JSC National Atomic Co. Kazatomprom

Annual Report (ESEF) • Mar 17, 2023

Untitled National Atomic Company Kazatomprom JSC Consolidated Financial Statements for the year ended 31 December 2022 and Independent Auditor’s Report Content INDEPENDENT AUDITOR’S REPORT CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statement of Profit or Loss and Other Comprehensive Income ............................................................... 1 Consolidated Statement of Financial Position ............................................................................................................. 2-3 Consolidated Statement of Cash Flows ......................................................................................................................... 4 Consolidated Statement of Changes in Equity ............................................................................................................... 5 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1 NAC Kazatomprom JSC Group and its Operations ............................................................................................ 7 2 Environment of the Group .................................................................................................................................. 8 3 Significant Accounting Policies ......................................................................................................................... 10 4 Critical Accounting Estimates and Judgements in Applying Accounting Policies ............................................. 27 5 Adoption of New or Revised Standards and Interpretations ............................................................................. 31 6 New Accounting Pronouncements .................................................................................................................... 32 7 Segment Information ........................................................................................................................................ 32 8 Balances and Transactions with Related Parties .............................................................................................. 36 9 Revenue ........................................................................................................................................................... 38 10 Cost of Sales .................................................................................................................................................... 38 11 Distribution Expenses ....................................................................................................................................... 39 12 General and Administrative Expenses .............................................................................................................. 39 13 Net Reversal / (Impairment Loss) on non-financial assets ............................................................................... 39 14 Other Income .................................................................................................................................................... 40 15 Other Expenses and Net Foreign Exchange Gain ............................................................................................ 40 16 Payroll Costs .................................................................................................................................................... 41 17 Finance Income and Costs ............................................................................................................................... 41 18 Income Tax Expense ........................................................................................................................................ 41 19 Earnings per Share ........................................................................................................................................... 44 20 Intangible Assets .............................................................................................................................................. 45 21 Property, Plant and Equipment ......................................................................................................................... 46 22 Mine Development Assets ................................................................................................................................ 48 23 Mineral Rights ................................................................................................................................................... 49 24 Exploration and Evaluation Assets ................................................................................................................... 49 25 Investments in Associates ................................................................................................................................ 50 26 Investments in Joint Ventures ........................................................................................................................... 55 27 Accounts Receivable ........................................................................................................................................ 57 28 Other Financial Assets ..................................................................................................................................... 57 29 Other Non-Financial Assets .............................................................................................................................. 59 30 Inventories ........................................................................................................................................................ 59 31 Cash and Cash Equivalents ............................................................................................................................. 60 32 Share Capital .................................................................................................................................................... 60 33 Loans and Borrowings ...................................................................................................................................... 60 34 Provisions ......................................................................................................................................................... 62 35 Accounts Payable ............................................................................................................................................. 63 36 Other Liabilities ................................................................................................................................................. 64 37 Contingencies and Commitments ..................................................................................................................... 65 38 Non-controlling Interest .................................................................................................................................... 67 39 Principal Subsidiaries ....................................................................................................................................... 