Columbus Energy S.A.

Quarterly Report • Apr 8, 2021

Unaudited interim consolidated report for the six months FY2021 ended 31st December 2020

Dear Ladies and Gentlemen,

Herewith we are presenting our unaudited interim consolidated financial report for the first six months of FY2021 (1H FY2021) and 2Q FY2021, ended 31st December 2020.

Ukrainian macroeconomic indicators remained under influence of COVID-19 pandemic and demonstrated decline in line with expert's forecasts. The decline of real gross domestic product (GDP) of Ukraine in 2020 is estimated at 4.4%. According National Bank of Ukraine after passing through a strict quarantine phase, the drop in GDP slowed to 3.5% y-o-y in the third quarter, this trend continued in the fourth quarter.

On the first half of FY 2021 operating and financial results of the Company also were affected by the pandemic of COVID-19, Ukrainian government implemented quarantine measures and operational activities were reduced to the level of maintaining the standby mode: ventilation of underground mine workings, pumping out groundwater, monitoring the state of the mine atmosphere.

At the same time for further development of the business the Management committed the decision to restructure the business and alienate assets located in the military conflict zone in the territory which is not controlled by the Ukrainian authorities. Following this strategy the Company sold the production assets LLC Donprombiznes, LLC Eximenergo, LLC Donugletekhinvest, LLC Coal Energy Ukraine, LLC Ugledobycha, LLC Donantracit in the 1H FY2021. Subsequently restructuring process was completed in 3Q FY2021.

Summarized highlights of the 2Q FY2021 and 1H FY2021 are presented below:

• Coal volume sales. In the 2Q FY2021 total coal volume sales composed 1.7 thousand tonnes increasing by 21.4% q-o-q (1.3 thousand tonnes in 1Q FY2021).For the 1H FY2021 coal volume sales composed 3.0 thousand tonnes or decreased by 92.2% y-o-y (38.3 thousand tonnes in 1H FY2021).
• Revenue from coal sales. In the 2Q FY2021 coal sales revenue composed US\$70 thousand demonstrating increase from US\$56 thousand in 1Q FY2021 or by 25.0% q-oq. For the 1H FY2021 revenue from coal sales composed US\$126 thousand as opposed to US\$3.5 million in 1H FY2020.
• EBITDA. In the 2Q FY2021 the Company recorded negative EBITDA of US\$0.5 million, while for the 1H FY2021 negative EBITDA composed US\$0.7 million.

The Company has people's health and safety as a top priority and in this regard, operates in accordance with the government requirements regarding industrial safety measures related to the COVID-19 pandemic. Despite the challenges faced by the Company in 1H FY2021, management expects recovery of operational activity in 2H FY2021, meanwhile development of coal mining assets located in the territory which is under control of the Ukrainian authorities - CwAL LE "Mine St.Matrona Moskovskaya" and Tekhinovatsiya LLC remains the priority.

Viktor Vyshnevetskyy Chairman of the Board of Directors and Chief Executive Officer

General market and economic overview (on available statistical information)

In 2019 calendar year coal mining companies in Ukraine produced 28.8 million tonnes of ROM coal thus general coal output declined by 7.7% y-o-y, thermal coal output decreased by 12.3% yo-y while coking coal output increased by 10.3% y-o-y. Along with that Ukraine decreased import of coal down to of 16.9 million tonnes in 2020 calendar year or by 19.6% y-o-y.

At the same time in 2020 calendar year electricity production in Ukraine decreased by 3.3% y-oy. While share of TPP in energy balance of Ukraine composed 35.2% (decreased from 36.3% in 2019).

Ukrainian coking plants in 2020 calendar year consumed 13.3 million tonnes of coals. Share of imported coals in the total supply volume for mentioned period amounted to 72.8% against 74.7% for the same period of 2019. As of 2020 calendar year steel production in Ukraine slightly decreased by 1.1% y-o-y and composed 20.6 million tonnes while export of metal products decreased by 12.0% y-o-y (in monetary terms). According to forecasts of The World Steel Association (WSA), global steel demand will recover in 2021 by 9.2% y-o-y.

Outlook for Ukraine economy for 2020 calendar year remains moderate. According to the World Bank estimations gross domestic product (GDP) of Ukraine in 2021 will demonstrate growth by 3.8%, and inflation will compose around 5.0%. National Bank of Ukraine expects that main driver for economical growth will be domestic demand due to rising real incomes. At the same deterioration of the epidemiological situation (strengthening of quarantine measures), significant weakening of external demand for Ukrainian exports, as well as an imbalance in public finances are the key risks for the implementation of macro forecasts for the development of the Ukrainian economy.

Review of the financial and operational results of Coal Energy S.A. including parent company and its subsidiaries (hereinafter "Company") for the six months (1H) FY2021 and 2Q FY2021.

in million of US\$	2Q FY20201	1Q FY2021	change q-o-q	1H FY2021	1H FY2020	Relative change y-o-y
Revenue	0.2	0.1	100.0%	0.3	3.5	(91.4%)
Gross profit/(loss)	0.1	0.03	233.3%	0.1	0.2	(50.0%)
EBIT	(1.1)	(0.7)	n/a	(1.8)	(0.7)	n/a
EBITDA	(0.5)	(0.1)	n/a	(0.7)	0.7	n/a
Net profit	47.3	(2.8)	n/a	44.4	39.0	13.8%

The following table summarizes the Company's key margins and ratios for the 2Q FY2021, the 1Q FY2021, 1H FY2021 and 1H FY2020 (numbers are rounded):

COAL ENERGY S.A., 1H FY2021 REPORT

Revenue

For the reporting six months total revenue comprised US\$0.3 million as opposed to US\$3.5 million for the 1H FY2020 demonstrating decline by 91.4% y-o-y due to decreased production and sales volumes under influence of quarantine measures and restrictions. On quarterly basis total revenue slightly improved and comprised US\$0.2 million in 2Q FY2021 as compared to US\$0.1 million in 1Q FY2021.

Coal sales volumes dynamics are presented in the table below (numbers are rounded):

in thousand tonnes	2Q FY2021	1Q FY2021	change in %	1H FY2021	1H FY2020	change in %
Thermal	-	-	n/a	-	11.5	(100.0%)
Coking	1.7	1.4	21.4%	3.1	67.5	(95.4%)
Total	1.7	1.4	21.4%	3.1	79.0	(96.1%)

Coking coal sales composed 1.7 thousand tonnes in the 2Q FY2021 thus increasing q-o-q and composed 3.1 thousand tonnes in the 1H FY2021, declining by 95.4% y-o-y under lower demand for coal and decrease in production volumes.

