Columbus Energy S.A.

Annual Report (ESEF) • May 30, 2025

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2023-06-30 ifrs-full:IssuedCapitalMemberxbrli:shares iso4217:USD iso4217:USDxbrli:shares 2023FY Coal Energy S.A. 2023FY RESTATED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) CONTENTS PAGE Statement of the board of director’s responsibilities 3 Management report 4 Corporate governance statement 5 Consolidated statement of profit or loss and other comprehensive income 7 Consolidated statement of financial position 8 Consolidated statement of changes in equity 9 Consolidated statement of cash flows 10 Notes to the consolidated financial statements 11 2 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) STATEMENT OF THE BOARD OF DIRECTOR’S RESPONSIBILITIES To the best of our knowledge, the consolidated financial statements as of 30 June 2023 of Coal Energy S.A.(the “Group”) which have been prepared in accordance with the International financial reporting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the both Coal Energy S.A. and its subsidiaries included into the Group, and the management report includes a fair review of the development and performance of the business and the position of the both Coal Energy S.A. and its subsidiaries included into the Group together with a description of the principal risks and uncertainties that they face for the year ended 30 June 2023 as required under article 3(2)c) of the Transparency Law. While preparing the consolidated financial statements, the Board of Directors bears responsibility for the following issues: - selection of the appropriate accounting policies and their consistent application; - making judgments and estimates that are reasonable and prudent; - adherence to IFRS concepts or disclosure of all material departures from IFRS in the consolidated financial statements; - preparation of the consolidated financial statements on the going concern basis. The Board of Directors confirms that it has complied with the above mentioned principles in preparing the consolidated financial statements of the Group. The Board of Directors is also responsible for: - keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Group; - taking reasonable steps to safeguard the assets of the Group and to prevent and detect fraud and other irregularities; - establishing for such internal controls is necessary to enable the preparation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error. On behalf of the Board of Directors: Directors A: Directors B: _signed_ Chairman of the Board of Directors Viktor Vyshnevetskyy _signed___ Independent Non-executive Director Diyor Yakubov __signed___ Business Development Director Oleksandr Reznyk __signed___ Independent Non-executive Director Arthur David Johnson Luxembourg, 30 May 2025 3 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) MANAGEMENT REPORT Management of the Group hereby presents the consolidated financial statements for the year ended 30 June 2023. 1. Results and developments during the year ended 30 June 2023 For the year ended 30 June 2023, the Group recorded EBITDA loss amounted USD 440 thousand (EBITDA for the year ended 30 June 2022 – USD 769 thousand). After depreciation, amortization, finance costs, finance income and taxation, net loss for the year ended 30 June 2023 was USD 13,690 thousand (net loss for the year ended 30 June 2022 – USD 695 thousand). 2. Future developments of the Group The Group have optimized internal reserves and considered remaining options for funding its operations to cover liquidity needs in the environment of the continued war in Ukraine. The Group have also started service activities in Poland related to coal mining and land reclamations and processing. 3. Activity in the field of research and development The Group is not involved in any activity in the field of research and development. 4. Own shares During the year ended 30 June 2023, the Group and its affiliates have not repurchased shares of Coal Energy S.A. 5. Group’s internal control Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that: - pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Group; - provide reasonable assurance that transactions are recorded, as necessary, to permit preparation of financial statements in accordance with IFRS; - provide reasonable assurance that receipts and expenditures of the Group are made in accordance with authorizations of Group’s management and directors; and - provide reasonable assurance that unauthorized acquisition, use or disposition of Group’s assets that could have a material effect on the financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 6. Risk Management The Group has implemented policies and procedures to manage and monitor financial market risks. Financial market activities are overseen by the CFO and the Group Management Board. 7. Other information Having in mind safety of people and being not able to provide the auditors with necessary access to the assets and documentation and other logistical obstacles (including hostilities, military checkpoints on the roads, absence of electricity, etc.) the Company, took the decision to postpone the annual audit procedure until the military unrests are resolved. The Group does not use hedging derivatives. On behalf of management: Directors A: Directors B: __signed___ Chairman of the Board of Directors Viktor Vyshnevetskyy __signed___ Independent Non-executive Director Diyor Yakubov __signed___ Business Development Director Oleksandr Reznyk __signed___ Independent Non-executive Director Arthur David Johnson Luxembourg, 30 May 2025 4 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) Coal Energy S.A. Société anonyme Registered address: 33 rue du Puits Romain, L-8070 Bertrange, Luxembourg, the Grand Duchy of Luxembourg R.C.S. Luxembourg: B 154144 (the “Company”) CORPORATE GOVERNANCE STATEMENT Directors: Name Date of Appointment Date of Resignation Viktor Vyshnevetskyy – Director A 17 May 2011 - Oleksandr Reznyk – Director A 17 May 2011 - Arthur David Johnson – Director A 10 June 2011 - Diyor Yakubov - Director B 1 August 2016 - Audit Committee: Name Date of Appointment Date of Resignation Oleksandr Reznyk – Director A 17 May 2011 - Ihor Nikitenko 16 Mar 2019 - Arthur David Johnson – Director A 10 June 2011 - The Board of Directors (the "Board") states its application of Warsaw Stock Exchange corporate governance rules included in the ”Code of Best Practice for WSE Listed Companies” to the form and extent determined by the Resolution No. 13/1834/2021 dated 29 March 2021. The code of Best Practice for WSE Listed Companies is available at the official website of the Warsaw Stock Exchange: gpw.pl/best-practice2021. The Board is responsible for establishing and maintaining adequate internal and risk management systems for the Company in relation to the financial reporting process. Such systems are designed to manage rather than eliminate the risk of failure to achieve the Company's financial reporting objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. The Board has established processes regarding internal control and risk management systems to ensure its effective oversight of the financial reporting process. These include appointing an independent administrator (the “Administrator") to maintain the accounting records of the Company independent of Coal Energy S.A. The Administrator has a duty of care to maintain proper books and records and prepare for review and approval by the Board the financial statements intended to give a true and fair view. The Board has appointed Wetrust Luxembourg S.A. as Administrator. The Board is responsible for assessing the risk of irregularities whether caused by fraud or error in financial reporting and ensuring that the processes are in place for the timely identification of internal and external matters with a potential effect on financial reporting. The Board has also put in place processes to identify changes in accounting rules and recommendations and to ensure that these changes are accurately reflected in the Company's financial statements. The Board maintains control structures designed and aimed to manage the risks, which are significant for internal control over financial reporting. These control structures include segregation of responsibilities and specific control activities aimed at detecting or preventing the risk of significant deficiencies in financial reporting for every significant account in the financial statements and the related notes in the Company's annual report. The Group’s policies and the Board's instructions with relevance for financial reporting are updated and communicated via appropriate channels, such as e-mail, correspondence and meetings to ensure that all financial reporting information requirements are met in a complete and accurate manner. The Board has an annual process to ensure that appropriate measures are taken to consider and address the shortcomings identified and measures recommended by the independent auditors. There are no restrictions on voting rights. The Group’s internal control over financial reporting includes those policies and procedures that pertain to the maintenance of financial records that, in reasonable detail, accurately and fairly reflect the transactions and disposals of the assets of the Company; provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with Luxembourg legal and regulatory requirements, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposals of the Company’s assets that could have a material effect on the financial statements. In order to ensure, that established controls over financial reporting system worked effectively during the year ended 30 June 2023, a summary of the work performed by the internal audit department was reviewed by the Audit Committee. No person has any special rights of control over the Company's share capital. 