70 40 Financial Risk Management ............................................................................................................................. 72 41 Fair Value Disclosures ...................................................................................................................................... 79 42 Presentation of Financial Instruments by Measurement Category ................................................................... 80 43 Events after the Reporting Period ..................................................................................................................... 80 рIУС Iж1ерепс1еп Апс1iог’$ i{ерог То Ше Зi,агеiо1сiега ап Ше Воагi Ы Оiгесогв Ы МаiопаI Аогiiiс Согтiрапу Кагаогпргоггi I3С: Оiiг орiпiоп ‘п оiiг орiпiоп, Ше сопзоIiiа1е 1iпапсiаi заегяепз ргезеп аiгIу, iп ан гтiаегiаI гезресз, Ше сопзо1iае 1папсiа1 роэШоп Ы ГаiопаI Аiогпiс Согярапу Кагаояiргогя ,Ь$С (Ше ап iз зiЬаiсiагiез (IодеШег — Ше аз а 31 ОесегяЬег 2022, ап Ше Огоiр’з сопзо1iае iпапсiа) рег!огяiапсе апс сопзоIiсаесi сазii Iодз ог Ше уеаг Шея еяе iп ассогапсе iШ iпегпаiояаI йпагiсiаi iерогiяд ЗапсIагсз. е Iiае аiiсIiесI Т,е Огоыр’з сопзо1iаес1 iпапсiаI з1аеяiепз согяргiзе: • Ше сопзоiiсаес заегяеп Ы ргьиI ог юзн аяс оШег согяргеIiепзiе iпсогяе ог Ше уеаг еясiес 31 ОесегяЬег 2022; • Ше сопзоIiае з1аея,еп Ы iпапсiа1 розiiоп аз а 31 ОесегяЬег 2022; • Ше сопзоIiае заеяiеп Ы сазIi Iоз ог Ше уеаг Шея еяе; • Ше сопзоIiае заетеп Ы сI,апдез iя еiу ог Ше уеаг Шея еяе; ая • Ше поез о Ше сопзо1iае iяаясiаI заегяеяз, IiiсIi iпсIiiе зiдяiiсаг ассоiiяiпд ронiсiез аясi оШег ехрiапаiюгу iяогяiа1:iоп. Вазiз ог орiпiоп ‘Л/е соп се оыг аiiс]i iя ассогiапсе ,уiШ Iпегпаiояа1 $апсIагз оп АiкШiпд (‘ЗАз). Оiiг гезроязiьиiiiез iiясiег Шозе запсiагсз аге лШег сенсгiЬес iя Ше Аiкiог’з гезропзiЫ1iiез ог Ше аii Ы Ше сопзоiiаес1 iпапсiаI заетепз зесiоп Ы оiiг герогi ‚Д/е ЬеIiее Ша Ше аiкi1 еiепсе е ю,ае оЬапес iз зiПсiеп ап арргоргiае ю ргоуiсiе а Ьазiз Iог ог орiяiоп. Iпсiерепсiепсе ‘Д/е аге iпiерепеп Ы Ше (3гоiр iп ассогапсе ,iШ Ше iп1егпаiопаI Сосе Ы ЕШiсз ог РгЫеззiопаi Ассоiiяапз (iпсIiiсiiпд iяегпаiопаI iперепепсе Запсагсз) iззiеi Ьу Ше iпегпаiопаi ЕШiсз Запагсз Воаг ог Ассоiiпапз (IЕЗВА Сосе) ап Ше еШiсаI геiгея,епз Ша аге геIеап1 ю оiг аiii Ы Ше соязоiсаес] 1iпапсiаi заеяiепз iя Ше 1ер1IЬ1iс Ы Кагаiiiзiап. Дiе I,ауе 1ii1iе снг оШег еШiсаI гезропзiЫIiiез iп ассогапсе ‘лиШ Ше IЕЗВА Соiе апсi Ше еШiсаI геснiгегяепз Ы Ше РернiЫiс Ы КагаiФзап Ша аге геIеап ю онiг аiкiii Ы Ше сопзоiiа1ж 1iпапсiаI заегяеп1з. Ргiсешаег11опВеСоорег5 IЬР 34 А/-Ра ,аЫАе., А25Е5Р6 АIтаIу, Каа/сI15ап Т: +7(727)3303200, Р: +7(727)2446868, шиуы.ршс.сотл/!с - ри,С Iiiаерепаепi а’кIiIог’б герои (Сопiiппеа) Рае 2 Снг анкЛi арргоасii Оуегуiе’л, Ав раг Ы севiдпiпд снг аыi, ме ееггпiпес1 гпаегiа1i1у апсI аввеввес Ше гiвiв Ы г,аегiаi гтывв1аегяеп iп Ше сопвоiiiаесi iпапсiа1 ваегРепIв. ‘п рагiiснiаг, ме сопвiсiегесi лiеге гяапаегпеп гпасе внiЬесiе ндегтiеп1в; ог ехагтiрIе, iп геврес Ы вiдпiiiсапi ассоiлiiпд евiгтiаев Ша iпоiес таIiп аввшiiрiопв апсi сопвiсiегiп 1Лнге еепв Ша аге iпIiегепIу нпсегаiп. Ав iп ан Ы онг ансв, ,е аIвс ас1гевве Ше гiвiс Ы гтiападеггiеп о’iеггiсе Ы iпегпаi сопго1в iпс1iкiпд, агтiопд оШег гт,айегв, сопвiегаiоп Ы ‘лфеШег Шеге ‚л,ав е’,iсIепсе Ы Ыав Ша гергевепесI а гiвi Ы гяаегiаI яiвв1аегпеп не о гаiк. МаегiаIi1у Тие всоре Ы оiiг акii ыав iпЛыепсе Ьу онг арр1iсаiоп Ы гпа1егiа1iу. Ап анi1 iв севiдпеi о оЬаiп геавопаЫе аввнгапсе мiiеШег Ше сопвоIiаес 1iпапсiаi ваепiепв аге гее гоп, гпаiегiаi пiiвва1егяепi Мiвва1егяеп1в гпау агiве сiiiе ю гаiлi ог еггог. Тiiеу аге сопвiсеге гяаюегiаи i iпсiiiсй.аiiу ог iп аддгедаюе, Шеу сон1с геавопаЫу Ье ехресюес 1о iпIIнепсе Ше есопопiiс сесiвiопв Ы нвегв юаеп оп Ше Ьазiв Ы Ше сопзонiсаюе iпапсiаI вюаюегяепюв. Ваве оп онг ргЫеввiопаi iндегпепю, е еюеггтiiпе сегiаiп янапюiюаюiУе Шгевио1в ог гяаюегiанiюу, iпсIысiiпд Ше оега11 Сгоыр гiiаiегiаiiюу сг Ше сопвоiiаюе iпапсiаi вюаюегтiепюв ав а Iiо1е ав вею оню iп Ше юаЬне ЬеIо’м. Тiiеве, юодеШег ‘мiШ яна1iюаюiе сопвiегаюiопз, Iiеiре ыв о еюеггяiпе Ше всоре Ы снг анiю ап Ше паюнге, юiя,iпд ап ехюепю Ы онг анiю ргссенгев ап юо еаинаюе Ше еесю Ы гпiввюаюегпепюв, i апу, ЬсШ iпiiнаIIу ап iii а9дгедаюе сп Ше сопзо1iаюе iпапсiа1 вюаюеяiепюв ав а ФсIе. ОегаII Сгонр глаюегiа1iу Тепде 19,000 ггiiIiiсп Но’,’i ме сIеегiтiiпес1 i арргсхiгтiаюеиу 5% Ы Шгее-уеаг аегае ргЫiю ЬЫсге юах Дiе сисве ргою ЬЫсге юах ав Ше Ьепсипiагi Ьесанве, iii снг уiе’м, iю iв Ше ЬепсигяагI а9аiпвю ‘мЫсI, Ше регсгяiапсе Ы Ше агснiр iв гясвю ссIтгтiопiу гтiеавнiгеi Ьу наега ап iв а депегаiIу ассерюес ЬепсигпагI. Тi гее-уеаг аегаде гтiеавнге ‘л,ав аррIiе юс геiIесю ЫдIi сIаюi1iюу Ы гтiасгсесспсггiiс асюсгв Шаю вiдпiiiсапюIу iгтiрасю ргЫiюв. ‘Аiе сиове 5% ‘л,I-iiсii iв сспвiвюепю ‘лiШ снапюiюаюiе гпаюегiаиiюу Шгевио1св нвеi сг ргс1iю-сгiепюес ссгярапiев. . . ОегаI1 (гснр ггiаюегiаиiюу: ка!аиФвюапi Тепде (“Теп9е”) 19,000 ггiiiiiсп, ми iси гергевепюв арргохiгтiаюеIу 5% Ы Шгее-уеаг ачегаде ргсiiю Ьеоге юах. Сгсыр анiю всоре iпсIiiс1ес Ше Ссгпрапу, юеп внiЬвiiагiев, Шгее iсiпю аггапдегяепюв, мо аввссiаюев iii кагаииiвюап апсI спе вiiЬвiiагу iп $‘мiюег1апсi. Онг аiкiю всоре асгеввесi 99% Ы Ше бгснр’в геепнев ап 99% Ы Ше Огсiiр’в аЬвсIнiюе а1нiе Ы нпсегIуiпд ргьию ЬЫсге юах. Ргоiвiсп ог аввею геюiгегпепю сьиiдаюiопв Раiопа1е ог юiiе iтаюегiанiу Ьепсiiггiагi аррiiесi рI4УС Iпаерепаепi аш1i1ог’ герот[ (Сопiiлией) Раде З Кеу аi.iсIi таегз Кеу аiiсiii таегз аге Шозе iтiаiiегз Шаг, п снг ргЫеззiопаi iiсдпiеп1, ыеге Ы гяозi зiдпiiсапсе п снг ансii Ы Ше сопзо1iсаес iпапсiаI заегтiепз Ы Ше снггеп регiосi. Тiезе пiа1егз ‚меге ассгеззес п Ше сопех Ы снг аiii Ы Ше сопзсIiса1есi iiпапсiаI заепiепз аз а ‘мi,сiе, ап iп оггтiiпд снг орiпiоп Шегесп, апс ‘ме сс псi ргсiсе а зерагаiе срiпiсп сп Шезе пiаiегз. Кеу аiкIi пiаег Но оiiг аi.iсIi асiсiгеззесi Iiе Iеу аiкIi пiаiiег Ргоiзiоп ог аззе-геiгеггiеп оЬ1iдаiопз i\iоiеб 3, 4 апсi 34 ю 1iе соп$о1iс1аiес1 [iпапсiаI баетепiб Онiгiпд 2022, Ше Сгонр геiзесI iIз гтiеШссiсiсду сг саiснIаIЛсп Ы Ше ргсiзiсп сг Ше аззе геiгегiiеп1 сЫёдаiспз сг iз ггiпiпд епiез с а гясге сiеаiIесI апсi запсагсIiес аззеззгяепi Ы ЬсШ Ше зссре Ы сЫiдаiiспз апсi Ше аззссiае рiiузiсаi снапЫиез аз еI1 аз аррiiсаЫе нiпi ссз гаез сг агiснз ессгтiгпiззiспiпд асiiуiiЛез. Тие агснр iiаз аiзс епдаде ехiегпаI ехрегiз Iс геуiе’м Ше Сгснр’з езiгтiа1ез Ы Ше ргсiзiспз сг Ше аззе геiгегтiеп сЫiдаiспз (А1О) сг iз пiiпiпд епьиез. Аз Ы 31 ОесегяЬег 2022, Ше 3гснр’з аззе геiгепiеп сЬ1iдаiспз сг iз гяiпiпд епьиез iае iпсгеазес Iс Тепде 38,116 гтiiiIiсп (2021: Тепде 31,431 гтiiiiiсп). РiiгШеггтiсге, сiнгiпд 2022 Ше Огснр Iiаз сiее1срес Ше гяеШссiсiсду сг саiсiiiаiЛсп Ы Ше ргсiзiсп сг Ше аззе геiгеiтiеп1 сЫiдаiiспз п геiаiiсп с из псп-iтiпiпд епi1iез п гезрспзе с Ше геснiiгепiеп1з Ы Ше ЕссIсдiсаi Сссе Ы Ше IернЬ1iс Ы КааiФзап iззнеi п 2021 . Аз а гезнI1 аз Ы 31 ОесегпЬег 2022, Ше Сгснр iаз аззеззесI апсI гессдпiес ап ассi1iспаI Тепде 7,624 гтiiiiiсп IiаЫIiIу сг сiзп,ап1еп,еп1 Ы Ше 1)IЬа МеIаIIнгдiсаI РIапI’з Ьнi1iпдз апс сспзгнсiспз. Тие Сгснр’з сШег псп-ггiiпiпд епьиез Iiае аIзс аззеззесi Шеiг аззе ге1гепiеп1 сЬ1iдаiспз нпiег Ше пе Ессiсдiсаi Сссiе Ьн1 Шiз пы гезнI п зiдпiiсап1 аii1спа1 ргсiiзiсп Ьеiпд гессдпiзес. Л/е сспзiсIегес Шiз iтiаiiег с Ье спе Ы Ше гтюз зiдпiiсап п снг анiсiii Ьесанiзе Ше саIснiаiсп Ы