Cost of sales and cash cost of production

The following table links cost of sales with total cash cost of production in each business segment of the Company in the 2Q FY2021 and 1Q FY2021:

in thousand of US\$	2Q FY2021	1Q FY2021
Cost of sales	138	43
Less:
Cost of merchandising inventory	81	-
Change in inventories	57	43
Depreciation and amortization	-	-
Total cash cost of production	-	-

Cost of sales includes cost of finished products previously formed, as operational activity was idled during the reporting period.

Idle capacity expenses

Idle capacity expenses increased by 50.0% y-o-y and comprised US\$1.5 million for the 1H FY2021 as opposed to US\$1.0 million for the 1H FY2020. As informed earlier for the sake of the employees' safety and due to damage and destruction of some assets given the continued military conflict in the region the management decided to limit production on some of the underground mining and coal processing assets resulting in the idle capacity expenses.

Gross profit

Gross loss composed US\$0.1 million for the reporting six months of FY2021 as opposed to US\$0.2 million in the 1H FY2020 demonstrating a decrease by 50.0% y-o-y. While in the 2Q FY2021 gross loss comprised US\$0.06 million as opposed to US\$0.03 million of gross profit in the 1Q FY2021.

Operating profit

For the 1H FY2021 the Company recorded US\$1.8 million of operating loss, as opposed to US\$0.7 million of loss for the 1H FY2020. Meanwhile the Company reported operating loss of US\$1.1 million for the 2Q FY2021 as compared to operating loss of US\$0.7 million for the 1Q FY2021.

Financial costs

For the reporting six months financial costs reached US\$3.2 million as compared to US\$4.5 million for the 1H FY2020, on the quarterly basis financial costs decreased down to US\$0.7 million in 2Q FY2021 as opposed to US\$2.5 million in the 1Q FY2021 remaining under influence of interest expenses and partly covered by gain from non-operating exchange differences included into finance income.

Net profit/ loss

The Company recorded net profit for the 1H FY2021 amounting to US\$44.4 million as compared to US\$39.1 million of net loss for the 1H FY2020. The Company's net profit for the 2Q FY2021 comprised US\$47.3 million as a result of disposal of subsidiaries (LLC Donprombiznes, LLC Eximenergo, LLC Donugletekhinvest, LLC Coal Energy Ukraine, LLC Ugledobycha, LLC Donantracit).

Production results

Operational activities were reduced to the level of maintaining/standby mode: ventilation of underground mine workings, pumping out groundwater, monitoring the state of the mine atmosphere.

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. Though Ukrainian coal market is a bit isolated, still global financial and economic crises may influence the Ukrainian coal prices.

To mitigate the price risk and risk of lowering demand, the Company endeavours to diversify its customer base both on local and export markets and aims to sign long-term framework contracts for coal supply. While prices are beyond control of the Company we constantly strive to lower and maintain low cost of production with the same level of operations quality.

The Company is subject to particular demands from customers which vary from customer to customer from product to product and from time to time

As the customer may require coal with higher efficiency characteristics the increased demand for higher grade coal may reduce demand and contract prices for coal with reduced energy efficiency.

COAL ENERGY S.A., 1H FY2021 REPORT

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. Changes in costs of the Group's mining and processing operations could occur as a result of unforeseen events and consequently result in changes in profitability or the feasibility and cost expectations in mining and processing existing reserves. Many of these changes may be beyond the Company's control.

Cost of mining operations per tonne as conditionally fixed (energy, water drainage, ventilation system, etc.) can not be reduced proportionally with the reduction of coal sales as the case may be. These costs need to be incurred in order to maintain certain safety of operations and to secure the Company's ability to increase production after the market revival. If sales for some particular coal grades from a particular asset are not expected to regain back their volume and price the Company may take decision to postpone mining operations on that asset and incur repairing and supportive works and hence incurring idle capacity expenses. Returning to the previous production levels may require additional capital investments amount of which can not be estimated reliably at the moment.

The risk has been realized as most of the Company's assets incurred various levels of damage due to military conflict in the region of assets location. Hence various level of reconstruction for renovation of mining and coal waste processing will be needed. Exact amounts are still to be estimated.

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 risk has been realized: during the recent years local currency has devaluated significantly. Such situation caused huge instability and uncertainty in banking sector; new loan facilities are very limited. Company maintains a constant dialog with its existing creditors. The majority of existing loan facilities is either in the process of restructuring or in the "on hold" status (creditors

COAL ENERGY S.A., 1H FY2021 REPORT

recognize the restructuring necessity but the terms could be determined only after the cease-fire in the region).

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

Failure to achieve political consensus necessary to support and implement reforms and any resulting instability could adversely affect the country's macroeconomic indices, economic growth, business climate, social and living standards, postpone business decisions by customer and major industrial groups. Such increased uncertainties will definitely affect the industrial output level in the country, electricity, heat and steel production and consumption as well as construction plans and metallurgic industry performance (being directly or indirectly the core consumers for the Company's products), tax payments to the state budget. The military conflict in the region of the Company's assets allocation may lead to damages to assets and inventories. Furthermore, depending on the severity of the conflict the assets/inventories may be damaged in scope which will make it impossible or economically not viable to restore them.

The realization of the risk is considered to be high. Mitigation of the risk is mainly outside of control of the Company on macro level.

Liquidity risk

As one of the major consequences of decreasing prices and lowering demand for coal is that the Company may need additional means to promote sales, i.e. providing customers with favourable trade credit terms, hence increasing working capital tied up mostly in the trade account receivables. If financial resources from lending institutions are available these additional working capital amounts could be financed respectively. 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. In the situation of absence of bank financing to cover the increased trade credit conditions the Company will be forced to decrease sales.

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.

CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED DECEMBER 31, 2020

1HY2021FY

Coal Energy S.A. 1HY2021FY

CONTENTS	PAGE
Statement of management responsibility	3
Management report	4
Consolidated statement of profit or loss and other comprehensive income	5
Consolidated statement of financial position	6
Consolidated statement of changes in equity	7
Consolidated statement of cash flows	8
Notes to consolidated financial statements	9

STATEMENT OF MANAGEMENT RESPONSIBILITY

To the best of our knowledge, consolidated financial statements as of 31 December 2020 of Coal Energy S.A. 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 result of its operations for the six months ended 31 December 2020 as required under the applicable Law. The interim management report includes a fair review of the information required under the applicable Law.

While preparing these consolidated financial statements, the Management 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.

Management confirms that it has complied with the above mentioned principles in preparing the consolidated financial statements of the Group.

