Columbus Energy S.A.

Annual Report • Jun 13, 2024

Annual Report for FY2023

Content_____________________________________________________________________ Page CEO letter 3 Business overview 4 Financial overview 6 Corporate governance 10 Consolidated financial statements 20

Dear Shareholders,

Herewith we are presenting our unaudited consolidated financial report for FY2023 and 4Q FY2023, ended 30th June 2023. This was the second year of full-scale military invasion of Russia, massive artillery shelling and rocket attacks, occupation of certain regions of Ukraine and significant civilian casualties.

In the midst of on-going military actions, disruptions of supply chains, infrastructure damage and challenges related to ensuring the safety of workers operations within the Company's business became notably complicated. Taking into account the impossibility of conducting mining activities in mines located directly in the war zone, the company's Management Board in decided to transfer most of the operational activities to European Union countries. Transferring part of the activities to the European Union, using the knowledge and competences of the management staff in the search for and extraction of minerals other than coal are the most important elements of the new strategy. In line with this strategy further in 2024FY the Company has acquired three assets: LLC UKRMINERAL TRADING (Ukraine), ADVANCED INDUSTRIAL TECHNOLOGIES Sp. z o.o. (Poland) and GREENTECH SOLUTIONS Sp. z o.o. (Poland).

By the end of 2022 calendar year the Company sold 79.92% of shares in the Svyato-Pokrovska mine (Tekhinovatsiya LLC) that was mining thermal coal. Mine St.Matrona was working on maintaining systems and ensuring safety and security of facilities of the site during second half of FY2023. As of the day of this report military clashes have intensified and the line of military actions is shifting due to Russia's occupation of more territories in the East of the country, where the St. Matrona mine is located. These events prevent the Company's management from planning the resumption of coal mining operations in Ukraine.

Summarized highlights of the 4Q FY2023 and FY2023 are presented below:

• Total output. Annual mining underground output in FY2023 amounted to 9.3 thousand tonnes as compared to 25.3 thousand tonnes in FY2022, decreasing by 63.2% y-o-y. There was no coal output in the 4Q FY2023.
• Coal volume sales. For the FY2023 coal volume sales composed 10.1 thousand tonnes or decreased by 55.7% y-o-y (22.8 thousand tonnes for FY2022). There were no coal sales in the 4Q FY2023.
• Revenue from coal sales. For the FY2023 revenue from coal sales composed US\$0.8 million as opposed to US\$2.3 million for FY2022. There were no revenues from coal sales in the 4Q FY2023.
• EBITDA. In the 4Q FY2023 the Company recorded negative EBITDA of US\$0.7 million, while for FY2023 negative EBITDA composed US\$1.3 million.

I am more than convinced that the decision to initially transfer the operational activities to European Union countries and in the near future to other continents will be reflected in positive information about the company's financial data. These data will certainly be an impulse for investors to become interested in the assets of our company and an incentive to increase the importance of Coal Energy in the minds of capital market participants

With best regards, Viktor Vyshnevetskyy Chairman of the Board of Directors and Chief Executive Officer

Business overview

Coal Energy S.A. (hereinafter "Coal Energy" or "the Company" or "the Group") incorporated in the Grand Duchy of Luxembourg is a holding company for a group of 6 companies operating in the mining industry (as of the day of publication of this report). In July 2011 the Group placed 25% of its shares on the Warsaw Stock Exchange via initial public offering.

The Company's principal business comprises of underground coal mining and sale of coking coal and providing mining services. The war in Ukraine and the location of the Company's mine in the fighting area make it practically impossible for the Company to conduct mining and commercial activities. Therefore, in accordance with the decision adopted by the Management Board, the Company plans to use the intellectual potential and its employees to conduct business abroad.

On December 22, 2022, the Company sold 79.92% of shares in the "Svyato-Pokrovska" mine to the LLC "Shidna Vugledobuvna Grupa". The transaction value amounted to USD 1.3 million. The proceeds from the sale of shares are divided into tranches. At the same time, after the end of hostilities in Ukraine and the implementation of the mine modernization project, for each tonne of coal mined by the buyer, Coal Energy will be entitled to a "royalty" in the amount of \$2 per tonne.

Coal Energy Cyprus Limited has been dissolved. The Group accounted this disposal as of 31 March 2023.

As of 4 July 2023, Coal Energy Trading Limited has been dissolved. Detailed description of the following liquidation will be presented in the appropriate financial statements.

Subsequently, as was reported, after ending of the reporting period on December 2023 the Company has signed an agreement on acquisition of 100% of shares of ADVANCED INDUSTRIAL TECHNOLOGIES Sp. z o.o. - company registered in Katowice, Poland. LLC

ADVANCED INDUSTRIAL TECHNOLOGIES was established in 2018 and provides underground mining services to coal mines in Poland.

Further in January 2024 ADVANCED INDUSTRIAL TECHNOLOGIES (Poland) jointly with DSB GROUP Sp. Zo.o. have incorporated GREENTECH SOLUTIONS Sp. z o.o. in Poland. The authorized capital of the new Company is 100 000 PLN, each party holds 50% share. The main activity of the new company will be the reclamation and processing of industrial rock dumps and mine waste dumps, as well as the reclamation of lands disturbed by man-made activities.

Production overview/ Coal mining

Coal output for the FY2023 comprised 9.3 thousand tonnes as the Company did not conduct mining operations in the second half of FY2023 as opposed to 25.3 thousand tonnes in FY2022. The table below shows mining volumes by types of coal (numbers are rounded):

in thousand of tonnes	FY2023	FY2022	change in %
Thermal coal	9.3	19.7	(52.8%)
Coking coal	-	5.6	-
Total mining	9.3	25.3	(63.2%)

Our markets (based on available statistical and media information)

In FY2023 Ukrainian economy was affected by military invasion and hostilities from Russian Federation.

Meanwhile according to International Energy Agency (IEA) in 2023 global demand for coal was rising by 1.4%, surpassing 8.5 billion tonnes for the first time. Russia's invasion of Ukraine significantly altered coal trade dynamics, price levels and supply and demand patterns. After the start of the full-scale invasion in Ukraine coal mining decreased considerably, due to the fact that about 60% of the country's coal deposits are occupied by Russia. Also, since the implementation of martial law certain government restrictions were introduced to address energy security concerns, like prohibition of anthracite export or quotas on coking coal export. Coal import volumes have been heavily hit by lower demand from domestic consumers and disruption of supply chains, as Ukrainian Black Sea ports have been shut down and Ukraine couldn't import coal by sea. According to authorities the priority of Ukraine in the near future is the diversification of logistics routes due to the expansion of land transport corridors to the EU in order to reduce dependence on maritime exports. In response to Russia's invasion of Ukraine, several western countries and institutions imposed sanctions on Russia, including exclusion from the international payment system SWIFT, impeding the settlement of Russian coal trades in dollars. Furthermore, the European Union implemented a ban on Russian coal effective from August 2022, and some Japanese and Korean utilities announced their intention to cease buying Russian coal. (in 2021, the European Union, Japan and Korea collectively accounted for about 40% of Russian coal exports).