5 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) Appointment and replacement of Directors and amendments to the Articles of Association Regarding the appointment and replacement of Directors, the Company is governed by its Articles of Association (hereafter referred as the “Articles of Association”) and Luxembourg Companies Law 1915. The Articles of Associations may be amended from time to time by a general meeting of the shareholders under the quorum and majority requirement provided for by the law of 10 August 1915 on commercial companies in Luxembourg, as amended. Powers of Directors The B oard is responsible for managing the business affairs of the Company within the clauses of the Articles of Association. The Directors may only act at duly convened meetings of the Board of Directors or by written consent in accordance with article 9 of Articles of Association. Rights of the shareholders The operation of the shareholders meetings and their key powers, description of their rights is governed by Articles of Association and national laws and regulation. Transfer of shares Transfer of shares is governed by Articles of Association of the Company. On behalf of management: Directors A: Director B: __signed___ Chairman of the Board of Directors Viktor Vyshnevetskyy __signed___ Independent Non-executive Director Diyor Yakubov __signed___ Business Development Director Oleksandr Reznyk __signed_______ Independent Non-executive Director Arthur David Johnson Luxembourg, 30 May 2025 6 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME Basic profit/(loss) per ordinary share is equal to diluted profit/(loss) per ordinary share. Notes on pages 11 to 33 are an integral part of these consolidated financial statements. Note Year ended 30 June 2023 (unaudited, restated) Year ended 30 June 2022 (unaudited) CONTINUING OPERATIONS Revenue 6 7602,291Cost of sales 7 (896)(2,106)GROSS PROFIT/(LOSS) (136)185General and administrative expenses 8 (165)(129)Other operating income/(expenses), net 9 355302Recovery/(impairment) of financial assets (643)(275)Idle capacity expenses 10 -(145)OPERATING PROFIT/(LOSS) (589)(62)Other non-operating income/(expenses), net 429Finance income 12 1011Finance expenses 13 (768)(170)Disposal of subsidiaries 33 (65)-PROFIT/(LOSS) BEFORE TAX (1,408)(192)Income tax benefit/(expenses), net 14 (1,751)(503)PROFIT/(LOSS) FROM CONTINUING OPERATIONS (3,159)(695)DISCONTINUED OPERATIONS Profit/(loss) from discontinued operation, net of tax 15 (10,531)-NET PROFIT/(LOSS) (13,690)(695)NET PROFIT/(LOSS) ATTRIBUTABLE TO: Equity holders of the parent (13,574)(696)Non-controlling interests (116)1OTHER COMPREHENSIVE INCOME/(LOSS) Disposal of subsidiaries 33 (335)-Effect of currency translation (1,950)(428)TOTAL OTHER COMPREHENSIVE INCOME/(LOSS) FROM CONTINUING OPERATIONS (2,285)(428)DISCONTINUED OPERATIONS Effect of currency translation from discontinued operation 15 938-TOTAL OTHER COMPREHENSIVE INCOME/(LOSS) (1,347)(428)TOTAL COMPREHENSIVE INCOME/(LOSS) (15,037)(1,123)TOTAL COMPREHENSIVE INCOME/(LOSS) ATTRIBUTABLE TO: Equity holders of the parent (14,951)(1,135)Non-controlling interests (86)12EARNINGS PER SHARE Weighted average number of ordinary shares 45,011,12045,011,120BASIC PROFIT/(LOSS) PER ORDINARY SHARE (USD cents) (30.41)(1.55)BASIC PROFIT/(LOSS) PER ORDINARY SHARE FROM CONTINUING OPERATIONS (USD cents) (7.02)(1.55)7 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) CONSOLIDATED STATEMENT OF FINANCIAL POSITION Notes on pages 11 to 33 are an integral part of these consolidated financial statements. 30 June 2023 30 June 2022 Note (unaudited, restated) (unaudited, restated) ASSETS Non-current assets Property, plant and equipment 16 - 9,227 Intangible assets 17 - 103 Right-of-use assets 26 - 3,974 Financial assets 18 - 872 - 14,176 Current assets Inventories 19 - 2,076 Trade and other receivables 20 1,300 1,978 Prepayments and prepaid expenses 21 - 1 Other taxes receivables 22 - 653 Cash and cash equivalents 23 5 3 1,305 4,711 TOTAL ASSETS 1,305 18,887 EQUITY Share capital 24 450 450 Share premium 77,578 77,578 Retained earnings (82,650) (69,076) Currency translation reserve (899) (6,358) Currency translation reserve related to operations held for sale (6,822) - Equity attributable to equity holders of the parent (12,343) 2,594 Non-controlling interest (129) (229) TOTAL EQUITY (12,572) 2,465 LIABILITIES Non-current liabilities Lease liabilities 26 - 2,085 Defined benefit obligation 27 - 623 Provisions 28 - 1,042 Deferred tax liabilities 14 - 195 - 3,945 Current liabilities Loans and borrowings 25 864 934 Lease liabilities 26 - 409 Defined benefit obligation 27 - 1,197 Trade and other payables 29 384 5,698 Income tax payables 14 4,294 2,542 Other tax payables 22 - 1,697 Liabilities directly associated with the assets held for sale 15 8,335 - 13,877 12,477 TOTAL LIABILITIES 13,877 16,422 TOTAL EQUITY AND LIABILITIES 1,305 18,887 8 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Equity attributable to equity holders of the parent Share capital Share premium Retained earnings Currency translation reserve Currency held for sale to operations reserve related translation Total Non- controlling interest Total equity 1 July 2021 (unaudited) 450 77,578 (836) (73,463) - 3,729 (141) 3,588 Profit/(loss) for the year - - (696) - - (696) 1 (695) Other comprehensive income/(loss) - - - (439) - (439) 11 (428) Disposal of subsidiaries - - - - - - - - 30 June 2022 (before restatement, unaudited) 450 77,578 (1,532) (73,902) - 2,594 (129) 2,465 Effect of restatement of comparative data - - (67,544) 67,544 - - - - 30 June 2022 (restated, unaudited) 450 77,578 (69,076) (6,358) - 2,594 (129) 2,465 Profit/(loss) for the year (restated) - - (13,574) - - (13,574) (116) (13,690) Other comprehensive income/(loss) (restated) - - - (1,042) - (1,042) 30 (1,012) Disposal of subsidiaries - - - (335) - (335) - (335) Equity reclassifications - - - 14 - 14 (14) - Reclassification due to discontinued operations (restated) - - - 6,822 (6,822) - - - 30 June 2023 (restated, unaudited) 450 77,578 (82,650) (899) (6,822) (12,343) (229) (12,572) Notes on pages 11 to 33 are an integral part of these consolidated financial statements. 9 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) CONSOLIDATED STATEMENT OF CASH FLOWS Note Year ended Year ended 30 June 2023 30 June 2022 (unaudited, (unaudited) restated) OPERATING ACTIVITIES Profit/(loss) before tax from continuing operations (1,408) (192) Profit/(loss) before tax from discontinued operations 15 (10,641) - Adjustments to reconcile profit before tax to net cash flows: Depreciation and amortization expenses 11 149 831 Finance income 12 (10) (11) Finance expenses 13 768 170 Impairment of prepayments made 9 (58) (46) Loss/(gain) from disposal of non-current assets - 26 Accounts payable write-off 9 (340) (241) Impairment/(recovery) of financial assets 1,273 275 Impairment loss recognised on the remeasurement to fair value less costs to sell 15 8,535 - Loss/(gain) from operational exchange differences 9 72 - Disposal of subsidiaries 33 65 - (1,595) 812 Working capital adjustments: Changes in trade and other receivables (3,329) (2,005) Changes in prepayments made and prepaid expenses 58 45 Changes in inventories - (146) Changes in trade and other payables 4,954 1,081 Changes in tax balances (86) 213 2 - Income tax paid 14 - - Net cash flow from operating activity 2 - INVESTING ACTIVITIES Purchase of property, plant and equipment and intangible assets - - Net cash flow from investing activity - - FINANCING ACTIVITIES Repayment of loans and borrowings - - Net cash flow from financial activity - - NET CASH FLOWS 2 - Cash and cash equivalents at the beginning of the period 23 3 3 Cash disposed with subsidiaries 33 - - Cash received as consideration of subsidiaries disposal 33 - - Effect of currency translation - - Cash and cash equivalents at the end of the period 23 5 3 Notes on pages 11 to 33 are an integral part of these consolidated financial statements. 10 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1 GENERAL INFORMATION 1.1. Information about the Group For the purposes of theses consolidated financial statements, Coal Energy S.A. (“Parent company”) and its subsidiaries have been presented as the Group as follows: Parent company and its subsidiaries Country of incorporation Group shareholding, % as of 30 June 2023 30 June 2022 Coal Energy S.A. Luxembourg Parent Parent Nertera Investments Limited Cyprus 100,00 100,00 C.E.C. Coal Energy Cyprus Limited Cyprus - 100,00 Coal Energy Trading Limited British Virgin Islands 100,00 100,00 Tekhinovatsiya LLC* Ukraine - 99,92 CwAL LE “Mine St.Matrona” Ukraine 99,00 99,00 Perspective resources LLC Ukraine 100,00 100,00 The parent company, Coal Energy S.A., was incorporated in Luxembourg as a joint stock company on 17 June 2010 and is listed on the Warsaw Stock Exchange. The registered office is located at 33 rue du Puits Romain, L-8070 Bertrange, Luxembourg and the Company number with the Registre de Commerce is B 154144. Principal activities of the Group are coal mining, coal beneficiation, waste dumps processing and sales of marketable coal. Major production facilities are located in Donetsk region of Ukraine. * As of 22 December 2022, the Group had sold 79.92% of shares in Tekhinovatsiya LLC and Tekhinovatsiya LLC has been disposed from the Group. ** As of 30 June 2021, C.E.C. Coal Energy Cyprus Limited has been dissolved. The Group accounted this disposal as of 31 March 2023. 1.2. Operating environment As of 24 February 2022, the Russian Federation launched a large-scale military invasion of Ukraine. Russian missiles began to hit locations across Ukraine as well as Russian ground forces entered the country. During the year ended 30 June 2023, Ukrainian hryvna officially devaluated by 25% against USD. National Bank of Ukraine remained key rate at 25% and continued numerous currency restrictions to stabilize foreign exchange market and inflation rates. 2 BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS 2.1 Basis of preparation The preparation of financial statements in accordance to International Financial Accounting Standards (IFRS) as adopted by European Union requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying of the Groups accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4. These consolidated financial statements are presented in thousands of USD, unless otherwise stated. 2.2 Statement of compliance The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU). 2.3 Going concern During the year ended 30 June 2023, the Group recorded USD 3,159 thousand of net loss from continuing operations (during the year ended 30 June 2022, the Group recorded USD 695 thousand of net loss). The Group suspended operation activity of CwAL LE “Mine St.Matrona” since the full-scale war actions in Ukraine. At the date of publication of these consolidated financial statements, Ukrainian activities are under direct war actions in Donetsk region. Military actions are now going near the several kilometers to the CwAL LE “Mine St.Matrona”, so the Group lost access to all related physical assets and facilities, documents and other information located there and have no actual status of the events and conditions thereover. Despite this fact, the Group has started its activity in Poland and achieved sufficient financial results on its Polish subsidiary, providing services to the polish coal companies, which is becoming the main source of the Group’s financing – further income and respective cash inflows will cover operation needs of the Group. These consolidated financial statements are prepared on a going concern basis, which contemplates the realisation of assets and the settlement of liabilities in the normal course of business. 11 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 2 BASIS OF PREPARATION OF THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 2.4 Basis of consolidation (a) Subsidiaries Subsidiaries are entities over which the Group has the power to govern the financial and operating policies. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the cost of acquisition over the fair value of the group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the statement of comprehensive income. Costs appeared in connection with the purchase of subsidiaries are recognized as expenses. Intragroup transactions, balances and unrealized gains on transactions between Group companies are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction. Subsequent to the loss of control of a subsidiary the value of remained share is revalued at fair value that influences the amount of income/loss from the disposal. Before June 30, 2010 the Parent company did not have direct or indirect ownership interest in consolidated entities included in the consolidated financial statements. The pooling of interest method was applied for business combinations under common control for the earlier periods. Financial statements of Parent company and its Subsidiaries, which are used while preparing the consolidated financial statements, should be prepared as at the same date on the basis of consistent application of accounting policy for all companies of the Group. (b) Transactions with non-controlling interests The Group applies a policy of treating transactions with non-controlling interests as transactions with parties external to the Group. The result of disposals to non-controlling interests being the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary are reflected in statements of changes in equity. Losses are attributed to the non-controlling interests even if that results in a deficit balance. Non-controlling interests are derecognized when purchased, a subsidiary sold or liquidated and profit or loss on de-recognition is recorded in the consolidated statements of changes in equity. 