The Management 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.

On behalf of management

Directors A: Directors B:

__________signed_____________ Chairman of the Board of Directors Viktor Vyshnevetskyy

__________signed_____________ Independent Non-executive Director Diyor Yakubov

__________signed_____________ Business Development Director Oleksandr Reznyk

__________signed_____________ Independent Non-executive Director Arthur David Johnson

Luxembourg, 8 April 2021

COAL ENERGY S.A. MANAGEMENT REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2020

Management of the Company hereby presents its interim consolidated financial statements for the six months on 31 December 2020.

1. Results and developments during the six months ended on 31 December 2020.

For the six months ended on 31 December 2020 the Group recorded an EBITDA loss of USD 677 thousand (EBITDA profit for the six months ended 31 December 2019 USD 669 thousand). After depreciation, amortization, finance costs, finance income and other non-operating income and expenses the final profit for the six months ended 31 December 2019 after taxation was USD 44,445 thousand (profit for the six months ended 31 December 2019 USD 39,061 thousand).

2. Future developments of the Group.

The Group is optimizing internal reserves and is considering remaining options for funding its operations to cover liquidity needs in the environment of continuing military conflict in the Eastern Ukraine.

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 period ended 31 December 2020, the Company 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.

The Group does not use hedging derivatives.

For Coal Energy S.A.: Directors A: Directors B:

__________signed_____________ Chairman of the Board of Directors Viktor Vyshnevetskyy

__________signed_____________ Independent Non-executive Director Diyor Yakubov

__________signed_____________ Business Development Director Oleksandr Reznyk

__________signed_____________ Independent Non-Executive Director Arthur David Johnson

Luxembourg, 8 April 2021

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Revenue 5 272 200 3,693 3,500 793 Cost of sales 6 (181) (138) (4,431) (3,346) (980) GROSS PROFIT/(LOSS) 91 62 (738) 154 (187) General and administrative expenses 7 (42) (26) (402) (255) (200) Selling and distribution expenses 8 (1) - (55) (52) (16) Other operating income/(expenses), net 9 (371) (375) 372 467 (68) Idle capacity expenses 9.1 (1,493) (745) (2,032) (988) (504) OPERATING PROFIT/(LOSS) (1,816) (1,084) (2,855) (674) (975) Other non-operating income/(expenses), net 10 (149) (305) (3,371) (1,978) (758) Finance income 12 456 206 9,699 6,861 2,141 Finance expenses 13 (3,166) (676) (11,796) (4,499) (2,784) Disposal of subsidiaries 30 49,018 49,018 38,446 38,446 38,446 PROFIT/(LOSS) BEFORE TAX 44,343 47,159 30,123 38,156 36,070 Income tax benefit/(expenses), net 14 102 102 993 905 760 NET PROFIT/(LOSS) 44,445 47,261 31,116 39,061 36,830 NET PROFIT/(LOSS) ATTRIBUTABLE TO: Equity holders of the parent 44,375 47,174 31,065 38 982 36,863 Non-controlling interests 70 87 51 79 (33) OTHER COMPREHENSIVE INCOME/(LOSS) Effect of foreign currency translation 3,110 5,641 989 (3,639) (1,217) Reclassification of currency translation reserve 30 (247) (247) 318 989 989 TOTAL OTHER COMPREHENSIVE INCOME/(LOSS) 2,863 5,394 1,307 (2,650) (228) TOTAL COMPREHENSIVE INCOME/(LOSS) 47,308 52,655 32,423 36,411 36,602 TOTAL COMPREHENSIVE INCOME/(LOSS) ATTRIBUTABLE TO: Equity holders of the parent 47,287 52,615 32,402 36,412 36,620 Non-controlling interests 21 40 21 (1) (18) EARNINGS PER SHARE Weighted average number of ordinary shares 45,011,120 45,011,120 45,011,120 45,011,120 45,011,120	Note	6 months ended 31 December 2020	3 months ended 31 December 2020	12 months ended 30 June 2020 (unaudited)	6 months ended 31 December 2019	3 months ended 31 December 2019
BASIC PROFIT/(LOSS) PER ORDINARY SHARE (USD cents) 98.59 104.81 69.02 86.81 81.90

Basic earnings per ordinary share are equal to diluted earnings per ordinary share.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		As at 31	As at 30 June	As at 31
	Note	December 2020	2020 (unaudited)	December 2019
ASSETS
Non-current assets
Property, plant and equipment	15	13,939	25,645	30,161
Intangible assets	16	310	495	728
Right-of-use assets	25	3,479	3,686	4,143
Financial assets	17	82,713	43,892	43,908
Deferred tax assets	14	1,881	2,448	2,651
		102,322	76,166	81,601
Current assets
Inventories	18	9,583	23,869	26,904
Trade and other receivables	19	11,793	20,747	19,039
Prepayments and prepaid expenses	20	1,775	3,071	3,521
Other taxes receivables	21	713	344	354
Promissory notes issued		537	-	-
Cash and cash equivalents	22	2	16	8
		24,406	48,047	49,826
TOTAL ASSETS		126,725	124,213	131,427
EQUITY
Share capital	23	450	450	450
Share premium		77,578	77,578	77,578
Retained earnings		(3,366)	(47,452)	(39,535)
Currency translation reserve		(67,814)	(70,726)	(74,633)
Equity attributable to equity holders of the parent		6,848	(40,150)	(36,140)
Non-controlling interest		(559)	(869)	(891)
TOTAL EQUITY		6,289	(41,019)	(37,031)
LIABILITIES
Non-current liabilities
Loans and borrowings	24	-	-	-
Lease liabilities	25	3,227	3,418	3,852
Defined benefit obligation		3,969	8,970	10,112
Provisions	26	2,156	2,729	2,980
Deferred tax liabilities	14	-	11	4
		9,352	15,128	16,948
Current liabilities
Loans and borrowings	24	55,122	64,754	65,242
Lease liabilities	25	253	268	302
Trade and other payables	27	52,114	81,362	80,372
Income tax payables		1,758	1,420	1,593
Provisions	26	69	1,901	2,143
Other tax payables	21	1,738	399	1,858
		111,084	150,104	151,510
TOTAL LIABILITIES		120,436	165,232	168,458
TOTAL EQUITY AND LIABILITIES		126,725	124,213	131,427

