Fon SE — Annual Report 2022

Sep 30, 2022

Raport FON SE ANNUAL REPORT FOR THE PERIOD SINCE 01 JULY 2021 TILL 30 JUNE 202 PREPARED IN COMPLIANCE WITH INTERNATIONAL FINANCIA Tallinn, 28/09/2022 Business name: FON SE Registry code: 14617916 LEI code: 259400WB3K1M8CZO6N24 Address: Harju maakond, Tallinn, Kesklinna linnaos Telephone: +48-796-118-929 E-mail address: Website: www.f Reporting period: 01/07/2021 - 30/06/2022 Auditor: Number RT OÜ, Eve Leppik, Nr: 230 Members of the Supervisory Board: Damian Patrowicz TABLE OF CONTENTS: I. LETTER OF THE MANAGEMENT BOARD II.SELECTED FINANCIAL DATA III. MANAGEMENT REPORT THE MAIN FIELDS OF ACTIVITY GENERAL (MACROECONOMIC) DEVELOPMENT FINANCIAL INSTRUMENTS, FINANCIAL RISK MANAGEMENT O THE STRUCTURE OF SHARE CAPITAL As of June 30, 2021 FON SE held 52 500 000 non-par As of June 30, 2022 FON SE held 1 875 000 non-par On September 7, 2022, a decrease in the share capi THE STRUCTURE OF THE COMPANY AND SHAREHOLDERS RESOLUTIONS AND RULES FOR AMENDMENT OF THE ARTICLE CHARACTERISTIC OF EXTERNAL AND INTERNAL FACTORS INFORMATION ON AVERAGE EMPLOYMENT INFORMATION REGARDING AN AGREEMENT AND AN ENTITY A OTHER SIGNIFICANT INFORMATION DESCRIPTION OF FACTORS AND EVENTS, IN PARTICULAR A IV. CORPORATE GOVERNANCE REPORT In 2021/2022 FON SE was subject to the corporate g The Company applied all the corporate governance p INFORMATION AND COMMUNICATION WITH INVESTORS POLIC 1.2. Companies make available their financial res 1.3. Companies integrate ESG – (environmental, so 1.3.1. environmental factors, including measures 1.3.2. social and employee factors, including to 1.4.1 explain how the decision-making processes of 1.4.2. present the equal pay index for employees, 1.5. Companies disclose at least on an annual basi MANAGEMENT BOARD, SUPERVISORY BOARD 2.1. Companies should have in place a diversity po Comments of the Company: Crucial personnel decisio 2.3. At least two members of the supervisory board Comments of the Company: The decision to elect Mem 2.11. In addition to its responsibilities laid dow 2.11.1. information about the members of the super Comments of the Company: In accordance with the ap 2.11.2. summary of the activity of the supervisory Comments of the Company: As explained in point 2.1 2.11.3. assessment of the company’s standing on, i Comments of the Company: As explained in point 2.1 2.11.4. assessment of the company’s compliance wit Comments of the Company: As explained in point 2.1 2.11.5. assessment of the rationality of expenses Comments of the Company: As explained in point 2.1 2.11.6. information regarding the degree of implem Comments of the Company: As explained in point 2.1 EXTERNAL SYSTEMS AND FUNCTIONS 3.9. The supervisory board monitors the efficiency Comments of the Company: In accordance with the ap GENERAL MEETING, SHAREHOLDER RELATIONS 4.1. Companies should enable their shareholders to Comments of the Company: The Company considers tha 4.3. Companies provide a public real-life broadcas Comments of the Company: The Company recognizes th 4.6. To help shareholders participating in a gener Comments of the Company: As at the date of publica Shareholders with major holdings Holders of securities that give special control po FON SE shares do not confer any special control ri Restrictions on voting rights Such restrictions do not apply to the Company's sh Restrictions on transferability of title to the Co In accordance with the Articles of Association of Rules governing appointment and removal of members The listed company FON SE is managed by the Manage Amendments to the Articles of Association Amendments to the Articles of Association require Proceedings of the General Meetings and its powers The General Meetings of the Company are held in ac Composition of the Management Board and descriptio Management Board: Damian Patrowicz Supervisory Board: Wojciech Hetkowski Jacek Koralewski Małgorzata Patrowicz Martyna Patrowicz The main task of the Management Board is to manage Description of the company’s internal control syst Due to the simplified structure and relatively lim The Management Board of the Company is responsible In the reporting period, the financial report was By using the services of a specialized office, the VI. FINANCIAL STATEMENTS 1.Statement of financial position Notes on pages 24-46 are an integral part of the f 2.Statement of profit or loss Notes on pages 24-46 are an integral part of the f 3.Statement of comprehensive income Notes on pages 24-46 are an integral part of the f 4.Statement of changes in equity Notes on pages 24-46 are an integral part of the f 5.Cash flow statement Notes on pages 24-46 are an integral part of the f NOTES TO THE FINANCIAL STATEMENTS Professional judgment ASSESSMENT CHARACTERISTIC OF EXTERNAL AND INTERNAL FACTORS Note 4. Financial assets The loans to Damar Patro UÜ was repaid fully afte On September 7, 2022, a decrease in the share capi Note 6. Shareholding structure Basic earnings per share (in EUR) Diluted earnings per share (in EUR) As at 30/06/2022 the number of shares amounted to Note 8. Credits and loans Note 9. Revenue Information on revenues and results for each indus Geographical information Note 10. Costs Note 11. Balances and transactions with related en There are no significant events after June 30,2022 At the moment, the war in Ukraine has not affected 1 FON SE ANNUAL REPORT FOR THE PERIOD SINCE 01 JULY 2021 TILL 30 JUNE 2022 AND FOR THE YEAR ENDED ON 30 JUNE 2022 PREPARED IN COMPLIANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS Tallinn, 28/09/2022 FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 2 FON SE GENERAL INFORMATION Business name: FON SE Registry code: 14617916 LEI code: 259400WB3K1M8CZO6N24 Address: Harju maakond, Tallinn, Kesklinna linnaosa, Tornimäe tn 5, 10145 Telephone: +48-796-118-929 E-mail address: biuro@fon-sa.pl Website: www.fon-sa.pl Reporting period: 01/07/2021 - 30/06/2022 Auditor: Number RT OÜ, Eve Leppik, Nr: 230 Members of the Supervisory Board:  Wojciech Hetkowski  Jacek Koralewski  Małgorzata Patrowicz  Martyna Patrowicz Members of the Management Board:  Damian Patrowicz FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 3 TABLE OF CONTENTS: I. LETTER OF MANAGEMENT BOARD ...….……….……….….……….….....................4 II. SELECTED FINANCIAL DATA......... ……….…………………………….........…....…5 III. MANAGEMENT REPORT ...............................................................................................6 IV. CORPORATE GOVERNANCE REPORT………….….........…….…...…..…..…..…...12 V. REMUNERATION REPORT………....................….….........…….…...…..…..…..….....19 VI. FINANCIAL STATEMENTS………………........………................ ………..…........…20 1. Balance sheet………..…………………….......….…....….….......….…........….........20 2. Profit and loss account…............................................................................................. 21 3. Statement of comprehensive income……..…….…… ....…….......................….........21 4. Statement of changes of equity……....……….....…....................................................22 5. Statement of cash flow…..…..…..........................................................................…....22 6. Notes to the financial statement……..………..…....…….....................................…...24 VII. MANAGEMENT BOARD’S CONFIRMATION OF THE ANNUAL REPORT ..................................................................................................................................47 FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 4 I. LETTER OF THE MANAGEMENT BOARD Dear Sirs, On behalf of the Management Board of FON SE, I am pleased to present to you the Annual Report for the financial year lasting from July 1, 2021 to June 30, 2022, containing a summary of the most important information about the activities and events in the Company that took place in the previous financial year. In the reporting period, the Company continued its activities in the field of financial services. The presented financial statements show a net profit, the Company's standing is stable and there is no risk of loss of liquidity or going concern. In the next financial year, the Company will continue its activities in the field of financial services by granting non- consumer cash loans. The Management Board of the Company would also like to thank all Shareholders and Co-operators, wishing them further, mutually beneficial cooperation. Yours faithfully, Damian Patrowicz Member of the Management Board FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 5 II. SELECTED FINANCIAL DATA SELECTED FINANCIAL DATA in thous. EUR Twelve months ended on 30/06/2022 Twelve months ended on 30/06/2021 Revenue from interest 372 167 Operating profit (loss) 346 150 Profit (loss) before taxation 250 116 Net profit (loss) 250 116 Net cash flow from operating activities 1 470 950 Net cash flow from investing activities 0 242 Net cash flow from financing activities -1 469 -1 193 Change in cash and cash equivalents 1 -1 Total assets 8 889 10 287 Long-term liabilities 2 742 3 928 Short-term liabilities 8 330 Equity 6 139 6 029 Share capital 28 875 28 875 Weighted average number of shares (in pcs.) 1 875 000 52 500 000 Profit (loss) per share (EUR) 0,13 0,002 Book value per share (EUR) 3,27 0,11 FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 6 III. MANAGEMENT REPORT THE MAIN FIELDS OF ACTIVITY In the reporting period, the main activity of the Company was financial activity, including granting loans. The company, implementing its business profile in the field of granting loans, has concluded agreements with Polish and Estonian entities. The Company intends to continue its operations in the area of lending activities. GENERAL (MACROECONOMIC) DEVELOPMENT The Company undertakes financial activities, especially related to granting loans to natural persons and business entities, mostly to related parties. Entrepreneurs who have not obtained financing from a bank, usually reach out to companies which provide lending services and declare high flexibility depending on the needs of a particular customer and their security capabilities. The Company notices development potential in the field of providing financial services for this kind of entities and, accordingly, intends to continue its business activity in this segment. As at the date of publication of the annual report, FON SE has one major borrower, a related party, also listed on the Warsaw Stock Exchange, thanks to which the Company can monitor the liquidity situation of its contractor on an ongoing basis. FINANCIAL INSTRUMENTS, FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICES The main types of risk resulted from Company’s financial instruments include: interest rate risk, liquidity risk, credit risk and risk related to the financial collateral. The Management Board is responsible for establishing risk management principles in the Company and for supervising its following. The purpose of the company's risk management policies is to identify and analyze the risks to which the company is exposed, by setting appropriate restrictions and controls, as well as by monitoring the risks and limits adjusted accordingly. The Management Board identifies potential risks by analyzing each transaction of the entity. Due to the simple structure of the company, there are no problems with communicating information in a timely manner. The management board is responsible for designing, introducing and ensuring adequate and effective actions aimed at achieving the goal. Also appropriate experience and education of the management board allows to minimize the influence of risks on the operating activity. THE STRUCTURE OF SHARE CAPITAL Since 27/05/1999 FON SE shares have been listed on the Warsaw Stock Exchange. As of June 30, 2021 FON SE held 52 500 000 non-par value shares and the price per share on the WSE was PLN 0,31 (EUR 0,07). As of June 3, 2022, a resplit took place on FON SE shares, as a result of which 28 old shares were converted into 1 new share without changing the share capital and the share price on the stock exchange was adjusted