ргсiзiсп сг аззе геiгеггiеп сЬ1iдаiспз по1ез iпIiегеп знЬесiiу п ез1iгяаiпд нiiге псггiiпаi ссзз ап нпсег1аiпу аззссiаiеЛ ‘мiШ Ше Iiггiiпд Ы Ше асiiiаI н1ii1гяеп Ы сiессгягт’iззiспiпд сЬ1iдаiспз. Тие ргсiзiсп сг аззе геiгегяеп сЫiдаiсп з аiзс зiдпi1сап п Ше сспзсiiсiаiесi iпапсiаI Онг ансiI ргссесiнгез iпсiнсiесi: \‘Уе аззеззе Ше ссгяреепсе апс сЬесii1у Ы сспзiiIiапi епдадесI Iс геуiе’м Ше Огснр’з езiгтiа1е Ы Ше ргсiзiсп сг Ше аззеi геiiгегтепi сЫдаiсп сг из п,iпiпд епьиез. \Л/е геуiе’месi сспзн1ап1з герсгi апсi гесспсiIес А1О агтiсiiпз п Ше герсг[ с аiнiез iiзеЛ Ьу Ше Сгсiiр iп А1О ргсiзiсп езiпiа1ез. Лiе геуiе’мес Ше СЭгсiiр’з са1сii1аiспз, гесспсi1е ргiпсiраi аззiлтiрiспз 1с ехiегпаI зснгсез апсi ез1есI сп а заiтiрiе Ьазiз iпрн1 сIаа нзес iп псгпiпаI ссзi са1сн1аiспз, iпсIнсiiпд риузiсаi сiште Ы’мсгiз, ссзi рег iiпi апс сспзгнсiсп езiгпа1е псггтiз. А/е епдадес снг iедаi ехрегiз с сЫаiп ап нIпсIегзапiiпд Ы геянiiгеп,епз Ы Ше ЕссiсдiсаI Сссе Ша сагяе iпс еi’1ес п )н1у 2021 ‘мiШ гедагсiз с сiессгягрiззiспiпд ргссезз сг псп-гтiiпiпд епiез апс аззеззес пiападегяепi’з iпегрге1аiсп апсi н11I1гпеп Ы знiсii геснiгегпепз Ша гезi,Iесi п Ше ассгнiаi Ы асЛiспа1 ргсiзiспз аз Ы 31 ОесегтiЬег 2022. Л/е iп”с1уес снг ассснпiЛпд Iесипiсаi зресiаIiзз Iс аззiз п Ше геуiе’м Ы Ше ассснiпiпд геагяеп Ы асiiiiспаI ргсiзiспз сг псп-гпiпiпд епьиез ШаI агсзе аз а гезн1 Ы iпгонiс1iсп Ы Ше пе’м Ессiсдiсаi Сссе. Л(е епдадесi снг аIнаiсп ехрегiз п Ше анкi1 ргссеснгез п геiаiЛсп Iс Ше аззеззгтiеп Ы Ше геазспаЫепезз Ы Ше iзсснп апс iпЛаiiспз гаез нзес Ьу Ше гснр iп са1сЫаiсп Ы Ше ргсiзiсп сг Ше аззеi геiгегтеп сЬ1iдаiспз сг iз ггiiпiпд апс псп пiiпiпд епiез. . Лiе геуiе’мес Огснр’з сiзсIсзнiгез iп Ше сспзсIiЛа1е iпапсiа1 з1а1егтепз сг ссгпрiiапсе ‘мiШ iРЗ генiгеп,епз. Ii р14’С Iпаереiiаепi аш1i1ог’ геротI (Сотiiiлпеi) Раде 4 за1егяеп1з. Тiе Сгоiiр’з ез1лтiа1оп Ы зiс1i а рго’Iiзiоп iпсогрогаiез Ше еi1есз Ы Ше ехресес арргоасii о сесогягтiiззiопiпд агiс сiiзсоiiпi: гаiез, еесз Ы сiiапдез iп Iосаi гедЫаiопз аiопд мiШ Ше е11есз Ы сiiапдез п iп1аiоп. Но’л, е аi1огесI оiг Сгоiр аiкIi эсоре \/Уе Iаiiогесi Ше эсоре Ы оiг аiкi iп огсег 1о регiоггя зЫиiсiепI ‚мог1 ю епаЫе из ю ргоiе ап орiпiоп оп Ше сопзо1iс1ае1 iпапсiаi заепiепз аз а лФо1е, Iаiiпд iпо ассоiiп Ше згiсiге Ы iiе Сгоiiр, Ше ассоiiпiпд ргосеззез апс сопiтоIз, апсi Ше iпсiiзгу п м1iiсi Ше Сгоiiр орегаез. Тие Огоiiр’з пiа)ог ргосiiс1оп асi1Ше$ апсi iгапiiятi зiез аге iосаес iп Ше ерiiЫiс Ы КагаiФзап. Тие Сгоiiр’з Iгасiiпд асii1ез аге саггiе оii ргiгяагiiу оiii Ы КагаiФзiап, аз лiе11 аа ШгоiiдIi орегаiiопз Ы а гасIiпд зiiЬзiсiагу зе нр п Злiiгег1ап. Тие Згоiiр орегаiеа зееп гпiпiпд зiiЬзiiагiез (iiпсег 1л’е1че зiЬзiiг1асе сопiгасiз), оiiг п,iпiпд ]оiпi аггапдегтiепз (iiпсIег зiх зiiЬзшiасе iзе соп1тасз) апс оiiг гяiпiпд аззосiаез (iпсег оiiг зiiЬзiiгасе iiзе соп1тасз). Л/е аiкiес зiх гпiпiпд зiiЬзiсiiагiез апс опе гтiiпiпд оiп аггапдегпепi АiиЛiогз Ы 1мо гтiiпiпд )оiп аггапдегяепз, опе гтiiпiпд зiiЬзiсiагу апс 1мо пiiпiпд аззосiаез герог[ес о из оп Шеiг аiiсiз. Тие аiiсi эсоре аIзо iпсIiк1ес оiг поп-гяiпiпд зiiЬзiсЯагiез, аiiсЯ1ес Ьу iз апс опе Ы РмС пе1мог1 iгпiз. Вазес оп оiг сопiпiоiiз аззеззiтiеп1 ‘лiе iпсIiiсiесi п оiг дгоiiр аiкй эсоре Ше Согтiрапу апсi зiхееп епьиез (согтiропепiз), iпс1iiсiпд iе согяропепз аiiсi1е Ьу оШег аiкiiiогз. Iп огсiег о асЫее арргоргiае аiкIi соегаде Ы Ше аiкii гiзIз ап Ы еасii iпсIiiа1Iу зiдпiiсап1 согтiропепi Ы Ше агоiiр, iпсIiкiiпд еасii зедгтiепi апсi дгоiр iiпсiоп: . $iдпiiсап1 согтiропепз меге зiЬес1 ю еiШег а Ыи эсоре аiiсIi, зресiiес гiзi4осiiзес аiкii ргосесiiiгез Ы зресс ассоiiп ЬаIапсез, ог Сгоiiр IееI ргосегез. Оiг аеIесiоп ыаз Ьааес оп Ше ге1аiуе зiдпiiсапсе Ы Ше епi1iез лЛШiп Ше Огоiiр ог зресiiс гiзз i1епiес1. Тие согРропепз мiШiп Ше эсоре Ы оiiг могi ассоiпе ог Ше оI1омiпд регсепiадез Ы Ше Огоiiр’з гяеазiiгез (1): Ргой Ьеiоге ах % Сто’iр оiа1 9’ . ГпII соре апаi ОЁIiег ап1iог5 Ю11 ОiiI о! соре Аiiсii iпз1гiсiопз зе оii Ше аiдпiiсап аiiсi1 агеаз, пiа1егiа1iу Шгезиоiсiз (‘мiiiсI, гапдесi гопi Тепде 958 гяiiiiоп о Тепде 9131 iрiIIiоп) апс зресiiс героiiiпд гесiiiгепiеп1з. Тие Сгоiр аiкЫ Iеапi сiгесес Ше л’ог пег1аеп Ьу согяропеп аiкi1огз, Шгоiди а соггЫпаiЛоп Ы геiаес1 пе1ногI апс поп- пе1ыогI iггя герогiiпд, гедiiiаг пiегасiiоп оп аiкi1 апс ассоiп1Лпд та1егз, регiоЛiс зiе iiзi1з апс геiем Ы зресiiс аiкiii мог1 рарегз. Ву регiоггтiiпд Ше ргосесiiiгез аЬое а Ше согтiропепiз п согтЫпаiЛоп мiШ ассIШопаI ргосесiiгез рег1оггтiес а а Сгоiiр 1еiе1, ‘ме иае оЫаiпес зЫиiсiепI апсi арргоргiае аiiсi1 еiсепсе гедагiпд Ше сопзо1iсiаеI iпапсiа1 з1а1епiепз аз а миоIе Ша ргоУiсез Ьазiз ог оiiг орiпiоп. }е”епiiе % 1 (i РI в ы !.ё 1Т i еетийет 2022 р14’С IшТереiкIепi ашIiIог’$ герогI (Сопiiлпей) Раде 5 ОШег iпоггтiа1iоп Мападегпеп з гезроп5iЫе ог Ше оШегiпоггяа1лоп. Тiе оШег iпоггпаiоп согтргiзез Ше Аппiiаi герог (ЫII соез по iпсiiкiе Ше сопзо1iсIаесi iпапсiа1 заегтiепз апс оiг аiсIi1ог’з герог Шегеоп), ‘мыс’-’ iз ехресеЛ о Ье гтiасе ааiiаЬ1е о i а1ег Ше сIае Ы Шiз аiiсiiiог’з герог. Оiiг орiпiоп оп Ше сопзо1iаес1 1iпапсiаi заепiепз соез по соiег Ше оШег iпоггтiаiоп апi ые мi11 поI ехргезз апу огпi Ы аззiiгапсе сопсiiзiоп Шегеоп. ‘п соппесiiоп мiШ оiiг аiкШ Ы Ше сопзоIiiаес iпапсiаI заегпеп1в, оiiг геаропаiьиiiу з о геас Ше оШег iпоггтiаiоп iсiепШiесi аЬое ап, iп оiпд зо, сопзiсiег мIiеШег Ше оШег iпоггтiаiоп iз гтiаiегiаIiу iпсопзiзеп1 мiШ Ше сопзоiiс1аесi iпапсiаi заеп,епз ог оiiг Iпом1есде оЫаiпесi п Ше аiкi, ог оШегмiзе арреага о Ье гйаiегiаIiу пiiззаеi \Мiеп ме геа Ше Аппiаi герогi, i ‘ме сопс1iiсе Ша1 Шеге iз а гпаегiаi пiiза1аепiеп Шегеiп, л’е аге геЫге ю согтюiiiпiсаiе Ше iтiаiiег о Шозе с1iагде ‘мiШ доУегпапсе. езропзiЫ1i1iез Ы iтiапа9егяепi апсi Шове сiагде лiiШ оiегпапсе ог Ше сопзо1iсiаесi iпапсiа1 зiаiеiтепiз Мападегтiепi iз гезропзiЫе ог Ше ргерагаiЛоп ап аiг ргезепаiоп Ы Ше сопзо1iса1е 1iпапсiаI з1а1егяепз iп ассогiапсе мiШ Iпегпаiопа1 йпапсiаi 1ерог1iпд 8апсiагсiз, апс ог зiiсii iпегпаI сопгоI аз гтiападеп,епi сееггпiпез iз песевзагу о епаЫе Ше ргерагаiоп Ы сопзо1iсаес iiпапсiаi з1а1егтiепз Ша аге гее гогя гяаегiа1 п,iзз1аеiтеп1, ‘мiiеШег iiе о гаiкi ог еггог. Iп ргерагiпд Ше сопзоIiсаеI iпапсiа1 з1аепiепз, гпападепiеп з гезропзiЫе ог аззеззiпд Ше Огоiiр’з аЫ1iу о сопiЛпiiе аз а доiпд сопсегп, сiiзсiозiпд, аз аррiiсаЫе, гтiайегз геiае о доiпд сопсегп апс 1зiпд Ше доiпд сопсегп Ьазiа Ы ассоiiпiЛпд iiпIезз гтiападегт’епi еiШег iпiепсiз ю Iiсiiiсiаюе Ше Огоiр ог юо сеаве орегаюiопз, ог iаз по геаiiзiiс а1юегпаюiе ью юо о зо. Тiiозе сI,агдес л’iШ до’б’егпапсе аге гезропзiЫе ог оегзееiпд Ше Сгоiiр’з Iiпапсiаi герогЁiпд ргосезз. Аiiсiiiог’з гезропзiЫIiiiез ог Ше аiiсi Ы Ше сопзоiiсiаiесi iпапсiа1 за1еiтiеп1з Оiг оьесюiез аге юо оьюаiп геазопаЫе аззiгапсе аЬоЫ лФеШег Ше сопзо1iсаюес 1Ёпапсiаi зюаюегяепюз аз а лФоIе аге гее гогтi гтiаюегiаi пiiззюаюегпепю, мiiеШег сiiе ю гаiiс1 ог еггог, апсi ю iззiiе ап аiкiiюог’з герог Шаю iпс1iкез оiiг орiпiоп. IеазопаЬ1е аззiiгапсе iз а Iiiдi’ iее1 Ы аззыгапсе ЬЫ iз поi а дiагапюее Шаю ап аiсi1 сопсiiсюес п ассогапсе мiШ ‘ЗАз ‘ми’ аКмауз сеюесю а гтiаюегiаi гпiззюаюегтiепю ‘мiiеп ю ехiзюз. Мiззюаюегяепюз сап агiзе гогя гаiсI ог еггог апсi аге сопзiЛеге пiаюегiаI i, iпсiiсй.