Notes on pages 9 to 27 are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Equity attributable to equity holders of the parent
	Share capital	Share premium	Retained earnings	Currency translation reserve	Total	NCI	Total equity
As at 30 June 2019	450	77,578	(78,185)	(72,063)	(72,220)	(1,222)	(73,442)
Profit/(loss) for the year	-	-	31,065	-	31,065	51	31,116
Other comprehensive income/(loss)	-	-	-	348	348	(30)	318
Disposal of subsidiary effect	-	-	(332)	989	657	332	989
As at 30 June 2020	450	77,578	(47,452)	(70,726)	(40,150)	(869)	(41,019)
Profit/(loss) for the period	-	-	44,375	-	44,375	70	44,445
Other comprehensive income/(loss)	-	-	-	3,159	3,159	(49)	3,110
Disposal of subsidiaries effect	-	-	(289)	(247)	(536)	289	(247)
As at 31 December 2020	450	77,578	(3,366)	(67,814)	6,848	(559)	6,289

Notes on pages 9 to 27 are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS

	Note	6 months ended 31 December 2020	12 months ended 30 June 2020 (unaudited)	6 months ended 31 December 2019
OPERATING ACTIVITIES
Profit/(loss) before tax		44,343	30,123	38,982
Adjustments to reconcile profit before tax to net cash flows:
Depreciation and amortization expenses	11	1,139	2,831	1,343
Finance income	12	(456)	(9,699)	(6,861)
Finance costs	13	3,166	11,796	4,499
Disposal of subsidiaries	30	(49,018)	(329)	(38,446)
Expenses for doubtful debts/(Recovery of doubtful debts)	9	368	-	(445)
Writing-off of non-current assets	10	-	(58)	-
(Profit)/Loss from exchange differences	9	-	-	33
Movements in defined benefits plan obligations		-	(38,446)	-
		(458)	(3,782)	(895)
Working capital adjustments:
Change in trade and other receivables		(492)	1,023	(24)
Change in advances made and deferred expenses		(620)	122	(572)
Change in inventories		1,432	(3,960)	(1,988)
Change in trade and other payables		(1,138)	1,321	4,663
Change in tax balances		1,283	5,410	(1,102)
		7	134	82
Income tax paid	14	-	-	-
Net cash flow from operating activity		7	134	82
INVESTING ACTIVITIES
Purchase of property, plant and equipment and intangible assets		(24)	(81)	(81)
Net cash flow from investing activity		(24)	(81)	(81)
FINANCING ACTIVITIES Repayment of loans and borrowings		-	(44)	-
Net cash flow from financial activity		-	(44)	-
NET CASH FLOWS		(17)	9	1
Cash and cash equivalents at the beginning of the period	23	16	7	7
Effect of translation to presentation currency		-	-	-
Cash disposed with subsidiaries		3	-	-
Cash and cash equivalents at the end of the period	23	2	16	8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2020

1 GENERAL INFORMATION

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 at
		31 December 2020	31 December 2019
Coal Energy S.A.	Luxembourg	Parent company	Parent company
Nertera Investments Limited	Cyprus	100,00	100,00
C.E.C. Coal Energy Cyprus Limited	Cyprus	100,00	100,00
Coal Energy Trading Limited	British Virgin Islands	100,00	100,00
Donugletekhinvest LLC*	Ukraine	-	99,00
Nedra Donbasa LLC	Ukraine	99,00	99,00
Donprombiznes LLC*	Ukraine	-	99,00
Ugledobycha LLC*	Ukraine	-	99,99
Donantracit LLC*	Ukraine	-	99,99
Tekhinovatsiya LLC	Ukraine	99,99	99,99
Eximenergo LLC*	Ukraine	-	99,00
CwAL LE "Sh/U Blagoveshenskoe"	Ukraine	99,00	99,00
CwAL LE "Mine St.Matrona Moskovskaya"	Ukraine	99,00	99,00
Coal Energy Ukraine LLC*	Ukraine	-	99,99
Progress-Vugillya LLC	Ukraine	99,99	99,99

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 205, route d`Arlon L-1150 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.

*During the six months ended 31 December 2020, six subsidiaries were disposed from the Group. Details of such disposals are disclosed in Note 30.

These consolidated financial statements were authorized by the Board of Directors as at 8 April 2021.

2 BASIS OF PREPARATION OF THE INTERIM 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 (IFRS) as adopted by the European Union (EU).

2.3 Basis of consolidation

(a) Subsidiaries

Subsidiaries are entities over which the Group has the power to govern the financial and operating policies. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

The excess of the cost of acquisition over the fair value of the group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the statement of comprehensive income. Costs appeared in connection with the purchase of subsidiaries are recognized as expenses.

Intragroup transactions, balances and unrealized gains on transactions between Group companies are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction. Subsequent to the loss of control of a subsidiary the value of remained share is revalued at fair value that influences the amount of income/loss from the disposal.

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

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.

2.4 Changes in accounting policy and disclosures

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

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 – standard establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of the standard (effective from 1 January 2021);

IFRS 10 (Amendments) and IAS 28 (Amendments) ''Sale or Contribution of Assets between an Investor and its Associate or Joint Venture'' (effective date postponed indefinitely).

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:
- 31 December 2020	28.2746
- 30 June 2020	26.6922
- 31 December 2019	23.6862
Average for the:
- three months ended 31 December 2020	28.2678
- three months ended 30 September 2020	27.5996
- three months ended 31 December 2019	24.2606
- three months ended 30 September 2019	25.2613

(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 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

3.17 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 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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:

Fair value of financial instruments

Where the fair value of financial assets and financial liabilities recognized in the statements of financial position cannot be derived from active markets, they are determined using valuation techniques including the discounted cash flows model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. The judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the recognized fair value of financial instruments.

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.

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.

4 SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES (CONTINUED)

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 OPERATIONAL SEGMENTS

The group defines the following business segments that include goods and services distinguished by the level of risk and terms of acquisition 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 six months ended 31 December 2020:

	Business segments
	Mineral resource and processing industry	Trade activity	Other activity	Assets and liabilities not included in segments	Total
Revenue
Sales to external customers	126	-	146	-	272
Profit/(Loss) before tax of the segment	(5,099)	657	48,785	-	44,343
Depreciation and amortization expenses	(1,139)	-	-	-	(1,139)
Defined benefits plan obligations expenses	-	-	-	-	-
Operational assets	30,046	9,966	867	85,846	126,725
Operational liabilities	109,212	7,659	-	3,565	120,436
Disclosure of other information
Capital expenditures	24	-	-	-	24

As at 31 December 2020 assets of segments do not include financial assets (USD 83,250 thousand), cash (USD 2 thousand), other taxes receivable (USD 713 thousand), as well as deferred tax assets (USD 1,881 thousand), since management of these assets is carried out at the Group level.