accordingly. FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 7 As of June 30, 2022 FON SE held 1 875 000 non-par value shares and the price per share on the WSE was PLN 0,22 (EUR 0,05). On September 7, 2022, a decrease in the share capital of FON SE from EUR 28 875 000 to EUR 187 500 was registered by the Business Register in order to meet the requirements of § 301 of the Estonian Commercial Code. Changes in the share capital in reporting period:  As at 30 June 2021, the share capital amounted to EUR 28 875 000 and was divided into 52 500 000 shares without par value;  Since 3 June 2022, the share capital of the Company amounts to EUR 28 875 000 and consists of 1 875 000 shares without par value; As at the balance sheet date, 30/06/2022, the Company’s equity is less than 50% of the share capital and does not comply with the requirements of § 301 of the Commercial Code of Estonia. On 7/09/2022 the Estonian Ariregister (the Business Register) registered the decrease of share capital of FON SE resulting from the resolutions adopted at the Extraordinary General Meeting of Shareholders on May 24, 2022. As a result of this the share capital decreased from 28 875 000 EUR to 187 500 EUR. At the time of preparing the report, the equity is in accordance with the requirements of the law. THE STRUCTURE OF THE COMPANY AND SHAREHOLDERS As at the balance sheet date 30/06/2022 the Company FON SE has no subsidiaries and it does not create its own consolidation group. According to the best knowledge of the Management Board the direct shareholder is Patro Invest OǕ that owns 37,06% contribution in the share capital and 37,06% votes at the general Meeting of Shareholders of the Company as at 30/06/2022. As at the balance sheet date 30/06/2022 the structure of direct and indirect shareholders holding at least 5% of the total number of votes at the General Meeting was as follows: Direct shareholding structure as at 30/06/2022 No. Direct shareholders Number of shares % of shares Number of votes % of votes 1. Patro Invest OÜ 694 858 37,06 694 858 37,06 X Total 1 875 000 100% 1 875 000 100% FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 8 Indirect shareholding structure as at 30/06/2022 No. Indirect shareholders Number of shares % of shares Number of votes % of votes 1. Damian Patrowicz 694 858 37,06 694 858 37,06 * Damian Patrowicz owns 100% of Patro Invest OÜ According to the information presented in the 2020/2021 financial year, the structure of direct and indirect shareholding structure at least 5% of the total number of votes at the General Meeting was as follows: Direct shareholding structure as at 30/06/2021 No. Direct shareholders Number of shares % of shares Number of votes % of votes 1. Patro Invest OÜ 18 720 750 35,66 18 720 750 35,66 X Total 52 500 000 100,00 52 500 000 100,00 Indirect shareholding structure as at 30/06/2021 No. Indirect shareholders Number of shares % of shares Number of votes % of votes 1. Damian Patrowicz 18 720 750 35,66 18 720 750 35,66 * Damian Patrowicz owns 100% of Patro Invest OÜ SHARES OWNED BY MEMBERS OF THE COMPANY’S MANAGEMENT AND SUPERVISORY BOARD:  Members of the Management Board As at the balance date 30/06/2022 and as at the date of publication of this annual report, the Member of the Management Board Mr. Damian Patrowicz owns indirectly the Company’s shares. Mr. Damian Patrowicz owns indirectly, via his company Patro Invest OÜ 694 858 shares of FON SE, constituting 37,06 % of the share capital of the Company and entitling to 694 858 votes which constitute 37,06 % of the votes at the General Meeting of the Company.  Members of the Supervisory Board Members of the Supervisory Board do not own directly and indirectly shares of the Company as at the balance date and as at the date of publication of the annual report. COMPETENCES AND ELECTION OF THE SUPERVISORY BOARD In accordance with the provisions of point 5.3. The Company's Articles of Association, members of the Company’s Management Board are appointed and dismissed by the Supervisory Board, which also decides on the remuneration of members of the Management Board. Members of the Supervisory Board are elected by the Company's general meeting of shareholders. FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 9 RESOLUTIONS AND RULES FOR AMENDMENT OF THE ARTICLES OF ASSOCIATION OF THE COMPANY In accordance with point 4.9.1 of the Company's Articles of Association, any amendment of the Company’s Articles of Association is included in the General Meeting of Shareholders’ competencies. In accordance with point 4.5 Of the Articles of Association, the General Meeting is able to adopt valid resolutions, if more than half of all votes are represented at the General Meeting, if the applicable legal acts do not provide for a higher majority of votes. If an enough number of shareholders does not participate in General Meeting, in order to ensure a majority of votes, in accordance with point 4.5, the Management Board of the Company within three weeks, but not earlier than after seven days, convenes a new general meeting with the same agenda. In this way, the General Meeting is competent to adopt resolutions regardless of the number of votes represented. Resolutions of the general meeting are adopted, when more than a half of all votes represented at the General Meeting support the resolution, and if there is no other requirement arising from applicable legal acts. CHARACTERISTIC OF EXTERNAL AND INTERNAL FACTORS Considering the specifics of the activity, i.e., financial service activities in the field of granting loans, results are significantly influenced by: - the general situation on the loan market and level of interest rates, - the proper fulfilment by the Borrowers of their obligations resulting from concluded loan agreements, as well as the progress of the enforcement procedure and the collection of overdue loans, if such agreements occur, - efficiency of administrative and legal procedures, - opportunity to gain possible borrowers, - the economic situation and investment conditions in Poland, Estonia and the entire region, - access to external financing sources, - cooperation with other financial entities. The risk related to the possibility of fluctuations in the exchange rate of one currency in relation to another may lead to both deterioration of the financial situation of an entity or its improvement. The Company's income and operating cash flows are dependent of changes in market interest rates, because some of the contracts are concluded at variable interest rates. Significant factors of risks are described on pages 33-37 of the annual report. INFORMATION ON AVERAGE EMPLOYMENT The Company did not employ any employees in the financial year lasting since July 1, 2021 to June 30, 2022 and in the previous financial year since July 1, 2020 to June 30, 2021. FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 10 INFORMATION REGARDING AN AGREEMENT AND AN ENTITY AUTHORIZED TO AUDIT FINANCIAL STATEMENTS OF THE COMPANY. According to the Company’s Articles of Association, the right to elect a certified auditor is at the General Meeting of Shareholders. On 04/05/2022, the General Meeting of Shareholders elected the auditing company Number RT OÜ as the auditor. Remuneration for the Auditor will be paid according to the Agreement concluded between the Company and Number RT OÜ which was established on market conditions. The audit fee for the financial year lasting since 01/07/2021 to 30/06/2022 amounted to 4.800 EUR and the audit fee for the previous financial year lasting since 1/07/2020 to 30/06/2021 amounted to 3.500 EUR. OTHER SIGNIFICANT INFORMATION  DESCRIPTION OF FACTORS AND EVENTS, IN PARTICULAR ATYPICAL ONES, HAVING SIGNIFICANT INFLUENCE ON THE ACHIEVED FINANCIAL RESULTS. Resolution of the Supervisory Board on appointing the Management Board for the next term of office. On July 29, 2021, in connection with the end of the term of office of the Management Board, the Supervisory Board of the Company adopted a resolution to appoint Mr.Damian Patrowicz for a new 3-year term starting on July 4, 2021 and ending on July 29, 2024, establishing that the Management Board will consist of one member of the Management Board. Extension of the term of office of Members of the Supervisory Board. On May 4, 2022, the Extraordinary General Meeting of shareholders extended the terms of office of all Members of the Supervisory Board for a new five-year term of office commencing on April 26, 2022. Registration of amendments to the Articles of Association. Estonian Ariregister (the Business Register) registered the amendments in the Articles of Association of the Company resulting from the resolutions adopted at the Ordinary General Meeting of Shareholders held on May 24, 2022. On June 3, 2022, resplit was registered, as a result of which the share capital of the Company did not change and is still 28 875 000 EUR. However, the book value of the shares increased to EUR 15,40 while the number of shares was reduced to 1 875 000. On the Warsaw Stock Exchange, the resplit operation was carried out on July 1, 2022. FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 11 Registration of amendments to the Articles of Association. On 7/09/2022 the Estonian Ariregister (the Business Register) registered the decrease of share capital of FON SE resulting from the resolutions adopted at the Extraordinary General Meeting of Shareholders of May 24, 2022. As a result of this the share capital decreased from 28 875 000 EUR to 187 500 EUR. Selected indicators of FON SE: Indicator 30/06/2022 30/06/2021 Assets (in thous. EUR) 8 889 10 287 Return on assets (ROA) 2,81% 1,13% Equity (in thous. EUR) 6 139 6 029 Return on equity (ROE) 4,07% 1,92% Net profitability 67,2% 70% Debt ratio 30,94% 41,39% Net profit (in thous. EUR) 250 116 Shares 30/06/2022 30/06/2021 Price per share (EUR) 0,05 0,07 Profit per share (EUR) 0,005 0,002 Indicator price-to-earnings (PE) 10,5 31,68 Book value per share (EUR) 0,12 0,11 Indicator price-to-book-value (P/BV) 0,43 0,61 Current liquidity ratio 38,88 2,38 Market cap (in EUR thous.) 2 625 3 675 * These data do not include the resplite operation registered by the court on June 3, 2022 but carried out on the WSE on July 1, 2022, i.e. after the balance sheet date in ratio 28:1 (it means that every shareholder received 1 new share instead of 28 old shares without changes in share capital. The price per share on the WSE was multiplied by 28 on 1 July 2022). The price is as at last day before suspension on the WSE due to resplite operation. Return on Assets = Net Profit / Total Assets Return on equity = net profit / equity Net profitability = net profit (loss) / sales revenues Debt ratio = liabilities / total assets Current liquidity ratio = current assets / short-term liabilities Price-to-earnings (P/E) ratio = market cap / net profit Price-per-share = market cap / number of shares Book value per one share = total equity / number of shares Price-to-book value (P/BV) ratio = market cap / book value Market capitalization = price per share * number of shares FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 12 IV. CORPORATE GOVERNANCE REPORT The Company's statement regarding the compliance with the Best Practice for The Warsaw Stock Exchange (GPW) Listed Companies 2021 and Corporate Governance Principles is available on the Company's website www.fon-sa.pl, in the "Regulations" section, the "Good practices" on corporate governance. In 2021/2022 FON SE was subject to the corporate governance standards contained in the document Best Practice for GPW Listed Companies 2021, which were adopted by resolution of the Stock Exchange Supervisory Board no. 13/1834/2021 of March 29, 2021 for companies listed on the GPW Main Market - "Best Practice for GPW Listed Companies 2021" (Best Practice 2021). In fulfilling disclosure requirements regarding the application of corporate governance standards, FON SE is guided by the principles of an effective and transparent information policy and communication with the market and investors. The Company applied all the corporate governance principles contained in the ‘Best Practice for GPW Listed Companies 2021’, except for the following: INFORMATION AND COMMUNICATION WITH INVESTORS POLICY 1.2. Companies make available their financial results compiled in periodic reports as soon as possible after the end of each reporting period; should that not be feasible for substantial reasons, companies publish at least preliminary financial estimates as soon as possible. Comments of the Company : The Company publishes periodic reports within deadlines arising from applicable Estonian law. 1.3. Companies integrate ESG – (environmental, social, and governance) factors in their business strategy, including in particular: 1.3.1. environmental factors, including measures and risks relating to climate change and sustainable development Comments of the Company: The main activity of the Company is granting loans. Therefore, the activity of the Company does not have significant impact on the environment. The Company makes efforts to ensure that its activity have the least possible impact on the natural environment. 