According to State Statistics Service industrial production in Ukraine in the first half of 2023 decreased by 2.9%, while in 2022 during this period the fall amounted to 31.9%. According to the sectors for January-June 2023, the greatest decrease by 11.4% was noted in the supply of electricity, gas and steam, while mining industry declined by 9.2%. Metallurgy, which has historically been among the locomotives of the Ukrainian economy and exports in particular,

incurred the most extensive losses with loss of the assets located mainly in the East and South of the country. In total, in the first half of 2023, 2.83 million tonnes of steel were produced in Ukraine, which is 37.0% less than in January-June 2022. In January-April 2023, Ukraine reduced electricity production by 19.4% as compared to the same period of 2022. As before, more than half of electricity in the country continues to produce atomic generation, and thermal power plants are ranked second.

The National Bank improved its estimate of Ukrainian real GDP growth in 2023 up to 5.7%, maintained growth expectations for 2024 at 3.6% and worsened its forecast for 2025 to 5.8%.The National Bank noted, among other positive factors, the high adaptability of business and the population to war conditions, as well as a soft fiscal policy, which was supported by international financing.

People

In FY2023 the Group employed 47 employees (weighted average headcount) demonstrating a decrease by 29.8% y-o-y. As the operations facilities were in the sustained/idled mode the headcount of personnel is declining. The Company used subcontractor services for underground mining thus headcount of mining personnel also decreased.

Additional information concerning the average number of the Group's employees by category for FY2023 and FY2022 is set forth in the table below:

	FY2023	FY2022
Mining	4	4
Support production	30	45
Administrative and sales personnel	13	18
Total	47	67

Summary of payments to the Ukrainian authorities

The Company did not perform payments to authorities in FY2023.

in thousand of US\$	FY2023	FY2022
Social Insurance Funds employer	-	-
Social Insurance Funds individual	-	-
Concession fee	-	-
Income tax	7	-
Natural resources payment	-	-
VAT	-	-
Environmental tax payments	-	-
Total	7	-

Financial overview

Business of the Company was adversely affected by the on-going full-scale hostilities and invasion from Russian Federation. The following table summarizes the Group's key indicators for FY2022 and FY2023 (numbers are rounded):

in million of US\$	FY2023	FY2022	Relative change y-o-y
Revenue	0.8	2.3	(65.2%)
Gross profit	(0.1)	0.2	n/a
EBIT	(1.7)	(0.1)	n/a
EBITDA	(1.3)	0.8	n/a
Net loss/profit	(2.9)	(0.7)	n/a

Revenue

For the FY2022 total revenue composed U\$0.8 million as compared to the US\$2.3 million for the FY2022 declining by 65.2% y-o-y representing absence of more high-price coking coal in the structure of sales as well as considerable exchange difference factor due to devaluation of Ukrainian hrivnya. While for the 4Q FY2023 revenue composed US\$1.0 thousand remaining flat q-o-q under discontinuation of operation activity in the 2H of FY2023.

Revenues in FY2023 are presented in the table below:

in thousand of US\$	FY2023	FY2022	change in %
Revenue
Revenue received from sale of finished goods	760	2,284	(66.7%)
Trade activity	-	-	n/a
Other activity	4	7	(42.9%)
Total revenue	764	2,291	(66.7%)

There were no export operations during the reporting period. Coal sales volumes are presented in the table below:

in thousand tonnes	FY2023	FY2022	change in %
Thermal	10	17	(41.9%)
Coking	-	6	(100.0%)
Total	10	23	(56.5%)

In line with production levels decline total coal sales also decreased by 56.5% y-o-y. At the same time there were no coal sales in the 4Q and 3Q FY2023.

Company's weighted average sales prices for thermal coal in FY2023 were in range 1975-3600 UAH/tonne (for FY2022 thermal coal prices composed 820-6180 UAH/tonne for thermal coal).

Cost of sales and cash cost of production

The following table demonstrates cost of sales of the Company in the FY2023 and the FY2022:

in thousand of US\$	FY2023	FY2022
Cost of sales	896	2,106
Less:
Cost of merchandising inventory	-	-
Change in inventories	8	(190)
Cost of other services	-	542
Depreciation and amortization	149	727
Total cash cost of production	739	1,027
in US\$ per tonne
Cash cost of mining per 1 tonne of ROM coal	79.5	40.6

Cash cost of mining in FY2023 composed US\$79.5 tonne and increased by 95.8% due to change in accounting approach and the inclusion of the cost of services received in the part of the cash cost.

Gross loss/profit

The Company recorded gross loss of US\$0.1 million for the reporting FY2023 as opposed to gross profit of US\$0.2million for the FY2022, under discontinuation of operation activity in the 2H of FY2023. While for the 4Q FY2023 gross profit composed US\$1.0 thousand remaining flat q-o-q.

Operating profit/ loss

For the FY2023 the Company recorded operating loss of US\$1.7 million, as opposed to US\$0.1million of loss for the FY2022 reflecting ceased operational activity. For the 4Q FY2023 operating loss amounted to US\$0.8 million versus US\$0.05 million of loss for the 3Q FY2023 due to write-off of accounts receivable.

Financial costs

For the FY2023 financial costs composed US\$0.9 million increasing y-o-y as opposed to US\$0.2 million for the FY2022 in line UAH devaluation resulted foreign exchange losses.

Net loss / profit

The Company recorded US\$2.9 million of net loss for FY2023 as opposed to US\$0.7 million of net loss for the FY2022 due to the discontinuation of its main operational activities in the 2H FY2023 under the circumstances of war. For the 4Q FY2023 the Company recorded loss of US\$0.8 million versus US0.1 million losses for the 3Q FY2023.

Risks and uncertainties

The Company's financial performance is dependent on the global price of and demand for coal

The Company's business is dependent on the global market price of coal. Sale prices and volumes in the worldwide coal market depend predominantly on the prevailing and expected levels of demand for and supply of coal, mainly from energy and steel manufacturers. But the

company's financial results will increasingly depend on the situation on the coal market in the countries where the company will operate. In general, European countries are taking steps to slowly move away from coal mining, but at the same time, more and more attention is being paid to the extraction of other minerals that may also be of interest to the Company.