As at 31 December 2020 liabilities of segments do not include deferred tax liabilities, other taxes payable (USD 1,738 thousand), income tax payables (USD 1,758 thousand), provision on tax liabilities (USD 69 thousand), since management of these liabilities is carried out at the Group level.

Information about the segments of business for the three months ended 31 December 2020:

	Business segments
	Mineral resource and processing industry	Trade activity	Other activity	Assets and liabilities not included in segments	Total
Revenue
Sales to external customers	70	-	130	-	200
Profit/(Loss) before tax of the segment	(2,663)	905	49,019	-	47,261
Depreciation and amortization expenses	(546)	-	-	-	(546)
Defined benefits plan obligations expenses	-	-	-	-	-
Operational assets	30,046	9,966	867	85,846	126,725
Operational liabilities	109,212	7,659	-	3,565	120,436
Disclosure of other information
Capital expenditures	-	-	-	-	-

5 INFORMATION ON OPERATIONAL SEGMENTS (CONTINUED)

Information about the segments of business for the six months ended 31 December 2019:

	Business segments
	Mineral resource and processing industry	Trade activity	Other activity	Assets and liabilities not included in segments	Total
Revenue
Sales to external customers	3,465	-	35	-	3,500
Profit/(Loss) before tax of the segment	38,121	-	35	-	38,156
Depreciation and amortization expenses	(1,343)	-	-	-	(1,343)
Defined benefits plan obligations expenses	-	-	-	-	-
Operational assets	81,008	2,409	1,089	46,921	131,427
Operational liabilities	158,444	4,290	126	5,598	168,458
Disclosure of other information
Capital expenditures	1,405	-	-	-	1,405

As at 31 December 2019 assets of segments do not include financial assets (USD 43,908 thousand), cash (USD 8 thousand), other taxes receivable (USD 354 thousand), as well as deferred tax assets (USD 2,651 thousand), since management of these assets is carried out at the Group level.

As at 31 December 2019 liabilities of segments do not include deferred tax liabilities (USD 4 thousand), other taxes payable (USD 1,858 thousand), income tax payables (USD 1,593 thousand), provision on tax liabilities (USD 2,143 thousand), since management of these liabilities is carried out at the Group level.

Information about the segments of business for the three months ended 31 December 2019:

	Business segments
	Mineral resource and processing industry	Trade activity	Other activity	Assets and liabilities not included in segments	Total
Revenue Sales to external customers	777	-	16	-	793
Profit/(Loss) before tax of the segment	36,054	-	16	-	36,070
Depreciation and amortization expenses Defined benefits plan obligations expenses	(636) -	- -		- - - -	(636) -
Operational assets	81,008	2,409	1,089	46,921	131,427
Operational liabilities	158,444	4,290	126	5,598	168,458
Disclosure of other information
Capital expenditures	90	-		- -	90
	6 months ended 31 December 2020		3 months ended 31 December 2020	6 months ended 31 December 2019	3 months ended 31 December 2019
Revenue received from sale of finished goods		126	70	3,465	777
Revenue from trading activity		-	-	-	-
Revenue from other activity		146	130	35	16
		272	200	3,500	793

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

	6 months ended 31 December 2020	3 months ended 31 December 2020	6 months ended 31 December 2019	3 months ended 31 December 2019
Raw materials	-	-	(927)	(146)
Cost of merchandising inventory	(81)	(81)	(135)	-
Wages and salaries of operating personnel	-	-	(279)	(131)
Depreciation and amortization expenses	-	-	(470)	(244)
Subcontractors services	-	-	(1,437)	(479)
Energy supply	-	-	(62)	(54)
Change in finished goods	(100)	(57)	138	117
Other expenses	-	-	(174)	(43)
	(181)	(138)	(3,346)	(980)

7 GENERAL AND ADMINISTRATIVE EXPENSES

	6 months ended 31 December 2020	3 months ended 31 December 2020	6 months ended 31 December 2019	3 months ended 31 December 2019
Subcontractors services	(12)	(7)	(62)	(33)
Wages and salaries of administrative personnel	(12)	(6)	(31)	(14)
Depreciation and amortization expenses	(9)	(4)	(19)	(10)
Bank services	-	-	(1)	(1)
Taxes	-	-	(142)	(142)
Other expenses	(9)	(9)	-	-
	(42)	(26)	(255)	(200)

8 SELLING AND DISTRIBUTION EXPENSES

	6 months ended 31 December 2020	3 months ended 31 December 2020	6 months ended 31 December 2019	3 months ended 31 December 2019
Delivery costs	(1)	-	(48)	(13)
Subcontractors services	-	-	(3)	(2)
Wages and salaries of distribution personnel	-	-	-	-
Depreciation and amortization expenses	-	-	(1)	(1)
	(1)	-	(52)	(16)

9 OTHER OPERATING INCOME/(EXPENSES), NET

	6 months ended 31 December 2020	3 months ended 31 December 2020	6 months ended 31 December 2019	3 months ended 31 December 2019
Doubtful debts income/(expenses)	(368)	(372)	445	(25)
Writing-off of VAT	(3)	(3)	(11)	(2)
Gain/(loss) from operating exchange differences	-	-	33	(41)
	(371)	(375)	467	(68)

9.1 IDLE CAPACITY EXPENSES

	6 months ended 31 December 2020	3 months ended 31 December 2020	6 months ended 31 December 2019	3 months ended 31 December 2019
Depreciation and amortization expenses	(1,130)	(542)	(961)	(490)
Wages and salaries	(153)	(99)	(27)	(14)
Other expenses	(210)	(104)	-	-
	(1,493)	(745)	(988)	(504)

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

	6 months ended 31 December 2020	3 months ended 31 December 2020	6 months ended 31 December 2019	3 months ended 31 December 2019
Recognized penalties, fines, charges	-	-	(1,752)	(625)
Depreciation of non-operating PPE	-	-	(2)	(1)
Other non-operating income	53	35	10	2
Other non-operating expenses	(202)	(340)	(234)	(134)
	(149)	(305)	(1,978)	(758)

11 DEPRECIATION AND AMORTIZATION EXPENSES

	6 months ended 31 December 2020	3 months ended 31 December 2020	6 months ended 31 December 2019	3 months ended 31 December 2019
Depreciation
Cost of sales	-	-	(451)	(234)
Idle capacity expenses	(1,031)	(508)	(821)	(418)
Selling and distribution expenses	-	-	(1)	(1)
General and administrative expenses	(9)	(4)	(13)	(7)
Other non-operating expenses	-	-	(2)	(1)
	(1,040)	(512)	(1,288)	(661)
Amortization
Cost of sales	-	-	(19)	(10)
Idle capacity expenses	(99)	(34)	(140)	(72)
General and administrative expenses	-	-	(6)	(3)
	(99)	(34)	(165)	(85)
	(1,139)	(546)	(1,453)	(746)