2.5 Changes in accounting policy and disclosures The Group has not applied the following standards and IFRIC interpretations and amendments to them that have been issued but are not yet effective: - IFRS 17 “Insurance Contracts” (effective for annual periods beginning on or after 1 January 2023); - IAS 1 “Presentation of Financial Statements” (Amendments): Classification of Liabilities as Current or Non-Current (effective for annual periods beginning on or after 1 January 2023). The Group anticipates that the adoption of these standards and amendments in future periods will have no material impact on its financial statements. The Group currently does not plan early application of the above standards and interpretations. 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 3.1 Currency translation (a) Functional and presentation currency All items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entities operate (the "functional currency"). The national currency of Ukraine, Ukrainian Hryvnia ("UAH") is the functional currency for the Group's entities that operate in Ukraine. For the entities that operate in Cyprus, Luxembourg and British Virgin Islands (BVI) the functional currency is US dollar ("USD"). These consolidated financial statements are presented in thousands of US dollars, unless otherwise stated. 12 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Foreign currency transactions Exchange rates used in the preparation of these in interim consolidated financial statements were as follows: Date/period UAH/USD As of: - 30 June 2023 36.5686 - 30 June 2022 29.2549 Average for the: - three months ended 30 June 2023 36.5686 - three months ended 31 March 2023 36.5686 - three months ended 31 December 2022 36.5686 - three months ended 30 September 2022 34.9787 - three months ended 30 June 2022 29.2549 - three months ended 31 March 2022 28.5545 - three months ended 31 December 2021 26.6808 - three months ended 30 September 2021 26.9110 (c) Translation into presentation currency - all assets and liabilities, both monetary and non-monetary, are converted at closing exchange rates at the dates of each statements of financial position presented; - income and expense items are converted at the average exchange rates for the period, unless exchange rates fluctuate significantly during the period, in which case exchange rates at the date of transactions are used; - all equity items are converted at the historical exchange rates; - all resulting exchange differences are recognized as a separate component in other comprehensive income; - in the consolidated statements of cash flows, cash balances and beginning and end of each period presented are converted at exchange rates at the respective dates. All cash flows are converted at the average exchange rates for the periods presented. Resulting exchange differences are presented as effect of conversion to presentation currency. 3.2 Revenue from contracts with customers The Group mines and sells coal commodities. Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. Revenue from rendering services is recognized based on the stage of work completion under each contract. When financial result can be measured reliably, revenue is recognized only to the extent of the amount of incurred charges, which can be recovered. 3.3 Income tax expense Income tax expense represents the sum of the tax currently payable and deferred tax. Income tax is recognized as an expense or income in profit and loss in the consolidated statements of comprehensive income, except when it relates to items recognized directly in other comprehensive income, or where they arise from the initial accounting for a business combination. (a) Current tax Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to estimate the amount are those that are enacted or substantively enacted, by the reporting date, in the countries where the Group operates and generates taxable income. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. (b) Deferred tax Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognized for all taxable temporary differences, except: - where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; - in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. 13 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized except: - where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; - in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. 3.4 Property, plant and equipment Property, plant and equipment are stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the statements of comprehensive income during the financial period in which they are incurred. Major renewals and improvements are capitalized, and the assets replaced are retired. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in item 'Other non-operating income (expenses)' in the statement of comprehensive income. Depreciation is calculated using the straight-line method over their estimated useful lives, as follows: Underground mining 15 - 50 years Buildings and constructions 5 - 50 years Machinery, equipment and vehicles 2 - 30 years Other 2 - 25 years The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each financial year end. Mine development costs are capitalized and classified as capital construction-in-progress. Mine development costs are transferred to mining assets when a new mine reaches commercial production quantities. Capital construction-in-progress comprises costs directly related to construction of buildings, infrastructure, machinery and equipment. Cost also includes finance charges capitalized during construction period where such costs are financed by borrowings. Depreciation of these assets commences when the assets are put into operation 3.5 Lease All leases are accounted for by recognizing a right-of-use asset and a lease liability except for: – Leases of low-value assets; – Leases with a duration of twelve months or less. Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Group’s incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate. On initial recognition, the carrying value of the lease liability also includes: – Amounts expected to be payable under any residual value guarantee; – The exercise price of any purchase option granted in favor of the Group if it is reasonable certain to assess that option; – Any penalties payable for terminating the lease, if the term of the lease has been estimated based on termination option being exercised. Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for: – Lease payments made at or before commencement of the lease; – Initial direct costs incurred; – The amount of any provision recognized where the Group is contractually required to dismantle, remove or restore the leased asset. 14 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortized on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term. When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted at the same discount rate that applied on lease commencement. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortized over the remaining (revised) lease term. 3.6 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. 3.7 Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in profit or loss in the period in which the expenditure is incurred. Research costs are recognized as an expense as incurred. Costs incurred on development (relating to the design, construction and testing of new or improved devices, products, processes or systems) are recognized as intangible assets only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of adequate resources to complete the development, and the ability to measure reliably the expenditure during the development. Other development expenditures are recognized as an expense as incurred. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. Amortization is charged on a straight-line basis over the following economic useful lives of these assets: Licenses, special permissions and patent rights 5 - 20 years Other intangible assets 5 - 10 years Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash generating unit level. 3.8 Impairment of non-current assets The carrying amounts of the Group's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less cost to sell and value-in-use. An impairment loss is recognized whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognized in the consolidated statements of comprehensive income. Where an impairment loss subsequently reversed, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the original carrying amount that would have been determined had no impairment loss been recognized in prior periods. A reversal of an impairment loss is recognized in the consolidated statements of the comprehensive income. 3.9 Financial assets Initial recognition and measurement The Group classifies its financial assets as financial assets at fair value through profit or loss; loans and receivables; held-to-maturity investments; available for-sale financial assets. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of financial assets at initial recognition and re-evaluates this designation at every reporting date. The Group's financial assets include cash and short-term deposits, trade and other receivables, loan and other receivables. All financial assets are recognized initially at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. Fair value at initial recognition is best evidenced by the transaction price. A gain or loss on initial recognition is only recorded if there is a difference between fair value and transaction price which can be evidenced by other observable current market transactions in the same instrument or by a valuation technique whose inputs include only data from observable markets. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognized on the trade date, i.e., the date that the Group commits to purchase or sell the asset. 15 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Subsequent measurement The subsequent measurement of financial assets depends on their classification as follows: (a) Financial assets at fair value through profit or loss. This category includes financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. (b) Loans and receivables. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Receivables include trade and other receivables. Loans are financial assets arising as a result of provision of funds to borrower. (c) Held-to-maturity investments. Investments with fixed or determinable payments and fixed maturity that management has the positive intent and ability to hold to maturity, other than loans and receivables originated by the Group, are classified as held-to-maturity investments. Such investments are included in non-current assets, except for maturities within twelve months from the reporting date, which are classified as current assets. (d) Available-for-sale financial assets. Investments intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, are classified as available-for-sale; these are included in non-current assets unless management has the express intention of holding the investment for less than 12 months from the reporting date or unless they will need to be sold to raise operating capital, in which case they are included in current assets. Available-for-sale financial assets are accounted at fair value through equity. Subsequent to initial recognition all financial assets at fair value through profit or loss and all available-for-sale instruments are measured at fair value, except that any instrument that does not have a quoted market price in an active market and whose fair value cannot be reliably measured is stated at cost, including transaction costs, less impairment losses. Loans and receivables and held-to-maturity assets are measured at amortized cost less impairment losses. Amortized cost is calculated using the effective interest rate method. Premiums and discounts, including initial transaction costs, are included in the carrying amount of the related instrument and amortized based on the effective interest rate of the instrument. Receivables are accounted at net realizable value, less the allowance for doubtful debts. The amount of allowance for doubtful debts is accounted by using the method of total amount of doubtful debts. Impairment of financial assets The Group assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred 'loss event') and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. For financial assets carried at amortized cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of receivables, loans issued where the carrying amount is reduced through the use of an allowance for impairment. When a trade or other or loans issued receivables is considered uncollectible, it is written off against the allowance. On basis of the facts confirming that receivables or loans issued, previously recognized as doubtful, at the reporting date are not doubtful, the amount of previously charged reserve is reflected in income of the reporting period. Except for available-for-sale assets, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss reverses directly through profit and loss account. The reversal shall not result in a carrying amount of the financial asset that exceeds what the amortized cost would have been had the impairment not been recognized at the date the impairment is reversed. When a decline in fair value of an available-for-sale investment has been recognized directly in other comprehensive income and there is objective evidence that investment is impaired, the cumulative loss that had been recognized directly in other comprehensive income is removed from other comprehensive income and recognized in profit or loss in the consolidated statements of comprehensive income even though the investment has not been derecognized. Impairment losses previously recognized through profit or loss in the consolidated statements of comprehensive income are not reversed. Any increase in fair value subsequent to an impairment loss is recognized directly in other comprehensive income. Derecognition of financial assets The Group derecognizes financial assets when: - the assets are redeemed or the rights to cash flows from the assets have otherwise expired; - or the Group has transferred substantially all the risks and rewards of ownership of the assets; - or the Group has neither transferred not retained substantially all risks and rewards of ownership but has not retained control. Control is retained if the counterparty does not have the practical ability to sell the asset in its entirety to an unrelated third party without needing to impose additional restrictions on the sale. 16 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 3.10 Financial liabilities Initial recognition and measurement The Group classifies its contractual obligations as financial liabilities at fair value through profit or loss, loans and borrowings. The Group classifies its financial liabilities at initial recognition. Financial liabilities, including borrowings, are initially measured at fair value, net of transaction cost. The Group's financial liabilities include trade and other payables, bank overdraft, loans and borrowings. Subsequent measurement The subsequent measurement of financial liabilities depends on their classification as follows: (a) Financial liabilities at fair value through profit or loss. Financial liabilities at fair value through profit or loss include financial liabilities held for trading and those designated at initial recognition as liabilities at fair value through profit or loss; (b) Loans and borrowings. Loans and borrowings are financial liabilities which the Group has after borrowings attraction. Loans and borrowings are classified as current liabilities except when the Group has unconditional right to delay settlement of obligation at least for 12 months. Derecognition A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized through profit or loss. 3.11 Inventories Inventories are recorded at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. The cost of inventories is assigned by using the FIFO cost formula. The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The cost of work in progress and finished goods includes costs of raw materials, direct labor and other direct productions costs and related production overheads (based on normal operating capacity). The Group periodically analyses inventories to determine whether they are damaged, obsolete or slow-moving or if their net realizable value has declined and makes an allowance for such inventories. If such situation occurred, the sum remissive the cost of inventories should be reflected in statements of comprehensive income. If the circumstances that caused the write-down no longer exist, the amount of the write-down is reversed. At the date of financial statements preparation, the Group estimates the balances of finished products to determine whether there is any evidence of impairment. Amount of impairment is measured based on the analysis of prices in the market of such inventories, existed at the reporting date and issued in official sources. 3.12 Value added tax Value added tax (VAT) output equals the total amount of VAT collected within a reporting period and arises on the earlier of the date of shipping goods to a customer or the date of receiving payment from the customer. VAT input is the amount that a taxpayer is entitled to offset against his VAT liability in a reporting period. Rights to VAT input arise on the earlier of the date of payment to the supplier or the date goods are received. Revenue, expenses and assets are recognized less VAT amount, except cases, when VAT arising on purchases of assets or services, is not recoverable by tax authority; in this case VAT is recognized as part of purchase costs or part of item of expenses respectively. Net amount of VAT, recoverable by tax authority or paid, is included into accounts receivable and payable, reflected in consolidated statements of financial position. 3.13 Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of six months or less. For the purpose of the consolidated statements of cash flows, cash and cash equivalents comprise cash and short-term deposits as defined above, net of outstanding bank overdrafts. 3.14 Share capital Ordinary shares are classified as equity. Nominal value of share capital of Parent company is specified in Note 24. 3.15 Legal reserve Luxembourg companies are required to allocate to a legal reserve a minimum of 5% of the annual net income, until this reserve equals 10% of the subscribed share capital. This reserve may not be distributed. 17 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 3.16 Defined benefits plan obligations The Group contributes to the Ukrainian state pension scheme, social insurance and employment funds in respect of its employees. The Group's pension scheme contributions are expensed as incurred. The contributions are included in expenses for wages and salaries. Companies comprising the Group provide additional post-employment benefits to those employees who are engaged in the industry with particularly detrimental and oppressive conditions of work. Under the Ukrainian legislation employees engaged in hazardous industry may retire earlier than usual terms stipulated by Employee Retirement Income Security Law. The Group reimburses to the State Pension Fund all pension payments which are to be paid to the employees until usual statutory date of retirement. In addition, according to the legislation, the Group makes payments related to providing the employees with domestic fuel (coal). The Group recognizes the liabilities in amount of this payment. The liability recognized in the statement of financial position in respect of post-employment benefits is the present value of the defined benefit obligation at the balance sheet date together with adjustments for unrecognized actuarial gains or losses. The cost of providing benefits under the defined benefit plans is determined using the projected unit credit method. Actuarial gains and losses are recognized in the other comprehensive income statements in the period in which they occur. 3.17 Provisions Provisions are recognized when the Group has legal or constructive obligations as the result of past event for which it is probable that an outflow of economic benefits can be required to settle the obligations, and the amount of the obligations can be reliably estimated. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the statement of financial position date, considering the risks and uncertainties surrounding obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, it’s carrying amount is the present value of those cash flows. Use of discounting results in recognition of financial expenses and increase in provision. Management created provision for the payment of potential tax liabilities related to settlement of financial assets and liabilities. Though if the controlling authorities classify such transactions as a subject of taxation and apply such classification to the companies of the Group, actual taxes and penalties may differ from the Management assessment. 3.18 Environmental obligations Environmental obligations include decommissioning and land restoration costs. The Group evaluates the provisions associated with ecological problems separately on every occasion taking into account the requirements of the relevant legislative acts. Future decommissioning costs, discounted to net present value, are capitalized and the corresponding decommissioning obligations are raised as soon as the constructive obligation to incur such costs arises and the future decommissioning cost can be reliably estimated. Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognized as part of the cost of the asset. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the decommissioning liability. The unwinding of the discount is expensed as incurred and recognized in the comprehensive income statement as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset. The amount deducted from the cost of the asset shall not exceed it's carrying amount. If a decrease in the liability exceeds the carrying amount of the asset, the excess shall be recognized immediately in profit or loss. Provision for land restoration, representing the cost of restoring land damage after the commencement of commercial production, is estimated at net present value of the expenditures expected to settle the obligation. Change in provision and unwinding of discount on land restoration are recognized in the consolidated statements of comprehensive income. Ongoing rehabilitation costs are expensed when incurred. 