1.3.2. social and employee factors, including to ensure equal treatment of women and men, decent working conditions, respect for employees’ rights, dialogue with local communities, customer relations. Comments of the Company: The Company explains that the principles of sustainable development and respect for social and employee rights and interests are applied in the strategy of its activity. In this regard, the Company complies with all applicable laws and guidelines. At the time of publication of this report, no written rules have been drawn up because there are no employees. 1.4. To ensure quality communications with stakeholders, as a part of the business strategy, companies publish on their website information concerning the framework of the strategy, measurable goals, including in particular long-term goals, planned activities and their status, FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 13 defined by measures, both financial and non-financial. ESG information concerning the strategy should among others: Comments of the Company: The Company publishes a number of financial and non-financial measures, as well as information on the adopted development strategy both on the Company’s website and by publishing current and periodic reports. The Company indicated that it does not publish information on its development plans and the progress of their implementation separately. The Company also does not publish any forecasts. 1.4.1 explain how the decision-making processes of the company integrate climate change, including the resulting risks. Comments of the Company: Due to the above-mentioned in point 1.3.1. marginal impact of the Company's activity on the natural environment, the Company does not publish additional explanations in this scope. 1.4.2. present the equal pay index for employees, defined as the percentage difference between the average monthly pay (including bonuses, awards and other benefits) of women and men in the last year, and present information about actions taken to eliminate any pay gaps, including a presentation of related risks and the time horizon of the equality target. Comments of the Company: Due to the fact that the Company has no employees, it is not appropriate to disclose this information. 1.5. Companies disclose at least on an annual basis the amounts expensed by the company in support of culture, sports, charities, the media, social organisations, trade unions, etc. If the company pay such expenses in the reporting year, the disclosure presents a list of such expenses. Comments of the Company: The Company does not conduct sponsorship activities. MANAGEMENT BOARD, SUPERVISORY BOARD 2.1. Companies should have in place a diversity policy applicable to the management board and the supervisory board, approved by the supervisory board and the general meeting, respectively. The diversity policy defines diversity goals and criteria, among others including gender, education, expertise, age, professional experience, and specifies the target dates and the monitoring systems for such goals. With regard to gender diversity of corporate bodies, the participation of the minority group in each body should be at least 30%. Comments of the Company: Crucial personnel decisions in relations to the Company’s governing bodies and its key managers are taken by the General Meeting and the Supervisory Board. 2.3. At least two members of the supervisory board meet the criteria of being independent referred to in the Act of 11 May 2017 on Auditors, Audit Firms and Public Supervision, and have no actual and material relations with any shareholder who holds at least 5% of the total vote in the company. Comments of the Company: The decision to elect Members of the Supervisory Board is within the competence of the General Meeting of Shareholders. Shareholders act on the basis of their competences and trust in individual candidates, appoint the composition of the Supervisory Board. Depending on the decision of the General Meeting, the Company may or may not fulfil this criterion periodically, depending on the selected composition of the FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 14 Supervisory Board. Currently, the Supervisory Board does not fulfil the independence criteria, as only one member of the Supervisory Board is independent, and assessment of the risk resulting from this is within the competence of the General Meeting. 2.11. In addition to its responsibilities laid down in the legislation, the supervisory board prepares and presents an annual report to the annual general meeting once per year. Such report includes at least the following: 2.11.1. information about the members of the supervisory board, including indication of those supervisory board members who fulfil the criteria of being independent referred to in the Act of 11 May 2017 on Auditors, Audit Firms and Public Supervision and those supervisory board members who have no actual and material relations with any shareholder who holds at least 5% of the total vote in the company, and information about the members of the supervisory board in the context of diversity; Comments of the Company: In accordance with the applicable provisions of the Estonian law, the Company does not publish or submit a report on activities of the Supervisory Board to the General Meeting for approval. 2.11.2. summary of the activity of the supervisory board. Comments of the Company: As explained in point 2.11.1. the Supervisory Board does not prepare such a document. 2.11.3. assessment of the company’s standing on, including assessment of the internal control, risk management and compliance systems and the internal audit function, and information about measures taken by the supervisory board to perform such assessment; such assessment should cover all significant controls, in particular reporting and operational controls; Comments of the Company: As explained in point 2.11.1. the Supervisory Board does not prepare such a document. 2.11.4. assessment of the company’s compliance with the corporate governance principles and the manner of compliance with the disclosure obligations concerning compliance with the corporate governance principles defined in the Exchange Rules and the regulations on current and periodic reports published by issuers of securities, and information about measures taken by the supervisory board to perform such assessment; Comments of the Company: As explained in point 2.11.1. the Supervisory Board does not prepare such a document 2.11.5. assessment of the rationality of expenses referred to in principle 1.5; Comments of the Company: As explained in point 2.11.1. the Supervisory Board does not prepare such a document. 2.11.6. information regarding the degree of implementation of the diversity policy applicable to the management board and the supervisory board, including the achievement of goals referred to in principle 2.1. Comments of the Company: As explained in point 2.11.1. the Supervisory Board does not prepare such a document. FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 15 EXTERNAL SYSTEMS AND FUNCTIONS 3.9. The supervisory board monitors the efficiency of the systems and functions referred to in principle 3.1 among others on the basis of reports provided periodically by the persons responsible for the functions and the company’s management board, and makes annual assessment of the efficiency of such systems and functions according to principle 2.11.3. Comments of the Company: In accordance with the applicable provisions of the Estonian law, the Company does not publish or submit a report on activities of the Supervisory Board to the General Meeting for approval. GENERAL MEETING, SHAREHOLDER RELATIONS 4.1. Companies should enable their shareholders to participate in a general meeting by means of electronic communication (e-meeting) if justified by the expectations of shareholders notified to the company, provided that the company is in a position to provide the technical infrastructure necessary for such general meeting to proceed Comments of the Company: The Company considers that the costs of enabling shareholders to participate in the general meeting by means of electronic communication (e-meeting) are too high. Nevertheless, the Management Board indicates, that the structure of the Company’s shareholding means that the shareholders are not interested in participating in the Company’s general meeting in electronic form. At the same time, the Company's Articles of Association and the Regulations of the General Meeting do not prescribe the possibility of participating in the Meeting by means of electronic communication. 4.3. Companies provide a public real-life broadcast of the general meeting. Comments of the Company: The Company recognizes that the costs of broadcasting the General Meeting are too high. At the same time, the Management Board indicates that the Company's shareholding structure causes the lack of interest in the General Meeting. At the same time, the Company's Articles of Association and the General Meeting Regulations do not prescribe transmission of the meeting. 4.6. To help shareholders participating in a general meeting to vote on resolutions with adequate understanding, draft resolutions of the general meeting concerning matters and decisions other than points of order should contain a justification, unless it follows from documentation tabled to the general meeting. If a matter is put on the agenda of the general meeting at the request of a shareholder or shareholders, the management board requests presentation of the justification of the proposed resolution, unless previously presented by such shareholder or shareholders. Comments of the Company: As at the date of publication of this report, the Company does not publish any additional justification for the draft resolutions of the General Meeting. So far, the shareholders of the Company have not expressed interest in the additional discussion of the matter of General Meetings. Shareholders with major holdings As at the balance sheet date 30/06/2022 the structure of direct and indirect shareholders holding at least 5% of the total number of votes at the General Meeting was as follows: FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 16 Direct shareholding structure as at 30/06/2022 No. Direct shareholders Number of shares % of shares Number of votes % of votes 1. Patro Invest OÜ 694 858 37,06 694 858 37,06 X Total 1 875 000 100% 1 875 000 100% Indirect shareholding structure as at 30/06/2022 No. Indirect shareholders Number of shares % of shares Number of votes % of votes 1. Damian Patrowicz 694 858 37,06 694 858 37,06 * Damian Patrowicz owns 100% of Patro Invest OÜ According to the information presented in the 2020/2021 financial year, the structure of direct and indirect shareholding at least 5% of the total number of votes at the General Meeting was as follows: Direct shareholding structure as at 30/06/2021 No. Direct shareholders Number of shares % of shares Number