such as augmented reality and artificial intelligence.

During the semester ended on 30 June 2023, NOS reinforced its investment on Tech Transfer Fund and in the company 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 114/2017 of 29 December, 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 2023 are:

• NOS (parent company)
• Empracine
• Lusomundo Imobiliária
• Lusomundo SII
• NOS Açores
• NOS Audiovisuais
• NOS Audiovisuais SGPS
• NOS Cinemas
• NOS Comunicações
• NOS Inovação
• NOS Internacional SGPS
• NOS Audio Sales and Distribution
• NOS Madeira
• NOS Mediação de Seguros
• NOS Sistemas
• NOS Technology
• NOS Wholesale
• NOS Corporate Center
• NOS Property
• Per-mar
• Sontária
• Teliz

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 June 2023.

A) Deferred tax

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 semesters ended on 30 June 2022 and 2023 were as follows:

	31-12-2021	INCOME (NOTE B)	EQUITY	30-06-2022
DEFERRED INCOME TAX ASSETS
Impairment of other receivable	6,531	1,064	-	7,595
Inventories	2,539	84	-	2,623
Other provision and adjustments	41.645	(617)	-	41,028
Intragroup gains	20,892	(85)	-	20,807
Liabilities recorded as part of the allocation of
fair value to the liabilities acquired in the	4,968	-	-	4,968
merger
Assets recognised under application of IFRS 16	4,739	788	-	5,527
Derivatives	76	(77)	9	8
	81,390	1,157	9	82,556
DEFERRED INCOME TAX LIABILITIES
Tax litigation	42,167	297	-	42,464
Revaluations of assets as part of the allocation
of fair value to the assets acquired in the	2,429	(87)	-	2,342
merger
Derivatives	116	64	712	892
Assets recognised under application of IFRS 16	23	(1)	-	22
Others	2,591	37	-	2,628
	47.326	310	712	48.348
	34.064	847	(703)	34.208

	31-12-2022	INCOME (NOTE B)	EQUITY	30-06-2023
DEFERRED INCOME TAX ASSETS
Impairment of other receivable	9,288	(2,195)	-	7,093
Inventories	2,579	188	-	2,767
Other provision and adjustments	39.761	330	-	40,091
Intragroup gains	26,851	(123)	-	26,728
Liabilities recorded as part of the allocation of
fair value to the liabilities acquired in the merger	4,865	(170)	-	4,695
Assets recognised under application of IFRS 16	6,160	1,646	-	7,806
Derivatives	50	14	98	162
	89,554	(310)	98	89,342
DEFERRED INCOME TAX LIABILITIES
Tax litigation	42,618	5	-	42,623
Revaluations of assets as part of the allocation
of fair value to the assets acquired in the merger	2,235	(86)	-	2,149
Derivatives	2,487	31	439	2,957
Others	2,785	115	-	2,900
	50,125	65	439	50,629
NET DEFERRED TAX	39,429	(375)	(341)	38,713

At 30 June 2023, the deferred tax assets related to the other provisions and adjustments are mainly due:

• Impairments and acceleration of amortizations beyond the acceptable fiscally and other adjustments in fixed tangible assets and intangible assets, amounted to 32.0 million euros (31 December 2022: 31.2 million euros); and
• Other provisions amounted to 8.1 million euros (31 December 2022: 8.6 million euros).

In the semester ended on 30 June 2023, the item "Tax litigation" includes liabilities, related to ongoing tax processes, of which highlights:

• Future credits transferred: for the financial year ended at 31 December 2010, 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 periodization 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 amortization 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 unfavorably, 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.

In May 2022, NOS was notified of the decision which did not admit the review appeal. An appeal has been filed against the Constitutional Court with suspensive effects on the transit of that non-admission decision. In addition to that appeal, an application was lodged in the file for recognition of the invalidity of the decision, for lack of reasoning. Both expedients are pending consideration and decision.

• 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, 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 favorably. This decision is concluded (favorably), 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 unfavorably. As for the year 2005, the Court decided favorably, having been concretized by the Tax Authorities, which meant the provision reversal of one million euros, in 2018.

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

At 30 June 2023, deferred tax assets were not recognised for an amount of 0.4 million euros, corresponding mainly to tax incentives and losses.

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 June 2023, the tax rate used to calculate the deferred tax assets relating to tax losses carried forward was 21% (2022: 21%). In the case of temporary differences, the rate used was 22.5% (2022: 22.5%) increased to a maximum of 6.3% (2022: 6.3%) 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.

With the State Budget for 2023, tax losses will have no time limit for carry forward, but there will be a limitation on their deduction up to 65% of the taxable profit generated.

B) Effective tax rate reconciliation

In the semesters ended on 30 June 2022 and 2023, the reconciliation between the nominal and effective rates of tax was as follows:

	2º QUARTER 22	6M 22	2º QUARTER 23	6M 23
Income before taxes	47,645	95,665	45,891	88,085
Statutory tax rate	22.5%	22.5%	22.5%	22.5%
ESTIMATED TAX	10,720	21,525	10,325	19,819
Permanent differences	(1,160)	(2,325)	(121)	(768)
Tax benefits	(6,677)	(8,227)	(10,485)	(12,131)
State surcharge	1,286	2,961	2,106	3,392
Autonomous taxation	173	310	120	264
Others	(924)	(3,883)	(1,594)	(3,079)
INCOME TAXES	3,418	10,361	351	7,497
Effective Income tax rate	7.2%	10.8%	0.8%	8.5%
Income tax	3,279	11,208	2,413	7,122
Deferred tax	139	(847)	(2,062)	375
	3,418	10,361	351	7,497

2º QUARTER 22 6M 22 2º QUARTER 23 6M 23 Equity method (Note 36) (5,082) (10,389) (704) (3,234) Others (74) 57 165 (179) (5,156) (10,332) (539) (3,413) 22.5% 22.5% 22.5% 22.5% (1,160) (2,325) (121) (768)

In the semesters ended on 30 June 2022 and 2023, the permanent differences were composed as follows:

Additionally, the amount registered as fiscal benefits relates to the register of deferred taxes and the use of tax benefits for which there was no record of deferred taxes: SIFIDE (Business Research and Development Tax Incentives System), a tax benefit introduced by Law 40/2005 of 3 August; fiscal benefit – RFAI (Investment Tax Incentive Regime) introduced by Law 10/2009 of 10 March; fiscal benefit of Incentive to Capitalization of Companies (ICE) – introduced by the Law 20/2023 of 17 May; and provisions for used tax incentives.

16. Inventories

At 31 December 2022 and 30 June 2023, this item was composed as follows:

	31-12-2022	30-06-2023
INVENTORIES
Telco	75,818	78,035
Audiovisuals	566	572
	76,384	78,607
IMPAIRMENT OF INVENTORIES
Telco	(9,161)	(9,819)
	(9,161)	(9,819)
	67,223	68,788

The movements occurred in impairment adjustments were as follows:

	6M 22	6M 23
AS AT JANUARY 1	8,935	9,161
Increase and decrease - Cost of products sold (Note 33)	1,035	872
Utilizations / Others	(727)	(214)
AS AT JUNE 30	9,243	9,819

17. Accounts receivable – trade

At 31 December 2022 and 30 June 2023, this item was as follows:

	31-12-2022	30-06-2023
Trade receivables	444,218	446,495
Unbilled revenues	89,805	74,922
	534,023	521,417
Impairment of trade receivable	(214,582)	(223,406)
	319,441	298,011

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:

	6M 22	6M 23
AS AT JANUARY 1	197,628	223,406
Increases and decreases (Note 35)	8,436	9,066
Penalties	3,955	3,678
Utilizations / Others	(7,763)	(12,744)
AS AT JUNE 30	202,256	223,406

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 June 2023, the contract assets, in the amount of 60.4 million euros (31 December 2022: 60.1 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 2022 and 30 June 2023, this item was composed as follow:

	31-12-2022	30-06-2023
Programming costs i)	21,091	16,271
Costs related to specific corportate projects	10,941	18,095
Costs of litigation procedure activity ii)	5,591	6,364
Repair and maintenance	1,875	3,821
Insurance	1,333	1,963
Advertising	132	1,223
Others iii)	11,269	15,591
	52,232	63,328

• 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 specialized 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. The increase in this item results mainly from expenses paid in advance at the beginning of each year in respect of the current year.

20. Derivative financial instruments

Interest rate derivatives

At 30 June 2023, NOS have 3 interest rate swaps in a total amount of 180 million euros (31 December 2022: 180 million euros) and 9 zero cost collars, amounting a total of 377.5 million euros, contracted in 2023.