The Company's production costs and costs of technologies applied by the Company may increase

The Company's main production expenses are energy costs, salaries and consumables. Due to the company's new strategy, which provides for the transfer of operations abroad, it is expected that there will be additional costs related to starting operations in new markets, acquiring new entities and acquiring customers..

The Company's activity may be impacted by limited banking financing for its projects and operating activity as well as local currency devaluation

In order to continue investment program at the levels which would allow reaching the expected targets the Company needs external financing. Macroeconomic and political instability in the country make the banks reassess their country risk policies and they may either stop providing new financing to customers or even lower their credit exposures.

Macroeconomic instability could also push the population to transfer their savings into US\$ (creating devaluating pressure on the local currency) and/or even to take their savings away from the banking system which may additionally squeeze the banking system's liquidity.

During the last years foreign currency loans had a more attractive interest rate, had longer tenors of financing and were easier available than local currency (hryvnia) loans, hence foreign currency loans may be more attractive in general.

Nevertheless foreign currency loans expose to the exchange rate risks which may inflate liabilities denominated in the foreign currencies in case of local currency devaluation. In order to fulfil obligations under the conditions of limited export proceeds restructuring may be needed with the goal of extending maturities and postponing interest payments until the markets rebound and sufficient resources are accumulated to cover the realized risk.

The majority of existing loan facilities is either in the process of restructuring or in the "on hold" status.

The Company's activity may be influenced by political instability and/or uncertainty and escalation of military conflict in Ukraine

The risk has been realized: the ongoing war with Russian Federation may lead to damages to assets and inventories in scope which will make it impossible or economically not viable to restore them.

Mitigation of the risk is mainly outside of control of the Company on macro level at the same time the company has set a course to diversify its business outside of Ukraine (outside the military conflict).

Liquidity risk

The Company is in constant dialogue with its current financing banks in order to secure timely rolling over and extending of the credit facilities. Nevertheless the ability of banking institutions to lend depends highly on country risks of Ukraine and there own liquidity (UAH liquidity is formed mainly from the deposits of the local individuals and enterprises) which diminishes dramatically in the times of macroeconomic and political instability.

The Company is cooperating with a number of private commercial banks which are subject to the regulations of the Ukrainian authorities. Banks' ability to perform in accordance with such regulations is out of control of the Company. Nevertheless if banks fail to comply with the Ukrainian legislation the regulator may impose various sanctions against them which may influence the ability of such banks to provide financing resources or might force the banks to draw back the financial resources provided to the Company if the Company does not fulfil obligations according to the loan agreements.

The Company can not mitigate the risk that the banks may demand early repayment and the Company will not be able to fund refinancing for such funds.

Corporate Governance

The Company has decided to observe the majority of the WSE Corporate Governance Rules included in the Code of Best Practice for WSE Listed Companies to the form and extent determined by the Resolution No. 19/1307/2012 of the Exchange Supervisory Board dated November 21, 2012. However, certain principles apply to the Company accordingly, with due observance of Luxembourg corporate law and the Company's corporate structure, especially the single board structure as opposed to the two-tier system that the WSE Corporate Governance Rules assume. The Company does not have two separate governing bodies (supervisory board and management board) which are obligatory in Polish joint stock companies. Instead, the Board of Directors of the Company performs both the management and supervisory functions. As a result, the Company applies those principles of the WSE Corporate Governance Rules which refer to relations between supervisory board and management board not directly, but accordingly. In all cases, the Company endeavours to create procedures maintaining the spirit of all rules applied accordingly. Therefore, the Company is of an opinion that it complies with the rules that refer to relations between supervisory board and management board or to the functioning of those bodies.

RULE	STATUS IN THE COMPANY
I. Recommendations for Best Practice for Listed Companies
1. A company should pursue a transparent and effective information policy using both traditional methods and modern technologies and latest communication tools ensuring fast, secure and effective access to information. Using such methods to the broadest extent possible, a company should in particular: - maintain a company website whose scope and method of presentation should be based on the model investor relations service available at http://naszmodel.gpw.pl/; - ensure adequate communication with	The Company made the broad use of both traditional and modern methods /i.e. Internet tools/ to ensure effective communication and access to information for shareholders, analysts and investors. The Company's website is not identical with the scope and method of presentation specified by naszmodel.gpw.pl, however the Company has launched website which in Company's opinion meets the requirements for fast and secure communication with stakeholders and is designed to pursue effective information policy.

investors and analysts, and use to this purpose also modern methods of Internet communication.
3. A company should make every effort to ensure that any cancellation of a General Meeting or change of its date should not prevent or restrict the exercise of the shareholders' right to participate in a General Meeting	Complies
4. Where securities issued by a company are traded in different countries (or in different markets) and in different legal systems, the company should strive to ensure that corporate events related to the acquisition of rights by shareholders take place on the same dates in all the countries where such securities are traded	Not applicable, the Company's securities are listed and traded on the WSE only
5. A company should have a remuneration policy and rules of defining the policy. The remuneration policy should in particular determine the form, structure, and level of remuneration of members of supervisory and management bodies. Commission Recommendation of 14 December 2004 fostering an appropriate regime for the remuneration of directors of listed companies (2004/913/EC) and Commission Recommendation of 30 April 2009 complementing that Recommendation (2009/385/EC) should apply in defining the remuneration policy for members of supervisory and management bodies of the company.	Currently, the Company does not have a remuneration policy adopted. The Company does not exclude that the remuneration policy will be adopted by the General Meeting in the future
6. A member of the Supervisory Board should have appropriate expertise and experience and be able to devote the time necessary to perform his or her duties. A member of the Supervisory Board should take relevant action to ensure that the Supervisory Board is informed about issues significant to the company	Complies with the reservation that according to the Luxembourg corporate law there is a single board structure in the Company.
7. Each member of the Supervisory Board should act in the interests of the company and form independent decisions and judgments, and in particular: - refuse to accept unreasonable benefits which could have a negative impact on the independence of his or her opinions and	Complies with the reservation that according to the Luxembourg corporate law there is a single board structure in the Company.