of votes % of votes 1. Patro Invest OÜ 18 720 750 35,66 18 720 750 35,66 X Total 52 500 000 100,00 52 500 000 100,00 Indirect shareholding structure as at 30/06/2021 No. Indirect shareholders Number of shares % of shares Number of votes % of votes 1. Damian Patrowicz 18 720 750 35,66 18 720 750 35,66 * Damian Patrowicz owns 100% of Patro Invest OÜ Holders of securities that give special control powers and description of those powers FON SE shares do not confer any special control rights. Restrictions on voting rights Such restrictions do not apply to the Company's shares. Restrictions on transferability of title to the Company's securities In accordance with the Articles of Association of FON SE there are no restrictions on transferability of title to the Company's shares. Rules governing appointment and removal of members of the management staff and their rights FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 17 The listed company FON SE is managed by the Management Board, its Members act in the interest of the Company and are responsible for its activities. The Management Board activities include, in particular, leadership in the Company, commitment to setting its strategic goals and their implementation, as well as ensuring the company efficiency and security. The Company is supervised by an effective and competent Supervisory Board. Members of the Supervisory Board act in the interest of the Company and are guided by the independence of their own opinions and judgements. The Supervisory Board in particular, gives opinions on the Company's strategy and verifies the work of the Management Board in achieving strategic goals and monitors the results achieved by the Company. Members of the Management Board are appointed by the Members of the Supervisory Board and Members of the Supervisory Board are elected by the Company's general meeting of shareholders. (The Article of Association, point IV) Amendments to the Articles of Association Amendments to the Articles of Association require a resolution of the General Meeting and entry in the register. The notice convening a General Meeting whose agenda includes amendments to the Articles of Association should contain existing provisions of the Articles of Association and the proposed amendments. Where justified by a significant scope of the intended amendments, the notice may include a draft of a new text of the Articles of Association together with a list of its new or amended provisions. The text of the Articles of Association is available on the Company's website at: http://www.fon-sa.pl/statut.php Proceedings of the General Meetings and its powers The General Meetings of the Company are held in accordance with the rules set out in the Commercial Code, the Articles of Association of FON SE and held the applicable capital market laws. Composition of the Management Board and description of the operation of the Company’s management and supervisory bodies in 2021/2022 Management Board: Damian Patrowicz Supervisory Board: Wojciech Hetkowski Jacek Koralewski Małgorzata Patrowicz Martyna Patrowicz The main task of the Management Board is to manage the Company's affairs and represent it, but is also responsible for designing, implementing and ensuring adequate and effective actions aimed at achieving the goal. The Supervisory Board exercises permanent supervision over the Company's activities in all areas of its operations. The main duties of supervisory board members also include appointing, dismissing and suspending members of the Company's management board, delegating members of the supervisory board to perform tasks in place of members of the management board. Due to the simple structure of the Company, FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 18 there are no problems with communicating information in a timely manner between the Management Board and the Supervisory Board. Description of the company’s internal control systems and risk management with regard to the process of preparing financial statements. Due to the simplified structure and relatively limited number of financial risks, the Company's Management Board has not developed and introduced a written procedure of the internal control system and risk management in the scope of preparing financial statements, however the Company approaches the issue of financial reporting with the utmost diligence. The Management Board of the Company is responsible for the internal control system in the Company and its effectiveness in terms of the correctness of preparing financial statements and periodic reports. Financial statements and periodic reports are prepared on the basis of financial data from the financial and accounting system, where they are recorded in accordance with the principles of the adopted accounting policy in accordance with the Accounting Act. The audit of the correctness of the preparation of periodic financial statements is conducted thanks to the annual financial audits carried out by independent auditors. In the reporting period, the financial report was prepared by a professional entity – the auditing office of the „Galex” auditor, providing accounting services for the Company on the basis of the outsourcing agreement. By using the services of a specialized office, the Management Board received ongoing external advice on consulting all problems related to the correct preparation of mandatory financial statements, including quarterly, semi-annual and annual financial statements and tax issues. FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 19 V. REMUNERATION REPORT This remuneration report has been prepared in accordance with the remuneration principles of the Company’s Management Board member. The member of the Management Board is remunerated pursuant to the signed contract. The remuneration report discloses the remuneration and benefits paid to the member of the Management Board in the financial year 2021/2022. The remuneration report is prepared for the first time and submitted to the shareholders for approval at the General Meeting of the Shareholders. The Management Board of the Group consist of one member - Damian Patrowicz. The contract of Damian Patrowicz, a member of the Management Board, was signed on 29/07/2021 and his term of office is valid until 29/07/2024. Management Board Members are selected by the Supervisory Board of the Company based on their expertise in the sector the Company is operating, in addition to candidate’s leadership and management experience is taken into account as well as the commitment to the Company. The Management Board member is not paid any remuneration. No share options are offered to the management. FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 20 VI. FINANCIAL STATEMENTS 1. Statement of financial position STATEMENT OF FINANCIAL POSITION Notes 30/06/2022 (thous. EUR) 30/06/2021 (thous. EUR) Assets Fixed assets 8 578 9 501 Long-term financial assets 4 8 578 9 501 Current assets 311 786 Short-term financial assets 4 301 783 Short-term receivables 8 3 Short-term prepayments 1 0 Cash and cash equivalents 1 0 T o t a l a s s e t s 8 889 10 287 Equity and liabilities Equity 6 139 6 029 Share capital 5 28 875 28 875 Share premium 1 247 1 247 Other reserve 3 805 3 805 Exchange differences -743 -603 Retained earnings -27 045 -27 295 Long-term liabilities 2 742 3 928 Other long-term liabilities 8 2 742 3 928 Short-term liabilities 8 330 Credits and loans 8 0 322 Trade liabilities 1 2 Other liabilities 2 3 Other provisions 5 3 T o t a l equity and l i a b i l i t i e s 8 889 10 287 Book value of equity 7 6 139 6 029 Number of shares 1 875 000 52 500 000 Book value per one share (in EUR) 3,27 0,11 Notes on pages 24-46 are an integral part of the financial statements. FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 21 2. Statement of profit or loss STATEMENT OF PROFIT OR LOSS Notes Period 01/07/2021 - 30/06/2022 (thous. EUR) Period 01/07/2020 - 30/06/2021 (thous. EUR) Revenue from interest 9 372 167 Gross profit on sales 372 167 General and administrative expenses 10 -15 -20 Other operating revenues 0 5 Other operating costs -11 -2 Profit on operating activities 346 150 Financial costs -96 -34 Profit (loss) before income tax 250 116 Profit (loss) for the period from continued operations 250 116 Net profit (loss) 250 116 Number of ordinary shares 1 875 000 52 500 000 Profit (loss) on continued and discontinued operations per share (in EUR) 0,13 0,002 Notes on pages 24-46 are an integral part of the financial statements. 3. Statement of comprehensive income STATEMENT OF COMPREHENSIVE INCOME Period 01/07/2021 - 30/06/2022 (thous. EUR) Period 01/07/2020 - 30/06/2021 (thous. EUR) Profit (loss) for the period 250 116 Other comprehensive income, including: -140 -53 - differences from conversion into EUR -140 -53 Total comprehensive income(loss) for the period 110 63 Basic earnings per share (in EUR) 0,13 0,002 Diluted earnings per share (in EUR) 0,005 0,002 Notes on pages 24-46 are an integral part of the financial statements. FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 22 4. Statement of changes in equity STATEMENT OF CHANGES IN EQUITY Period 01/07/2021 - 30/06/2022 (thous. EUR) Period 01/07/2020 - 30/06/2021 (thous. EUR) Opening balance of equity 6 029 5 966 Opening balance of share capital 28 875 7 700 increase due to bonus issue 0 21 175 Closing balance of share capital 28 875 28 875 Opening balance of share premium 1 247 22 422 decrease due to bonus issue 0 -21 175 Closing balance of share premium 1 247 1 247 Opening balance of other reserve 3 805 3 805 Closing balance of other reserve 3 805 3 805 Opening balance of Retained earnings -27 295 -27 411 increase due to profit for the period 250 116 Closing balance of retained earnings -27 045 -27 295 Opening balance of exchange differences -603 -550 changes in exchange differences -140 -53 Closing balance of exchange differences -743 -603 Closing balance of equity 6 139 6 029 Notes on pages 24-46 are an integral part of the financial statements. 5. Cash flow statement CASH FLOW STATEMENT (indirect method) Period 01/07/2021 - 30/06/2022 (thous. EUR) Period 01/07/2020 - 30/06/2021 (thous. EUR) OPERATING ACTIVITIES Net profit (loss) 250 116 Adjustments: Difference between interest calculated and received -123 -90 Loans granted -69 -55 Received loans repayments 1 407 969 Change in receivables and other accruals -5 11 Change in liabilities -2 -1 Other adjustments 11 0 Net cash flow (outflow) from operating activities 1 469 950 INVESTING ACTIVITIES Inflows from investing activities 0 242 Sale of financial assets 0 242 Net cash flow (outflow) from investing activities 0 242 FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 23 Notes on pages 24-46 are an integral part of the financial statements. FINANCING ACTIVITIES Outflows from investing activities -1 469 -1 193 Repayments of credits and loans -1 374 -1 149 Interest paid -95 -44 Net cash flow (outflow) from financing activities -1 469 -1 193 Exchange differences 1 0 Total net cash flows (outflows) 0 -1 Change in cash balances 1 -1 Opening balance of cash 0 1 Closing balance of cash 1 0 FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 24 NOTES TO THE FINANCIAL STATEMENTS Note 1. Accounting policies 1.1. General information FON SE (hereinafter referred to as the “Company” or “FON”), a company based on Polish capital, operates in Estonia and Poland. The financial statements of the Company for 2021/2022 were signed by the member of management Board of FON SE on 28 September 2022. In accordance with the requirements of the Commercial Code of the Republic of Estonia, the annual report prepared by the Management Board and approved by the Supervisory Board, which also includes the financial statements, is approved by the general meeting of shareholders. Shareholders have the right not to approve the annual report prepared by the Management Board and approved by the Supervisory Board and to request that a new report is prepared. The Annual General Meeting of Shareholders, one of the items on the agenda of which is the approval of the annual report of FON SE for 2021/2022, is planned on 15/11/2022. 