Exchange rate derivatives

At the date of the statement of the financial position there are foreign currency forwards open worth 30,280 thousand euros (31 December 2022: 41,147 thousand euros).

	31-12-2022
	NOTIONAL	ASSETS		LIABILITIES
		CURRENT	NON CURRENT	CURRENT	NON CURRENT
Interest rate derivatives	180,000	-	10,947	-	-
Exchange rate derivatives	41,147	-	302	397	-
	221,147	-	11,249	397	-

	30-06-2023
	NOTIONAL ASSETS			LIABILITIES
		CURRENT	NON CURRENT	CURRENT	NON CURRENT
Interest rate derivatives	557,500	-	12,899	-	-
Exchange rate derivatives	30,280	30	161	551	16
	587,780	30	13,060	551	16

Movements during the semesters ended on 30 June 2022 and 2023 were as follows:

	31-12-2021	INCOME	EQUITY	30-06-2022
Fair value interest rate derivatives	(10)	-	2,025	2,015
Fair value exchange rate derivatives	313	134	886	1,333
Fair value equity swaps	(218)	461	(39)	204
DERIVATIVES	85	595	2,872	3,552
Deferred income tax liabilities	(116)	(64)	(712)	(892)
Deferred income tax assets	76	(77)	9	8
DEFERRED INCOME TAX	(40)	(141)	(703)	(884)
	45	454	2,169	2,668

	31-12-2022	INCOME	EQUITY	30-06-2023
Fair value interest rate derivatives	10,947	-	1,952	12,899
Fair value exchange rate derivatives	(95)	62	(343)	(376)
DERIVATIVES	10,852	62	1,609	12,523
Deferred income tax liabilities	(2,487)	(31)	(439)	(2,957)
Deferred income tax assets	50	14	98	162
DEFERRED INCOME TAX	(2,437)	(17)	(341)	(2,795)
	8,415	45	1,268	9,728

21. Cash and cash equivalents

At 31 December 2022 and 30 June 2023, this item was composed as follows:

	31-12-2022	30-06-2023
Cash	1,017	558
Other deposits	-	3,797
Terms deposits	14,198	6,564
Cash and cash equivalents	15,215	10,919
Bank overdrafts (Note 24)	7,136	4,626
Cash and cash equivalents for the purposes of the Cash Flow Statement	8,079	6,293

At 30 June 2023, the "Term deposits" have maturity of less than 10 days and bear interest at market rates.

At 31 December 2022 and 30 June 2023, there are 5.6 million euros and 5.2 million euros, respectively, recorded in the item "Current deposits" whose use is restricted, because they are held by the Capital Fund NOS 5G, subscribed by NOS.

22. Shareholder's equity

22.1. Share capital

At 31 December 2022 and 30 June 2023, the share capital of NOS was 855,167,890.80 euros. At 30 June 2023, the share capital is represented by 515,161,380 shares registered book-entry shares, with a nominal value of 1.66 euro each (2022: 1.66 euro each).

The main shareholders as of 31 December 2022 and 30 June 2023 are:

	31-12-2022		30-06-2023
	NUMBER OF SHARES	% SHARE CAPITAL	NUMBER OF SHARES	% SHARE CAPITAL
Sonaecom, SGPS, S.A.	134,322,268	26.07%	134,322,268	26.07%
ZOPT, SGPS, SA	134,322,269	26.07%	134,322,269	26.07%
Sonae, SGPS, S.A.	55,524,516	10.78%	55,524,516	10.78%
Mubadala Investment Company	25,758,569	5.00%	25,758,569	5.00%
TOTAL	349,927,622	67.93%	349,927,622	67.93%

According to paragraphs b) and c) of number 1 of article 20º and article 21º of the Portuguese Securities Code, a qualified shareholding of 26.07% of the share capital and voting rights of NOS, SGPS, S.A. as calculated in the terms of article 20º of the Portuguese Securities Code, is attributable to the following companies:

• Sonaecom The aforementioned qualified holding is also attributable to Sonaecom SGPS S.A., and all entities in a control relationship with Sonaecom, namely SONTEL, BV and SONAE, SGPS, S.A., directly or indirectly controled by EFANOR INVESTIMENTOS, SGPS, S.A., as a result of the control relationship and shareholders agreement mentioned. As of November 29th, 2017, EFANOR INVESTIMENTOS, SGPS, S.A., no longer has a controlling shareholder under the terms and for the purposes of articles 20 and 21 of the Portuguese Securities Code;
• ZOPT This qualified holding is attributable to the companies Kento Holding Limited ("Kento"), BV, as well as to Mrs. Isabel dos Santos, being (i) Kento and Unitel International directly and indirectly controlled by Mrs. Isabel dos Santos; (ii) a ZOPT, a society controled by Kento Holding Limited, Unitel International Holdings, BV.

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:

• share capital in the amount of 2,060,646 euros;
• premium for issue of shares in the amount of 854,343,632 euros.

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:
• To cover part of the losses on the balance of the year that cannot be covered by other reserves;
• To cover part of the losses carried forward from the previous year that cannot be covered by the net income of the year or by other reserves;
• To increase the share capital.

On 21 April 2022, was approved in the Annual General Meeting of shareholders of NOS SGPS, an increase of share capital, by incorporation of share premium, in the amount of 850,016,277.00, through the increase of the nominal value of the total shares representing the share capital in the amount of 1.65€. The nominal value of each share is now 1.66€.

As of 30 June 2023, the amount of share issue premium is 4,202,356 euros (2022: 4,202,356 euros).

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 June 2023 there were 3,748,774 own shares, representing 0.7277% of share capital (31 December 2022: 4,008,391 own shares, representing 0.7781% of the share capital).

The movements occurred in the financial semesters ended on 30 June 2022 and 2023 were as follows:

	QUANTITY	VALUE
BALANCE AS AT 1 JANUARY 2022	3,002,427	12,353
Acquisition of own shares	1,653,129	6,281
Distribution of own shares - share incentive scheme	(790,569)	(3,185)
Distribution of own shares - other remunerations	(70,908)	(286)
BALANCE AS AT 30 JUNE 2022	3,794,079	15,163
BALANCE AS AT 1 JANUARY 2023	4,008,391	15,968
Acquisition of own shares	1,234,638	5,171
Distribution of own shares - share incentive scheme	(1,466,630)	(5,919)
Distribution of own shares - other remunerations	(27,625)	(111)
BALANCE AS AT 30 JUNE 2023	3,748,774	15,109

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 June 2023 NOS had reserves, which by their nature are considered distributable for an amount of approximately 150.7 million euros, not including the net income.

Dividends

The General Meeting of Shareholders held on April 21, 2022 approved the Board of Directors' proposal to pay an ordinary dividend per share of €0.278, in the amount of €143,215 thousand. The dividend attributable to own shares amounted to approximately 858 thousand euros. The dividend was paid on May 9, 2022.

The General Meeting of Shareholders held on April 5, 2023 approved the Board of Directors' proposal to pay an ordinary dividend per share of €0.430, in the amount of €221,519 thousand. The dividend attributable to own shares amounted to approximately 1,532 thousand euros. The dividend was paid on April 21, 2023.

23. Non-controlling interests

The movements of the non-controlling interests occurred during the semesters ended on 30 June 2022 and 2023 and the results attributable to non-controlling interests for the year are as follows:

	31-12-2021	ATTRIBUTABLE PROFITS	OTHERS	30-06-2022
NOS Madeira	5,289	82	(2)	5,369
NOS Açores	1,090	(97)	-	993
	6,379	(15)	(2)	6,362

	31-12-2022	ATTRIBUTABLE PROFITS	OTHERS	30-06-2023
NOS Madeira	5,432	190	(6)	5,616
NOS Açores	819	(63)	(2)	754
	6,251	127	(8)	6,370

24. Borrowings

At 31 December 2022 and 30 June 2023, the composition of borrowings was as follows:

	31-12-2022		30-06-2023
	CURRENT	NON-CURRENT	CURRENT	NON-CURRENT
LOANS - NOMINAL VALUE	350,136	655,000	161,119	1,000,500
Debenture loan	300,000	290,000	50,000	365,000
Commercial paper	43,000	365,000	106,500	635,500
Bank overdrafts	7,136	-	4,626	-
LOANS - ACCRUALS AND DEFERRALS	2,832	(541)	5,779	(1,176)
LOANS - AMORTISED COST	352,968	654,459	166,898	999,324
LEASES	74,485	555,722	82,048	562,176
	427,453	1,210,181	248,946	1,561,500

During the semester ended on 30 June 2023, the average cost of debt of the used lines was approximately 2.8% (2022: 1.2%).