аI1у ог п Ше аддгедаюе, Шеу соii1с геазопаЫу Ье ехресюесi юо iп1iепсе Ше есопогяiс сесiзiопз Ы iiзегз юаеп оп Ше Ьазiз Ы Шезе сопзоiiса1ес 1iпапсiаi зюаюепiепюз. Аз рагю Ы ап аiкi1 п ассогсапсе лЛШ ‘ЗАз, ме ехегсiзе ргЫеззiопаI iiсIдгтепю ап гяаiпiаiп ( ргЫеззiопаi зсерюiсiзгя шгодою ше аiiсЖ. Лiе аiзо: . Iсеп1iу апс аззезз Ше гiзiз Ы гпаюегiаI гтiiззюаюегпепю Ы Ше сопзо1iсаюес Iiпапсiаi зюаюегтiепюз, лФеШег сию юо гаiiс1 ог еггог, сiезiдп апсi регiогпi аiiсiiю ргосесыгез гезропзiе юо Шозе гiзIз, апсi оьюаiп аiкЯю еiЛепсе ШаI iз зьиiсiепю апсi арргоргiаюе ю ргоiс1е а Ьазiз ог оiг орiпiоп. Тие гiзi Ы пою еюесюiпд а гяаюегiаi гтiззюаюегтiепю гезiiIюiпд гоггi гаiк з Ыдi,ег Шап ог опе гезiiiюiпд гогтi еггог, аз гаiк гтiау iпо1уе соiiiiзiоп, огдегу, iпюепюiопаi огяiззiопз, гтiiзгергезепюаюiопз, ог Ше оеггiе Ы iпюегпаi сопюгоi. . ОЫаiп ап пегзюапiпд Ы iпюегпаI сопюгоi ге1еапю юо Ше аiкiю п огсiег юо сезiдп аiiсiю ргосегез Шаю аге арргоргiаюе п Ше сiгсштiзюапсез, ью пою ог Ше рiiгрозе Ы ехргеззЁпд ап орiпiоп оп Ше еесюiепезз Ы Ше Огоiр’з iпюегпаI сопюгоi. . Еа1iiа1е Ше арргоргiаюепезз Ы ассоiiпюiпд роiiсiез iiзес ап Ше геазопаЫепезз Ы ассоiпюiпд езюiпiаюез ап геIаюес iiзсIозiiгез гтiасе Ьу гпападеггiепю. -iii рI4УС Iшiерепаепi аiкиi1ог’ герогi (Сопiйiиеi) Рае б . Сопс1iке оп Ше арргоргiаiепезз Ы гяападеггiеп’з iзе Ы iiе доiпд сопсегп Ьазiз Ы ассоiпiпд апсi, Ьазес оп Ше аiкi еiсепсе оЬ1аiпес, л4iеШег а гпаегiаi iiпсегаiпу ехiаз геIаесI о ееп1з ог сопiопз ШаI гтiау саз зiдпiiсап1 сiсiЫ оп Ше Сгоiр’з аЫиiу ю сопiпiiе аз а доiпд сопсегп. 11 л’е сопсIiiсiе Ша а гпаiегiаi iiпсегаiп1у ехiзз, ме аге гесiiiгес1 о 1гам аЦепiоп п оiг аiiсЖог’з герогi о Ше геIаес сiзс1озiгез iп Ше сопзоIiаес iпапсiаI заегпепз ог, i зiiсi с1iзс1озiгез аге iпасеща1е, Iю гяосIiiу оiг орiпiоп. Оiiг сопсiiiзiопз аге Ьазеi оп Ше аiкi1 еiсIепсе оЫаiпес нр ю ше саюе Ы оiiг аiкiiюог’з герогi Но’меуег, iiюiiге еепюз ог согiсiюiопз гяау саiiзе Ше Сгоiiр юо сеазе юо сопюiпiiе аз а доiпд сопсегп. . ЕаIiiаюе Ше оегаIi ргезепюаюiоп, зюгiiсюiiге ап сопюепю Ы Ше сопзоIiсiаюеi iпапсiа1 зюаюегтiепюа, псIiiЛпд Ше сiзсIозiгез, ап мIiеШег Ше сопзоiiаюес1 iпапсiа1 зюаюепiепюз гергезепю Ше шiсег1уiпд югапзасюiопз апi еепюз iп а гяаппег Шаю асЫеез аiг ргезепюаюiоп. . ОЫаiп зЫiсiепю арргоргiаiе аiiсiiю еiсепсе гедагсШiд Ше iпагiсiаI iпоггiiа1iоп Ы Ше епюiюiез ог Ыiзiпезз асюiiюiез ‘мiШiп Ше Сгоiр юо ехргезз ап орiпiоп оп Ше сопзо1iа1есi iпапсiаI зюаюеп-епюз. \Лiе аге гезропзiЫе ог Ше сiгес1iоп, зiiрегiiзiоп ап реiiоггтiапсе Ы Ше агоiiр аiiсiiю. Лiе гегтаiп зоiеiу гезропзiЫе ог оiг аiкiiю орiпiоп. Лiе согтiггшпiсаюе л’iШ Шозе сi,агде л’iШ доегпапсе гедагiпд, агпопд оШег iтiаююегз, Ше рiаппесi эсоре апсi юiпiiпд Ы Ше аiiсiii апсi зiдпiiiсапi аiкiю iпсiпдз, iпсIiiсiiпд апу зiдпiiсап1 сеiсiепсiез п iпiегпаi сопюгоi ШаI л’е iсiепюiiу Ёiгiпд оiiг аiiсiiю. \‘Уе аIзо ргоiс1е Шозе сiiагдесi мiШ доегпапсе мiШ а зюаюегйепю Шаю ме Iiае соглрiiесi мiШ ге1еапю еШiсаI гесгеп,епю$ геагсЛпд iпсерепдепсе, апс юо сотггшпiсаюе ыиШ Шегя аН геIаюiопзЫр8 ап оШег таегз шаю гтiау геазопаЫу Ье ШодЫ юо Ьеаг оп оiг iперепс1епсе, апсi мiiеге аррiiсаЫе асюiопз юаеп юо еiiгрiпаюе Шгеаюз ог заедiагс1з аррIiеi Ргогтi Ше гта1егз сотггшпiсаюес л’iШ Шозе сIiагдес л’iШ доУегпапсе, ые сеюеггтiiпе Шове пiаегз Шаю ‘меге Ы гяозi зiдпi1сапсе п Ше аiкIiю Ы Ше сопзоIiс1аюес iпапсiа1 зюаюегпепюз Ы Ше сiiггепю регiо апс аге Шегеоге Ше iеу аiiсШ гпаююегз. Лiе езсгiЬе Шезе гтiаююегз п оiiг аiкЖог’з герогi iiпiезз Iа’м ог гедiiiаюiоп ргес1iкез рiЫiс сIiзсiозiiге аьоiiю Ше iтаюiег ог лФеп, iп ехюгегтiеiу гаге сiгсiiгязюапсез, ме сеюеггпiпе шаю а гяаююег зiоii1с1 пою Ье согтптшпiсаюес п оiiг герог Ьесаiiзе Ше асегзе сопзещiепсез Ы оiпд зо моii1сi геазопаЫу Ье ехресюесi юо оiлiеiдIi Ше рiЬ1iс iпюегезю ьепе1ю$ Ы виси согтптiiiпiсаюiоп. Тiе епдадеггiепю раг[пег оп Ше аiкiю гезЫюiпд п Шiз iпсерепсIеп1 аiкiiюог’з герогю з А1гта ЗасуIо. Оп ЬеIiа1 Ы РгiселiаюегIiоiiзеСоорегз нР Оапа 1п Мападiпд Аiкiiюог п сiiаг Ргiсе’маюеi (ОiiаIiiеi АiсШог’з Сегюiiсаюе (бепегаI зюаюе Ысепзе ЫШе Мiпiзюгу Ы ОООО745 са1еi 8 РеЬгiiагу 2019) йпапсе Ы Ше IерiiЫiс Ы кааIФзюап М0000005 саюесi 21 Осюоьег 1999) 16 Магсi 2023 Аiггiаюу, Ка2аiФзюап 1 -. Г - ‘_,р National Atomic Company Kazatomprom JSC Consolidated Statement of Profit or Loss and Other Comprehensive Income The accompanying notes are an integral part of these consolidated financial statements. 1 These consolidated financial statements were approved by management on 16 March 2023: Beketayev R.B. Chief Financial Officer Jakypbekova S.J. Chief Accountant In millions of Kazakhstani Tenge Note For the year ended 31 December 2022 For the year ended 31 December 2021 Revenue 9 1,001,171 691,011 Cost of sales 10 (475,097) (402,967) Gross profit 526,074 288,044 Distribution expenses 11 (25,605) (15,706) General and administrative expenses 12 (44,507) (34,105) Net reversal/(impairment losses) on non-financial assets 13 176 (3,805) Net reversal/(impairment losses) on financial assets 132 (208) Net foreign exchange gain 15 17,304 3,345 Other income 14 21,717 7,525 Other expenses 15 (9,564) (15,394) Finance income 17 17,327 7,077 Finance costs 17 (8,425) (6,712) Share of results of associates 25 75,736 47,294 Share of results of joint ventures 26 13,340 4,289 Profit before tax 583,705 281,644 Income tax expense 18 (110,742) (61,618) PROFIT FOR THE YEAR 472,963 220,026 Other comprehensive income Items that may be subsequently reclassified to profit or loss: Exchange differences arising on translation of entities with foreign functional currency (46) 205 Items that will not be reclassified to profit or loss: Net gain/(losses) from investments in equity securities at fair value through other comprehensive income 14 (3) Remeasurements of post-employment benefit obligations (478) 66 Other comprehensive (loss)/income for the year (510) 268 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 472,453 220,294 Profit for the year attributable to: - Owners of the Company 348,048 140,773 - Non-controlling interest 38 124,915 79,253 Profit for the year 472,963 220,026 Total comprehensive income attributable to: - Owners of the Company 347,589 141,043 - Non-controlling interest 124,864 79,251 Total comprehensive income for the year 472,453 220,294 Earnings per share attributable to the owners of the Company, basic and diluted (rounded to Tenge) 19 1,342 543 National Atomic Company Kazatomprom JSC Consolidated Statement of Financial Position The accompanying notes are an integral part of these consolidated financial statements. 2 In millions of Kazakhstani Tenge Note 31 December 2022 31 December 2021 ASSETS Non-current assets Property, plant and equipment 21 188,300 171,487 Mine development assets 22 162,174 138,673 Mineral rights 23 525,140 552,957 Intangible assets 20 59,159 58,940 Exploration and evaluation assets 24 26,543 24,378 Investments in associates 25 154,124 116,892 Investments in joint ventures 26 44,208 37,803 Deferred tax assets 18 34,515 30,689 Other financial assets 28 59,371 23,671 Other non-financial assets 29 21,279 24,258 1,274,813 1,179,748 Current assets Accounts receivable 27 270,921 220,138 Prepaid income tax 11,451 7,526 VAT recoverable 62,389 46,447 Inventories 30 392,621 275,856 Cash and cash equivalents 31 169,536 161,190 Other financial assets 28 20,678 52,249 Other non-financial assets 29 19,274 7,137 946,870 770,543 Assets of disposal groups classified as held for sale 25 850 1,213 947,720 771,756 TOTAL ASSETS 2,222,533 1,951,504 * Certain amounts in this column do not correspond to the consolidated financial statements for the year ended 31 December 2021, since they comprise reclassifications that are described in Note 3. National Atomic Company Kazatomprom JSC Consolidated Statement of Financial Position The accompanying notes are an integral part of these consolidated financial statements. 