1.2. Basis of preparation of financial statements The Company’s 2021/2022 annual financial statements have been prepared in conformity of International Financial Reporting Standards as endorsed in the European Union (“IFRS (EU)”). The Company has consistently applied the accounting policies throughout all periods presented, unless stated otherwise. The annual financial statements for 2021/2022 have been prepared on a going concern basis. The preparation of annual financial statements in conformity with IFRS (EU) requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. Changes in assumptions may have a significant impact on the financial statements in the period the assumptions changed. The management of the Company believes the underlying assumptions in the preparation of annual financial statements for 2021/2022 are appropriate. These annual financial statements consist of statements of financial position, statement of profit or loss, statement of comprehensive income, statement of changes in equity, statement of cash flows, and explanatory notes. The annual financial statements are presented in euros and all values are rounded to the nearest thousand (€000), except when otherwise indicated. FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 25 The original annual financial statements of the Company have been prepared is English. In case of the conflict with Polish or Estonian translation, the English version shall prevail. 1.3. Functional and reporting currency The functional currency of the Company is Polish zloty (PLN) and reporting (presentational) currency is euro (EUR). Balance sheet items are calculated according to the exchange rate announced by the European Central Bank as at the balance sheet day. Items in the statement of profit or loss and in the cash flow statement are converted at the exchange rate being the arithmetic average exchange rate published by the European Central Bank for the financial year. 1.4. Accounting policies, changes in accounting estimates and errors (IAS 8) When an IFRS (EU) specifically applies to a transaction, other event, or condition, the accounting policy or policies applied to that item shall be determined by applying the IFRS (EU). In the absence of an IFRS (EU) that specifically applies to a transaction, other event or condition, management shall use its judgement in developing and applying an accounting policy that results in information that is relevant to the economic decision-making needs of users and reliable. The Company selects and applies its accounting policies consistently for similar transactions, other events, and conditions, unless an IFRS (EU) specifically requires or permits categorization of items for which different policies may be appropriate. If an IFRS (EU) requires or permits such categorization, an appropriate accounting policy shall be selected and applied consistently to each category. The Company changes an accounting policy only if the change is required by IFRS (EU) or results in the financial statements providing reliable and more relevant information about the effects of transactions, other events, or conditions on the entity’s financial position, financial performance or cash flows. When a change in accounting policy is applied retrospectively the Company adjusts the opening balance of each affected component of equity for the earliest prior period presented and the other comparative amounts disclosed for each prior period presented as if the new accounting policy had always been applied. The effect of a change in an accounting estimate shall be recognized prospectively by including it in profit or loss in the period of the change, if the change affect that period only or the period of the change and future periods, if the change affects both. The Company corrects material prior period errors retrospectively in the first set of financial statements authorized for issue at their discovery by restating the comparative amounts for the prior period(s) presented in which the error occurred; or if the error occurred before the FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 26 earliest prior period presented, restating the opening balances of assets, liabilities and equity for the earliest prior period presented. 1.5. Impact of new and revised standards and interpretations The accounting policies applied in the preparation of these financial statements are the same as those used by the Company in the financial statements for the year ended 30 June 2021. Revised standards effective on or after 1 January 2022 Certain new or revised standards and interpretations have been issued that are mandatory for the Company’s annual reporting periods beginning on or after 1 January 2022 and that have not been adopted by the Company ahead of effective date. Amendments to the Conceptual Framework for Financial Reporting (amendments to IFRS 3) - The amendments update the obsolete reference to the conceptual framework in IFRS 3 without substantially changing the requirements of the standard. Effective for annual reporting periods beginning on or after 1 January 2022. The EU has approved the changes. Definition of Accounting Estimates (amendments to IAS 8) - The amendment replaces the definition of a change in accounting estimates with the definition of accounting estimates. According to the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty". Entities should develop accounting estimates when the accounting policies require the measurement of items in the financial statements that are subject to measurement uncertainty. The amendments clarify that a change in an accounting estimate resulting from new information or new developments is not a correction of an error. Effective for annual reporting periods beginning on or after 1 January 2023. The EU has approved the changes. Classification of liabilities as current or non-current (amendments to IAS 1) - The amendments are aimed to promote consistency in applying the requirements by helping the companies determine whether liabilities and other liabilities with uncertain settlement dates should be classified as current (to be settled within 12 months) or non-current. The amendments clarify what is meant by the right to defer settlement; that a right to deferral must exist at the end of the reporting period; that classification is unaffected by the likelihood that an entity will exercise its deferral right and that only if the embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification. Effective for annual reporting periods beginning on or after 1 January 2023. The EU has approved the changes. Disclosure of Accounting Policies (amendments to IAS 1) - The amendments require an entity to disclose its material accounting policies instead of significant accounting policies. The additional amendments clarify how an entity can determine a material accounting policy. Examples are provided where the accounting policy is likely to be material. Effective for annual reporting periods beginning on or after 1 January 2023. Not yet endorsed for use in the EU. FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 27 The Company does not expect the amendments to have a material impact on its financial statements when initially applied. Other new standards, amendments to standards and interpretations that are not yet effective are not expected to have a significant impact on the Company’s financial statements. 1.6. Financial assets (IFRS 9, IAS 32) Classification The Company classifies financial assets into the following measurement categories: • those at fair value (either through other comprehensive income or through profit or loss); • those carried at amortised cost. The classification depends on the Company's business model for managing its financial assets and the contractual terms of the cash flows. Registration and derecognition Purchases and sales of financial assets under normal market conditions are recognized on the trade date, the date on which the Company commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the asset have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Measurement Financial assets (unless they are receivables from a buyer that does not have a significant financing component and are initially measured at transaction price) are initially measured at fair value and in the case of assets not measures at fair value through profit or loss, related acquisition costs of assets are added to the initial value. Debt instruments Subsequent recognition of debt instruments depends on the Company's business model for managing its financial assets and the contractual cash flows of the financial assets. Assets held for the purpose of collecting contractual cash flows that have only cash flows and interest payable are recognised at amortised cost using the effective interest rate method. Impairment losses are deducted from the adjusted acquisition cost. Interest income, foreign exchange gains and losses and impairment losses are recognised in the income statement. Gains or losses on derecognition are recognised in the income statement under “Other operating income / expense”. As of 30 June 2021 and 30 June 2022 and during 2021/2022, financial assets of the Company were classified as at amortised cost. FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 28 Impairment of financial assets The impairment loss model is applied to financial assets at amortized cost. Financial assets carried at amortized cost consist of loan receivables, other receivables, cash and cash equivalents. Expected credit losses are probability-weighted estimated credit losses. Credit loss is the difference between the contractual cash flows of the Company and the expected cash flows of the Company, discounted at the original effective interest rate. Measurement of expected credit loss takes into account: (i) an unbiased and probabilistic amount that estimates a number of different outcomes, (ii) the time value of money and (iii) reasonable and reasonable information available at the end of the reporting period conditions and forecasts of future economic conditions. The Company measures impairment as follows:  cash and cash equivalents at low credit risk (senior management considers a low credit risk assessment of at least one of the major credit rating agencies) to be equivalent to expected credit losses within 12 months;  for all other financial assets, the amount of credit losses expected to be incurred over a 12-month period, unless the credit risk (i.e. the expected life of the financial asset in default) has increased significantly after initial recognition; if the risk is significantly increased, the credit loss is measured at an amount equal to the expected credit loss over a lifetime. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are initially recognised at their fair value plus transaction costs. After initial recognition, loans and receivables are carried at amortised cost using the effective interest rate method. This method is used to calculate interest income on the receivable in subsequent periods. Financial assets are adjusted for impairment losses. Impairment is based on expected credit loss. The principle of expected credit loss is to show the overall trend in the deterioration or improvement in the credit quality of a financial asset. Impairment losses on financial assets classified at amortised cost are recognised as a provision for impairment. Expected credit losses are probability-weighted estimated credit losses that, at the reporting date, consider all relevant information, including information about past events, current conditions, reasonable and reasonable future events, and forecasts of economic conditions. At the end of each reporting period, the Company conducts a review to determine whether there has been a material increase in risk compared to the last estimate. Indicators of increased credit risk include, but are not limited to, overdue payments over 30 days, significant financial FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 29 difficulties of the debtor, possible bankruptcy or restructuring of the debtor. Impairment charges are recognised in the income statement under “Other operating expenses”. If receivables are uncollectible, they are written off together with a provision for impairment. Receivables are generally recognised as current assets when they are due to be settled within 12 months after the balance sheet date. Receivables that are due later than 12 months after the balance sheet date are recognised as non-current assets. Financial assets that do not include SPPI (Solely Payment of Principal and Interest) cash flows are recognised at fair value through profit or loss. Information on financial instruments 30/06/2022 Types of financial instruments (thous.EUR) Fair value through total income Fair value through profit or loss Amortised cost Total Total financial assets 0 0 8 889 8 889 Loans granted 0 0 8 879 8 879 Receivable from deliveries and services and other receivables 0 0 8 8 Short-term prepayments 0 0 1 1 Cash and cash equivalents 0 0 1 1 Total financial liabilities 0 0 2 742 2 742 Long-term loan 0 0 2 742 2 742 30/06/2021 Types of financial instruments (thous.EUR) Fair value through total income Fair value through profit or loss Amortised cost Total Total financial assets 0 0 10 287 10 287 Loans granted 0 0 10 284 10 284 Receivable from deliveries and services and other receivables 0 0 3 3 Total financial liabilities 0 0 3 928 3 928 Long-term loan 0 0 3 928 3 928 Professional judgment If a given transaction is not regulated by any standard or interpretation, the Management Board, guided by its subjective judgment, determines and applies accounting policies which will ensure that the financial statements will contain correct and reliable information and will:  correctly, clearly and fairly present the property and financial situation of the Company, the results of its activities and cash flows,  reflect the economic content of the transaction,  objective, FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 30  prepared in accordance with the principle of prudent valuation,  complete in all material respects. When valuating the loans, the debtor's solvency is taken into account. We take into account the risk of non-repayment. If there is no risk of repayment, we value the loans at their nominal value. There are conducted proper analysis. The Management Board makes decisions considering all the potential consequences of its decisions. Hence, the decision-making process is based on multi-stage analysis of, inter alia, borrowers' collaterals. Uncertainty of estimates When applying the accounting principles in force in the Company, the Management Board is obliged to make estimates, judgments and assumptions regarding the amounts of valuation of individual assets and liabilities. The estimates and related assumptions are based on historical experience and other factors considered relevant. The actual results may differ from the adopted estimated values. The preparation of the financial statements requires the Management Board of the Company to make estimates, as much of the information contained in the financial statements cannot be measured precisely. The Management Board verifies the adopted estimates based on changes in the factors considered when making them, new information or past experiences. Therefore, the estimates made as at June 30, 2022 may be changed in the future. In the report for 2021/2022, the Management Board assesses that there are no other significant areas with regard to which there is a risk related to uncertainty of estimates. 1.7. Cash and cash equivalents, cash flows (IAS 7) Cash and cash equivalents are cash at bank and on hand, short-term extremely high liquidity investments (up to three months) that are readily convertible into a known amount of cash and which are subject to an insignificant risk of changes in value. The statement of cash flows reports cash flows during the period classified by operating, investing and financing activities. The Company reports cash flows from operating activities using the indirect method whereby net profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows. 1.8. Share Capital (IAS 1) Ordinary shares are included within equity. The expenditures related to the issue of ordinary shares are recognised as a reduction of equity. Treasury shares repurchased by the parent company are recognised as a reduction of equity (in the line item “Treasury shares”). Disbursements and contributions related to treasury shares are recognised in equity. FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 31 1.9. Share premium (IAS 1) The differences between the fair value of the payment received and the nominal value of shares are recognized in the share premium. In the event of buyout of shares, the amount paid for the shares is charged to equity and is disclosed in the statement of financial position under equity. The costs of issuing shares, incurred when establishing a joint-stock company or increasing the share capital, reduce the entity's supplementary capital to the amount of the excess of the issue value over the par value of the shares, and the remaining part is classified as financial costs. 1.10. Statutory reserve capital (IAS 1) Reserve capital is formed to comply with the requirements of the Commercial Code of the Republic of Estonia. During each financial year, at least 5% of the net profit shall be transferred to reserve capital until reserve capital reaches one-tenth of share capital. Reserve capital may be used to cover a loss or to increase share capital. Payments shall not be made to shareholders from reserve capital. In the statement of financial position statutory reserve is recognised in Other reserves. 1.11. Earnings per share (IAS 33) Basic earnings per share is calculated by dividing the profit for the year attributable to ordinary equity holders of the Company by the weighted average number of shares outstanding during the year. Diluted earnings per share is calculated by dividing the profit attributable to equity holders of the Company (after adjusting for interest on the convertible preference shares) by the weighted average number of shares outstanding during the year plus the weighted average number of shares that would be issued on conversion of all the dilutive potential shares into shares. 1.12. Financial liabilities (IFRS 9, IAS 32) All financial liabilities (trade payables, other short and long-term liabilities, borrowings, etc.) are initially recognised at their fair value, less any transaction costs. They are subsequently recognised at amortised cost, using the effective interest rate method. The amortised cost of the current financial liabilities generally equals their nominal value; therefore current financial liabilities are stated in the statement of financial position at redemption value. To calculate the amortised cost of non- current financial liabilities, they are initially recognised at fair value of the proceeds received (net of transaction costs incurred) and an interest expense is calculated on the liability in subsequent periods using the effective interest rate method. A financial liability is classified as current when it is due to be settled within 12 months after the balance sheet date or the Company does not have an unconditional right to defer FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 32 settlement of the liability for at least 12 months after the balance sheet date. Interest-bearing liabilities that are due within 12 months after the balance sheet date, but which are refinanced after the balance sheet date as long-term, are recognised as short-term interest-bearing liabilities. Also, borrowings are classified as short-term if the lender had at the balance sheet date the contractual right to demand immediate payment of the borrowing due to the breach of conditions set forth in the agreement. 1.13. Provisions and contingent liabilities (IAS 37) Provisions are recognized when the Company has a present obligation (legal or constructive) because of a past event it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, considering the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). When some or all the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received. Contingent liabilities Contingent liabilities are those liabilities the realization of which is less probable than non- realization or the amount of which cannot be measured sufficiently reliably. The Company does not recognize contingent liabilities but discloses brief description of the nature of the contingent liability and, where practicable an estimate of its financial effect; an indication of the uncertainties relating to the amount or timing of any outflow; and the possibility of any reimbursement unless the possibility of any outflow in settlement is remote. 1.14. Revenue recognition (IFRS 15) Interest income Interest income is recognized when it is probable that the economic benefits associated with the transaction will flow to the Company and the amount of the revenue can be measured reliably. Interest income is recognized on an accrual basis. 1.15. Operating segments (IFRS 15, IFRS 8) A segment is a distinguishable component of the Company, which generates revenues and incurs expenditures. The segment reporting is presented in respect of operating and geographical segments. The company operates in only one business area, therefore the segment reporting is not relevant. FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 33 1.16. Income tax (IAS 12) Corporate income tax in Estonia According to the Income Tax Act entered into force in Estonia at 1 January 2000, it is not the company's profits that are taxed but net dividends paid. Income tax is paid on dividends, fringe benefits, gifts, donations, costs of reception of guests, non-business payments and transfer price adjustments. The effective income tax rate is 20/80 on net dividends paid out. Starting from 2019, it is possible to apply a more favorable tax rate on dividend payments (14/86). The more favorable tax rate can be applied to a dividend distribution that amounts to up to three preceding years’ average dividend distribution that has been taxed at 20/80 rate. 1.17. Related parties (IAS 24) A related party is a person or entity that is related to the entity that is preparing its financial statements. A related party transaction is a transfer of resources, services, or obligations between a reporting entity and a related party, regardless of whether a price is charged. Such transactions could have an effect on the profit or loss and financial position of the Company. For this reason, knowledge of the Company’s transactions, outstanding balances, including commitments, and relationships with related parties may affect assessments of its operations by users of financial statements, including assessments of the risks and opportunities facing the Company. The Company discloses the related party relationship when control exists, irrespective of whether there have been transactions between the related parties. The Company considers key members of the management (supervisory and management board), their close relatives and entities under their control or significant influence as well as associated companies as related parties. 1.18. Events after the reporting period (IAS 10) Events after the reporting period are those events, favorable and unfavorable, that occur between the end of the reporting period and the date when the financial statements are authorized for issue. Events after the reporting period are those that provide evidence of conditions that existed at the end of the reporting period (adjusting events after the reporting period) and those that are indicative of conditions that arose after the reporting period (non- adjusting events after the reporting period). Note 2. Financial risks The main types of risk arising from the Company's financial instruments include interest rate risk, liquidity risk, credit risk. The Management Board is responsible for establishing of the risk management rules and supervising of its respecting. The principles of risk management FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 34 aim is to identify and analyse the risks that the Company is exposed to, by establishing appropriate limits and controls.  