The average global financing cost (used and unused lines) during the semester ended on 30 June 2023 was approximately 2.9% (2022: 1.3%).

At 30 June 2023 there is no default in terms of capital, interest, conditions for redemption on loans payable or other commitments.

24.1. Debenture loans

At 30 June 2023, NOS has a total amount of 415 million euros of bonds issued:

• 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.
• 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.
• 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.
• 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.
• A bond loan in the amount of 75 million euros placed by Caixa Geral de Depósitos in March 2022 and maturing in March 2027. The loan bears interest at variable rates, indexed to Euribor and paid semi-annually.
• A bond loan in the amount of 75 million euros placed by BPI in July 2022 and maturing in March 2027. The loan bears interest at variable rates, indexed to Euribor and paid quarterly.
• A bond loan in the amount 50 million euros placed by BPI in April 2023 and maturing in January 2028. The loan bears interest at variable rates, indexed to Euribor and paid quarterly.
• A bond loan in the amount 75 million euros placed by Caixa Geral de Depósitos in April 2023 and maturing in April 2028. The loan bears interest at variable rates, indexed to Euribor and paid semi-annually.

At 30 June 2023, an amount of 1,617 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 June 2023, the Company has borrowings of 742,0 million euros in the form of commercial paper of which €131.5 million issued under programmes without underwriting. The total amount contracted, under underwriting securities, is of 885 million euros, corresponding to 17 programmes, with 7 banks, 785 million euros of which bear interest at market rates and 100 million euros are issued in fixed rate. Commercial paper programmes with maturities over one-year totaling 835 million euros (of which 586 million euros have been used as of 30 June 2023), since the Company can renew unilaterally current issues on or before the programmes' maturity dates and because they are underwritten by the organizer. 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 June 2023 an amount of 2,986 thousand euros, corresponding to interest and commissions, was deducted to this amount, and recorded in the item "Loans - accruals and deferrals".

24.3. Leases

At 31 December 2022 and 30 June 2023, 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

	31-12-2022	30-06-2023
Until 1 year	120,515	112,132
Between 1 and 5 years	305,011	318,528
Over 5 years	420,531	412,522
	846,057	843,182
Future financial costs (lease)	(215,850)	(198,958)
PRESENT VALUE OF LEASE LIABILITIES	630,207	644,224

Leases – present value

	31-12-2021	30-06-2023
Until 1 year	74,485	82,048
Between 1 and 5 years	214,269	224,429
Over 5 years	341,453	337,747
	630,207	644,224

The maturities of the loans obtained are as follows:

	31-12-2022		30-06-2023
	UNTIL 1 YEAR	BETWEEN 1 AND 5 YEARS	OVER 5 YEARS	UNTIL 1 YEAR	BETWEEN 1 AND 5 YEARS	OVER 5 YEARS
Debenture loan	302,944	289,466	-	52,973	363,939	-
Commercial paper	42,888	364,993	-	109,601	635,385	-
Bank overdrafts	7,136	-	-	4,626	-	-
Leases	74,485	214,269	341,453	82,048	224,429	337,747
	427,453	868,728	341,453	248,946	1,223,753	337,747

25. Provisions

At 31 December 2022 and 30 June 2023, the provisions were as follows:

	31-12-2022	30-06-2023
Litigation and other - i)	32,158	33,535
Dismantling and removal of assets - ii)	22,294	22,854
Contingent liabilities - iii)	22,908	22,908
Contingencies - other - iv)	3,907	3,324
	81,267	82,621

• i) At 30 June 2023, the amount under the item "Litigation and other" corresponds to provisions to cover the legal and others claims in-progress.
• ii) 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;
• iii) 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 Açores 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 Açores, corresponding to that period, in the amount of 13.6 million euros which 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 Açores 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 around 2.4 million euros. In December 2017, the settlement notes relating to NOS, SA, NOS Madeira and NOS Açores, 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) flagrantly violate the Directive of Universal Service. Moreover, considering the existing legal framework since NOS began its activity, the request of payment of the extraordinary contribution violates the principle of the protection of confidence, recognised on a legal and constitutional level in Portuguese domestic law. For these reasons, NOS has judicially challenged either the approval of audit results of the universal service net cost related with the pre-contest period as well as the liquidation of each and every extraordinary contributions that may be required. In September 2021, the Lisbon Administrative Circle Court ruled as unfounded the action regarding the administrative challenge of the results of the CLSU 2007-2009 audit, which NOS appealed in October 2021. The Board of Directors is convinced it will be successful in both challenges and appeals undertaken;

iv) The amount under the caption "Contingencies - other" refers to provisions for risks related to miscellaneous events/disputes of various kinds, the settlement of which may result in outflows of cash, and other likely liabilities related to several transactions from previous periods, and whose outflow of cash is probable, namely, costs charged to the current period or previous years, for which it is not possible to estimate reliably the time of occurrence of the expense.

	31-12-2021	INCREASES	DECREASES	OTHERS	30-06-2022
Litigation and other	32,468	2,252	(2,883)	-	31,837
Financial investments	1,075	-	-	-	1,075
Dismantling and removal of assets	22,326	235	-	(1,377)	21,184
Contingent liabilities	23,707	-	-	-	23,707
Contingencies - other	2,940	1,129	(38)	(1,932)	2,099
	82,516	3,616	(2,921)	(3,309)	79,902

During the semester ended on 30 June 2022, movements in provisions were as follows:

During the semester ended on 30 June 2023, movements in provisions, were as follows:

	31-12-2022	INCREASES	DECREASES	OTHERS	30-06-2023
Litigation and other	32,158	2,635	(2,645)	1,387	33,535
Dismantling and removal of assets	22,294	560	-	-	22,854
Contingent liabilities	22,908	-	-	-	22,908
Contingencies - other	3,907	1,095	-	(1,678)	3,324
	81,267	4,290	(2,645)	(291)	82,621

During the semesters ended on 30 June 2022 and 2023, the increases refer mainly to compensation to employees, provisions for legal and other claims plus interests and charges, and the decreases refer mainly to the reassessment and prescription of several legal contingencies.

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

The net movements for the semesters ended on 30 June 2022 and 2023 reflected in the income statement under Provisions were as follows:

	6M 22	6M 23
Provisions and adjustments (Note 35)	(167)	(1,377)
Other losses / (gains) non-recurrent (Note 38)	1,121	1,095
Interests - dismantling	235	560
Other	(494)	1,367
INCREASES AND DECREASES IN PROVISIONS	695	1,645

26. Accrued expenses

At 31 December 2022 and 30 June 2023, this item was composed as follows:

	31-12-2022	30-06-2023
CURRENT
Invoices to be issued by operators i)	39,314	44,063
Investments in tangible and intangible assets	40,116	49,285
Costs related to specific projects of business customers	30,494	27,888
Vacation pay and bonuses	24,320	20,184
Professional services	16,306	17,735
Taxes (ANACOM and Cinema Law) ii)	-	15,301
Advertising	15,084	13,765
Content and film rights	13,205	13,868
Programming services	11,779	7,507
Comissions	5,198	5,922
Energy and water	5,495	5,589
Costs of litigation procedure activity	4,033	4,160
Maintenance and repair	1,699	1,999
Other accrued expenses	5,387	7,295
	212,430	234,561

i. Invoices to be issued by operators correspond predominantly to interconnection costs for international traffic and for the use of roaming services not yet billed.

ii. Amounts relating to ANACOM licences and other ICA fees, the invoicing of which is issued annually in subsequent periods.

27. Deferred income

At 31 December 2022 and 30 June 2023, this item was composed as follows:

	31-12-2022		30-06-2023
	CURRENT	NON-CURRENT	CURRENT	NON-CURRENT
Advanced billing i)	37,844	-	35,242	-
Investment subsidy ii)	346	2,824	-	-
	38,190	2,824	35,242	-

• 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, SA customers, related with the recharges of mobile phones and purchase of telecommunications minutes yet unused.
• ii) This item is related mainly to the deferral of income related to the implicit subsidy calculated with the obtaining of a loan, in the meantime fully repaid, from EIB, at interest rates below market values. At 30 June 2023, this amount was reclassified, in accordance with a change in the method of accounting for grants, as disclosed in Note 2.3.13.