12 FINANCIAL INCOME

	6 months ended 31 December 2020	3 months ended 31 December 2020	6 months ended 31 December 2019	3 months ended 31 December 2019
Gain from non-operating exchange differences Income from measurement of financial instruments at amortized cost	450	203	6,612	1,978
	6	3	249	163
	456	206	6,861	2,141

13 FINANCIAL COSTS

	6 months ended 31 December 2020	3 months ended 31 December 2020	6 months ended 31 December 2019	3 months ended 31 December 2019
Interest expenses	(662)	(339)	(3,030)	(1,514)
Loss from non-operating exchange differences	(2,394)	(245)	(1,392)	(1,208)
Loss from measurement of financial instruments at amortized cost	(110)	(92)	(77)	(62)
	(3,166)	(676)	(4,499)	(2,784)

14 INCOME TAX EXPENSES

	6 months ended 31 December	3 months ended 31 December	6 months ended 31 December	3 months ended 31 December
	2020	2020	2019	2019
Current income tax	-	-	(2)	(2)
Deferred tax	102	102	907	762
Income tax expenses	102	102	905	760
At the beginning of the period	(1,593)	(1,751)	(1,491)	(1,417)
Current income tax charge	-	-	(2)	(2)
Other IFRS effect	-	-	-	-
Effect of translation to presentation currency	(165)	(7)	(100)	(174)
At the end of the period	(1,758)	(1,758)	(1,593)	(1,593)
Income tax reconciliation
Profit/(loss) before tax	44,343	47,159	38,156	36,070
Income tax (18%)	(7,982)	(8,489)	(6,868)	(6,493)
Effect of different statutory tax rates of overseas jurisdictions	739	232	360	145
Tax effect of permanent differences	8,823	8,823	7,413	7,108
Income tax income/(expenses)	102	102	905	760

According to the Tax Code of Ukraine effective from 1 January 2014, corporate income tax rate is 18%.

Deferred tax assets and liabilities are measured at the corporate 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 of Ukraine.

14 INCOME TAX EXPENSES (CONTINUED)

	30 June 2020	Recognized in profit/(loss)	Currency translation effect	31 December 2020
Effect of temporary differences on deferred tax assets
Property, plant and equipment, intangible assets	253	661	(48)	866
Inventories	66	(42)	(1)	23
Provisions	491	(81)	(22)	388
Defined benefit plan obligations	1,615	(861)	(40)	714
Charged vacation expenses	26	(7)	(1)	18
Folded on individual Companies level	(3)	(111)	(14)	(128)
Total deferred tax assets	2,448	(441)	(126)	1,881
Effect of temporary differences on deferred tax liabilities
Property, plant and equipment, intangible assets	(14)	(100)	(14)	(128)
Folded on individual Companies level	3	111	14	128
Total deferred tax liabilities	(11)	11	-	-
Net deferred tax asset/(liability)	2,437	(430)	(126)	1,881

	30 June 2019	Recognized in profit/(loss)	Currency translation effect	30 June 2020
Effect of temporary differences on deferred tax assets
Property, plant and equipment, intangible assets	280	(48)	21	253
Inventories	19	94	(47)	66
Provisions	474	43	(26)	491
Defined benefit plan obligations	1,665	(67)	17	1,615
Charged vacation expenses	32	(11)	5	26
Folded on individual Companies level	(917)	896	18	(3)
Total deferred tax assets	1,553	907	(12)	2,448
Effect of temporary differences on deferred tax liabilities
Property, plant and equipment, intangible assets	(1,053)	1,018	21	(14)
Folded on individual Companies level	917	(896)	(18)	3
Total deferred tax liabilities	(136)	122	3	(11)
Net deferred tax asset/(liability)	1,417	1,029	(9)	2,437

15 PROPERTY, PLANT AND EQUIPMENT

as at 30 June 2019 33,353 9,455 11,329 542 1,260 55,939 Additions 1,074 306 25 - - 1,405 Disposals - (2,709) (1,054) (15) (1,034) (4,812) Effect of translation to presentation currency 3,568 943 1,159 56 86 5,812 as at 31 December 2019 37,995 7,995 11,459 583 312 58,344 as at 30 June 2020 33,190 7,095 10,684 509 277 51,755 Additions 24 - 40 - - 64 Disposals - - (23) (1) (265) (289) Disposals of subsidiaries (13,512) (2,576) (3,260) (274) - (19,622) Effect of translation to presentation currency (1,637) (397) (598) (27) (9) (2,668) as at 31 December 2020 18,065 4,122 6,843 207 3 29,240 Accumulated depreciation as at 30 June 2019 (11,414) (4,318) (10,447) (514) - (26,693) Depreciation for the period (890) (220) (170) (8) - (1,288) Disposals - 1,514 1,044 15 - 2,573 Effect of translation to presentation currency (1,223) (425) (1,073) (54) - (2,775) as at 31 December 2019 (13,527) (3,449) (10,646) (561) - (28,183) as at 30 June 2020 (12,823) (3,269) (9,523) (495) - (26,110) Depreciation for the period (759) (144) (133) (4) - (1,040) Disposals - - 21 1 - 22 Disposals of subsidiaries 5,785 1,061 3,242 271 - 10,359 Effect of translation to presentation currency 725 183 534 26 - 1,468 as at 31 December 2020 (7,072) (2,169) (5,859) (201) - (15,301) Net book value as at 31 December 2019 24,468 4,546 813 22 312 30,161 as at 31 December 2020 10,993 1,953 984 6 3 13,939	Historical cost	Underground mining	Buildings and constructions	Machinery, equipment and vehicles	Other	Construction in progress	Total

15 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

As at 31 December 2020, property, plant and equipment amounted USD 3,180 thousand were pledged under loans and borrowings agreements disclosed in Note 24 "Loans and borrowings" (As at 31 December 2019 – USD 6,996 thousand). During the reporting period, there were no capitalized borrowing costs. During the reporting period, 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 at 31 December 2020 and 31 December 2019, contractual commitments for property, plant and equipment of the Group were immaterial.

As at 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.