3 In millions of Kazakhstani Tenge Note 31 December 2022 31 December 2021 EQUITY Share capital 32 37,051 37,051 Additional paid-in capital 2,539 2,539 Reserves 1,874 1,866 Retained earnings 1,268,580 1,148,387 Equity attributable to shareholders of the Company 1,310,044 1,189,843 Non-controlling interest 38 386,459 347,258 TOTAL EQUITY 1,696,503 1,537,101 LIABILITIES Non-current liabilities Loans and borrowings 33 83,300 77,700 Provisions 34 43,475 32,192 Deferred tax liabilities 18 116,808 121,101 Employee benefits 1,731 1,168 Other liabilities 36 9,313 23,420 254,627 255,581 Current liabilities Loans and borrowings 33 54,971 11,317 Provisions 34 4,506 869 Accounts payable 35 98,809 66,014 Other tax and compulsory payments liabilities 24,688 17,973 Employee benefits 325 215 Income tax liabilities 4,221 5,096 Other liabilities 36 83,883 57,338 271,403 158,822 TOTAL LIABILITIES 526,030 414,403 TOTAL EQUITY AND LIABILITIES 2,222,533 1,951,504 Carrying value of one share (rounded to Tenge) 19 6,313 5,699 These consolidated financial statements were approved by management on 16 March 2023: Beketayev R.B. Chief Financial Officer Jakypbekova S.J. Chief Accountant National Atomic Company Kazatomprom JSC Consolidated Statement of Cash Flows The accompanying notes are an integral part of these consolidated financial statements. 4 In millions of Kazakhstani Tenge Note For the year ended 31 December 2022 For the year ended 31 December 2021 OPERATING ACTIVITIES Cash receipts from customers 1,213,489 779,981 VAT refund 74,910 45,204 Interest received 11,701 4,104 Payments to suppliers (677,658) (488,883) Payments of wages and salaries (87,317) (63,236) Income tax paid (125,914) (97,747) Other taxes paid (89,259) (50,882) Interest paid 33 (3,570) (3,319) Payment held as restricted funds 28 (14,812) - Compensation paid under subsoil use agreement 12 (7,310) - Social payments (5,226) (3,166) Other payments, net (5,175) (3,327) Cash flow from operating activities 283,859 118,729 INVESTING ACTIVITIES Acquisition of property, plant and equipment (21,571) (16,625) Proceeds from disposal of property, plant and equipment 1,211 104 Acquisition of intangible assets (1,013) (754) Acquisition of mine development assets (48,670) (28,233) Acquisition of exploration and evaluation assets (3,223) (1,682) Proceeds from disposal of subsidiary net of cash and cash equivalents of disposed subsidiary 39 - 1,339 Acquisition of short-term debt securities 28 (80,219) (126,331) Acquisition of long-term debt securities 28 (8,804) - Proceeds from redemption of short-term debt securities 28 86,006 127,341 Placement of term deposits and restricted cash 28 (12,486) (51,158) Redemption of term deposits and restricted cash 28 44,688 6,350 Loan repayments received from related parties 3,514 3,138 Acquisition of equity investments 28 (12,368) - Dividends received from associates, joint ventures 25,26 45,346 17,108 Other payments, net (3,304) (1,838) Cash flow used in investing activities (10,893) (71,241) FINANCING ACTIVITIES Proceeds from loans and borrowings 33 70,905 65,525 Proceeds from sale of non-controlling interest in subsidiary 39 - 185,858 Repayment of loans and borrowings 33 (26,555) (76,108) Dividends paid to shareholders 32 (227,388) (150,082) Dividends paid to non-controlling interest (85,667) (26,584) Payments under lease 33 (162) (452) Other payments, net (10) - Cash flow used in financing activities (268,877) (1,843) Net increase in cash and cash equivalents 4,089 45,645 Cash and cash equivalents at the beginning of the year 161,190 113,347 Effect of exchange rate fluctuations on cash and cash equivalents 4,245 2,201 Change in impairment provision for cash and cash equivalents 12 (3) Cash and cash equivalents at the end of the year 31 169,536 161,190 * Certain amounts in this column do not correspond to the consolidated financial statements for the year ended 31 December 2021, since they comprise reclassifications that are described in Note 3. These consolidated financial statements were approved by management on 16 March 2023: Beketayev R.B. Chief Financial Officer Jakypbekova S.J. Chief Accountant National Atomic Company Kazatomprom JSC Consolidated Statement of Changes in Equity The accompanying notes are an integral part of these consolidated financial statements. 5 In millions of Kazakhstani Tenge Attributable to the shareholders of the Company Share capital Reserves Retained earnings Additional paid-in capital Total Non-controlling interest Total equity Balance at 1 January 2021 37,051 1,666 1,029,477 4,461 1,072,655 267,137 1,339,792 Profit for the year - - 140,773 - 140,773 79,253 220,026 Foreign currency translation difference - 203 - - 203 2 205 Remeasurements of post-employment benefit obligations - - 70 - 70 (4) 66 Other comprehensive loss - (3) - - (3) - (3) Total comprehensive income for the year - 200 140,843 - 141,043 79,251 220,294 Dividends declared (Note 32) - - (150,082) - (150,082) (150,082) Dividends declared by subsidiarie s to other participants - - - - - (26,583) (26,583) Other operations (Note 39) - - 2,254 (1,922) 332 377 709 Change in ownership interest in a subsidiary without loss of control (Note 39) - - 125,895 - 125,895 27,076 152,971 Balance at 31 December 2021 37,051 1,866 1,148,387 2,539 1,189,843 347,258 1,537,101 National Atomic Company Kazatomprom JSC Consolidated Statement of Changes in Equity The accompanying notes are an integral part of these consolidated financial statements. 6 Profit for the year - - 348,048 - 348,048 124,915 472,963 Foreign currency translation difference - (6) - - (6) (40) (46) Remeasurements of post-employment benefit obligations - - (467) - (467) (11) (478) Other comprehensive income - 14 - - 14 - 14 Total comprehensive income for the year - 8 347,581 - 347,589 124,864 472,453 Dividends declared (Note 32) - - (227,388) - (227,388) - (227,388) Dividends declared by subsidiarie s to other participants - - - - - (85,663) (85,663) Balance at 31 December 2022 37,051 1,874 1,268,580 2,539 1,310,044 386,459 1,696,503 These consolidated financial statements were approved by management on 16 March 2023: Beketayev R.B. Chief Financial Officer Jakypbekova S.J. Chief Accountant National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 7 1 NAC Kazatomprom JSC Group and its Operations These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) for the year ended 31 December 2022 for National Atomic Company Kazatomprom JSC (the “Company”) and its subsidiaries (hereinafter collectively referred to as “the Group” or “NAC Kazatomprom JSC”). The Company is a joint stock company set up in accordance with regulations of the Republic of Kazakhstan. The Company was established