3.19 Financial guarantee contracts Management on annual basis assesses probability of risks that can be arising in relation of financial guarantee contracts through financial analysis of counterparties. If the risk is significant – financial guarantee contracts must be recognized as liabilities in notes to consolidated financial statements in accordance with IAS 37. Otherwise – if risk is insignificant – financial guarantee contracts liabilities must be disclosed as off-balance sheet liabilities. 4 SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES The preparation of the Group's consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods. In the process of applying the Group's accounting policies, management has made the following judgments, estimates and assumptions, which have the most significant effect on the amounts recognized in these consolidated financial statements: Remaining useful life of property, plant and equipment Management assesses the remaining useful life of property, plant and equipment in accordance with the current technical conditions of assets and estimated period when these assets bring economic benefit to the Group. 18 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 4 SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES (CONTINUED) Impairment of non-current assets An impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on available data from binding sales transactions in an arm's length transaction of similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow model. The recoverable amount is most sensitive to the growth rate used for extrapolation purposes (coal price, sales volume) and to the discount rate used for the discounted cash flow model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. Defined benefits plan obligations For the purpose of estimation of defined benefit obligation, the projected unit credit method was used, which includes the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexity of the valuation, the underlying assumptions and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. In determining the appropriate discount rate, management considers the interest rates of high-quality government bonds with extrapolated maturities corresponding to the expected duration of the defined benefit obligation. Future salary increases and pension increases are based on expected future inflation rates. Environmental obligations The Group's mining and processing activities are susceptible to various environmental laws and regulations changes. The Group estimates environmental obligations based on management's understanding of the current legal requirements, terms of the license agreements and internally generated estimates. Provision is made, based on net present values, for decommissioning and land restoration costs as soon as the obligation arises. Actual costs incurred in future periods could differ materially from the amounts provided. Additionally, future changes to environmental laws and regulations, life of mine estimates and discount rates could affect the carrying amount of this provision. Income taxes The Group is subject to income taxes in numerous jurisdictions. Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. The differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective Group company's domicile. Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies. If actual results differ from these estimates or if these estimates must be adjusted in future periods, the financial position and results of operations may be negatively affected. Idle capacity expenses Due to volatility of the coal market production capacity of the Group’s individual Companies in some periods could be operated not according to its normal capacity of the production facilities. In the case of significant deviation of the actual capacity from the normal capacity, part of the fixed production overheads is reflected in item “Idle capacity expenses”. Management of the Group uses estimations and judgments to determine the following items: normal capacity of the individual companies, the period of the partial exploitation of the production capacity, amount of overheads that should be allocated. Expected credit losses measurement Measurement of expected credit losses (ECL) is a significant estimate that involves determination methodology, models and data inputs. The Group regularly reviews and validates the models and inputs to the models to reduce any differences between expected credit loss estimates and actual credit loss experience. Legal proceedings The Group's management applies significant assumptions in measurement and reflection of reserves and risks of exposure to contingent liabilities, related to existing legal proceedings and other unsettled claims, and also other contingent liabilities. Management’s judgment is required in estimating the probability of a secured claim against the Group or incurring material liabilities, and in determining feasible amount of the final settlement or liabilities. Due to uncertainty inherent to the process of estimation, actual expenses may differ from the initial estimates. Such preliminary estimates may alter as far as new information is received, from internal specialists within the Group, if any, or from third parties, such as lawyers. Revision of such estimates may have significant effect on the future results of operating activity. Contingent liabilities Contingent liabilities are determined by the occurrence or non-occurrence of one or more future events. Measurement of contingent liabilities is tightly connected with development of significant judgments and estimates relating to the consequences of such future events. 19 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 5 INFORMATION ON OPERATING SEGMENTS The group defines the following business segments that include goods and services distinguished by the level of risk and terms of income: - mineral resource and processing industry — includes income from sale of own coal products and income from coal beneficiation; - trade activity - includes income from sale of merchandises; - other activity - includes income from rendering of other works and services. Management controls the results of operating segments separately for the purpose of decision making about allocation of resources and performance measurement. The results of segments are estimated on profit/(loss) before tax. Information about the segments of business for the year ended 30 June 2023: Business segments Mineral resource and processing industry Trade activity Other activity Assets and liabilities not included in segments Total Revenue Sales to external customers 760 - - - 760 760 - - - 760 Profit/(loss) before tax of the segment - 100 (1,508) - (1,408) Operational assets (before restatement) 8,535 - 1,305 - 9,840 Effect of restatement (8,535) - - - (8,535) Operational assets (restated) - - 1,305 - 1,305 Operational liabilities (before restatement) 7,845 - 3,790 - 11,635 Effect of restatement 493 - 1,749 - 2,242 Operational liabilities (restated) 8,338 - 5,539 13,877 Disclosure of other information Capital expenditure - - - - - The Group does not incur depreciation and amortization expenses or defined benefit plan obligations expenses, as well as has no capital expenditures. The Group does not have assets and liabilities that are not included in the above-mentioned business segments. Information about the segments of business for the year ended 30 June 2022: Business segments Mineral resource and processing industry Trade activity Other activity Assets and liabilities not included in segments Total Revenue Sales to external customers 2,284 - 7 - 2,291 2,284 - 7 - 2,291 Profit/(loss) before tax of the segment (80) - (112) - (192) Depreciation and amortization expenses (831) - - - (831) Defined benefits plan obligations expenses - - - - - Operational assets 17,359 - - 1,528 18,887 Operational liabilities 10,571 51 1,366 4,434 16,422 Disclosure of other information Capital expenditure 83 - - - 83 As of 30 June 2022, assets of segments don’t include financial assets (USD 872 thousand), cash (USD 3 thousand), other taxes receivable (USD 653 thousand) and deferred tax assets (USD null thousand), since management of these assets is carried out at the Group level. As of 30 June 2022, liabilities of segments do not include deferred tax liabilities (USD 195 thousand), other taxes payable (USD 1,697 thousand), income tax payables (USD 2,542 thousand), since management of these liabilities is carried out at the Group level. All non-current assets of the Group are located in Ukraine. 20 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 6 REVENUE FROM SALES Year ended 30 June 2023 (restated) Year ended 30 June 2022 Revenue received from sale of finished goods 760 2,284 Revenue from other activity - 7 760 2,291 During the reviewed periods sales were performed on the territory of Ukraine exclusively. The following table provides information about balances resulting from contracts with customers: 30 June 2023 (restated) 30 June 2022 Trade receivables, gross - 4,102 Advances received (contract liabilities) - (51) 7 COST OF SALES Year ended 30 June 2023 (restated) Year ended 30 June 2022 Raw materials (2) (7) Wages and salaries of operating personnel (16) (106) Change in finished goods (8) 190 Energy supply (397) (785) Depreciation and amortization expenses (149) (727) Subcontractors services (309) (542) Other expenses (15) (129) (896) (2,106) 8 GENERAL AND ADMINISTRATIVE EXPENSES Year ended 30 June 2023 (restated) Year ended 30 June 2022 Subcontractors services (138) (61) Wages and salaries of administrative personnel (16) (60) Depreciation and amortization expenses - (1) Other expenses (11) (7) (165) (129) 9 OTHER OPERATING INCOME/(EXPENSES), NET Year ended 30 June 2023 (restated) Year ended 30 June 2022 Doubtful debts income/(expenses) 58 46 Writing-off of VAT - (2) Income from lease - 34 Accounts payable write-off 340 241 Gain/(loss) from operational exchange differences (72) - Other operating income/(expenses) 29 (17) 355 302 10 IDLE CAPACITY EXPENSES Year ended 30 June 2023 (restated) Year ended 30 June 2022 Depreciation and amortization expenses - (103) Wages and salaries - (4) Energy supply - (33) Other expenses - (5) - (145) Idle capacity expenses for the year ended 30 June 2023 were fully reclassified as discontinued operation. 21 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 11 DEPRECIATION AND AMORTIZATION EXPENSES Year ended 30 June 2023 (restated) Year ended 30 June 2022 Depreciation Idle capacity expenses - (102) Cost of sales (143) (713) General and administrative expenses - (1) (143) (816) Amortization Idle capacity expenses - (1) Cost of sales (6) (14) (6) (15) (149) (831) 12 FINANCE INCOME Year ended 30 June 2023 (restated) Year ended 30 June 2022 Gain from non-operational exchange differences 5 - Income from measurement of financial instruments at amortized cost 5 11 10 11 13 FINANCE EXPENSES Year ended 30 June 2023 (restated) Year ended 30 June 2022 Loss from non-operational exchange differences (761) - Expenses from measurement of financial instruments at amortized cost (7) (170) (768) (170) 14 INCOME TAX Year ended 30 June 2023 (restated) Year ended 30 June 2022 Current income tax (1,749) (309) Deferred tax (2) (194) Income tax expenses (1,751) (503) At the beginning of the year 2,542 2,233 Current income tax charge (restated) 1,749 309 Disposal of subsidiaries - - Effect of translation to presentation currency 3 - At the end of the year (restated) 4,294 2,542 Reconciliation of tax expense and the accounting profit Profit/(loss) before tax from continuing operations (1,408) (192) Theoretical income tax (18%) 253 35 Effect of different statutory tax rates of overseas jurisdictions (1,850) 12 Tax effect of permanent differences (154) (356) Income tax income/(expenses) (1,751) (309) According to the Tax Code of Ukraine, a tax rate of 18% is applied starting from 1 January 2014. 