judgments; - raise explicit objections and separate opinions in any case when he or she deems that the decision of the Supervisory Board is contrary to the interest of the company.
8. No shareholder may be given undue preference over other shareholders with regard to transactions and agreements made by the company with shareholders and their related entities	Complies
9. The WSE recommends to public companies and their shareholders that they ensure a balanced proportion of women and men in management and supervisory functions in companies, thus reinforcing the creativity and innovation of the companies' economic business	Currently, the Company does not comply with this recommendation. The Company supports this recommendation however the members of the Board of Directors are appointed by the General Meeting of Shareholders and therefore the compliance with this recommendation depends on the shareholders' future decisions
10. If a company supports different forms or artistic and cultural expression, sport activities, educational or scientific activities, and considers its activity in this area to be a part of its business mission and development strategy, impacting the innovativeness and competitiveness of the enterprise, it is good practice to publish, in a mode adopted by the company, the rules of its activity in this area.	Complies
11. As part of a listed company's due care for the adequate quality of reporting practice, the company should take a position, expressed in a communication published on its website, unless the company considers other measures to be more adequate, wherever with regard to the company: - published information is untrue or partly untrue from the beginning or at a later time; - publicly expressed opinions are not based on material objective grounds from the beginning or as a result of later circumstances. This rule concerns opinions and information expressed publicly by company representatives in the broad sense or by other persons whose statements may have an opinion-making effect, whether such information or opinions contain suggestions advantageous or disadvantageous to the company	Complies
A company should enable its shareholders to exercise the voting right during a General	Currently, the Company complies with this recommendation partially. Articles of

Meeting either in person or through a plenipotentiary, outside the venue of the General Meeting, using electronic communication means.	Association of the Company provide that all the meetings take place in Luxembourg, in the place specified in the convening note and the Company has not implemented the technology enabling electronic communication. The Company however supports its shareholders to exercise their voting rights by authorizing the proxies who are bound by instruction or a third party. The Company does not preclude the possibility of providing shareholders with electronic communication tools during General Meetings in the future.
II. Best Practice for Management Boards of Listed Companies
1. A company should operate a corporate website and publish on it, in addition to information required by legal regulations: 1) basic corporate regulations, in particular the statutes and internal regulations of its governing bodies;	Complies with the reservation that according to the Luxembourg corporate law there is a single board structure in the Company. Currently, the Company has not adopted rules of changing the company authorized to audit financial statements - rule II.1.14). The
2) professional CVs of the members of its governing bodies;	Company does not exclude that the rules will be adopted in the future. The Company has not implemented
2a)on an annual basis, in the fourth quarter – information about the participation of women and men respectively in the Management Board and in the Supervisory Board of the company in the last two years;	registration of General Meetings in audio or video format, nonetheless the Company does not exclude that such rule will be adopted in the future.
3) current and periodic reports;
4) deleted
5) where members of the company's governing body are elected by the General Meeting – the basis for proposed candidates for the company's Management Board and Supervisory Board available to the company, together with the professional CVs of the candidates within a timeframe enabling a review of the documents and an informed decision on a resolution;
6) annual reports on the activity of the Supervisory Board taking account of the work of its committees together with the evaluation of the internal control system and the significant risk management system submitted by the Supervisory Board;
7) shareholders' questions on issues on the agenda submitted before and during a

General Meeting together with answers to those questions;
8) information about the reasons for cancellation of a General Meeting, change of its date or agenda together with grounds;
9) information about breaks in a General Meetings and the grounds of those breaks;
9a) a record of the General Meeting in audio or video format;
10) information on corporate events such as payment of the dividend, or other events leading to the acquisition or limitation of rights of a shareholder, including the deadlines and principles of such operations. Such information should be published within a timeframe enabling investors to make investment decisions;
11) information known to the Management Board based on a statement by a member of the Supervisory Board on any relationship of a member of the Supervisory Board with a shareholder who holds shares representing not less than 5% of all votes at the company's General Meeting;
12) where the company has introduced an employee incentive scheme based on shares or similar instruments – information about the projected cost to be incurred by the company from its introduction;
13) a statement on compliance with the corporate governance rules contained in the last published annual report, as well as the report referred to in § 29.5 of the Exchange Rules, if published;
14) information about the content of the company's internal rule of changing the company authorized to audit financial statements or information about the absence of such rule.
2. A company should ensure that its website is also available in English, at least to the extent described in section II.1.	Complies
3. Before a company executes a significant agreement with a related entity, its Management Board shall request the approval	Not applicable. According to the Luxembourg corporate law there is a single board structure in the Company.

of the transaction/agreement by the Supervisory Board. This condition does not apply to typical transactions made on market terms within the operating business by the company with a subsidiary where the company holds a majority stake. 4. A member of the Management Board should provide notification of any conflicts of interest which have arisen or may arise, to the Management Board and should refrain from taking part in the discussion and from voting on the adoption of a resolution on the issue which gives rise to such a conflict of interest.	Complies with the reservation that according to the Luxembourg corporate law there is a single board structure in the Company. The Articles of Association address the conflict of interest issue in article 14.
6. A General Meeting should be attended by members of the Management Board who can answer questions submitted at the General Meeting.	Complies with the reservation that according to the Luxembourg corporate law there is a single board structure in the Company.
7. A company shall set the place and date of a General Meeting so as to enable the participation of the highest possible number of shareholders.	Complies
8. If a company's Management Board is informed that a General Meeting has been summoned pursuant to Article 399 § 2–4 of the Code of Commercial Partnerships and Companies, the company's Management Board shall immediately perform the actions it is required to take in connection with organizing and conducting a General Meeting. This rule shall also apply if a General Meeting is summoned on the basis of authorization given by the registration court pursuant to Article 400 § 3 of the Code of Commercial Partnerships and Companies.	Complies with the reservation that the Code of Commercial Partnerships and Companies is not applicable to the Luxembourg based companies and according to the Luxembourg corporate law there is a single board structure in the Company. Nonetheless the Articles of Association in article 15.3. states that shareholders representing one tenth of the subscribed share capital may, in compliance with the law of 10 August, as amended, on commercial companies, request the Board of Directors to call a General Meeting of shareholders.
III. Best Practice for Supervisory Board Members
1. In addition to its responsibilities laid down in legal provisions the Supervisory Board should: 1) once a year prepare and present to the Ordinary General Meeting a brief assessment of the company's standing including an evaluation of the internal control system and the significant risk management system; 2) deleted 3) review and present opinions on issues subject to resolutions of the General Meeting.	Not applicable. According to the Luxembourg corporate law there is a single board structure in the Company. The Board of Directors reports are available together with the auditor report and the annual accounts prior to the Annual General Meeting.