16 INTANGIBLE ASSETS

Historical cost patent rights as at 30 June 2019 3,296 16 34	3,346 348 3,694
Effect of translation to presentation currency 345 1 2
as at 31 December 2019 3,641 17 36
as at 30 June 2020 3,231 16 33	3,280
Disposals of subsidiaries (111) (1) (6)	(118)
Effect of translation to presentation currency (195) (2) (14)	(211)
as at 31 December 2020 2,925 13 13	2,951
Accumulated depreciation
as at 30 June 2019 (2,485) (16) (32)	(2,533)
Amortization charge for the period (165) - -	(165)
Effect of translation to presentation currency (253) (1) (4)	(258)
as at 31 December 2019 (2,913) (17) (36)	(2,966)
as at 30 June 2020 (2,737) (16) (32)	(2,785)
Amortization charge for the period (99) - -	(99)
Disposals of subsidiaries 53 1 5	59
Effect of translation to presentation currency 168 2 14	184
as at 31 December 2020 (2,615) (13) (13)	(2,641)
Net book value
as at 31 December 2019 728 - -	728
as at 31 December 2020 310 - -	310

Licenses, special permissions and patent rights included following special permissions for subsurface use:

-special permissions for subsurface use # 5098 as of 30 December 2009 issued by Ministry of ecology and natural resources of Ukraine for 20 years. Net book value of this permission as 31 December 2020 amounted USD 127 thousand (31 December 2019: USD 169 thousand);

-special permissions for subsurface use # 4782 as of 18 November 2008 issued by Ministry of ecology and natural resources of Ukraine for 13 years. Net book value of this permission as at 31 December 2020 amounted USD 107 thousand (31 December 2019: USD 255 thousand);

• special permissions for subsurface use # 9754 as of 27 December 2011 issued by Ministry of ecology and natural resources of Ukraine for 20 years. Net book value of this permission as at 31 December 2020 amounted USD 102 thousand (31 December 2019: USD 134 thousand).

As at 31 December 2020 and 31 December 2019, there were no pledged intangible assets. As at 31 December 2020 and 31 December 2019, there were no contractual commitments for intangible assets of the Group.

17 FINANCIAL ASSETS

	As at 31	As at 30 June	As at 31
	December 2020	2020	December 2019
Non-current financial assets
Held-to-maturity investments	185	5	21
Loans issued	82,528	43,887	43 887
	82,713	43,892	43 908
Current financial assets
Loans issued	3,313	5,120	6,019
Allowance for loans issued	(2,776)	(5,120)	(6,019)
	537	-	-

18 INVENTORIES

	As at 31 December 2020	As at 30 June 2020	As at 31 December 2019
Merchandise	1,224	10,645	11,538
Finished goods	648	1,896	2,390
Raw materials	6,368	9,256	10,627
Spare parts	1,333	1,894	2,150
Goods on commission	-	158	178
Other inventories	10	20	21
	9,583	23,869	26,904

As at 31 December 2020 inventories amounted USD 5,500 thousand were pledged under loans and borrowings agreements disclosed in Note 24 "Loans and borrowings" (As at 31 December 2019 – USD 5,500 thousand).

As at the date of publication of these financial statements, the Group`s management has no possibility to assess inventory damage, theft probability and to estimate impact of military conflict on impairment of inventories.

19 TRADE AND OTHER RECEIVABLES

	As at 31 December 2020	As at 30 June 2020	As at 31 December 2019
Trade receivables	6,691	11,901	13,903
Allowance for trade receivables	(1,727)	(3,497)	(3,813)
Receivables under factoring contracts	-	490	552
Other receivables	6,786	11,807	8,345
Allowance for other receivables	-	-	-
Receivables on sale of property, plant and equipment	43	46	52
Allowance for receivables on sale of property, plant and equipment	-	-	-
	11,793	20,747	19,039

As at 31 December 2020 trade receivables amounted USD 4,091 thousand were pledged under loans and borrowings agreements disclosed in Note 24 "Loans and borrowings" (As at 31 December 2019 – USD 4,884 thousand).

20 PREPAYMENTS AND PREPAID EXPENSES

	As at 31 December 2020	As at 30 June 2020	As at 31 December 2019
Advances paid	2,076	3,764	4,302
Allowances for advances paid	(301)	(693)	(781)
	1,775	3,071	3,521
21 TAXES RECEIVABLE AND PAYABLE
	As at 31 December 2020	As at 30 June 2020	As at 31 December 2019
Current taxes receivable
VAT recoverable	678	344	354
Prepayments for other taxes	35	-	-
	713	344	354
Current taxes payable
Payable for wages and salaries related taxes	664	1,222	1,217
VAT payable	609	(1,423)	-
Payables for other taxes	465	600	641
	1,738	399	1,858

22 CASH AND CASH EQUIVALENTS

	As at 31 December 2020	As at 30 June 2020	As at 31 December 2019
Cash in bank	2	15	7
Cash in hand	-	1	1
	2	16	8

23 SHARE CAPITAL

		As at 31 December 2020		As at 30 June 2020		As at 31 December 2019
	%	Amount	%	Amount	%	Amount
Lycaste Holding Limited*	75	338	75	338	75	338
Free float	25	112	25	112	25	112
	100	450	100	450	100	450

* - according to the pledge agreement signed as at 11 February 2013 between Lycaste Holding Limited, European Bank for Reconstruction and Development and Coal Energy S.A. 6747167 shares owned by Lycaste Holding Limited are pledged.

During the six months ended 31 December 2020, quantity of shares did not change.

24 LOANS AND BORROWINGS

	As at 31 December 2020	As at 30 June 2020	As at 31 December 2019
Non-current loans and borrowings
Loans received	35,000	35,000	35,000
	35,000	35,000	35,000
Deducting current portion of long-term borrowings:
Current portion of long-term loans and borrowings	(35,000)	(35,000)	(35,000)
Total non-current loans and borrowings	-	-	-
Current loans and borrowings
Bank loans	20,000	29,309	29,709
Current portion of long-term loans and borrowings	35,000	35,000	35,000
Current payables under factoring contract	-	369	416
Notes issued	122	76	117
Total current loans and borrowings	55,122	64,754	65,242

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

All current bank loans are on demand due to breach of repayment terms.

25 LEASE

	As at 31	As at 30 June	As at 31
	December 2020	2020	December 2019
Due within 1 year	253	268	302
From 1 to 5 years	904	957	1,208
More than 5 years	2,323	2,729	2,644
	3,480	3,686	4,154

There are fixed payments on these contracts, 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.

Net book value of leased assets

	As at 31 December 2020	As at 30 June 2020	As at 31 December 2019
Property, plant and equipment	-	-	-
Intangible assets	337	340	362
	337	340	362

Intangible assets were not reclassified into right-of-use assets due to close termination of appropriate lease agreement.