22 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 14 INCOME TAX (continued) Deferred tax assets and liabilities are measured at the income tax rates, which are expected to be applied in the periods when an asset is realized, or liability is calculated in accordance with the tax rates provided by the Tax Code. 30 June 2022 Recognized in profit/(loss) Discontinued operations (restated) Disposal of subsidiary Effect of currency translation Derecognition (restated) 30 June 2023 (restated) Effect of temporary differences on deferred tax assets Intangible assets 15 - - (1) (3) (11) - Defined benefit plan obligations 34 - - 2 (7) (29) - Folded on individual Companies level (49) - - (1) 10 40 - Total deferred tax assets - - - - - - - Effect of temporary differences on deferred tax liabilities Property, plant and equipment (244) (2) (37) 47 49 187 - Netting on subsidiary level 49 - - 1 (10) (40) - Total deferred tax liabilities (195) (2) (37) 48 39 147 - Net deferred tax asset/(liability) (195) (2) (37) 48 39 147 - 30 June 2021 Recognized in profit/(loss) Disposal of subsidiary Effect of currency translation 30 June 2022 Effect of temporary differences on deferred tax assets Intangible assets 17 (2) - - 15 Provisions 175 (175) - - - Defined benefit plan obligations 37 (3) - - 34 Folded on individual Companies level (193) 144 - - (49) Total deferred tax assets 36 (36) - - - Effect of temporary differences on deferred tax liabilities Property, plant and equipment (248) (14) - 10 (244) Netting on subsidiary level 193 (144) - - 49 Total deferred tax liabilities (55) (158) - 10 (195) Net deferred tax asset/(liability) (19) (194) - 10 (195) 15 DISCONTINUED OPERATIONS AND DISPOSAL GROUP HELD FOR SALE Events and conditions of military invasion disclosed in the Note 2 of these financial statements forced to suspending of operating activity of the last Ukrainian coal mine – CwAL LE “Mine St.Matrona”. Since that, Management assessed inability to restoration any kinds of activity and disposal of this operation unit. As of 30 June 2023, Management decided to recognise CwAL LE “Mine St.Matrona” as disposal group held for sale with respective reclassification of its operations as discontinued. During the year ended 30 June 2024, management committed a plan to sell CwAL LE “Mine St.Matrona”. Accordingly, net liabilities of the subsidiary were presented as a disposal group held for sale. Management expects to complete disposal of coal mine during the year ended 30 June 2025. During the year ended 30 June 2023, total comprehensive income/(loss) from discontinued operation was presented as follows: Year ended 30 June 2023 (restated) Revenue from sales 4 General and administrative expenses (7) Other operating income/(expenses), net (821) Recovery/(impairment) of financial assets (630) Idle capacity expenses (322) Other non-operating income/(expenses), net (177) Impairment loss recognised on the remeasurement to fair value less costs to sell (8,535) Finance income - Finance expenses (153) Profit/(loss) from discontinued operation before tax (10,641) Income tax benefit/(expenses), net 110 Profit/(loss) from discontinued operation, net of tax (10,531) Effect of currency translation from discontinued operation 938 Total other comprehensive income from discontinued operation 938 Total comprehensive income/(loss) from discontinued operation (9,593) 23 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 15 DISCONTINUED OPERATIONS AND DISPOSAL GROUP HELD FOR SALE (continued) During the year ended 30 June 2023, the Company recognized impairment loss on the remeasurement to fair value less costs to sell amounting to USD 8,535 thousand, which was related to impairment of its property, plant and equipment (USD 3,778 thousand), right-of-use assets related to leased mining property, plant and equipment (USD 3,262 thousand) and inventory stocks (USD 1,495 thousand) due to the absence of physical control of these assets and the absence of ability to recover its their value until the end of the military actions in the region. The Group, however, continues to consolidate the relevant entities, as it retains legal ownership and control in accordance with IFRS 10. The restatement of the financial statements as of 30 June 2023 due to this fact is disclosed in Note 34. During the year ended 30 June 2023, net cash flows from discontinued operation were presented as follows: Year ended 30 June 2023 (restated) Net cash flow from operating activity from discontinued operation - Net cash flow from investing activity from discontinued operation - Net cash flow from financial activity from discontinued operation - Net cash flow from discontinued operation - As of 30 June 2023, net liabilities directly associated with the disposal group held for sale were presented as follows: 30 June 2023 (restated) Property, plant and equipment - Right-of-use assets - Inventories - Total assets - Lease liabilities 2,249 Defined benefit obligation 1,427 Provisions 971 Trade and other payables 2,127 Other tax payables 1,561 Total liabilities 8,335 Net liabilities directly associated with the disposal group held for sale 8,335 As of 30 June 2023, the Company hold cumulative losses in form of currency translation reserve amounted USD 75,265 thousand. This reserve will be reclassified to the retained earnings at the date of disposal of the CwAL LE “Mine St.Matrona”. 16 PROPERTY, PLANT AND EQUIPMENT Historical cost Underground mining Buildings and constructions Machinery, equipment, vehicles Other Construction in progress Total 30 June 2021 7,139 1,551 2,107 77 3,304 14,178 Additions 58 - - - 25 83 Disposals - - (49) - - (49) Effect of currency translation (512) (110) (146) (6) (397) (1,171) 30 June 2022 6,685 1,441 1,912 71 2,932 13,041 Disposal of subsidiaries (3,835) (453) (845) (31) (22) (5,186) Effect of currency translation (1,337) (288) (383) (14) (587) (2 609) Impairment (restated) (1,513) (700) (684) (26) (2,323) (5,246) 30 June 2023 (restated) - - - - - - Accumulated depreciation 30 June 2021 (1,515) (574) (1,338) (73) - (3,500) Depreciation charge (340) (102) (171) (2) - (615) Disposals - - 23 - - 23 Effect of currency translation 125 45 102 6 - 278 30 June 2022 (1,730) (631) (1,384) (69) - (3,814) Depreciation charge (164) (63) (49) - - (276) Disposal of subsidiaries 1,097 234 493 30 - 1,854 Effect of currency translation 349 127 278 14 - 768 Impairment (restated) 448 333 662 25 - 1,468 30 June 2023 (restated) - - - - - - Net book value 30 June 2021 5,624 977 769 4 3,304 10,678 30 June 2022 4,955 810 528 2 2,932 9,227 30 June 2023 (restated) - - - - - - 24 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 16 PROPERTY, PLANT AND EQUIPMENT (continued) During the preparation of these financial statements, the management of the Group reassessed recoverable amount of the property, plant and equipment as of 30 June 2023 as zero due to ongoing war actions nearby and resulted suspended operation and recognized impairment loss on property, plant and equipment amounted USD 3,778 thousand. As of 30 June 2023 and 30 June 2022, property, plant and equipment were not pledged under loans agreements. During the years ended 30 June 2023 and 30 June 2022, there were no capitalized borrowing costs. During the years ended 30 June 2023 and 30 June 2022, there were no capitalized research and development costs. As of 30 June 2023 and 30 June 2022, there were no contractual commitments for property, plant and equipment of the Group. 17 INTANGIBLE ASSETS Historical cost Licenses, special permissions and patent rights Other intangible assets Other projects and permissions Total 30 June 2021 287 11 1 299 Effect of currency translation (20) (1) - (21) 30 June 2022 267 10 1 278 Disposal of subsidiaries (213) (8) (1) (222) Effect of currency translation (54) (2) - (56) 30 June 2023 - - - - Accumulated amortization 30 June 2021 (162) (11) (1) (174) Amortization charge (15) - - (15) Effect of currency translation 13 1 - 14 30 June 2022 (164) (10) (1) (175) Amortization charge (6) - - (6) Disposal of subsidiaries 137 8 1 146 Effect of currency translation 33 2 - 35 30 June 2023 - - - - Net book value 30 June 2021 125 - - 125 30 June 2022 103 - - 103 30 June 2023 - - - - Licenses, special permissions and patent rights are represented by special permission for subsurface use # 5098 as at 30 December 2009 issued by Ministry of ecology and natural resources of Ukraine for 20 years. As of 30 June 2023 and 30 June 2022, there were no pledged intangible assets. As of 30 June 2023 and 30 June 2022, there were no contractual commitments for intangible assets of the Group. 18 FINANCIAL ASSETS 30 June 2023 30 June 2022 Non-current financial assets Held-to-maturity investments - 152 Loans issued - 720 - 872 Held-to maturity investments are non-interest notes, issued to related parties and discounted using an effective interest rate of 18%. Management of the Group has the intention to hold these notes to maturity. Loans issued are interest-free loans issued to related parties. 19 INVENTORIES 30 June 2023 (restated) 30 June 2022 Merchandise - 4 Finished goods - 238 Raw materials - 1,272 Spare parts - 555 Other inventories - 7 - 2,076 As of 30 June 2023 and 30 June 2022, loans were not secured by inventories. During the preparation of these financial statements, the management of the Group reassessed net realize value of inventories as of 30 June 2023 as zero due to ongoing war actions nearby and resulted suspended operation and recognized impairment loss on inventories amounted USD 1,495 thousand. 25 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 20 TRADE AND OTHER RECEIVABLES 30 June 2023 (restated) 30 June 2022 Trade receivables - 4,102 ECL allowance for trade receivables - (2,124) Other receivables 1,300 4,969 ECL allowance for other receivables - (4,969) 1,300 1,978 As of 30 June 2023 and 30 June 2022, loans were not secured by trade and other receivables. Changes in allowance for trade and other receivable are presented as follows: 30 June 2023 (restated) 30 June 2022 Balance as of the beginning of the period (7,093) (4,030) (Accrual)/reverse (1,273) (3,345) Disposal of subsidiaries 748 - Effect of currency translation 1,218 282 Reclassification to disposal group held for sale (restated) 6,400 - Balance as of the end of the period - (7,093) 21 PREPAYMENTS AND PREPAID EXPENSES 30 June 2023 (restated) 30 June 2022 Advances paid 14 2,220 Allowances for prepayments made (14) (2,219) - 1 22 TAXES RECEIVABLE AND PAYABLE 30 June 2023 (restated) 30 June 2022 Current taxes receivable VAT recoverable - 653 - 653 Current taxes payable VAT payable - 648 Payable for wages and salaries related taxes - 623 Payables for other taxes - 426 - 1,697 23 CASH AND CASH EQUIVALENTS 30 June 2023 30 June 2022 Cash in bank 5 2 Cash in hand - 1 5 3 24 SHARE CAPITAL 30 June 2023 30 June 2022 % Amount % Amount Lycaste Holding Limited * 60.15 271 60.15 271 Free float 25.00 112 25.00 112 Management of subsidiaries 14.85 67 14.85 67 100.00 450 100.00 450 During the years ended 30 June 2023 and 30 June 2022, quantity of shares has not been changed. 