28. Accounts payable - trade

At 31 December 2022 and 30 June 2023, this item was composed as follows:

31-12-2022		30-06-2023
Suppliers current account	252,195	232,500
Invoices in reception and conference	1,160	790
	253,355	233,290

29. Accounts payable - other

At 31 December 2022 and 30 June 2023, this item was composed as follows:

	31-12-2022	30-06-2023
NON-CURRENT
Contractual rights	42,128	41,691
	42,128	41,691
CURRENT
Fixed assets suppliers	47.437	18.677
Contractual rights	1.934	1.984
Advances from customers	191	138
Advances on investment subsidies	-	7.147
Others	4.227	7.149
	53.789	35.095
	95.917	76.786

The caption Contractual Rights refers to the liability to be settled over 20 years, related with the contractual right acquired with the agreement celebrated 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 semesters ended on 30 June 2022 and 2023, were as follows:

	2º QUARTER 22	6M 22	2º QUARTER 23	6M 23
SERVICES RENDERED:
Communications service revenues i)	317,368	629,725	335,335	663,742
Revenue distribution and cinematographic exhibition ii)	9,327	14,530	11,184	20,254
Advertising revenue iii)	4,741	8,914	4,873	9,314
Production and distribution of content and channels iv)	6,066	11,574	5,865	11,291
Others	955	1,684	2,163	4,155
	338,457	666,427	359,420	708,756
SALES:
Telco v)	20,349	56,316	22,529	44,832
Audiovisuals and cinema exhibition vi)	3,014	4,972	4,190	7,297
	23,363	61,288	26,719	52,129
OTHER OPERATING REVENUES:
Telco	6,607	13,950	7,478	14,116
Audiovisuals and cinema exhibition	172	301	174	194
	6,779	14,251	7,652	14,310
	368,599	741,966	393,791	775,195

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 datacenter 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 semesters ended on 30 June 2022 and 2023, this item was composed as follows:

	2º QUARTER 22	6M 22	2º QUARTER 23	6M 23
Remuneration	15,279	30,571	17,809	34,494
Social taxes	4,257	8,443	4,599	9,097
Social benefits	541	1,036	555	1,043
Other	493	812	579	875
	20,570	40,862	23,542	45,509

In the semesters ended on 30 June 2022 and 2023, the average number of employees of the companies included in the consolidation was 2,295 and 2,447, respectively. At 30 June 2023, the number of employees of the companies included in the consolidation was 2,486 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 semesters ended on 30 June 2022 and 2023, this item was composed as follows:

	2º QUARTER 22	6M 22	2º QUARTER 23	6M 23
Exhibition costs	48,326	93,433	48,319	93,509
Traffic costs	18,180	33,960	18,157	34,957
Costs related to corporate customers services	13,713	26,138	14,298	26,025
Capacity costs	4,231	8,530	5,079	10,069
Shared advertising revenues	3,211	6,121	3,171	6,063
	87,661	168,182	89,024	170,623

33. Cost of products sold

In the semesters ended on 30 June 2022 and 2023, this item was composed as follows:

	2º QUARTER 22	6M 22	2º QUARTER 23	6M 23
Costs of products sold	20,341	54,928	21,773	43,118
Increases / (decreases) in inventories impairments (Note 16)	549	1,035	437	872
	20,890	55,963	22,210	43,990

34. Support services and supplies and external services

In the semesters ended on 30 June 2022 and 2023, this item was composed as follows:

	2º QUARTER 22	6M 22	2º QUARTER 23	6M 23
SUPPORT SERVICES:
Administrative support and others	7,529	15,967	9,843	19,548
Call centers and customer support	8,064	16,556	8,732	18,141
Information systems	3,915	7,615	4,027	8,946
	19,508	40,138	22,602	46,635
SUPPLIES AND EXTERNAL SERVICES:
Maintenance and repair	11,485	23,268	16,186	28,618
Leasing of ducts and poles	6,953	14,098	6,607	13,038
Electricity	7,496	14,415	2,569	7,282
Professional services	2,714	5,405	2,163	4,358
Installation and removal of terminal equipment	1,345	2,692	1,220	2,561
Travel and accommodation	682	1,124	884	1,777
Communications	1,024	2,005	709	1,432
Other supplies and external services	6,928	13,793	8,322	15,378
	38,627	76,800	38,660	74,444

During the semester ended on 30 June 2022, 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 2.5 million euros.

35. Provisions and adjustments

In the semester ended on 30 June 2022 and 2023, these items were composed as follows:

	2º QUARTER 22	6M 22	2º QUARTER 23	6M 23
Provisions (Note 25)	(285)	(167)	(669)	(1,377)
Impairment of account receivables - trade
(Note 17)	3,839	8,436	4,189	9,066
Impairment of account receivables - others
(Note 12)	-	127	24	63
Others	(1)	(2)	(9)	(5)
	3,553	8,394	3,535	7,747

36. Losses / (gains) of affiliated companies, net

In semesters ended on 30 June 2022 and 2023, this item was composed as follows:

	2º QUARTER 22	6M 22	2º QUARTER 23	6M 23
EQUITY METHOD (NOTE 11)
Dreamia	(112)	(221)	127	125
Finstar	(4,869)	(10,086)	1,458	(1,063)
Mstar	(190)	(390)	(1,312)	(946)
Upstar	(4)	(9)	(142)	(512)
Others	93	317	19	16
	(5,082)	(10,389)	150	(2,380)
OTHERS (NOTE 12)	-	-	(854)	(854)
	(5,082)	(10,389)	(704)	(3,234)

37. Depreciation, amortization and impairment losses

In the semesters ended on 30 June 2022 and 2023, this item was composed as follows:

	2º QUARTER 22	6M 22	2º QUARTER 23	6M 23
TANGIBLE ASSETS
Buildings and other constructions	2,679	5,539	2,812	6,909
Basic equipment	41,471	83,902	42,983	87,795
Tools and dies	16	32	10	24
Administrative equipment	878	1,931	944	1,931
Other tangible assets	99	188	109	324
	45,143	91,592	46,858	96,983
INTANGIBLE ASSETS
Industrial property and other rights	26,288	50,771	27,471	54,932
	26,288	50,771	27,471	54,932
CONTRACT COSTS
Contract costs	24,549	49,035	24,543	48,999
	24,549	49,035	24,543	48,999
RIGHTS OF USE
Rights of use	14,928	29,911	17,736	36,096
	14,928	29,911	17,736	36,096
INVESTIMENT PROPERTY
Investment property	4	8	3	6
	4	8	3	6
	110,912	221,317	116,611	237,016

38. Restructuring Costs

In the semesters ended on 30 June 2022 and 2023, this item was composed as follows:

	2º QUARTER 22	6M 22	2º QUARTER 23	6M 23
Personnel compensation (Note 25)	187	1,121	732	1,095
Personnel costs related to non-recurrent projects	55	127	4	-
	242	1,248	736	1,095

39. Other losses / (gains) non-recurrent, net

In the semesters ended on 30 June 2022 and 2023, the other non-recurring costs / (gains) was composed as follows:

	2º QUARTER 22	6M 22	2º QUARTER 23	6M 23
GAINS:
Legal processes	84	6,218	-	-
	84	6,218	-	-
COSTS:
Others	312	2,728	258	476
	312	2,728	258	476
TOTAL	228	(3,490)	258	476

40. Financing costs and other financials expenses / (income), net

In the semesters ended on 30 June 2022 and 2023, financing costs and other financial expenses / (income) were composed as follows:

	2º QUARTER 22	6M 22	2º QUARTER 23	6M 23
FINANCING COSTS:
INTEREST EXPENSE:
Borrowings	2,056	4,416	9,205	14,090
Finance leases	6,257	12,465	7,573	15,001
Derivatives	4	20	-	50
Others	552	1,033	978	1,807
	8,869	17,934	17,756	30,948
INTEREST EARNED	(805)	(1,732)	(2,252)	(3,564)
Interest on late payments charged to customers	(780)	(1,684)	(778)	(1,670)
Derivatives	-	-	(725)	(1,012)
Others	(25)	(48)	(749)	(882)
	8,064	16,202	15,504	27,384
NET OTHER FINANCIAL EXPENSES / (INCOME):
Comissions and guarantees	727	1,588	744	1,548
Others	181	106	188	357
	908	1,694	932	1,905

41. Net earnings per share

Earnings per share for the semesters ended on 30 June 2022 and 2023 were calculated as follow:

	2º QUARTER 22	6M 22	2º QUARTER 23	6M 23
Consolidated net income attributable to shareholders	44,211	85,319	45,546	80,461
Number of ordinary shares outstanding during the period (weighted average)	511,720,745	511,930,752	515,161,380	513,245,651
Basic earnings per share - euros	0.09	0.17	0.09	0.16
Diluted earnings per share - euros	0.09	0.17	0.09	0.16

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

42.1. Guarantees

At 31 December 2022 and 30 June 2023, the Group presents guarantees in favour of third parties corresponding to the following situations:

	31-12-2022	30-06-2023
Tax authorities i)	33,155	34,121
Others ii)	13,757	14,476
	46,912	48,597

• i) At 31 December 2022 and 30 June 2023, this amount relates to guarantees demanded by the tax authorities in connection with tax proceedings contested by the Company and its subsidiaries (Note 44).
• ii) At 31 December 2022 and 30 June 2023, this amount mainly relates to 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 7.3 million euros, NOS signed a promissory note, proportional to the participation held, of 30% of the loan. At 30 June 2023, the responsibility amounts to 1.7 million euros

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 14.6 million euros.