Credit risk (a) Credit risk assessment - credit risk represents a potential loss that could arise if a Company’s counterparty in a transaction is unable to meet its contractual obligations and provide cash flows. Credit risk is mainly related to loans granted by the Company, cash and cash equivalents, deposits. The scope of the Company's credit risk is most affected by the specific circumstances of each customer. At the same time, the Company's management also follows the general circumstances such as the legal status of the client (private or public company), the geographical location of the client, the field of operation, the state of the economy and future economic forecasts. To reduce the credit risk, customers' payment discipline and their ability to meet their commitments are monitored daily. (b) Credit quality of financial assets - the Company uses a simplified approach to measure expected credit losses under IFRS 9, applying lifetime expected credit losses. Historical loss rates are adjusted to include both current and future information about the macroeconomic factors, which may have impact on the ability of customers to pay the receivables. Based on the principles described above, the impact of impairment losses on the Company’s cash flows was immaterial. The maturity dates of the assets as at 30/06/2022 30/06/2022 in EUR thous. Maturity Dates Total < 1 year 1-2 years 2-3 years Above 3 years Cash and cash equivalents 1 1 0 0 0 Short-term prepayments 1 1 0 0 0 Short-term receivables 8 8 0 0 0 Loans granted 8 879 301 0 8 578 0 Total 8 889 311 0 8 578 0 The maturity dates of the assets as at 30/06/2021 30/06/2020 in EUR thous. Maturity Dates Total < 1 year 1-2 years 2-3 years Above 3 years Cash and cash equivalents 0 0 0 0 0 Other 3 3 0 0 0 FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 35 receivables Loans granted 10 284 783 84 2 233 7 184 Total 10 287 786 84 2 233 7 184 Entities to which Company provides financing are related entities, therefore there is no particular type of control. Related entities received loans to invest in the capital market or grant further loans.  Interest rate risk At the balance sheet date, the interest rate structure of the Company’s interest-bearing financial instruments were as follows: Interest rate Fixed/Variable interest rate Damar Patro UÜ 2,5% Fixed Damar Patro UÜ 8% Fixed Natural person 10% Fixed Elkop SE 1% + WIB1M Variable Elkop SE 4,5% + WIB1M Variable The Company has one significant interest-bearing liabilities: Interest rate Fixed/Variable interest rate Atlantis SE 0,5% + WIB1M Variable The Company's income and operating cash flows are dependent of changes in market interest rates, because some of the contracts are concluded at variable interest rates. If the variable interest rate as at 30/06/2022 had been higher/lower 1 % point, the Company’s profit for the financial year would have increased/decreased by EUR 28 thous./EUR 22 thous. (30/06/2021: EUR 47 thous./EUR 54 thous.), assuming all other variables remained constant.  Liquidity risk Liquidity risk management process bases on monitoring estimated cash-flows, and adjusting final maturity of assets and liabilities, analysing working capital and maintaining an access to different sources of funding. The aim of the Company is to maintain the balance between funding continuity and flexibility, through using sources of funding such as loan, overdraft facility, financial leasing agreement. The maturity dates of liabilities as at 30/06/2022 Maturity dates 30/06/2022 in thous. EUR Total < 1 year 1-2 years 2-3 years Above 3 years Credits and loans 2 742 0 0 2 742 0 Trade liabilities 1 1 0 0 0 Other liabilities 2 2 0 0 0 Other provisions 5 5 0 0 0 FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 36 Total 2 750 8 0 2 742 0 The maturity dates of liabilities as at 30/06/2021 Maturity dates 30/06/2021 in thous. EUR Total < 1 year 1-2 years 2-3 years Above 3 years Credits and loans 4 250 322 0 0 3 928 Trade liabilities 2 2 0 0 0 Other liabilities 3 3 0 0 0 Other provisions 3 3 0 0 0 Total 4 258 330 0 0 3 928  Risk of shares price’s fluctuations and limited liquidity An inherent feature of market trading is fluctuations in share prices and short-term fluctuations in turnover. It might result in possible sale or purchase of the qualifying holding of the Company’s shares will relate to a necessity to accept significantly less favourable price than the reference price. The Company cannot also exclude significant, temporary limitations of liquidity, which may significantly hamper the sale or purchase of the Company’s shares.  Risk connected to links between members of the Company’s corporate bodies There are interpretations indicating the possibility of risks arising from the negative impact of links between members of the Company's management or control bodies on their decisions. This applies in particular to the impact of these ties in the scope of ongoing supervision over the Company's operations. When assessing the likelihood of such a risk, it should be considered that the supervisory bodies are subject to the control of another body - the General Meeting, and it is in the interest of the members of the Supervisory Board to perform their duties in a reliable and lawful manner. Otherwise members of the Supervisory Board are exposed to responsibility from Ordinary General Meeting or criminal responsibility from the title of acting against.  Risk related to the shareholder structure As at the balance sheet date (30/06/2022), 37,06% of the share capital and 37,06% of votes at the Company’s General Meeting owned directly Patro Invest OU, as a result of which the above-mentioned Shareholder has a significant influence on the adopted resolutions at the General Meeting of the Company’s Shareholder.  Risk related to the economic situation in Poland and Estonia. The economic situation in Poland and Estonia have a significant impact on the financial results achieved by all entities operating in these countries, including the Company, because the success of the development of companies investing in financial instruments and conducting financial services activities largely depends on the conditions of running a business. Rising inflation may also have an impact on the business situation because it may have an impact on the level of interest rates. FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 37  Currency risk There is a currency risk in connection with the loans granted in PLN. The risk related to the possibility of fluctuations in the exchange rate of one currency in relation to another may lead to both deterioration of the financial situation of an entity and its improvement as a result of a decrease in a given receivable or an increase in this receivable. Financial assets and liabilities recognized in euros and polish zlotys did not carry considerable risk.  Risk related to the impact of the SARS-CoV-2 coronavirus epidemic on the Company’s operations. Due to the type of business, the Company is moderately exposed to the negative consequences of the SARS-CoV-2 coronavirus epidemic causing the COVID19 disease. The Company, after analysing the current situation related to the SARS-CoV-2 coronavirus epidemic, causing the COVID-19 disease, and its potential impact on the Company's operations - indicates that as at the date of publication of the report, the Company did not notice the impact of the above-mentioned the situation on the Company's activity.  Risk related to the armed conflict in Ukraine. Due to the ongoing armed conflict in Ukraine, the Company's operations are moderately exposed to the consequences of the war. As at the date of publication of the report, the Company does not anticipate extending the conflict beyond the territory of Ukraine therefore, no impact on the operating activities of the Company is expected. ASSESSMENT As at the day of preparation of the annual report, the Management Board according to their best knowledge, does not recognize any threat in terms of fulfilling his obligations and financial liquidity. The Company settles its liabilities systematically and has not taken any credits or loans taken or other significant obligations. The Company dedicates its financial resources for conducted lending activity and intends to develop this activity gradually. Possible surpluses are located on temporary deposits in safe banks. Because of the fact that the main activity of the Company is the granting of loans, the proper and prompt fulfilment of the contractual obligations of the borrowers has a significant impact on the Company's results and maintaining. CHARACTERISTIC OF EXTERNAL AND INTERNAL FACTORS Considering the specifics of the activity, i.e., financial service activities in the field of granting loans, results are significantly influenced by: - the general situation on the loan market and level of interest rates, - the proper fulfilment by the Borrowers of their obligations resulting from concluded loan agreements, as well as the progress of the enforcement procedure and the collection of overdue loans if such agreements occur, FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 38 - efficiency of administrative and legal procedures, - opportunity to gain possible borrowers, - the economic situation and investment conditions in Poland, Estonia and the entire region, - access to external financing sources, - cooperation with other financial entities. Note 3. Capital management The policy of the Management Board is to maintain a solid capital base in order to maintain investor confidence and to ensure the future development of economic activity. The Company manages its capital to maintain the ability to continue the activity, considering the implementation of planned investments, so that it can generate returns for shareholders. In line with market practice, the Company monitors capital, among others, on the basis of the equity ratio and the ratio of credits, loans and other sources of financing. The equity ratio is calculated as the ratio of the net asset value to the balance sheet total. The debt / EBITDA ratio is calculated as the ratio of liabilities due to loans, borrowings and finance leases minus free cash and short-term investments with maturity up to 1 year to EBITDA (net profit after adding depreciation). In order to maintain financial liquidity and creditworthiness allowing for obtaining external financing at a reasonable level of costs, the Company assumes maintaining the equity ratio at a level not lower than 0.5, and the ratio of loans, borrowings and other sources of financing / EBITDA at the level of 2.0. 30/06/2022 (thous.EUR) 30/06/2021 (thous.EUR) Equity 6 139 6 029 Net asset value 6 139 6 029 Balance sheet total 8 889 10 287 Equity ratio 0,69 0,59 Net profit (loss) 250 116 EBITDA 250 116 Credits, loans and other sources of financing 2 750 4 258 Free cash and short-term investments 302 783 Indicator: Credits, loans and other sources of financing - Free cash and short-term investments/EBITDA 9,79 29,96 Equity ratio = equity / assets **EBITDA = Net income + taxes + interest expenses + deprecation and amortization Free cash and short term investment = short term investments + cash FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 39 Note 4. Financial assets 30.06.2022 Borrower Allocation by remaining maturity Interest rate Currency of the loan granted Deadline Collaterals During 12 months (thous. EUR) 1-5 years (thous. EUR) Elkop SE 155 5 521 WIBOR 1M + 1% PLN 31.12.2024 bill of exchange Elkop SE 4 788 WIBOR 1M + 4,5% PLN 31.12.2024 bill of exchange, mortgage Damar Patro UÜ 112 2 200 2,5% EUR 31.12.2024 bill of exchange Damar Patro UÜ 0 69 8% PLN 31.12.2024 bill of exchange Auto Kluge 30 0 10% PLN 31.08.2015 bill of exchange, transfer of ownership for collateral TOTAL: 301 8 578 The loans to Damar Patro UÜ was repaid fully after the balance sheet date. 30.06.2021 Borrower Allocation by remaining maturity Interest rate Currency Deadline Collaterals During 12 months (thous. EUR) 1-5 years (thous. EUR) Elkop SE 6 5 733 WIBOR 1M + 1% PLN 31.12.2024 bill of exchange Elkop SE 56 1 535 WIBOR 1M + 4,5% PLN 31.12.2024 bill of exchange, mortgage Damar Patro UÜ 57 2 200 2,5% EUR 30.06.2023 bill of exchange FLY Sp. z o.o.