Right-of-use assets

	As at 31	As at 30 June	As at 31
Property, plant and equipment	December 2020	2020	December 2019
	3,479	3,686	4,153
	3,479	3,686	4,153

26 PROVISIONS

	As at 31 December 2020	As at 30 June 2020	As at 31 December 2019
Non-current provisions
Provision for land restoration	2,135	2,337	2,574
Dismantling provision	21	392	406
	2,156	2,729	2,980
Current provisions
Provision on tax liabilities	69	1,901	2,143
	69	1,901	2,143

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%.

Management recognized provision for the payment of potential tax liabilities. However, if the tax authorities classify such transactions as subject to taxation and apply such classification to the companies of the Group, actual taxes and penalties may differ from the Management assessment

27 TRADE AND OTHER PAYABLES

	As at 31 December 2020	As at 30 June 2020	As at 31 December 2019
Trade payables	5,149	9,165	10,438
Interest due	29,233	46,591	43,456
Payables for wages and salaries	957	144	1,288
Interest due to factoring contract	-	1,253	1,354
Payables for unused vacations	102	1,201	172
Other payables	14,141	19,324	21,010
Advances received	2,527	531	2,056
Payables for acquisition property, plant and equipment	35	3,153	598
	52,144	81,362	80,372

28 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.

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

	6 months ended 31 December 2020	Year ended 30 June 2020	6 months ended 31 December 2019
Income from sales of finished products, goods	126	2,535	2,384
Income from other sales	54	35	13
Purchases of property, plant and equipment	-	(21)	(21)
Purchases of inventories	-	(49)	(49)

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

	As at 31 December 2020	As at 30 June 2020	As at 31 December 2019
Held-to-maturity investments	185	5	21
Non-current loans issued	82,528	43,887	-
Current loans issued	3,313	5,120	6,019
Allowances for loans issued	(2,776)	(5,120)	(6,019)
Trade receivables	1,879	7,195	8,108
Allowances for trade receivables	-	(380)	(442)
Advances paid	48	323	364
Allowances for advances paid	-	(27)	(30)
Other receivables	17	3,837	4,324
Receivables on sale of property, plant and equipment	43	46	52
Advances received	60	623	703
Other payables	2,235	2,719	3,064
Trade payables	172	112	127

29 CONTINGENT ASSETS AND LIABILITIES

As at 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.

30 DISPOSALS OF SUBSIDIARIES

During the six months ended 31 December 2020, the Group sold its 100% shares in the six subsidiaries: Donugletekhinvest LLC with total consideration of UAH 26 thousand, Donprombiznes LLC with total consideration of UAH 15 thousand, Ugledobycha LLC with total consideration of UAH 16 thousand, Donantracit LLC with total consideration of UAH 46 thousand, Eximenergo LLC with total consideration of UAH 7 thousand, Coal Energy Ukraine LLC with total consideration of UAH 16 thousand. Net assets and results of disposals are presented as follows:

						Coal
						Energy
	Donugletekhinvest	Donprombiznes	Ugledobycha	Donantracit	Eximenergo	Ukraine	Total
Property, plant, equipment	513	3,187	553	-	5,006	4	9,263
Intangible assets	-	44	4	-	11	-	59
Deferred tax asset	92	14	214	9	190	4	523
Inventories	438	1,404	413	253	10,334	12	12,854
Trade and other receivables	4,306	5,446	494	4,903	8,308	127	23,584
Prepayments and prepaid expenses	(21)	4,051	3,311	(36)	566	799	8,670
Other taxes receivable	11	-	38	(14)	146	15	196
Cash and cash equivalents	-	3	-	-	-	-	3
Non-current loans and borrowings	(2,498)	(14,103)	(11,046)	-	(12,738)	-	(40,385)
Defined benefit obligation	(188)	(1,929)	(959)	-	(1,415)	-	(4,491)
Non-current provisions	(59)	(119)	(256)	-	(88)	-	(522)
Loans and borrowings	-	(1,089)	-	(1,324)	(5,192)	(1,290)	(8,895)
Trade and other payables	(5,932)	(7,505)	(1,362)	(6,286)	(20,429)	(5,676)	(47,190)
Current provisions	(256)	(395)	(618)	(57)	(400)	-	(1,726)
Other tax payable	(46)	(191)	(85)	(1)	(364)	(21)	(708)
Net assets at the date of disposal	(3,640)	(11,182)	(9,299)	(2,553)	(16,065)	(6,026)	(48,765)
Consideration received	1	1	1	2	-	1	6
Net assets disposed	(3,641)	(11,183)	(9,300)	(2,555)	(16,065)	(6,027)	(48,771)
Reclassification of currency
translation reserve of	(217)	347	291	(258)	51	(461)	(247)
disposed subsidiaries
Profit from disposal	3,858	10,836	9,009	2,813	16,014	6,488	49,018

As at 31 October 2019, the Group sold 100% shares of Toretsk Coal Mining Company LLC with total consideration of UAH 1 thousand. As at 10 December 2019, the Group sold 99% shares of Antracit LLC with total consideration of UAH 1 thousand. Net assets and results of disposals are presented as follows:

	Toretsk CMC	Antracit	Total
Property, plant and equipment	-	1,813	1,813
Inventories	1,417	1,434	2,851
Trade and other receivables	196	19,612	19,808
Loans and borrowings	-	(49,197)	(49,197)
Deferred tax liabilities	-	(113)	(113)
Trade and other payables	(5,303)	(6,550)	(11,853)
Taxes payable	(2,529)	(215)	(2,744)
Net assets at the date of disposal	(6,219)	(33,216)	(39,435)
Consideration received	-	-	-
Net assets disposed	(6,219)	(33,216)	(39,435)
Reclassification of currency translation reserve of disposed subsidiaries	652	337	989
Profit from disposal	5,567	32,879	38,446

31 SUBSEQUENT EVENTS

During the three months ended 31 March 2021, the Group sold its 100% shares in the three subsidiaries: Nedra Donbasa LLC, CwAL LE "Sh/U Blagoveshenskoe" and Progress-Vugillya LLC.

During the three months ended 31 March 2021, the Group established new subsidiary – Perspective resources LLC for searching for new deposits of coking coal with registration of mining licenses as well as study of business opportunities, related to other minerals (ore and other minerals, mining and chemical raw materials, etc.) with the subsequent registration of licenses for the extraction and development of deposits.

According to the management's opinion, there were no events after the reporting date, except for the disclosed above and known to the management which would substantially influence the financial standing of the Group.