42.2.Other undertakings

Covenants

From the loans obtained (excluding financial leases), besides being subject to the Group's compliance with its obligations (operational, legal and fiscal) 100% of them are subject to Cross default and Pari Passu, 96% are subject to Negative Pledge clauses and 72% are subject to Ownership clauses.

Additionally, about 19% of total borrowings require that the consolidated net financial debt does not exceed 3 times EBITDA after payment of consolidated leases, about 4% require that the consolidated net financial debt does not exceed 3.5 times EBITDA after payment of consolidated leases, about 6% require that the consolidated net financial debt does not exceed 4 times EBITDA after payment of consolidated leases and about 8% require that the consolidated net financial debt does not exceed 5 times EBITDA after payment of consolidated leases.

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

EBITDA = Operating profit + Depreciation, amortisation and impairment losses + Restructuring costs + Losses / (gains) on disposal of assets + Other non-recurrent costs / (gains)

EBITDA after lease payments = EBITDA - lease payments (principal 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) TV broadcasting rights and multimedia home games of Sporting SAD;
• 2) The right to explore the static and virtual advertising at Stadium José Alvalade;
• 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) Associação Académica de Coimbra Organismo Autónomo de Futebol, SDUQ, Lda
• 2) Os Belenenses Sociedade Desportiva Futebol, SAD
• 3) Clube Desportivo Nacional Futebol, SAD
• 4) Futebol Clube de Arouca Futebol, SDUQ, Lda
• 5) Futebol Clube de Paços de Ferreira, SDUQ, Lda
• 6) Marítimo da Madeira Futebol, SAD
• 7) Sporting Clube de Braga Futebol, SAD
• 8) Vitória Futebol Clube, SAD

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.

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	2023/24	Following
Estimated cash-flows with the contract signed by NOS with the sports entities*	104.4 M€	352.6 M€
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	49.2 M€	201.0 M€
* 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 nonmonetary 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 each 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.

43. Related parties

43.1. Balances and transactions between related parties

Transactions and balances between NOS and companies of the NOS Group were eliminated in the consolidation process and are not subject to disclosure in this note.

The balances at 31 December 2022 and 30 June 2023 and transactions in the semesters ended on 30 June 2022 and 2023 between NOS Group and its associated companies, joint ventures and other related parties are as follows:

Balances at 31 December 2022

	Balances at 31 December 2022
	ACCOUNTS RECEIVABLES AND PREPAID EXPENSES	ACCOUNTS PAYABLE AND DEFERRED INCOME	BORROWINGS
ASSOCIATED COMPANIES	26,212	12,775	-
Big Picture 2 Films(1)	5	67	-
Sport TV	26,207	12,708	-
JOINTLY CONTROLLED COMPANIES	14,224	1,116	3,082
Dreamia SA	2,409	410	-
Dreamia Servicios de Televisión, S.L.	102	-	3,082
Finstar	11,261	73	-
Upstar	299	405	-
ZAP Media	142	142	-
MSTAR	11	-	-
DUALGRID	-	86	-
OTHER RELATED PARTIES	10,253	3,506	-
Banco BIC Português, S.A.	199	-	-
Cascaishopping- Centro Comercial, S.A.	75	152	-
Centro Colombo- Centro Comercial, S.A.	296	522	-
Centro Vasco da Gama-Centro Comercial,SA	699	819	-
Maiashopping- Centro Comercial, S.A.	76	102	-
MC Shared Services, S.A.	1,667	-	-
Modelo Continente Hipermercados,SA	1,577	38	-
Norteshopping-Centro Comercial, S.A.	351	360	-
SC-Consultadoria,SA	341	-	-
Sierra Portugal, SA	299	131	-
Universo, IME, S.A.	110	-	-
Worten-Equipamento para o Lar,SA	3,318	1,275	-
Other related parties	1,245	107	-
	50,689	17,397	3,082

Transactions in the semester ended on 30 June 2022

	30-06-2022
	SERVICES RENDERED	SUPPLIES AND EXTERNAL SERVICES	INTEREST GAINS
ASSOCIATED COMPANIES	35,921	39,868	-
Big Picture 2 Films(1)	65	1,216	-
Sport TV (2)	35,856	38,652	-
JOINTLY CONTROLLED COMPANIES	7,048	79	45
Finstar	4,536	-	-
Upstar	115	65	-
Dreamia Servicios de Televisión, S.L.	-	-	45
Dreamia SA	2,397	(107)	-
DUALGRID	-	121	-
OTHER RELATED PARTIES	12,862	6,368	-
Banco Bic Português, S.A.	904	-	-
Cascaishopping- Centro Comercial, S.A.	6	349	-
Centro Colombo- Centro Comercial, S.A.	9	919	-
Centro Vasco da Gama-Centro Comercial,SA	7	249	-
Continente Hipermercados, S.A.	243	10	-
Gaiashopping I- Centro Comercial, S.A.	5	136	-
Maiashopping- Centro Comercial, S.A.	5	103	-
MDS Corretor de Seguros, SA(3)	702	-	-
Modalfa-Comércio e Serviços,SA	357	-	-
Modelo Continente Hipermercados,SA	2,773	94	-
Norteshopping-Centro Comercial, S.A.	7	744	-
Olivedesportos- Publicidade Televisão e Media SA(4)	12	1,110	-
PHARMACONTINENTE - Saúde e Higiene, S.A.	187	-	-
S21SEC Portug-Cyber Security Services,SA(5)	27	1,436	-
SC-Consultadoria,SA	427	-	-
SDSR - Sports Division SR, S.A	108	-	-
SFS, Gestão e Consultoria, S.A.	2	146	-
Sierra Portugal, SA	1,133	56	-
Solinca Classic, S.A.	166	-	-
Sonae Arauco Portugal, S.A.	130	41	-
MC Shared Services, S.A.	1,209	-	-
UNITEL S.a.r.l.	87	104	-
Universo, IME, S.A.	116	1	-
Worten-Equipamento para o Lar,SA	2,660	311	-
ZIPPY - Comércio e Distribuição, SA	114	-	-
Other related parties	1,465	558	-
	55,830	46,314	45

Balances at 30 June 2023

	Balances at 30 June 2023
	ACCOUNTS RECEIVABLES AND PREPAID EXPENSES	ACCOUNTS PAYABLE AND DEFERRED INCOME	BORROWINGS
ASSOCIATED COMPANIES	9,541	2,514	-
Sport TV	9,541	2,514	-
JOINTLY CONTROLLED COMPANIES	16,756	1,050	3,173
Dreamia SA	1,561	1,169	-
Dreamia Servicios de Televisión, S.L.	58	-	3,173
DUALGRID	-	88	-
Finstar	14,342	(372)	-
Mstar	814	-	-
Upstar	(19)	165	-
OTHER RELATED PARTIES	6,575	1,293	-
Banco Bic Português, S.A.	275	-	-
Centro Colombo Centro Comercial, SA	156	23	-
Fashion Division, S.A.	128	-	-
Modelo Continente Hipermercados, SA	1,068	60	-
Norteshopping Centro Comercial, SA	151	109	-
SC - Sociedade de Consultoria, SA	177	-	-
SFS - Financial Services, IME, S.A.	172	-	-
Sierra Portugal, SA	363	(5)	-
Sonae MC - Serviços Partilhados, SA	479	3	-
Worten - Equipamento para o Lar, SA	2,243	1,007	-
Other related parties	1,363	96	-
	32,872	4,857	3,173

