NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended 30 June 2021

Note 1: Basis of preparation of the interim financial statements

The condensed consolidated interim financial statements of Coro Energy plc (the "Group") for the six month period ended 30 June 2021 have been prepared in accordance with Accounting Standard IAS 34 Interim Financial Reporting.

The interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 December 2020, which was prepared under International Financial Reporting Standards (IFRS) in conformity with the requirements of the Companies Act 2006, and any public announcements made by Coro Energy plc during the interim reporting period.

These condensed consolidated interim financial statements do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2020 prepared under IFRS have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 498(2) of the Companies Act 2006. These condensed consolidated interim financial statements have not been audited.

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except as set out below.

Basis of preparation - going concern

The interim financial statements have been prepared under the going concern assumption, which presumes that the Group will be able to meet its obligations as they fall due for the foreseeable future.

The Group ended the period with cash of $4.7m (excluding cash recorded within assets of the Italian disposal group held for sale). However, the Group balance sheet records net current liabilities of $20.9m due to the classification of the Group's Eurobond within current liabilities. The bonds are scheduled to mature on 12 April 2022 when outstanding principal of €22.5m (undiscounted, $26.7m at period end exchange rates) and accrued, unpaid interest of €2.3m ($2.7m) will fall due.

The Directors have a reasonable expectation that the Group can restructure its balance sheet to enable the Group to remain in operation for at least 12 months from the date of publication of these interim financial statements. This may include a restructuring of its bond obligations in part or in full and/or a sale of assets, where the Directors' believe that the value of the Group's assets exceeds its debt exposure.

However, the ability of the Group to successfully manage its capital structure over the next 12 months is not guaranteed and represents a material uncertainty concerning the appropriate use of the going concern assumption in these interim financial statements. Should the Group be unable to continue trading, adjustments would have to be made to reduce the value of the assets to their recoverable amounts, to provide for further liabilities that might arise and to classify fixed assets as current.

a)   New and amended standards adopted by the Group

New and amended standards which became applicable on 1 January 2021 do not have a material impact on the Group, and the Group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these standards/amendments.

b)   New accounting policies adopted by the Group

There were no new accounting policies adopted by the Group during the period, nor any amendments to existing accounting policies.

Note 2: Significant changes

The financial position and performance of the Group was particularly affected by the following events and transactions during the six months to 30 June 2021:

−   Acquisition of Global Energy Partnership Limited, an originator and developer of renewable energy projects in South East Asia, with an initial focus on the Philippines, for share consideration of $788k. The acquisition has been treated as a business combination, with goodwill recognised on the Group balance sheet representing the excess of consideration paid over the fair value of net assets acquired. Refer to note 10;

−   Issue of shares to new and existing investors to raise gross proceeds of $6.0m (net proceeds $5.5m) following a placing and open offer. Proceeds from the fund raise will be used for development of the Group's renewable energy projects, fund the Group's share of Duyung PSC expenditures, as well as general working capital purposes.

For further discussion of the Group's performance and financial position refer to the Chairman and CEO's Statement.

The Group's results are not materially impacted by seasonality.

Note 3: Segment information

The Group's reportable segments as described below are based on the Group's geographic business units. This includes the Group's upstream gas operations in Italy and South East Asia, along with the corporate head office in the United Kingdom. This reflects the way information is presented to the Group's Chief Operating Decision Maker, which is the Chief Executive Officer. Results from the Group's Italian business are classified as a discontinued operation in the income statement, and reflected as such in the table below. Refer to further disclosure in note 11.

Assets and liabilities of the Italian segment are classified as a disposal group held for sale in the Group balance sheet

Note 4: Profit and loss information

a)   General and administrative expenses

General and administrative expenses in the income statement includes the following significant items of expenditure:

b)    Finance income / expense

Note 5: Loss per share

The calculation of basic loss per share from continuing operations was based on the loss attributable to shareholders of $2.8m (30 June 2020: $4.9m) and a weighted average number of ordinary shares outstanding during the half year of 1,567,991,076 (30 June 2020: 792,641,298).

Basic loss per share from discontinued operations was based on the loss attributable to shareholders from discontinued operations of $456k (30 June 2020: $1.8m).

Diluted loss per share from continuing and discontinued operations for the current and comparative periods is equivalent to basic loss per share since the effect of all dilutive potential ordinary shares is anti-dilutive.

Note 6: Intangible assets

Reconciliation of the carrying amounts for each material class of intangible assets are set out below:

Exploration and evaluation assets relates to the Group's 15% interest in the Duyung PSC, which contains the Mako gas field. There were no indicators of impairment noted at 30 June 2021.