2. A member of the Supervisory Board should submit to the company's Management Board information on any relationship with a shareholder who holds shares representing not less than 5% of all votes at the General Meeting. This obligation concerns financial, family, and other relationships which may affect the position of the member of the Supervisory Board on issues decided by the Supervisory Board.	Not applicable. According to the Luxembourg corporate law there is a single board structure in the Company.
3. A General Meeting should be attended by members of the Supervisory Board who can answer questions submitted at the General Meeting.	Complies
4. A member of the Supervisory Board should notify any conflicts of interest which have arisen or may arise to the Supervisory Board and should refrain from taking part in the discussion and from voting on the adoption of a resolution on the issue which gives rise to such a conflict of interest.	Complies with the reservation that according to the Luxembourg corporate law there is a single board structure in the Company. The Articles of Association address the conflict of interest issue in article 14.
5. A member of the Supervisory Board should not resign from this function if this action could have a negative impact on the Supervisory Board's capacity to act, including the adoption of resolutions by the Supervisory Board.	Complies with the reservation that according to the Luxembourg corporate law there is a single board structure in the Company.
6. At least two members of the Supervisory Board should meet the criteria of being independent from the company and entities with significant connections with the company. The independence criteria should be applied under Annex II to the Commission Recommendation of 15 February 2005 on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board. Irrespective of the provisions of point (b) of the said Annex, a person who is an employee of the company or an associated company cannot be deemed to meet the independence criteria described in the Annex. In addition, a relationship with a shareholder precluding the independence of a member of the Supervisory Board as understood in this rule is an actual and significant relationship with any shareholder who has the right to exercise at least 5% of all votes at the General Meeting.	Complies with the reservation that according to the Luxembourg corporate law there is a single board structure in the Company. 2 members of the Board of Directors are independent.
8. Annex I to the Commission	Complies partially. The Board of Directors

Recommendation of 15 February 2005 on the role of non-executive or supervisory directors… should apply to the tasks and the operation of the committees of the Supervisory Board.	established from among its members the Audit Committee. The Company did not establish the Remuneration Committee. The tasks and duties contemplated by a remuneration committee and selection and appointment committee were performed by the entire Board of Directors
9. Execution by the company of an agreement/ transaction with a related entity which meets the conditions of section II.3 requires the approval of the Supervisory Board.	Not applicable. According to the Luxembourg corporate law there is a single board structure in the Company.
IV. Best Practices of Shareholders
1. Presence of representatives of the media should be allowed at General Meetings.	Complies
2. The rules of General Meetings should not restrict the participation of shareholders in General Meetings and the exercising of their rights. Amendments of the rules should take effect at the earliest as of the next General Meeting.	Complies
4. A resolution of the General Meeting concerning an issue of shares with subscription rights should specify the issue price or the mechanism of setting it or obligate the competent body to set it before the date of subscription rights within a timeframe enabling an investment decision.	Complies
5. Resolutions of the General Meeting should allow for a sufficient period of time between decisions causing specific corporate events and the date of setting the rights of shareholders pursuant to such events.	Complies
6. The date of setting the right to dividend and the date of dividend payment should be set so to ensure the shortest possible period between them, in each case not longer than 15 business days. A longer period between these dates requires detailed grounds.	Complies
7. A resolution of the General Meeting concerning a conditional dividend payment may only contain such conditions whose potential fulfillment must take place before the date of setting the right to dividend.	Complies
9. A resolution of the General Meeting to split the nominal value of shares should not set the new nominal value of the shares at a	Complies

level which could result in a very low unit market value of the shares, which could consequently pose a threat to the correct and reliable valuation of the company listed on the Exchange.

10. A company should enable its shareholders to participate in a General Meeting using electronic communication means through: 1) real-life broadcast of General Meetings; 2) real-time bilateral communication where shareholders may take the floor during a General Meeting from a location other than the General Meeting.

Currently, the Company complies with this recommendation partially. Articles of Association of the Company provide that all the meetings take place in Luxembourg, in the place specified in the convening note and the Company has not implemented the technology enabling real-life broadcasting or real-time bilateral communication. The Company however supports its shareholders to exercise their voting rights by authorizing the proxies who are bound by instruction or a third party. The company does not preclude the possibility of providing shareholders with real-time bilateral communication during General Meetings in the future.

Board of Directors

The Company has a one-tier corporate governance structure and is administered and managed by the Board of Directors.

In FY2023 Company's Board of Directors composed of 4 directors. The information below sets forth the names, positions, election date, and terms of office of the members of the Board of Directors, discharging their responsibilities as for reporting date of 30th June 2023.

Name	Position/ Function	Class
	Chairman of the Board of	Class A director
Viktor Vyshnevetskyy	directors, executive director
Oleksandr Reznyk	Executive director	Class A director
Arthur David Johnson	Non-executive independent	Class A director
	director
Diyor Yakubov	Non-executive independent	Class B director
	director

The business address for all directors is: 33 rue du Puits Roman, L-8070 Bertrange, Luxembourg.

According to Articles of Association the number of directors is fixed by General Meeting of Shareholders. The General Meeting of Shareholders may decide to appoint Directors of two different classes, being class A Director(s) and class B Director(s). Any such classification of Directors shall be duly recorded in the minutes of the relevant meeting and the Directors be identified with respect to the class they belong. The Directors are to be appointed by the General Meeting of Shareholder for a period not exceeding six years until their successors are elected. Decision to suspend or dismiss a Director must be adopted by the General Meeting of Shareholders with a majority of more than one-half of all voting rights present or represented.

Committees of the Board of Directors

In FY2011, the Board of Directors has established from among its members the Audit Committee. The Company did not establish the Remuneration Committee. The tasks and duties contemplated by a remuneration committee and selection and appointment committee were performed by the entire Board of Directors.

General Meeting of Shareholders

The General Meeting of Shareholders has the powers conferred upon it by the Luxembourg act dated 10 August 1915 on commercial companies as amended.

In 2022 calendar year the Company had postponed the Annual General meeting and held Annual General Meeting of Shareholders on 21st December 2023.

Equity and ownership structure of the parent company

As at the report's publication date and on the June 30, 2023, share capital of Coal Energy S.A. comprised 45,011,120 shares.

The following changes in the ownership structure occurred during FY2023:

Ownership structure of significant blocks of shares (at least 5% of the total number of votes at the Shareholder Meeting of Coal Energy S.A.) as of the date of releasing this financial report is as follows:

There are no restrictions on transferability of the Company's Shares. According to Articles of Association any transfer of registered shares shall be recorded in the register by the delivery to the Company of an instrument of transfer satisfactory to the Company. There are no holders with special control rights. As at the date of this report there are no agreements between shareholders which are known to the company and may result in restrictions on the transfer of securities or voting right.