Transactions in the semester ended on 30 June 2023

	30-06-2023
	SERVICES RENDERED	SUPPLIES AND EXTERNAL SERVICES	INTEREST GAINS
ASSOCIATED COMPANIES	28,876	34,305	-
Big Picture 2 Films(1)	15	934	-
Sport TV(2)	28,861	33,371	-
JOINTLY CONTROLLED COMPANIES	6,700	137	47
Dreamia Servicios de Televisión, S.L.	-	-	47
Dreamia SA	2,445	(70)	-
Finstar	4,245	-	-
Upstar	10	63	-
DUALGRID	-	144	-
OTHER RELATED PARTIES	14,353	4,282	-
Arrábidashopping - Centro Comercial, SA	6	122	-
Banco Bic Português, S.A.	978	-	-
Cascaishopping Centro Comercial, SA	6	544	-
Centro Colombo Centro Comercial, SA	9	929	-
Centro Vasco da Gama Centro Comercial,SA	7	241	-
Continente Hipermercados, SA	251	20	-
Fashion Division, S.A.	356	-	-
Gaiashopping I Centro Comercial, SA	5	215	-
Modalfa - Comércio e Serviços, SA	296	-	-
Modelo Continente Hipermercados, SA	2,591	73	-
Norteshopping Centro Comercial, SA	7	910	-
Pharmacontinente - Saúde e Higiene, SA	202	-	-
SC - Sociedade de Consultoria, SA	424	-	-
SDSR - Sports Division SR, S.A.	104	-	-
SFS - Financial Services, IME, S.A.	379	-	-
SFS, Gestão e Consultoria, S.A.	10	218	-
Sierra Portugal, SA	834	44	-
Solinca Classic, S.A.	201	-	-
Sonae Arauco Portugal, S.A.	134	85	-
Sonae Investment Management-S.T.,SGPS,SA	115	-	-
Sonae MC - Serviços Partilhados, SA	2,217	1	-
Worten - Equipamento para o Lar, SA	3,903	473	-
Other related parties	1,318	407	-
	49,929	38,724	47

(1) Company ceased to be a related party in June 2023, due to the disposal of the shareholding in the company.

(2) In the period of six months ended on 30 June 2022 and 2023, the amount related to Sales and Services Rendered includes about 28 million euros (30 June 2022: 35 million euros), which are not recorded in the consolidated accounts under Sales and Services Rendered, since it is related to the agreement celebrated with the operators, which configures a sharing of costs and benefits, therefore the compensation of the revenue is made with the expenses with the clubs (Note 42.2).

(3) Company ceased to be a related party in December 2022.

(4) Company ceased to be a related party in April 2022.

(5) Company ceased to be a related party in December 2022.

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. Legal actions and contingent assets and liabilities

44.1.Legal actions with regulators and Competition Authority (AdC)

• NOS SA, NOS Açores 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, 2020, 2021 and 2022) 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, 2021 and 2022.

The settlement amounts are, respectively, as follows:

• NOS SA: 2009: 1,861 thousand euros, 2010: 3,808 thousand euros, 2011: 6,049 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; 2020: 10,184 thousand euros, 2021: 9,653 thousand euros and 2022: 9,850 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, 2020: 120 thousand euros, 2021: 123 thousand euros and 2022: 123 thousand euros.
• NOS Madeira: 2009: 40 thousand euros, 2010: 83 thousand euros, 2011: 130 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, 2020: 202 thousand euros, 2021: 223 thousand euros and 2022: 235 thousand euros.
• NOS Wholesale: 2020: 36 thousand euros, 2021: 110 thousand euros and 2022: 90 thousand euros.

This fee is a percentage decided annually by ANACOM (in 2009 it was 0.5826%) of operators' electronic communications revenues. The appeals invoke: i) 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. Twenty three sentences were handed down on the matter, of which ANACOM appealed to the Central Administrative Court and/or the Constitutional Court. In June and July 2023, the Constitutional Court ruled, in three separate cases, on the unconstitutionality of Ordinance no. 1473-B/2008, of 17 December, which regulates the determination of fees due for the exercise of the activity of provider of electronic communications networks and services, and also ordered ANACOM to refund the amount unduly charged to NOS Açores in 2009, to NOS Madeira in 2018 and, for the time being, one of the assessments to NOS Comunicações in 2009, which is in progress. 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, as a result of prices changes, 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, ANACOM gave NOS 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. NOS was notified, in November 2022, of ANACOM's decision that condemned NOS to pay a fine of 5.2 million euros. NOS has challenged the decision in court and, in June 2023, the court reduced the amount of the fine imposed on NOS to €4.2 million. NOS appealed this decision to the Court of Appeal.

• On 17 July 2020, NOS was notified by the AdC of an illegality note (accusation) related to digital marketing without a google search engine, which accuses the operators MEO, NOS, NOWO and Vodafone of concertation, for a period ranging from between 2010 and 2018, failing to identify a concrete fine. It is not possible, at this moment, to estimate the value of an eventual fine. NOS presented its written defense to the Portuguese Competition Authority (AdC) and an appeal to the Lisbon Court of Appeal, where it challenged the nullity of the obtained evidence. In July 2022, the Lisbon Court of Appeal confirmed NOS position pending further developments. Is the Board of Directors' conviction, taking into account the elements it knows, that will be able to demonstrate the various arguments in favor of its defense.
• On 15 December 2021, NOS was notified by the Portuguese Competition Authority (AdC) of an illegality note (accusation) related to advertising service practices in automatic recordings, which accuses NOS, other operators and a consultant of concertation behavior in the television recordings advertising market. NOS presented its written defense. At the time, it is not possible to estimate whether there will be an acquittal or conviction and, in the case of the latter, the amount of a possible fine. Further developments on the AdC's decision are awaited. It is the conviction of the Board of Directors, taking into account the elements it knows, that it will be able to demonstrate the various arguments in favor of its defense.

44.2.Tax authorities

During the course ofthe 2003 to 2023 financial years, some companies of the NOS Group were the subject of tax inspections for the 2001 to 2021 financial years. Following these inspections, NOS SGPS, as the controlling company of the Tax Group, and companies not covered by Tax Group, were notified of the corrections made to the Group's tax losses, to VAT and stamp tax and to make the payments related to the corrections made to the above exercises. The total amount of the notifications unpaid is about 38 million euros, added interest, and charges. These settlement notes, which totally were contested, are the respective lawsuits in progress.

Based on the advice obtained from the process representatives and tax consultants, the Board of Directors maintains the belief in a favorable outcome, which is why these proceedings are maintained in court. However, in accordance with the principle of prudence, an assessment of the group's level of exposure to these proceedings is made periodically, in the light of the evolution of case law, and consequently the provisions recorded for this purpose are adjusted. The Group provided the guarantees demanded by the Tax Authorities, related to these processes, according reference in Note 42.

44.3.Actions by MEO against NOS SA, NOS Madeira and NOS Açores and by NOS SA against MEO

In 2011, MEO brought against NOS SA, in the Judicial Court of Lisbon, a claim for the compensation of 10.3 million of Euros, as compensation for alleged unauthorized portability of NOS SA in the period between March 2009 and July 2011. NOS SA contested, and the Court ordered an expert opinion, meanwhile, deemed without effect. The discussion and trial hearing took place in the first quarter of 2016, being the rendered in September of the same year, which considered the action to be partially justified, based not on the occurrence of improper portability, which the Court has determined to restrict itself to those which do not correspond to the will of the proprietor. In that regard, it sentenced NOS to the payment of approximately 5.3 million euros to MEO, a decision of which NOS appealed to the Lisbon Court of Appeal. MEO, on the other hand, was satisfied with the decision and did not appeal against the part of the sentence that acquitted NOS. This Court, in the first quarter of 2018, upheld the decision of the Court of First Instance, except for interests, in which it gave reason to the claims of NOS, in the sense that interests should be counted from the citation to the action and not from the due date of the invoices. NOS filed an extraordinary appeal with the Supreme Court of Justice (SCJ), that appeal which found that the facts established were insufficient to resolve on the substance of the case. Consequently, the SCJ ordered that the court under appeal should amplify the facts. The case was transferred to the Court of First Instance and in November 2019, this, granted the parties the possibility of requesting the production of supplementary evidence on the subject of the extension, with NOS requesting an expert examination and the repetition of testimonial evidence. In February 2020, the Court determined the need to obtain new evidence, which requires the analysis of the information relating to all portabilities that serve as the basis for the process, determining the carrying out of expert evidence for that purpose. The appointment of the expert occurred on October 2021. In December 2022, the expert asked to be relieved of his duties because he felt that the qualified non-judicial verification was unfeasible in view of the volume of documentation to be analysed, having the court determined in April 2023, that, in view of the expert's request, the trial should be limited to the submission of written pleadings. The parties submitted their written pleadings in June and NOS, in addition, filed an autonomous appeal against

that order, on the grounds that the court's decision violated the STJ judgment. Further developments are awaited.