25 LOANS AND BORROWINGS 30 June 2023 30 June 2022 Current borrowings 864 864 Notes issued - 70 864 934 As of 30 June 2023, current borrowings are presented by borrowing from the «Financial Company Altares Finance» LLC on an interest-free basis with repayment on demand. This borrowing arose from the restructuring of the previously received loan from EBRD, that has been restructured during the year ended 30 June 2021, from which «Financial Company Altares Finance» LLC obtained a claim right for residual debt. 26 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 26 LEASE Lease liabilities 30 June 2023 (restated) 30 June 2022 Due within 1 year - 409 From 2 to 5 years - 1,066 More than 5 years - 1,019 - 2,494 As of 30 June 2023, lease liabilities were reclassified as liabilities directly associated with the assets held for sale. There are fixed payments on this contract, but each consequent lease payment is determined by correction of previous month payment on current month inflation rate. Amendments, addendums or cancellation of this contract are possible under agreement of both parties. Right-of-use assets Year ended 30 June 2023 (restated) Year ended 30 June 2022 Balance as of the beginning of the year 3,974 4,026 Remeasurement 255 376 Disposal (5) (17) Depreciation charge (169) (201) Effect of currency translation (793) (210) Impairment (restated) (3,262) - Balance as of the end of the year - 3,974 27 DEFINED BENEFIT OBLIGATIONS 30 June 2023 (restated) 30 June 2022 Discounted further retirement benefits - 623 Current liabilities to statutory fund - 1,197 - 1,820 As of 30 June 2023, defined benefit obligations were reclassified as liabilities directly associated with the assets held for sale. Changes in defined benefit obligations are presented as follows: 30 June 2023 (restated) 30 June 2022 Balance as of the beginning of the period 1,820 1,959 Disposal of subsidiaries (188) - Effect of currency translation (205) (139) Reclassification to disposal group held for sale (restated) (1,427) - Balance as of the end of the period - 1,820 28 PROVISIONS 30 June 2023 (restated) 30 June 2022 Provision for land restoration - 1,024 Dismantling provision - 18 - 1,042 The Group liabilities, connected with environmental restoration, notably decommission of property, plant and equipment and land restoration under waste dumps. Estimation of liability is based on estimated prices of decommissions of property, plant and equipment and land restoration under waste dumps procedures. The discount rate used by the Group is 18%. As of 30 June 2023, provisions were reclassified as liabilities directly associated with the assets held for sale. Changes in non-current provisions are presented as follows: Provision for land restoration Dismantling provision Total 30 June 2021 955 17 972 Unwinding of discount 144 1 145 Effect of currency translation (75) - (75) 30 June 2022 1,024 18 1,042 Unwinding of discount 153 1 154 Disposal of subsidiaries - (16) (16) Effect of currency translation (206) (3) (209) Reclassification to disposal group held for sale (restated) (971) - (971) 30 June 2023 (restated) - - - 27 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 29 TRADE AND OTHER PAYABLES 30 June 2023 (restated) 30 June 2022 Financial payables Trade payables 70 3,592 Other payables 305 1,059 375 4,651 Non-financial payables Payables for unused vacations - 27 Payables for wages and salaries 9 969 Advances received - 51 9 1,047 384 5,698 As of 30 June 2023, trade and other payables held by CwAL LE “Mine St.Matrona” were reclassified as liabilities directly associated with the assets held for sale. 30 TRANSACTIONS WITH RELATED PARTIES According to existing criteria of determination of related parties, the related parties of the Group are divided into the following categories: - Entities - related parties under common control with the Companies of the Group; - Entities - related parties, which have joint key management personnel with the Companies of the Group. Ultimate controlling party is Mr. Vyshnevetskyy V. The sales of finished goods, merchandises and rendering of the services to related parties are made at terms equivalent to those that prevail in arm's length transactions on market price basis. Provision of loans and operations with notes are made at terms different from the transactions with independent parties. Transactions between related parties attributable to the second category are occasional and not significant, thus, they are not disclosed in these consolidated financial statements. Details of transactions between entities - related parties under common control with the Companies of the Group are disclosed below: Year ended 30 June 2023 Year ended 30 June 2022 Income from rendering of services - 54 Details of balances between entities - related parties under common control with the Companies of the Group are disclosed below: 30 June 2023 (restated) 30 June 2022 Notes issued - 152 Prepayments made - 19 Allowances for prepayments made - (19) Other receivables - 1,236 Allowance for other receivables - (1,236) Other payables 246 298 Current notes issued - 70 Trade payables 3 3 Remuneration of key management personnel Year ended 30 June 2023 Year ended 30 June 2022 Wages and salaries 1 26 Contribution to Pension Fund and other social taxes - - 1 26 The average number of key management personnel, persons 6 6 During the years ended 30 June 2023 and 30 June 2022, there were no other benefits to key management personnel except above listed. Remuneration of personnel Year ended 30 June 2023 (restated) Year ended 30 June 2022 Wages and salaries of operating personnel 16 106 Wages and salaries of administrative personnel 15 60 Wages and salaries of idle capacity personnel - 4 Wages and salaries of personnel for discontinued operation 18 - 49 170 The average number of employees, persons 47 67 28 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 31 FINANCIAL RISKS MANAGEMENT Operating environment The operations and earnings of the Group are affected by political, legislative, fiscal and regulatory developments. It is impossible to predict the nature and frequency of these developments and events associated with these risks as well as their effect on future operations and earnings of the Group. Ukrainian tax legislation is characterized by frequent changes is subject to controversial interpretations. Tax authorities may be taking a more assertive position in their interpretation of the legislation and tax assessments. Such cases create a taxation risk exposure which considerably exceeds that of the countries with more advanced tax systems. Management believes that its interpretation of the relevant legislation as of 30 June 2023 is appropriate and all of the Croup's tax will be sustainable. Though, amount of VAT recoverable, as well as terms of such refunds substantially depends on the position of tax authorities. The Group is continuing to be subject to reform initiatives in the Ukraine. The future direction and effects of any reforms are the subject of political considerations, which could have a significant but undeterminable, effect on entities operating in the Group. Financial risk factors The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group's overall risk management focuses on the unpredictability of financial markets and seeks to reduce potential adverse effects on the financial performance of the Group. Risks are managed centrally. This note presents information about Group's exposure of each type of risks, objectives of risk management, policy and procedures of assessment and management, as well as approaches to capital management. Additional qualitative and quantitative information are disclosed through overall consolidated financial statements. Credit risk Credit risk is a risk of financial loss to the Group, which results from failure of a buyer or a contractor under the financial instrument to fulfill its contractual obligations. Credit risk arises from cash and cash equivalents, deposits in banks as well as credit exposures to customers, including outstanding receivables. Financial assets are subject to the credit risk of the Group. Management of the Group assesses the credit risk as for financial assets on the year basis considering counterparties financial position, credit reputation, background cooperation and other factors. The Group recognizes allowance for receivables to secure trade and other receivables. The calculation of the allowance’s amount is based on individual assessment of the financial position of the contractor. Group’s Management performs monitoring of payback period. In case of delay in payment, its reasons are clarified, and the decision whether to implement a sanction or provide a short time delay of payment is made. It should be noted that the average delay period in payment for main debtors is 90 days. Even though the current business environment may have influence on the customers ability to redeem their debts, management considers that recognized allowance for receivables is sufficient. The maximum exposure to credit risk at the reporting date is represented by the carrying amount of each class of financial assets. Group estimates the concentration of risk in respect of the trade and other receivables as high. Specific of the Group’s activity implies that trade receivables are composed of receivables due from wholesale customers. Carrying amount of financial assets reflect maximum exposure credit risk is presented as follows: 30 June 2023 (restated) 30 June 2022 Trade receivables - 4,102 Other receivables 1,300 4,969 Notes issued - 152 Loans issued - 720 Cash in bank 5 2 1,305 9,945 For general evaluation of potential customers Group judges’ ratings of companies based on public information (if any) from all available sources of information, as well previous experience of business partnership with counterparty is taken for evaluation purposes. Apart from general evaluation made by management, there is an approval procedure which each potential customer must follow. Customer reliability is evaluated and approved by following departments: - department, which initiated cooperation with counterparty (usually Sales department or Purchase department); - Financial department; - Analytical department; - Audit department; - Legal department. As a result of evaluation procedures, approval sheet is completed with signoffs and comments if any of all stated above departments. After Management’s approval and clarifications of all responsible departments’ comments approval sheet is completed. Consequently, of asserted Approval sheet, department which initiated cooperation with the counterparty is entitled to sign an agreement. 29 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 31 FINANCIAL RISKS MANAGEMENT (continued) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Approach of the Group to the liquidity management lies in providing, as much as possible, permanent availability of the liquid funds, sufficient for the repayment of liabilities in time, not allowing losses and not exposing to risk of the Group. Liquidity risk management implies maintaining the availability of funding through an adequate amount of committed credit facilities. Management analyses regularly terms of settlement of obligations and receipts from financial assets, monitors the expected cash flows from operating activities. Market risk Market risk is a risk that fair value of future cash flows from financial instrument will fluctuate as a result of changes in market prices. There are 3 types of market risk within the Group's activity: - commodity price risk; - foreign currency risk; - interest rate risk. Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group's exposure to the risk of changes in foreign exchange rates relates primarily to the Group's operating activities (when revenue or expenses are denominated in a different currency from the Group's functional currency). Such transactions are carried out mainly in USD and rarely in EUR. The Group's exposure to foreign currency changes for all other currencies is not material. 30 June 2023 Increase/decreases in exchange rate Effect on profit before tax Loans and borrowings 864 +20% (5%) (173) 43 Trade and other payables 375 +20% (5%) (75) 19 Total effect of changes in exchange rate +20% (5%) (248) 62 30 June 2022 Increase/decreases in exchange rate Effect on profit before tax Loans and borrowings 934 +20% (5%) (187) 47 Trade and other payables 461 +20% (5%) (92) 23 Total effect of changes in exchange rate +20% (5%) (279) 70 Commodity price risk The Group is not exposed to the effects of fluctuations in prices for mine and related products which may negatively affect the financial results of the Group because of absence of mining activity. Interest rate risk The Group is not exposed to the effects of fluctuations in interest rates which may negatively affect the financial results of the Group because of absence of loans attracted with floating interest rates. Financial instruments Set out below is a comparison by category of carrying amounts and fair values of financial instruments: Carrying amount Fair value 30 June 2023 (restated) 30 June 2022 30 June 2023 (restated) 30 June 2022 Financial assets Notes receivable - 152 - 152 Loans issued - 720 - 720 Trade and other receivables 1,300 1,978 1,300 1,978 Cash and cash equivalents 5 3 5 3 Financial liabilities Loans and borrowings 864 934 864 934 Trade and other payables 375 4,651 375 4,651 30 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 31 FINANCIAL RISKS MANAGEMENT (continued) Cash and cash equivalents, trade receivables, trade payables approximate their carrying amounts largely due to the short-term maturities of these instruments. Receivables are evaluated by the Group based on individual creditworthiness. Based on this evaluation, allowances are taken to account for the expected losses of these receivables. As of each reporting date, the carrying amounts of such receivables, net of allowances, are not materially different from their calculated fair values. The fair value of unquoted instruments, loans from banks, long-term promissory notes issued, obligations under finance leases as well as other financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities. 32 CONTINGENT ASSETS AND LIABILITIES As of the date of presentation of the financial statements, the Group is not involved in any legal processes that can have material impact on its financial position. 33 DISPOSAL OF SUBSIDIARIES As of 22 December 2022, the Group had sold 79.92% of shares in Tekhinovatsiya LLC for consideration amounted USD 1,300 thousand and Tekhinovatsiya LLC has been disposed from the Group. As of 30 June 2021, C.E.C. Coal Energy Cyprus Limited has been dissolved. Net assets and results from disposals are presented as follows: C.E.C. Coal Energy Cyprus Limited Tekhinovatsiya LLC Total Property, plant and equipment - 3,332 3,332 Intangible assets - 76 76 Non-current financial assets - 127 127 Inventories - 162 162 Trade and other receivables 113 716 829 Other taxes receivable - 513 513 Non-current defined benefit obligation - (188) (188) Non-current provisions - (16) (16) Deferred tax liabilities - (48) (48) Current loans and borrowings - (62) (62) Trade and other payables - (5,966) (5,966) Other tax payables - (410) (410) Net assets at the date of disposal 113 (1,764) (1,651) Effective ownership ratio, % 100.00 99.92 n/a Non-controlling interests - 1 1 Receivables to disposed subsidiaries - (3,465) (3,465) Payables to disposed subsidiaries 113 - 113 Fair value of consideration received - 1,300 1,300 Reclassification of currency translation reserve of disposed subsidiaries - 335 335 Profit/(loss) from disposal - (65) (65) 34 ADJUSTMENTS OF MISSTATEMENTS AND CHANGES IN PRESENTATION AND DISCLOSURES The financial statements for the year ended 30 June 2022 and 30 June 2023 have been restated due to misstatements that were identified. As a result, the comparative and opening balances have been restated accordingly. The impact of such misstatements on the statement of financial position as of 30 June 2023 is presented below: Description 30 June 2023 (restated) Adjustments 30 June 2023 (as previously presented) Property, plant and equipment a - (3,778) 3,778 Right-of-use assets a - (3,262) 3,262 Inventories a - (1,495) 1,495 Retained earnings g (82,650) (78,231) (4,419) Currency translation reserve g (899) 74,366 (75,265) Currency translation reserve related to operations held for sale g (6,822) (6,822) - Non-controlling interest g (229) (90) (139) Deferred tax liabilities b - (147) 147 Non-current lease liabilities f - (2,248) 2,248 Non-current defined benefit obligation f - (477) 477 Non-current provisions f - (971) 971 Current lease liabilities f - (1) 1 Current defined benefit obligation f - (950) 950 Trade and other payables c,f 384 (1,850) 2,234 Income tax payables d 4,294 1,749 2,545 Other tax payables e - (1,198) 1,198 Liabilities directly associated with the assets held for sale f 8,335 8,335 - 31 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 34 ADJUSTMENTS OF MISSTATEMENTS AND CHANGES IN PRESENTATION AND DISCLOSURES (continued) The impact of such misstatements on the statement of financial position as of 30 June 2022 is presented below: Description 30 June 2022 (restated) Adjustments 30 June 2022 (as previously presented) Retained earnings g (69,076) (67,544) (1,532) Currency translation reserve g (6,358) 67,544 (73,902) The impact of misstatements on the statement of profit or loss and other comprehensive income for the year ended 30 June 2023 is presented below: Description Year ended 30 June 2023 (restated) Adjustments Year ended 30 June 2023 (as previously presented) Revenue f 760 (4) 764 General and administrative expenses f (165) 7 (172) Other operating income/(expenses), net f 355 181 174 Recovery/(impairment) of financial assets f (643) 630 (1,273) Idle capacity expenses f - 322 (322) Other non-operating income/(expenses), net f 4 177 (173) Finance expenses f (768) 153 (921) Income tax benefit/(expenses), net e (1,751) (1,712) (39) Profit/(loss) from discontinued operation, net of tax a,b,c,d,f (10,531) (10,531) - Effect of currency translation f (1,950) (938) (1,012) Effect of currency translation from discontinued operation f 938 938 - a) Management of the Group reassessed carrying amounts of its physical assets located in Toretsk city (property, plant and equipment, right-of-use assets and inventories) as of 30 June 2023 as zero due to ongoing war actions nearby and resulted suspended operation with respective impairment of above-mentioned assets amounting to USD 8,535 thousand. The circumstances that led to the impairment exist already in the prior year. As CwAL LE “Mine St.Matrona” has been classified at as held for sale, the assets and liabilities has also been measured at their fair value less cost of sales for the year ended 30 June 2023. b) In the prior period, deferred tax assets and liabilities were recognized; however, this recognition was not appropriate under IAS 12, as the Group did not have reliable forecasts of future taxable profits within a reasonably estimable timeframe. As a result, the recognition did not meet the criteria set out in IAS 12. The financial statements for the year ended 30 June 2023 have been therefore restated. c) Management has restated the opening balances to recognize a provision amounting to USD 271 thousand for lawsuit #911/4610/15 (905/996/21) against State company “Regionalny electrichny merezhy” due to violation of the repayment terms and that criteria to be recognized existed already in the previous year. The provision covers accrued court expenses, inflation losses and penalties. d) Management of the Group reassessed the impact of the VAT liabilities incurred in relation to the impairment of prepayments made with the respective recognition of VAT payables in accordance with the Ukrainian tax legislation and accrued other tax payables amounting to USD 369 thousand. e) During the reporting period, the Group completed statutory audits of Nertera Investments Limited for the years ended from 31 December 2019 till 31 December 2023. The tax computation made by the independent auditor led to revaluation of income tax payables of Nertera Investments Limited by the Management to the actual amount, and an accrual amounting to USD 1,749 thousand were adjusted in the comparative figures of the consolidated financial statements as the facts and circumstances leading to such adjusted existed already in the previous year. f) The rest of the changes in profit or loss and other comprehensive income are related to the reclassification of the financial results of CwAL LE “Mine St.Matrona” to discontinued operations. g) Management of the Group reassessed the currency translation reserve related to the Group subsidiaries that were disposed of the Group before 30 June 2022 and reclassified accordingly overstatement of the reserve to the retained earnings as of 30 June 2022. 35 SUBSEQUENT EVENTS As of 4 July 2023, Coal Energy Trading Limited has been dissolved. Detailed description of the liquidation will be presented in the appropriate financial statements. As of 15 December 2023, the Group has acquired a new subsidiary – Ukrmineral Trading LLC with the main purpose of obtaining licenses for the mining of mineral resources in Ukraine. Detailed description of the acquisition will be presented in the appropriate financial statements. As of 21 December 2023, the Group has acquired a new subsidiary – Advanced Industrial Technologies Sp. z.o.o. with the main purpose of providing underground mining services to coal mines in Poland. Detailed description of the acquisition will be presented in the appropriate financial statements. As of 25 January 2024, the Group jointly have incorporated a new entity – Greentech Solutions Sp. z.o.o, with the main purpose of reclamation and processing of industrial rock dumps and mine waste dumps, as well as the reclamation of lands disturbed by man-made activities. 32 COAL ENERGY S.A. Restated Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated) 35 SUBSEQUENT EVENTS (continued) As of 17 July 2024, the Group transferred its 100% shares in Advanced Industrial Technologies Sp. z.o.o. from the ownership by Ukrmineral Trading LLC directly to the Coal Energy S.A. As of 13 January 2025, the Company signed a facility agreement for obtaining EUR 300 thousand of borrowing from non-related party. As of 21 February 2025, the amount of borrowing has been increased up to EUR 500 thousand. On 18 March 2025, the Group disposed of its entire interest in Ukrmineral Trading LLC (100%) and CwAL LE "Mine St. Matrona" (99%) for a total consideration of USD 1 thousand. As part of the transaction, the acquirer assumed all liabilities associated with these two entities. Consequently, in 2025, the Group will recognize an increase of approximately USD 7.7 million in equity attributable to the equity holders of the parent in the consolidated financial statements for the year ended 30 June 2025. As of May 2025, the Group is an advanced process to sell its subsidiary Nertera Investments Limited. According to the management’s opinion, there have been no events after the closing date, except for those disclosed above and known to the management that would substantially influence the financial standing of the Group. 33