The Company may acquire its own Shares to the extent permitted by law. To the extent permitted by Luxembourg law the Board of Directors or as the case may be the Sole Director, is irrevocably authorized and empowered to take any and all steps to execute any and all documents and to do and perform any and all acts for and in the name and on behalf of the Company which may be necessary or advisable in order to effectuate the acquisition of the Shares and the accomplishment and completion of all related action. There are no agreements between the company and its board members or employees providing for compensation if they resign or are made redundant without valid reason or if their employment ceases because of a takeover bid.

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Coal Energy S.A. 2023FY

2023FY

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

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_____________ Business Development Director Oleksandr Reznyk

__________signed_____________ Independent Non-executive Director Arthur David Johnson

Luxembourg, 13 June 2024

__________signed_____________ Independent Non-executive Director Diyor Yakubov

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 1,274 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 2 913 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_____________ Business Development Director Oleksandr Reznyk

__________signed_____________ Independent Non-executive Director Arthur David Johnson

Luxembourg, 13 June 2024

__________signed_____________ Independent Non-executive Director Diyor Yakubov

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
Vyktor 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. 20/1287/2011 of the Exchange Supervisory Board dated 19 October 2011. Code of Best Practice for WSE Listed Companies is available at the official website of the Warsaw Stock Exchange: www.corp-gov.gpw.pl.

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.

COAL ENERGY S.A. Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated)

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 specialrights of control over the Company'sshare capital.

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 Board 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_____________ Business Development Director Oleksandr Reznyk

__________signed_____________ Independent Non-executive Director Arthur David Johnson

Luxembourg, 13 June 2024

__________signed_____________ Independent Non-executive Director Diyor Yakubov

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

	Note	Year ended 30 June 2023 (unaudited)	Year ended 30 June 2022 (unaudited)
Revenue	5	764	2,291
Cost of sales	6	(896)	(2,106)
GROSS PROFIT/(LOSS)		(132)	185
General and administrative expenses	7	(172)	(129)
Selling and distribution expenses	8	-	-
Other operating income/(expenses), net	9	174	302
Recovery/(impairment) of financial assets		(1,273)	(275)
Idle capacity expenses	10	(322)	(145)
OPERATING PROFIT/(LOSS)		(1,725)	(62)
Other non-operating income/(expenses), net	11	(173)	29
Finance income	13	10	11
Finance expenses	14	(921)	(170)
Disposal of subsidiaries	34	(65)	-
PROFIT/(LOSS) BEFORE TAX		(2,874)	(192)
Income tax benefit/(expenses), net	15	(39)	(503)
NET PROFIT/(LOSS)		(2,913)	(695)
NET PROFIT/(LOSS) ATTRIBUTABLE TO:
Equity holders of the parent		(2,887)	(696)
Non-controlling interests		(26)	1
OTHER COMPREHENSIVE INCOME/(LOSS)
Disposal of subsidiaries	34	(335)	-
Effect of currency translation		(1,012)	(428)
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS)		(1,347)	(428)
TOTAL COMPREHENSIVE INCOME/(LOSS)		(4,260)	(1,123)
TOTAL COMPREHENSIVE INCOME/(LOSS) ATTRIBUTABLE TO:
Equity holders of the parent		(4,264)	(1,135)
Non-controlling interests		4	12
EARNINGS PER SHARE
Weighted average number of ordinary shares		45,011,120	45,011,120
BASIC PROFIT/(LOSS) PER ORDINARY SHARE (USD cents)		(6.41)	(1.55)

Basic profit/(loss) per ordinary share is equal to diluted profit/(loss) per ordinary share.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Note	30 June 2023 (unaudited)	30 June 2022 (unaudited)
ASSETS
Non-current assets
Property, plant and equipment 16	3,778	9,227
Intangible assets 17	-	103
Right-of-use assets 26	3,262	3,974
Financial assets 18	-	872
Deferred tax assets 15	-	-
	7,040	14,176
Current assets
Inventories 19	1,495	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
	2,800	4,711
TOTAL ASSETS	9,840	18,887
EQUITY
Share capital 24	450	450
Share premium	77,578	77,578
Retained earnings	(4,419)	(1,532)
Currency translation reserve	(75,265)	(73,902)
Equity attributable to equity holders of the parent	(1,656)	2,594
Non-controlling interest	(139)	(129)
TOTAL EQUITY	(1,795)	2,465
LIABILITIES
Non-current liabilities
Lease liabilities 26	1,880	2,085
Defined benefit obligation 27	477	623
Provisions 28	971	1,042
Deferred tax liabilities 15	147	195
	3,475	3,945
Current liabilities
Loans and borrowings 25	864	934
Lease liabilities 26	369	409
Defined benefit obligation 27	950	1,197
Trade and other payables 29	2,234	5,698
Income tax payables 15	2,545	2,542
Other tax payables 22	1,198	1,697
	8,160	12,477
TOTAL LIABILITIES	11,635	16,422
TOTAL EQUITY AND LIABILITIES	9,840	18,887

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Equity attributable to equity holders of the parent
	Share capital	Share premium	Retained earnings	Currency translation reserve	Total	Non controlling interest	Total equity
30 June 2021	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	450	77,578	(1,532)	(73,902)	2,594	(129)	2,465
Profit/(loss) for the year	-	-	(2,887)	-	(2,887)	(26)	(2,913)
Other comprehensive income/(loss)	-	-	-	(1,042)	(1,042)	30	(1,012)
Disposal of subsidiaries	-	-	-	(335)	(335)	-	(335)
Equity reclassifications	-	-	-	14	14	(14)	-
30 June 2023	450	77,578	(4,419)	(75,265)	(1,656)	(139)	(1,795)

Notes on pages 11 to 31 are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS

	Note	Year ended 30 June 2023 (unaudited)	Year ended 30 June 2022 (unaudited)
OPERATING ACTIVITIES
Profit/(loss) before tax		(2,874)	(192)
Adjustments to reconcile profit before tax to net cash flows:
Depreciation and amortization expenses	12	451	831
Finance income	13	(10)	(11)
Finance expenses	14	921	170
Impairment of prepayments made	9	(58)	(46)
Impairment of VAT	11	182	-
Loss/(gain) from disposal of non-current assets	11	5	26
Accounts payable write-off		(340)	(241)
Impairment/(recovery) of financial assets		1,273	275
Loss/(gain) from operational exchange differences	9	72	-
Disposal of subsidiaries	34	65	-
		(313)	812
Working capital adjustments:
Changes in trade and other receivables		(3,135)	(2,005)
Changes in prepayments made and prepaid expenses		58	45
Changes in inventories		-	(146)
Changes in trade and other payables		3,478	1,081
Changes in tax balances		(86)	213
		2	-
Income tax paid	15	-	-
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		3	3
Cash disposed with subsidiaries	34	-	-
Cash received as consideration of subsidiaries disposal	34	-	-
Effect of currency translation		-	-
Cash and cash equivalents at the end of the period		5	3

Notes on pages 11 to 31 are an integral part of these consolidated financial statements.