In 2011, NOS SA brought an action in Lisbon Judicial Court against MEO, claiming payment of 22.4 million euros, for damages suffered by NOS SA, arising from violations of the Portability Regulation by MEO, in particular, the large number of unjustified refusals of portability requests by MEO in the period between February 2008 and February 2011. The court declared the performance of expert evidence of technical nature and an economic-financial survey, which were completed in February 2016 and June 2018, respectively. MEO argued for the nullity of the expert economic-financial report, which was dismissed. After the trial, in May 2022, the court partially agreed with NOS, condemning MEO to pay 7.9 million euros, a decision challenged by MEO and NOS by filing appeals in October 2022. At the end of March 2023, the Lisbon Court of Appeal revoked the initial decision and ordered the expansion of the facts, which will entail new trial sessions. It is the understanding of the Board of Directors, corroborated by the attorneys accompanying the process, that it is, in formal and substantive terms, likely that NOS SA will be able to win the lawsuit, due to MEO already having been convicted for the same offences by ANACOM.

44.4.Action brought by DECO

In March 2018, NOS was notified of a lawsuit brought by DECO against NOS, MEO and NOWO, in which a declaration of nullity of the obligation to pay the price increases imposed on customers at the end of 2016 is requested. In April and May 2018, the operators, including NOS, lodged a defence. The action's value has been fixed at EUR 60,000. After the discussion and trial sessions were held in 2022, the parties are now awaiting the Court's decision. Board of Directors is convinced that the arguments used by the author are not justified, which is why it is believed that the outcome of the proceeding should not result in significant impacts for the Group's financial statements.

44.5.Action brought by Citizens Voice

In November 2022, NOS was served with a lawsuit filed by Citizens Voice - Consumer Advocacy Association ("Citizens Voice"), where a set of requests related to the automatic activation of pre-defined volumes of mobile data, once the data volume included in the monthly fee contracted by customers has been exhausted. Citizens Voice requests more specifically (i) the judicial declaration of the illegality of this practice for understanding that violates a set of national and European rules, (ii) the recognition of the right of customers to refuse to contract these services, (iii) the return of amounts paid on this basis over the past years by NOS customers, as well as (iv) the payment of compensation in the amount of 100 euros to each customer for alleged moral damages resulting from that practice. In December 2022 NOS presented its response invoking the illegitimacy of Citizens Voice to present the action, namely by the existence of a profit interest, and furthermore defending the lawfulness of the practice and its total transparency and clarity for the respective customers. The Board of Directors is convinced that the arguments used by the plaintiff are unfounded, reason why it is believed that the outcome of the process will not result in significant impacts for the Group's financial statements.

44.6. Interconnection tariffs

At 30 June 2023, accounts receivable and accounts payable include 37,139,253 euros and 43,475,093 euros, respectively, resulting from a dispute between the subsidiary NOS SA and, essentially, the operator MEO – Serviços de Comunicação e Multimédia, S.A. (previously named TMN – Telecomunicações Móveis Nacionais, S.A.), in relation to the non-definition of interconnection tariffs of 2001. In what concerns to that dispute with MEO, the result was totally favourable to NOS S.A., having already become final. In March 2021, MEO filed a new lawsuit against NOS, in which it claimed the price of interconnection services between TMN and Optimus for 2001 at 55\$00 (€ 0.2743) per minute. After NOS presented its defence contesting MEO's petition, a preliminary hearing was held and, by court decision, NOS was acquitted of the case. MEO filed an appeal against the decision, which was dismissed, and in February 2023 filed a new appeal to the STJ where NOS presented reply allegations. Further developments of the process are awaited, being the understanding of the Board of Directors, supported by the lawyers who monitor the process, that there is, in substantive terms, a good chance that NOS SA can win the action.

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 June 2023, the unvested plans are:

	NUMBER OF SHARES
NOS PLAN
Plan 2021	1,433,575
Plan 2022	1,170,811
Plan 2023	1,039,820

During the semester ended on 30 June 2023, the movements that occurred in the plans are detailed as follows:

	NOS PLAN 2020	NOS PLAN 2021	NOS PLAN 2022	NOS PLAN 2023	TOTAL
BALANCE AS AT 31 DECEMBER 2022:	1,459,370	1,320,809	1,079,152	-	3,859,331
MOVEMENTS IN THE PERIOD:
Awarded	-	-	-	1,040,472	1,040,472
Vested	(1,458,712)	(4,456)	(3,462)	-	(1,466,630)
Cancelled / elapsed / corrected (1)	(658)	117,222	95,120	(652)	211,032
BALANCE AS AT 30 JUNE 2023	-	1,433,575	1,170,810	1,039,820	3,644,205

(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. The responsibility is recorded in Reserves and Accrued Expenses, respectively.

As at 30 June 2023, the outstanding responsibility related to these plans is 4,797 thousand euros and is recorded in Reserves.

The costs recognised in previous years and in the semester ended on 30 June 2023, and its liabilities are as follows:

	ACCRUED EXPENSES	RESERVES	TOTAL
Costs recognised in previous years related to plans as at 31 December 2021	-	6,675	6,675
Costs of plans vested in the period	-	(4,629)	(4,629)
Costs incured in the period and others	-	2,751	2,751
TOTAL COST OF THE PLANS	-	4,797	4,797

46. Other matters

46.1.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.ª 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.

Following the communication of April 4, 2020, ZOPT filed third-party claims, which, in June 2020, were rejected by the investigating judge on the grounds that the Portuguese courts had no jurisdiction to hear and decide them, a decision that, having been appealed by ZOPT, was revoked by the Lisbon Court of Appeal, in February 2021.

In November 2021, the Investigating Judge, aware of the cause's merit, dismissed the third-party embargoes presented by ZOPT, a decision that, according to ZOPT, was appealed to the Court of Appeal. After being admitted in February 2022, in June 2022, ZOPT was notified of the decision dismissing the appeal. Further developments are awaited. The Board of Directors of NOS is not aware of any developments in this process.

In September 2022, Sonaecom informed that in a meeting of the General Meeting of ZOPT it was decided to proceed with the amortization of Sonaecom's stake in that company and the refund of the additional payments made by Sonaecom, for a consideration that includes the delivery of shares representing 26.075% of the capital of NOS. As a result of this repayment, which was subject to the applicable legal procedures, Sonaecom is no longer a shareholder of ZOPT, which is now wholly owned by Unitel International Holdings, BV and Kento Holding Limited, companies controlled by Isabel do Santos. In December 2022, Sonaecom, upon completion of the legal procedures, informed that it now holds directly 134,322,268 ordinary shares of NOS, corresponding to 26.07% of its share capital.

Additionally, also informed that such participation is also attributable to the entities with which it is in a control relationship, namely, SONTEL, BV, Sonae Investments, BV, SONAE, SGPS, S.A. and EFANOR INVESTIMENTOS, SGPS, S.A..

The Board of Directors of NOS is not aware of any developments in the above mentioned preventive seizure process.

47. Subsequent events

As of the date of approval of this document, no other material subsequent events have occurred that merit disclosure in this report.

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.