** 66 33 - PLN 15.10.2022 mortgage, bill of exchange, guarantee Patro Inwestycje Sp.z o.o. 562 0 2,5% PLN 31.12.2021 bill of exchange Auto Kluge 36 0 10% PLN 31.08.2015 bill of exchange, transfer of ownership for security TOTAL: 783 9 501 FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 40 Note 5. Share capital SHARE CAPITAL 30/06/2022 (thous.EUR) 30/06/2021 (thous.EUR) Opening balance of share capital 28 875 7 700 Increase of share capital due to bonus issue 0 21 175 Closing balance of share capital 28 875 28 875 As at the balance sheet date, 30/06/2022, the Company’s equity is less than 50% of the share capital and does not comply with the requirements of § 301 of the Commercial Code of Estonian. On September 7, 2022, a decrease in the share capital of FON SE from EUR 28 875 000 to EUR 187 500 was registered by the Business Register. As at the date of publication of the annual report, the share capital amounts to EUR 187 500 and is divided into 1 875 000 shares. Note 6. Shareholding structure As at 30/06/2022, the structure of shareholders directly and indirectly holding at least 5% of the total number of votes at the General Meeting was as follows: Direct shareholding structure as at 30/06/2022 No. Direct shareholders Number of shares % of shares Number of votes % of votes 1. Patro Invest OÜ 694 858 37,06 694 858 37,06 X Total 1 875 000 100,00 1 875 000 100,00 Indirect shareholding structure as at 30/06/2022 No. Indirect shareholders Number of shares % of shares Number of votes % of votes 1. Damian Patrowicz 694 858 37,06 694 858 37,06 * Damian Patrowicz owns 100% of Patro Invest OÜ To the best knowledge of the Management Board, as at the balance sheet date, i.e. 30/06/2021, the structure of shareholders directly and indirectly holding at least 5% of the total number of votes at the General Meeting was as follows: Direct shareholding structure as at 30/06/2021 No. Direct shareholders Number of shares % of shares Number of votes % of votes 1. Patro Invest OÜ 18 720 750 35,66 18 720 750 35,66 X Total 52 500 000 100,00 52 500 000 100,00 FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 41 Indirect shareholding structure as at 30/06/2021 No. Indirect shareholders Number of shares % of shares Number of votes % of votes 1. Damian Patrowicz 18 720 750 35,66 18 720 750 35,66 * Damian Patrowicz owns 100% of Patro Invest OÜ Note 7 Book value per share As at 30/06/2022 As at 30/06/2021 Book value (in thous.EUR) 6 139 6 029 Number of shares (pcs) 1 875 000 52 500 000 Book value per one share (in EUR) 3,27 0,11 Basic earnings per share (in EUR) 0,13 0,002 Diluted earnings per share (in EUR) 0,005 0,002 As at 30/06/2022 the number of shares amounted to 1 875 000. On 3/06/2022 the Court registered the resplit of shares voted on the EGM on 24/05/2022. The resplit was carried out in the ratio 28:1. It means that every shareholder received 1 new share instead of 28 old shares without changes in share capital. Note 8. Credits and loans 30.06.2022 Lender During 12 months (thous. EUR) 1-5 years (thous. EUR) Interest rate Currency Deadline Collaterals ATLANTIS SE 0 2 742 WIBOR 1M + 0,5% PLN 31.12.2024 bill of exchange FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 42 30.06.2021 Lender During 12 months (thous. EUR) 1-5 years (thous. EUR) Interest rate Currency Deadline Collaterals ATLANTIS SE 322 3 928 WIBOR 1M + 0,5% PLN 31.12.2024 bill of exchange Note 9. Revenue Information on revenues and results for each industry segment In accordance with the requirements of IFRS 8, operating segments should be identified based on internal reports on those elements of the Company that are regularly verified by persons deciding about allocating resources to a given segment and assessing its financial results. The Company conducts a homogeneous activity of providing other financial services. The Company’s main activity is granting loans, there are no other activities, segment reporting is not applicable. Geographical information Revenue by Geographical regions (location of customer): GEOGRAPHICAL AREA FOR FINANCIAL ACTIVITY REVENUES FROM CUSTOMERS 01/07/2021 - 30/06/2022 (thous.EUR) REVENUES FROM CUSTOMERS 01/07/2020 - 30/06/2021 (thous.EUR) Estonia 55 55 Poland 317 112 Total 372 167 Information on leading customers In the period since 01/07/2021 to 30/06/2022 the Company achieved revenue from transactions with two customers in excess of 10% of the entity’s total revenue:  Customer no. 1 – 83,6 % of total revenues  Customer no. 2 – 14,82 % of total revenues In the period since 01/07/2020 to 30/06/2021 the Company achieved revenue from transactions with three customers in excess of 10% of the entity’s total revenue: FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 43  Customer no. 1 – 54,18 % of total revenues  Customer no. 2 – 32,94 % of total revenues  Customer no. 3 – 10,29 % of total revenues Note 10. Costs COST BY TYPE Period 01/07/2021 - 30/06/2022 (thous.EUR) Period 01/07/2020 - 30/06/2021 (thous.EUR) a) external services -15 -20 Total general and administrative expenses -15 -20 Note 11. Balances and transactions with related entities In the period covered by the report, the Company did not conclude transactions with related entities on other terms than market terms. Relations between members of Company’s bodies Between managing and supervising bodies of the Company, there are following organizational relations: Parent company: Patro Invest OÜ in Tallinn (directly), Mr. Damian Patrowicz (indirectly by Patro Invest OǕ). Entities related by personal ties in the composition of a Supervisory Board and due to the dominant direct and indirect shareholder: INVESTMENT FRIENDS CAPITAL SE, Atlantis SE, Elkop S.A., Investment Friends SE, Patro Invest Sp. z o.o. w likwidacji, Patro Invest OÜ, Damar Patro UÜ. Management Board:  Damian Patrowicz – performs the function of the single Member of the Management Board of the Company and Patro Invest OÜ, is also Member of the Management Board in Patro Administracja Sp. z o.o., INVESTMENT FRIENDS CAPITAL SE, Atlantis SE and performs function of the Member of the Supervisory Board in: Elkop S.A., Investment Friends SE, is a shareholder of Patro Invest OÜ. Mr. Damian is a general partner in Damar Patro UÜ and shareholder of Patro Invest Sp. z o.o. in liquidation. FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 44 Supervisory Board:  Wojciech Hetkowski Chairman of the Supervisory Board – performs a function of a Member of the Supervisory Board in: Atlantis SE, Elkop SE, Investment Friends SE, INVESTMENT FRIENDS CAPITAL SE.  Jacek Koralewski Member of the Supervisory Board - performs a function of Chairman of the Management Board in: Elkop SE and Member of the Supervisory Board in: Atlantis SE, Investment Friends SE, FON SE.  Małgorzata Patrowicz Secretary of the supervisory board - performs a function of liquidator of Patro Invest Sp. z o.o in liquidation. In addition, performs a function of a Member of the Supervisory Board in: Atlantis SE, Elkop SE, INVESTMENT FRIENDS CAPITAL SE, Investment Friends SE.  Martyna Patrowicz Member of the Supervisory Board – performs a function of the Member of a Supervisory Board in: Atlantis SE, Elkop SE, INVESTMENT FRIENDS CAPITAL SE Loans granted to related entities are described in note 2. Loans granted to entities other than natural persons are granted to related entities: Patro Invest OÜ - the parent company of FON SE and Damar Patro UÜ. Member of the Management Board of Patro Invest OU is also a Member of the Management Board of FON SE. General partner Damar Patro UÜ is a member of the Management Board of FON SE. The parent company of FON SE is also the parent company of ELKOP SE and of Patro Inwestycje Sp. z o.o. BALANCES AND TRANSACTIONS FOR THE PERIOD 01/07/2021 - 30/06/2022 (thous.EUR) Interest revenue Costs of the interests and other financial costs. Loan granted Loan repayments (capital) Receivables for the end of the period (including loans) Liabilities for loans and other liabilities ATLANTIS SE 0 95 0 0 0 2 742 ELKOP SE 311 0 0 872 6 468 0 PATRO INWESTYCJE SPÓŁKA Z OGRANICZONĄ ODPOWIEDZIALNOŚCIĄ 3 0 0 531 0 0 DAMAR PATRO UU 55 0 69 0 2 381 0 Total (in EUR thous.) 369 95 69 1 403 8 849 2 742 During the financial year lasting since 01/07/2021 to 30/06/2022 the Company repaid EUR 1 508 thous. (PLN 6 352 thous.) of loan principal to Atlantis SE. FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 45 BALANCES AND TRANSACTIONS FOR THE PERIOD 01/07/2020 - 30/06/2021 (thous.EUR) Interest revenue Costs of the interests and other financial costs. Loan granted Loan repayments (capital) Receivables for the end of the period (including loans) Liabilities for loans and other liabilities ATLANTIS SE 0 34 0 0 0 4 250 ELKOP SE 92 0 0 727 7 390 0 PATRO INVEST OU 1 0 55 55 0 0 PATRO INWESTYCJE SPÓŁKA Z OGRANICZONĄ ODPOWIEDZIALNOŚCIĄ 19 0 0 176 562 0 DAMAR PATRO UU 55 0 0 0 2 257 0 Total (in EUR thous.) 167 34 55 958 10 209 4 250 The Company didn't issue any letter of guarantees to the related entities in the both reporting period. Note 12. Remuneration of Management Board and Supervisory Board The Company's managing and supervising persons did not receive any payments for remuneration, guarantees and sureties in the reporting period and in the previous financial year. Note 13. Contingent assets and liabilities. Pending courtcases: The Company has a pending legal case with the Polish Financial Supervision Authority which consists of a claim for fines paid by the Company in previous periods. In the opinion of the Management Board, this will not involve any additional costs. A Tax authorities have the right to review the Company tax records for up to 5 years after submitting the tax declaration and upon finding errors, impose additional taxes, interest and fines. The tax authorities have not performed any tax audits at the Company during 2020- 2022. Note 14. Events after the balance sheet date. There are no significant events after June 30,2022. At the moment, the war in Ukraine has not affected the situation of the Company. FON SE does not expect military actions in Ukraine to have a negative impact on the operating activities of the Company. FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 46 On 7/09/2022 the Estonian Ariregister (the Business Register) registered the decrease of share capital of FON SE resulting from the resolutions adopted at the Extraordinary General Meeting of Shareholders of May 24, 2022. As a result of this the share capital decreased from 28 875 000 EUR into 187 500 EUR. FINANCIAL STATEMENT OF FON SE FOR THE YEAR ENDED 30/06/2022 /in thous. EUR/ page 47 VI. MANAGEMENT BOARD’S CONFIRMATION OF THE ANNUAL REPORT The Management Board confirms that the management report, corporate governance report and remuneration report as set out on pages 6 to 19 gives a true and fair view of the key events that occurred during the reporting period and their impact on the financial statements contains a description of the key risks and uncertainties, and reflects material transactions with related parties. The Management Board confirms the correctness and completeness of FON SE financial statements for the year 2021/2022 as set out on pages 20 to 46 and that:  the accounting policies used in preparing the financial statements are in compliance with International Financial Reporting Standards as adopted by the European Union;  the financial statements give a true and fair view of the financial position, financial performance and cash flows of the Company;  FON SE is going concern. Tallinn, 28/09/2022 Damian Patrowicz Member of the MB First name and last name Position …….................... Signature