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 Moskovskaya"	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. 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 Group`s 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 2 913 thousand of net loss (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 Moskovskaya" since the full-scale war actions in Ukraine.

As of the date of publication of these financial statements, the Management had no ability to accurately evaluate losses caused by invasion factors. Management makes the best possible steps to maintain suspended activity.

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.

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.

2 BASIS OF PREPARATION OF THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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.

(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.

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	40 - 80 years
Buildings and constructions	35 - 50 years
Machinery, equipment and vehicles	5 - 10 years
Other	3 - 5 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.

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.

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.

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 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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.

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 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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.

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.

4 SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES (CONTINUED)

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.

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	-	4	-	764
	760	-	4	-	764
Profit/(loss) before tax of the segment	(2,041)	100	(933)	-	(2,874)
Depreciation and amortization expenses	(451)	-	-	-	(451)
Defined benefits plan obligations expenses	-	-	-	-	-
Operational assets	8,535	-	1,300	5	9,840
Operational liabilities	6,505	-	1,240	3,890	11,635
Disclosure of other information
Capital expenditure	-	-	-	-	-

As of 30 June 2023, assets of segments don't include cash (USD 5 thousand), since management of these assets is carried out at the Group level.

As of 30 June 2023, liabilities of segments do not include deferred tax liabilities (USD 147 thousand), other taxes payable (USD 1,198 thousand), income tax payables (USD 2,545 thousand), since management of these liabilities is carried out at the Group level.

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.

COAL ENERGY S.A. Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated)

	Year ended 30 June 2023	Year ended 30 June 2022
Revenue received from sale of finished goods	760	2,284
Revenue from trading activity	-	-
Revenue from other activity	4	7
	764	2,291

During the reviewed periods sales were performed on the territory of Ukraine exclusively.

All non-current assets of the Group are located in Ukraine.

6 COST OF SALES

	Year ended 30 June 2023	Year ended 30 June 2022
Cost of merchandising inventory	-	-
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)

7 GENERAL AND ADMINISTRATIVE EXPENSES

	Year ended	Year ended
	30 June 2023	30 June 2022
Subcontractors services	(138)	(61)
Wages and salaries of administrative personnel	(23)	(60)
Depreciation and amortization expenses	-	(1)
Other expenses	(11)	(7)
	(172)	(129)

8 SELLING AND DISTRIBUTION EXPENSES

	Year ended	Year ended
	30 June 2023	30 June 2022
Delivery costs	-	-
Subcontractors services	-	-
Wages and salaries of distribution personnel	-	-
Depreciation and amortization expenses	-	-
	-	-

9 OTHER OPERATING INCOME/(EXPENSES), NET

	Year ended 30 June 2023	Year ended 30 June 2022
Doubtful debts income/(expenses)	58	46
Writing-off of VAT	(182)	(2)
Income from lease	14	34
Accounts payable write-off	340	241
Gain/(loss) from operational exchange differences	(72)	-
Other operating expenses	-	(17)
Other operating income	16	-
	174	302

10 IDLE CAPACITY EXPENSES

	Year ended	Year ended
	30 June 2023	30 June 2022
Depreciation and amortization expenses	(302)	(103)
Wages and salaries	(10)	(4)
Energy supply	(19)	(33)
Other expenses	9	(5)
	(322)	(145)

COAL ENERGY S.A. Consolidated Financial Statements for the year ended 30 June 2023 (all amounts in USD thousand, unless otherwise stated)

11 OTHER NON-OPERATING INCOME/(EXPENSES), NET

	Year ended	Year ended
	30 June 2023	30 June 2022
Gain/(loss) on disposal of non-current assets	(5)	(43)
Depreciation of non-operating property, plant and equipment	-	(7)
Other non-operating income	-	79
Other non-operating expenses	(168)	-
	(173)	29

12 DEPRECIATION AND AMORTIZATION EXPENSES

	Year ended 30 June 2023	Year ended 30 June 2022
Depreciation
Idle capacity: depreciation expenses	(302)	(102)
Cost of sales	(143)	(713)
Selling and distribution expenses	-	-
General and administrative expenses	-	(1)
	(445)	(816)
Amortization
Idle capacity: amortization expenses	-	(1)
General and administrative expenses	-	-
Cost of sales	(6)	(14)
	(6)	(15)
	(451)	(831)

13 FINANCE INCOME
	Year ended 30 June 2023	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

14 FINANCE EXPENSES

	Year ended 30 June 2023	Year ended 30 June 2022
Loss from non-operational exchange differences	(761)	-
Expenses from measurement of financial instruments at amortized cost	(160)	(170)
	(921)	(170)

15 INCOME TAX

	Year ended	Year ended
	30 June 2023	30 June 2022
Current income tax	-	(309)
Deferred tax	(39)	(194)
Income tax expenses	(39)	(503)
At the beginning of the year	2,542	2,233
Current income tax charge	-	309
Disposal of subsidiaries	-	-
Effect of translation to presentation currency	3	-
At the end of the year	2,545	2,542
Effect
Profit/(Loss) before tax	(2,874)	(192)
Theoretical income tax (18%)	517	35
Disposal of subsidiaries effect	(12)	-
Effect of different statutory tax rates of overseas jurisdictions	(222)	12
Tax effect of permanent differences	(283)	(356)
Income tax income/(expenses)	-	(309)

According to the Tax Code of Ukraine, a tax rate of 18% is applied starting from 1 January 2014.

15 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)	Disposal of subsidiary	Effect of currency translation	30 June 2023
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)	(39)	47	49	(187)
Netting on subsidiary level	49	-	1	(10)	40
Total deferred tax liabilities	(195)	(39)	48	39	(147)
Net deferred tax asset/(liability)	(195)	(39)	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)

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
Additions	-	-	-	-	-	-
Disposals	-	-	-	-	-	-
Disposal of subsidiaries	(3,835)	(453)	(845)	(31)	(22)	(5,186)
Effect of currency translation	(1,337)	(288)	(383)	(14)	(587)	5,246
30 June 2023	1,513	700	684	26	2,323	5,246
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)
Disposals	-	-	-	-	-	-
Disposal of subsidiaries	1,097	234	493	30	-	1,854
Effect of currency translation	349	127	278	14	-	768
30 June 2023	(448)	(333)	(662)	(25)	-	(1,468)
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	1,065	367	22	1	2,323	3,778

16 PROPERTY, PLANT AND EQUIPMENT (continued)

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. The Group's mining activity currently relates to exploitation of the existing mines and mined beds. As of 30 June 2023 and 30 June 2022, there were no contractual commitments for property, plant and equipment of the Group.