As explained further in note 10, goodwill was recognised following the acquisition of GEPL. No impairment of goodwill was noted following testing performed at 30 June 2021.

Note 7: Borrowings

Borrowings relates to €22.5m three year Eurobonds with attached warrants which were issued to institutional investors. The bonds were issued in two equal tranches A and B, ranking pari passu, with Tranche A paying an annual 5% cash coupon and Tranche B accruing interest at 5% payable on redemption. The bonds are scheduled to mature on 12 April 2022 at 100% of par value plus any accrued and unpaid coupon.

Note 8: Share capital and share premium

Note 9: Reserves

a)   Other reserves

Share based payments reserve

The Company implemented a new Long Term Incentive Plan ("LTIP") during the period. Under the Plan, 22.5m options were issued on 22 February 2021 and 57.2m on 17 March 2021 to directors and management. The options vest on 22 February 2024 provided the awardees remain employed by the Company and the mid-market closing price per Coro ordinary share on the last day of the vesting period is equal to or higher than 0.46 pence per ordinary share. Assuming those conditions are met, the number of options which ultimately vest depends on the Company's Total Shareholder Return ("TSR") over the vesting period compared to a peer group of 20 companies. Vested options will be exerciseable at 0.1p per ordinary share.

The options have been valued on their respective grant dates using a Monte Carlo simulation model, resulting in a valuation of £0.0044 per award for the 22 February grants and £0.0026 for the 17 March awards. The total value of the awards will be expensed over the vesting period in line with the requirements of IFRS 2.

Functional currency translation reserve

The translation reserve comprises all foreign currency differences arising from translation of the financial position and performance of the parent company and certain subsidiaries which have a functional currency different to the Group's presentation currency of USD. The total loss on foreign exchange recorded in other reserves for the period was $412k (30 June 2020: $1.0m gain).

Note 10: Business combination

Summary of acquisition

On 17 March 2021, the Company completed the acquisition of 100% of the issued capital of Global Energy Partnership Limited ("GEPL") in exchange for 142.5 million new ordinary shares in the Company. GEPL is incorporated in the United Kingdom and involved in the origination and development of renewable energy projects in South East Asia. On the same date, GEPL co-founders Mark Hood and Michael Carrington joined the Company in the roles of CEO and COO respectively, with Mark Hood also appointed as a director of the Company.

Background to the acquisition

Since inception, GEPL has screened over 25GW of renewable energy projects and has identified a short list of priority pipeline projects for investment across the Philippines, Vietnam and Indonesia, with an initial focus on the Philippines.

For the financial period ended 31 January 2021, GEPL generated no revenues, incurred a trivial net loss and had net liabilities of £3k (approx. $4k).

The acquisition met a number of key strategic objectives for the Group, including:

•    Acquiring GEPL's pipeline of early-stage renewable energy projects in South East Asia, with an initial focus on the Philippines;

•    Securing an experienced executive team with a proven record of originating and executing energy projects; and

•    Building on the Company's investment in ion Ventures in 2020, acquiring a complementary business with opportunities for project co-development in future.

Consideration for the acquisition

In exchange for acquiring 100% of the issued capital of GEPL, the Company issued 142.5 million new ordinary shares to the former GEPL shareholders at 0.4p per share, being the same price as the fundraise completed concurrently with the acquisition, resulting in a total value of consideration of £570k ($788k).

Transaction costs totalling $383k have been expensed within General and Administrative expenses as business development costs.

Fair value of assets and liabilities acquired

At acquisition, GEPL's projects were at an early stage, with the initial focus being on two high graded opportunities in the Philippines: a 100 MW solar project and 100 MW onshore wind project. Work done on the projects prior to acquisition date mainly comprised GEPL management's time including pre-feasibility studies, understanding of relevant laws/regulations, site visits, community engagement, liaising with potential engineering contractors and financiers, and building networks and partnerships locally. The Directors believe there is significant latent value which can be unlocked by investing in these Filipino opportunities however, at the date of acquisition, there were no contractual rights associated with the projects and accordingly, we have assessed that there were no identifiable assets under IFRS. Similarly, GEPL had no liabilities, with all creditors extinguished prior to acquisition completion.

Accordingly, the full purchase consideration of $788k has been allocated to goodwill. While GEPL has identified opportunities in Vietnam and Indonesia, we view the principal value in the company as being its Philippines project pipeline and associated intellectual property and the goodwill has been allocated accordingly. No impairment of goodwill was identified in the short period from acquisition to 30 June 2021.

Revenue and profit contribution

The acquired business contributed nil revenues and a net loss of $23k to the Group in the period from 17 March 2021 to 30 June 2021. If the business were acquired on 1 January 2021 the Group's loss before tax would have increased by $2k.