48. Annexes

A) Companies included in the consolidation by the full consolidation method

	HEADQUARTERS			PERCENTAGE OF OWNERSHIP
COMPANY		PRINCIPAL ACTIVITY	SHARE HOLDER	EFFECTIVE 30-06-2022	DIRECT 30-06-2023	EFFECTIVE 30-06-2023
NOS, SGPS, S.A. (Holding)	Lisbon	Management of investments	-	-	-	-
BLU S.A (a)	Lisbon	Rendering of telecommunications services, establishment, management and operation of telecommunications networks	NOS Comunicações	-	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%
Fundo de Capital de Risco N5G (b)	Lisbon	Movies exhibition	NOS	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. (c) NOS Açores Comunicações, S.A.	Maputo Ponta Delgada	Movies exhibition and commercialization of other public events Distribution of television by cable and satellite and operation of telecommunications services in the Azores	NOS + NOS Cinemas NOS Comunicações	100% 84%	100% 84%	100% 84%
NOS Audio - Sales and Distribution, S.A.	Lisbon	area Movies distribution, editing, distribution, commercialization and production of audiovisual products. Procurement and exploitation of advertising and any activity of commercial valorization of objects and figures related to entertainment activities.	NOS	100%	100%	100%
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 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. NOS Lusomundo Cinemas , S.A.	Lisbon Lisbon	Import, distribution, commercialization and production of audiovisual products Movies exhibition and commercialization of other public events	NOS Audiovisuais SGPS NOS	100% 100%	100% 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%
NOS Mediação de Seguros, S.A.	Lisbon	Distribution of insurance and related activities. It may also engage in any other complementary, subsidiary or accessory activities, directly or through participation in any other forms of association, temporary or permanent, with other companies and/or other public or private entities.	NOS	-	100%	100%
NOS Property, S.A.	Lisbon	Management of investments	NOS	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 Sistemas, S.A. NOS TECHNOLOGY – Concepção, Construção e Gestão de Redes de Comunicações, S.A. ('Artis')	Lisbon Matosinhos	Rendering of consulting services in the area of information systems 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 NOS Comunicações	100% 100%	100% 100%	100% 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 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.	NOS SA	0%	100%	100%
Per-Mar – Sociedade de Construções, S.A. ('Per Mar')	Lisbon	Purchase, sale, renting and operation of property and commercial 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, S.A.	Lisbon	Management of group financing activities	NOS	100%	100%	100%
Ten Twenty One, S.A (d)	Lisbon	Provision of engineering and consulting services in the area of information technology, communications and electronics	NOS	-	100%	100%

(a) Acquired on March 2023. On May 2023 merged with NOS Comunicações (b) NOS SGPS: 27,50%; NOS Audiovisuais SGPS: 22,50%; NOS Sistemas: 20,00%; NOS Internacional SGPS: 20,00%; NOS Cinemas: 10,00%

(c) NOS SGPS: 90%; NOS Lusomundo Cinemas: 10% (d) Created on February 2023

B) Associated companies

	HEADQUARTERS	PRINCIPAL ACTIVITY		PERCENTAGE OF OWNERSHIP
COMPANY			SHARE	EFFECTIVE	DIRECT	EFFECTIVE
			HOLDER	30-06-2022	30-06-2023	30-06-2023
Big Picture 2 Films, S.A. (a)	Oeiras	Import, distribution, commercialization and production of audiovisual products	NOS Audiovisuais	20.00%	0.00%	0.00%
Big Picture Films, S.L.	Madrid	Distribution and commercialization of movies	Big Picture 2 Films, S.A.	20.00%	0.00%	0.00%
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%

(a) Disposal of the stake in the company in June 2023

C) Jointly controlled companies

	HEADQUARTERS	PRINCIPAL ACTIVITY		PERCENTAGE OF OWNERSHIP
COMPANY			SHARE HOLDER	EFFECTIVE 30-06-2022	DIRECT 30-06-2023	EFFECTIVE 30-06-2023
Dreamia Servicios de Televisión, S.L.	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 (a)	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.	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%	50.00%	50.00%

(a) NOS SGPS: 29,40%; NOS Comunicações: 0,60%.

Financial investments whose participation is less than 50% were considered as joint arrangements due to shareholder agreements that confer joint control.

D) Companies in which NOS does not have significant influence

	HEADQUARTERS			PERCENTAGE OF OWNERSHIP
COMPANY		PRINCIPAL ACTIVITY	SHARE HOLDER	EFFECTIVE 30-06-2022	DIRECT 30-06-2023	EFFECTIVE 30-06-2023
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	3.90%	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	11.76%	11.76%	11.76%
SkillAugment, Lda (KIT-AR) (a)		KIT-AR is a software-based startup, founded in 2018, resulting from a European industrial research project led by 2 European R&D entities - Sintef (NO) and UCL (UK). KIT-AR has developed an innovative augmented reality platform supporting operators on the shop floor equipped with smart glasses: (By using KIT-AR, large industrial companies with processes requiring manual intervention from operators will be able to mitigate errors in the various manufacturing processes and increase the global productivity of the operation;As a company operating in a rapidly expanding market, with a technically differentiated solution already validated by a small initial set of customers and with a technically robust team, KIT-AR configures a relevant investment opportunity.
Seems Possible, Lda. (Knock Healthcare) (b)	Porto	Data processing activities, information domiciliation and related activities, namely in the health area. Business and management consultancy, namely planning, organization, control, information and management, company reorganization. Compensation strategies for termination of employment relationship. Consultancy on safety and hygiene at work. Design of accounting programs and budget control processes. Development of all types of software. Marketing objectives and policies and human resources management. Sale of medical devices and other health equipment. Services to support the internationalization of plans in health area.	Fundo NOS 5G	-	0.00%	0.00%
Mindprober	Braga	The society aims to measure the emotional impact that multimedia content has on consumers, through wearables that monitor biometric data such as sweat or heartbeat acceleration.	Fundo NOS 5G	-	2.09%	2.09%
Didimo Inc. (c)	Dover	DIDIMO has developed a platform that allows the generation, in about 60 seconds, of 3D digital avatars based on photographs.	Fundo NOS 5G	-	0.00%	0.00%
Didimo SA (c)	Porto	DIDIMO has developed a platform that allows the generation, in about 60 seconds, of 3D digital avatars based on photographs.	Fundo NOS 5G	-	0.00%	0.00%
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) The investment in the entity (KIT-AR) was in convertible debt, which represent a participation of 0%

(b) The investment in the entity (Knock Healthcare) was in convertible debt, which represent a participation of 0%

(c) NOS 5G Fund only holds 1 share in each entity, representing 0.0% of the capital.

LIMITED REVIEW REPORT PREPARED BY AUDITOR REGISTERED IN CMVM

STATEMENT BY THE BOARD OF DIRECTORS

UNDER THE TERMS OF PARAGRAPH 1, C) OF ARTICLE 29.º-J OF THE SECURITIES CODE

In accordance with Article 29.º-J, paragraph 1, c) of the Securities Code, the Board of Directors of NOS, SGPS, SA, whose name and roles are listed below, declare that, to their knowledge:

• a) The first half 2023 accounts, were elaborated in compliance with the applicable accounting standards, accurately and truthfully portraying the assets and liabilities, situation and results, as well as those of the companies included in its consolidation perimeter;
• b) The management report faithfully portrays the important events occurred in first half 2023 and its impact on the accounts and, when applicable, contains a description of the main risks and uncertainties for the following six months.

Lisbon, 19 July 2023

Ângelo Paupério

(Chairman of the Board of Directors)

Miguel Almeida

(Chairman of the Executive Committee)

José Pedro Pereira da Costa

(Member of the Executive Committee)

Daniel Beato

(Member of the Executive Committee)

Filipa Santos Carvalho

(Member of the Executive Committee)

Jorge Graça

(Member of the Executive Committee)

Luís Nascimento

(Member of the Executive Committee)

Manuel Ramalho Eanes

(Member of the Executive Committee)

António Lobo Xavier

(Member of the Board of Directors)

Catarina Tavira Van-Dúnem

(Member of the Board of Directors)

Cláudia Azevedo

(Member of the Board of Directors)

Cristina Marques

(Member of the Board of Directors)

Eduardo Verde Pinho

(Member of the Board of Directors)

João Dolores

(Member of the Board of Directors)

Rita Rodrigues

(Member of the Board of Directors)

STATEMENT BY THE STATUTORY AUDIT BOARD UNDER THE TERMS OF PARAGRAPH 1, C) OF ARTICLE 29.º-J OF THE SECURITIES CODE

Within the scope of its competences, under the terms of Article 29-J, Paragraph 1, c) of the Portuguese Securities Code, the Statutory Audit Board declares that, to its knowledge:

• a) The first half 2023 accounts, were elaborated in compliance with the applicable accounting standards, accurately and truthfully portraying the assets and liabilities, situation and results of NOS, SGPS, S.A., as well as those of the companies included in its consolidation perimeter.
• b) The management report faithfully portrays the important events occurred in First Half 2023 and its impact on the accounts and contains a description of the main risks and uncertainties for the following six months.

Lisbon, 19 July 2023

José Pereira Alves

(Chairman of the Statutory Audit Board)

Patrícia Teixeira Lopes

(Member of the Statutory Audit Board)

Paulo Mota Pinto

(Member of the Statutory Audit Board)

RUA ACTOR ANTÓNIO SILVA, Nº9, CAMPO GRANDE, 1600-404 LISBOA.

www.nos.pt/ir