As of the date of publication of these financial statements, the Group`s management has no possibility to estimate impact of military conflict on impairment of property, plant and equipment considering uncertainties of their future economic benefits.

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
Current financial assets
Loans issued	-	-
Allowance for loans issued	-	-
	-	-

Held-to maturity investments are non-interest notes, issued to related parties and discounted using 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	30 June 2022
Merchandise	3	4
Finished goods	44	238
Raw materials	998	1,272
Spare parts	444	555
Other inventories	6	7
	1,495	2,076

As of 30 June 2023 and 30 June 2022, loans were not secured by inventories. As of the date of publication of financial statements, Management has no possibility to assess inventory damage and theft probability.

COAL ENERGY S.A. 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	30 June 2022
Trade receivables	2,300	4,102
ECL allowance for trade receivables	(1,000)	(2,124)
Other receivables	5,400	4,969
ECL allowance for other receivables	(5,400)	(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	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	-
Use of allowances	-	-
Effect of currency translation	1,218	282
Balance as of the end of the period	(6,400)	(7,093)

21 PREPAYMENTS AND PREPAID EXPENSES

	30 June 2023	30 June 2022
Advances paid	1,724	2,220
Allowances for prepayments made	(1,724)	(2,219)
	-	1

22 TAXES RECEIVABLE AND PAYABLE

	30 June 2023	30 June 2022
Current taxes receivable
VAT recoverable	-	653
	-	653
Current taxes payable
VAT payable	553	648
Payable for wages and salaries related taxes	346	623
Payables for other taxes	299	426
	1,198	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 loans and borrowings
Current borrowings	864	864
Notes issued	-	70
Total current loans and borrowings	864	934

Notes issued are presented by the interest-free notes. These notes are reflected at amortized cost using effective interest rate of 18%.

26 LEASE

Lease liabilities

	30 June 2023	30 June 2022
Due within 1 year	369	409
From 2 to 5 years	962	1,066
More than 5 years	918	1,019
	2,249	2,494

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

Historical cost	Total
30 June 2021	7,619
Remeasurement	376
Disposals	(118)
Effect of currency translation	(482)
30 June 2022	7,395
Remeasurement	255
Disposals	(55)
Effect of currency translation	(1,480)
30 June 2023	6,115
Accumulated depreciation
30 June 2021	(3,593)
Depreciation charge	(201)
Disposals	101
Effect of currency translation	272
30 June 2022	(3,421)
Depreciation charge	(169)
Disposals	50
Effect of currency translation	687
30 June 2023	(2,853)
Net book value
30 June 2021	4,026
30 June 2022	3,974

27 DEFINED BENEFIT OBLIGATIONS

	30 June 2023	30 June 2022
Discounted further retirement benefits	477	623
Current liabilities to statutory fund	950	1,197
	1,427	1,820

30 June 2023 3,262

Changes in defined benefit obligations are presented as follows:

	30 June 2023	30 June 2022
Balance as of the beginning of the period	1,820	1,959
Disposal of subsidiaries	(188)	-
Repayments	-	-
Retirement benefits revaluation	-	-
Effect of currency translation	(205)	(139)
Balance as of the end of the period	1,427	1,820

28 PROVISIONS

Non-current provisions	30 June 2023	30 June 2022
Provision for land restoration	971	1,024
Dismantling provision	-	18
	971	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 bases on estimated prices of decommissions of property, plant and equipment and land restoration under waste dumps procedures. Discount rate used by the Group is 18%.

Changes in non-current provisions are presented as follows:

	Provision for land	Dismantling	Total
	restoration	provision
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)
30 June 2023	971	-	971

29 TRADE AND OTHER PAYABLES

	30 June 2023	30 June 2022
Trade payables	1,179	3,592
Payables for unused vacations	7	27
Payables for wages and salaries	694	969
Other payables	354	1,059
Advances received	-	51
	2,234	5,698

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 sales of finished products, goods	-	-
Income from rendering of services	-	54
Purchases of inventories	-	-

Details of balances between entities - related parties under common control with the Companies of the Group are disclosed below:

	30 June 2023	30 June 2022
Held-to-maturity investments	-	152
Trade receivables	-	1
Allowances for trade receivables	-	(1)
Prepayments made	-	19
Allowances for prepayments made	-	(19)
Other receivables	878	1,236
Allowance for other receivables	(878)	(1,236)
Other payables	246	298
Current notes issued	-	70
Trade payables	3	3

30 TRANSACTIONS WITH RELATED PARTIES (continued)

Remuneration of key management personnel

30 June 2023 30 June 2022	Year ended
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	Year ended 30 June 2022
Wages and salaries of operating personnel	16	106
Wages and salaries of administrative personnel	23	60
Wages and salaries of distribution personnel	-	-
Wages and salaries of idle capacity personnel	10	4
	49	170
The average number of employees, persons	47	67

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 customer`s 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.

31 FINANCIAL RISKS MANAGEMENT (continued)

Carrying amount of financial assets reflect maximum exposure credit risk is presented as follows:

	30 June 2023	30 June 2022
Trade receivables	2,300	4,102
Other receivables	5,400	4,969
Held-to-maturity investments	-	152
Loans issued	-	720
Cash in bank	5	2
	7,705	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.

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.

		Increase/decreases	Effect on profit before
	30 June 2023	in exchange rate	tax
		+20%	(173)
Loans and borrowings	864	(5%)	43
		+20%	(75)
Trade and other payables	376	(5%)	19
Total effect of changes in exchange rate		+20%	(248)
		(5%)	62
	30 June 2022	Increase/decreases	Effect on profit before
		in exchange rate	tax
Loans and borrowings	934	+20%	(187)
		(5%)	47
		+20%	(92)
Trade and other payables	461	(5%)	23
Total effect of changes in exchange rate		+20%	(279)

31 FINANCIAL RISKS MANAGEMENT (continued)

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	30 June 2022	30 June 2023	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	1,533	4,651	1,533	4,651

The following methods and assumption were used to estimate fair values:

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	Tekhinovatsiya
	Cyprus Limited	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)

35 SUBSEQUENT EVENTS

As of 4 July 2023, Coal Energy Trading Limited has been dissolved. Detailed description of the following 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 following 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 following 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.