Note 11: Discontinued operations

The Group classifies the assets and liabilities of its Italian business as a disposal group held for sale following a decision by the Board of Directors to prioritise full divestment of the Group's Italian operations in the first half of 2019. Given the Italian business represents a separate geographical area of operation for the Group, the Italian results have also been treated as a discontinued operation. In May 2021, the Group announced it had entered into a conditional Sale and Purchase Agreement ("SPA") with Dubai Energy Partners, Inc ("DEPI") to dispose of the Company's interest in Coro Europe Limited ("CEL"), which in turn owns Apennine Energy SpA ("AES"), for cash consideration of €300,000 (the "Disposal"). AES owns all the Group's gas properties in Italy. Completion of the Disposal is conditional on, inter alia, receipt of required regulatory approvals from the Italian authorities. The disposal has an economic effective date of 26 May 2021, being the date the SPA was signed. However, until all conditions precedent for the disposal have been met, principally the receipt of all regulatory approvals, Coro continues to control Coro Europe and AES. As a result, we have continued to consolidate the results of CEL and AES in line with the requirements of IFRS 10.

The results of the Italian operations for the period are presented below:

The major classes of assets and liabilities of the Italian operations classified as held for sale as at 30 June 2021 are as follows:

Under IFRS 5, non-current assets are not depreciated once they are designated as held for sale. As a result, impairments of $138k were recorded on other PPE (office furniture and equipment) and Right-of-Use assets, representing the amount that would have otherwise been depreciated if IFRS 5 accounting was not applied.

The entire Italian business has been fair valued at the balance sheet date to determine if any further writedowns are required in addition to the impairments discussed above. Management determined the fair value of the disposal group with reference to the disposal price agreed with DEPI which is €300k ($355k). In addition, under the terms of the SPA, DEPI is required to reimburse Coro for any working capital surplus within CEL/AES calculated on the date of signing the SPA, which is estimated at €150k ($177k). This results in a small amount of headroom so no further impairment has been recorded.

The net cash flows of the Italian operations were as follows:

Note 12: Interests in other entities

Asia

The Group's wholly owned subsidiary, Coro Energy Duyung (Singapore) Pte Ltd, is the owner of a 15% interest in the Duyung Production Sharing Contract ("PSC"), which contains the Mako gas field. The operator of the Duyung venture is West Natuna Exploration Ltd ("WNEL"). WNEL is a subsidiary of Conrad Petroleum Ltd, and is incorporated in the British Virgin Islands with its principal place of business in Indonesia.

The Duyung PSC partners have entered into a Joint Operating Agreement ("JOA") which governs the arrangement. The Group accounts for its share of assets, liabilities and expenses of the venture in accordance with the IFRSs applicable to the particular assets, liabilities and expenses.

Italy

In April 2021, the Group's Italian subsidiary, Apennine Energy SpA, completed the acquisition of a 10% interest in the Cascina Castello production licence from Petrorep Italiana SpA. This licence, which contains the Bezzecca gas field and West Vitalba exploration prospect, is now 100% owned by AES. In exchange for the acquisition, AES received €130k ($156k) from Petrorep, paid in cash.

ion Ventures

In 2020, the Company acquired a 20.3% interest in ion Ventures Holdings Limited which is treated as an associate and accounted for under the equity method.

The Group's share of loss of associates for the 6 month period ended 30 June 2021 was $65k. There were no dividends declared or paid by associates during the period.

Note 13: Contingencies and commitments

Commitments

The remaining 2021 work program for the Duyung PSC is estimated at $164k net to the Group, of which approximately $24k is capital in nature. The Group has no other capital commitments.

Contingencies

The Group has no contingent assets or liabilities.

Note 14: Subsequent events

On 12 July 2021 the Company entered into a Heads of Terms to acquire rights over a portfolio of 150 MW rooftop solar projects in Vietnam from Vinh Phuc Electrical Mechanical Installation Co Ltd, trading as Vinh Phuc Energy JSC ("VPE"). Upon execution of definitive transaction documents, Coro will acquire 85% of a newly formed joint venture company in Vietnam, which will be used as a vehicle for development of the rooftop solar projects currently within the VPE portfolio. In exchange for its 85% interest, Coro will provide initial funding up to $500k to develop a 5 MW pilot rooftop solar project through to Ready to Build status. Subject to meeting satisfactory technical and commercial specifications, Coro will provide up to a further $3.5m for construction of the pilot project. VPE will retain a 15% share of the new vehicle. VPE are a leading Vietnamese Solar asset owner and Engineering, Procurement and Construction contractor, with an experienced team of over 90 operations staff and extensive experience deploying solar PV systems in Vietnam.

There are no other material subsequent events requiring disclosure.