pursuant to the Decree of the President of the Republic of Kazakhstan on the establishment of National Atomic Company Kazatomprom No. 3593, dated 14 July 1997, and the Decree of the Government of the Republic of Kazakhstan on National Atomic Company Kazatomprom Issues No. 1148 dated 22 July 1997, as a closed joint stock company with a 100% government shareholding. As of 31 December 2022, 75% of the Company’s shares are held by Samruk-Kazyna JSC and 25% are on free float. Government is an ultimate controlling party of the Group. This is unchanged from the prior year end. The Company’s registered address is Syganak street, building 17/12, Astana city, the Republic of Kazakhstan. The principal place of business is the Republic of Kazakhstan. The Group’s principal activities include production of uranium and sale of uranium products. The Group is one of the leading uranium producing companies of the world. The Group is also involved in processing of rare metals, manufacture and sale of beryllium and tantalum products and scientific support of operational activities. NAC Kazatomprom JSC is an entity representing interests of the Republic of Kazakhstan at the initial stages of the nuclear fuel cycle and production of fuel assemblies and their components. The Group is a participant in a number of associates and joint ventures which make a significant contribution to its profit (Notes 25 and 26). The Group’s development strategy focuses on the core business activities of mining and processing of uranium and related natural resources. The development strategy is designed to ensure long term value growth for all stakeholders of the Group in accordance with the principles of sustainable development through aligning production volumes to market conditions and adopting a market centric focus to sales capabilities, applying best practices in business activities, and developing a corporate culture consistent with the Group’s position as an industry leader. As at 31 December 2022, the Group and its associates and joint ventures were a party to the following contracts for production and exploration of uranium: Mine/area Stage Contract date Contract term Group Kazatomprom-SaUran LLP Kanzhugan Production 27 November 1996 51 years Uvanas Liquidation 27 November 1996 26 years Mynkuduk, East lot Production 27 November 1996 31 years Moinkum, lot 1 (South) (south part) Liquidation 26 September 2000 20 years Moinkum, lot 3 (Central) (north part) Production 31 May 2010 29 years DP Ortalyk LLP Mynkuduk, Central lot Production 8 July 2005 28 years Zhalpak Production 14 December 2021 21 years Appak LLP Mynkuduk, West lot Production 8 July 2005 30 years RU-6 LLP North and South Karamurun Production 15 November 1996 44 years JV Inkai LLP Inkai, block 1 Production 13 July 2000 45 years Company Inkai, block 2 Exploration 25 June 2018 6 years Inkai, block 3 Exploration 25 June 2018 4 years Baiken-U LLP North Khorasan, block 2 Production 1 March 2006 49 years JV Khorassan-U LLP North Khorasan, block 1 Exploration and Production 8 May 2005 53 years Karatau LLP Budenovskoe, block 2 Production 8 July 2005 35 years JV Akbastau JSC Budenovskoe, block 1 Production 20 November 2007 30 years Budenovskoe, blocks 3, 4 Production 20 November 2007 31 years National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 8 1 NAC Kazatomprom JSC Group and its Operations (Continued) Mine/area Stage Contract date Contract term Associates JV KATCO LLP Southern Moinkum (Northern part and Tortkuduk) Production 3 March 2000 39 years JV Zarechnoye JSC Zarechnoye Production 23 September 2002 23 years JV South Mining Chemical Company LLP Akdala Production 28 March 2001 25 years Inkai, block 4 Production 8 July 2005 24 years Joint Ventures Semizbay-U LLP Semizbai Production 2 June 2006 25 years Irkol Production 14 July 2005 25 years JV Budenovskoe LLP Block 6&7 Budenovskoye Production 16 October 2020 25 years * Exploration completed, the Group is in the process of developing the pilot production project. At 31 December 2022 the Group comprises 33 entities (2021: 33), including associates and joint ventures, located in six regions of the Republic of Kazakhstan: Turkestan region, East Kazakhstan region, Kyzylorda region, Akmola region, Pavlodar region and Almaty region. At 31 December 2022 the aggregate number of employees of the Group is 21 thousand (2021: 21 thousand) people. 2 Environment of the Group The economy of the Republic of Kazakhstan continues to display characteristics of an emerging market. Its economy is particularly sensitive to prices on oil and gas and other commodities, which constitute a major part of the country’s exports. These characteristics include, but are not limited to, the existence of a national currency that is not freely convertible outside of the country and little presence of Kazakhstani debt and equity securities on foreign stock exchanges. Higher inflation, challenges posted by the domestic unrest in January 2022, ongoing political tension in the region and volatility of exchange rates have had and may continue to have a negative impact on the economy of the Republic of Kazakhstan, including decrease in liquidity, and creation of difficulties in attracting international financing. On 20 August 2015 the National Bank and the Government of the Republic of Kazakhstan resolved to discontinue supporting the exchange rate of Tenge and implemented a new monetary policy, which is based on an inflation targeting regime, cancellation of exchange rate trading band and start of a free-floating exchange rate. However, the National Bank's exchange rate policy allows it to intervene to prevent dramatic fluctuations of the Tenge exchange rate and to ensure financial stability. As at the date of this report, the official exchange rate of the National Bank of the Republic Kazakhstan was Tenge 464.79 per 1 US Dollar compared to Tenge 462.65 per 1 US Dollar as at 31 December 2022 (31 December 2021: Tenge 431.67 per 1 US Dollar). The average exchange rate for 2022 was Tenge 460.85 per 1 US Dollar (2021: Tenge 426.03 per US Dollar 1). Uncertainty remains in relation to the exchange rate of Tenge and future actions of the National Bank and the Government of the Republic of Kazakhstan and the impact of these factors on the economy of the Republic of Kazakhstan. COVID-19 In March 2020, the World Health Organisation declared the outbreak of COVID-19 a global pandemic. In response to the pandemic, the Kazakhstani authorities implemented numerous measures attempting to contain the spreading and impact of COVID-19, such as travel bans and restrictions, quarantines, shelter-in-place orders and limitations on business activity, including closures. Most of those measures were subsequently relaxed, however, as of 31 December 2022, there remains a risk that the authorities may impose additional restrictions in 2023 as a response to possible new variants of the virus. Conflict between Russia and Ukraine On 21 February 2022 the Russian President announced that the Russian government would recognise the Luhansk and Donetsk People’s Republics. On 24 February the Russian president directed its military to mobilize troops to the territory of Ukraine. As a response to the Russian actions, the United States, the European Union and a number of other states imposed sanctions against Russia including the disconnection of a number of Russian financial institutions from SWIFT. Russia is Kazakhstan's largest trading partner and is a key country of transit for trade, notably via the Caspian Pipeline Consortium (CPC) pipeline, through which up to 80% of Kazakh crude is exported. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 9 2 Environment of the Group (Continued) CPC operations were temporarily interrupted in March 2022 officially due to storm damage, which did not have a significant budgetary economic impact because of rising oil prices. However, a prolonged closure by Russia of the CPC route for Kazakh crude oil would have serious consequences for Kazakh exports and the economy as a whole. The Kazakh authorities consider alternative routes to the Caspian Sea, including through Azerbaijan, Georgia and Turkey, but these will require significant additional infrastructure and it will take many years to replace the CPC route. In connection with the Russian/Ukraine conflict and its consequences, the Tenge exchange rate began to be more volatile and the annual inflation rate was 20.3% in 2022. To date, the National Bank of the Republic of Kazakhstan has taken a number of measures to maintain the stability of the Kazakhstan financial system. The Group’s exported products are transported through Russia which creates risks associated with both transit through the territory of Russia and the delivery of cargo by sea vessels, logistical constraints could also increase import costs. The Group constantly monitors the potential impact of sanctions on the transportation of finished products. At the date of these financial statements, there are no restrictions on the Group's activities related to the supply of the Group's products to end customers. The Group also has permission to transit uranium through the Trans-Caspian International Transport Route (hereinafter referred to as the TITR), which the Group has successfully used as an alternative route since 2018 to help mitigate the risk of the primary route being unavailable, for any reason. There are also risks associated with Russian partners in Group’s subsidiaries, associates and joint ventures, including reputational and corporate governance risks. The Group has a Uranium Processing Agreement with the Uranium Enrichment Center (TsOU) (a resident of the Russia). At the date of these financial statements, the Group anticipates that provision of services under this agreement will continue as the situation should not affect the activities of the TsOU and its ability to enrich uranium for the Group. As part of its ongoing risk assessment program, management is reviewing the impact of anti-Russian sanctions on the Group's operations. To date, the sanctions have not had a significant impact on the Group's operations, although the resulting market uncertainty caused by the conflict between Russia and Ukraine has led to significant volatility in the spot uranium price, the exchange rate of the national currency and the quotations of the Company's securities. During the reporting period, the Company experienced some difficulties with certain bank payments, as described in Note 28. As of December 31, 2022, all funds placed with financial institutions included in the sanctions list were withdrawn and transferred to other financial institutions. The most significant factors that affected the Group’s results of operations during the year included: • A 31% increase in the average realized price of uranium during 2022 compared to 2021 due to a higher spot price for uranium (US Dollar 43.44 vs. US Dollar 33.11). Some long-term contract pricing mechanisms incorporated a portion of base (fixed) price components that were established prior to the increase in spot price during the current period. As a result, the increase in the Group’s average realized prices during the reporting period were lower than the increase in the spot market price for uranium; • US Dollar appreciation of approximately 8% during 2022 (8% increase in comparison with the prior period). The above factors had a positive effect on revenue from sales of uranium in the current period that increased by approximately Tenge 245,318 million (Note 9). Most of the Group’s borrowings are denominated in US Dollars, including Tenge bonds with indexation to the US Dollar. As a result of depreciation of the Tenge against the US Dollar, loans and borrowings have increased by Tenge 4,758 million at 31 December 2022 (Note 15). The net foreign exchange gain was larger in 2022 than in 2021 by approximately Tenge 13,959 million (Note 15) in line with the US Dollar appreciation because most of the Group’s consolidated accounts receivable and cash are denominated in US Dollars. The economic environment has a significant impact on the Group’s operations and financial position. Management is taking necessary measures to ensure sustainability of the Group’s operations. However, the future effects of the current economic situation are difficult to predict, and management’s current expectations and estimates could differ from actual results. Additionally, the energy sector in the Republic of Kazakhstan is still impacted by political, legislative, fiscal and regulatory developments. The prospects for future economic stability in the Republic of Kazakhstan are largely dependent upon the effectiveness of any economic and public policy measures undertaken by the Government which are beyond the Group’s control. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 10 3 Significant Accounting Policies Basis of preparation These consolidated financial statements have been prepared in accordance with IFRS under the historical cost convention, as modified by financial instruments categorised at fair value through profit or loss (“FVTPL”) and at fair value through other comprehensive income (“FVOCI”). The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented. The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4. Presentation currency These consolidated financial statements are presented in millions of Kazakhstani Tenge (“Tenge”), unless otherwise stated. Consolidation (i) Consolidated financial statements Subsidiaries are those investees, including structured entities, that the Group controls because the Group (i) has power to direct the relevant activities of the investees that significantly affect their returns, (ii) has exposure, or rights, to variable returns from its involvement with the investees, and (iii) has the ability to use its power over the investees to affect the amount of the investor’s returns. The existence and effect of substantive rights, including substantive potential voting rights, are considered when assessing whether the Group has power over another entity. For a right to be substantive, the holder must have a practical ability to exercise that right when decisions about the direction of the relevant activities of the investee need to be made. The Group may have power over an investee even when it holds less than the majority of the voting power in an investee. In such a case, the Group assesses the size of its voting rights relative to the size and dispersion of holdings of the other vote holders to determine if it has de-facto power over the investee. Protective rights of other investors, such as those that relate to fundamental changes of the investee’s activities or applied only in exceptional circumstances, do not prevent the Group from controlling an investee. Subsidiaries are consolidated from the date on which control is transferred to the Group (acquisition date) and are deconsolidated from the date on which control ceases. The acquisition method of accounting is used to account acquisition of subsidiaries other than those acquired from parties under common control. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at their fair values at the acquisition date, irrespective of the extent of any non- controlling interest. The Group measures non-controlling interest that represents present ownership interest and entitles the holder to a proportionate share of net assets in the event of liquidation non-controlling interest’s proportionate share of net assets of the acquiree. Goodwill is measured by deducting the net assets of the acquiree from the aggregate of the consideration transferred for the acquiree, the amount of non-controlling interest in the acquiree and the fair value of an interest in the acquiree held immediately before the acquisition date. Any negative amount (“negative goodwill” or a “bargain purchase”) is recognised in profit or loss, after management reassesses whether it identified all the assets acquired and all the liabilities and contingent liabilities assumed and reviews the appropriateness of their measurement. The consideration transferred for the acquiree is measured at the fair value of the assets given up, equity instruments issued and liabilities incurred or assumed, including the fair value of assets or liabilities from contingent consideration arrangements, but excludes acquisition related costs such as advisory, legal, valuation and similar professional services. Transaction costs related to the acquisition of and incurred for issuing equity instruments are deducted from equity; transaction costs incurred for issuing debt as part of the business combination are deducted from the carrying amount of the debt and all other transaction costs associated with the acquisition are expensed. Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated; unrealised losses are also eliminated unless the cost cannot be recovered. The Company and all of its subsidiaries use uniform accounting policies consistent with the Group’s policies. When necessary amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting policies. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 11 3 Significant Accounting Policies (Continued) Non-controlling interest is that part of the net results and of the equity of a subsidiary attributable to interests which are not owned, directly or indirectly, by the Group. Non-controlling interest forms a separate component of the Group’s equity. (ii) Purchases and sales of non-controlling interests The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. Any difference between the purchase consideration and the carrying amount of non- controlling interest acquired is recorded as a capital transaction directly in equity. The Group recognizes the difference between sales consideration and the carrying amount of non-controlling interest sold as a capital transaction in the consolidated statements of changes in equity. (iii) Purchases of subsidiaries from parties under common control Purchases of subsidiaries from parties under common control are accounted for using the predecessor values method. Under this method the consolidated financial statements of the combined entity are presented as if the businesses had been combined from the beginning of the earliest period presented or, if later, the date when the combining entities were first brought under common control. The assets and liabilities of the subsidiary transferred under common control are at the predecessor entity’s carrying amounts. The predecessor entity is considered to be the highest reporting entity in which the subsidiary’s IFRS financial information was consolidated. Related goodwill inherent in the predecessor entity’s original acquisitions is also recorded in these consolidated financial statements. Any difference between the carrying amount of net assets, including the predecessor entity’s goodwill, and the consideration for the acquisition is accounted for in these consolidated financial statements as an adjustment to retained earnings within equity. (iv) Associates Associates are entities over which the Group has significant influence (directly or indirectly), but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. Dividends received from associates reduce the carrying value of the investment in associates. Other post-acquisition changes in the Group’s share of net assets of an associate are recognised as follows: (i) the Group’s share of profits or losses of associates is recorded in the consolidated profit or loss for the year as the share of results of associates, (ii) the Group’s share of other comprehensive income is recognised in other comprehensive income and presented separately, (iii) other changes in the Group’s share of the carrying value of net assets of associates are recognised in profit or loss within the share of results of associates. However, when the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. (v) Joint arrangements The Group is a party of joint arrangement when it exercises joint control over arrangement by acting collectively with other parties and decisions about the relevant activities require unanimous consent of the parties sharing control. The joint arrangement is either a joint operation or a joint venture depending on the contractual rights and obligations of the parties to the arrangement. The Group’s interests in joint ventures are accounted for using the equity method and are initially recognised at cost. Dividends received from joint ventures reduce the carrying value of the investment in joint ventures. Other post-acquisition changes in the Group’s share of net assets of joint ventures are recognised as follows: (i) the Group’s share of profits or losses of joint ventures is recorded in the consolidated profit or loss for the year as share of results of joint ventures, (ii) the Group’s share of other comprehensive income is recognised in other comprehensive income and presented separately, (iii) other changes in the Group’s share of the carrying value of net assets of joint ventures are recognised in profit or loss within the share of result of joint ventures. When the Group’s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group’s net investment in the joint ventures), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 12 3 Significant Accounting Policies (Continued) Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group. If participants of joint arrangements have rights to assets and bear responsibility for obligations under joint arrangements, then the joint arrangement is classified as a joint operation. In relation to interest in joint operations the Group recognises: (i) its share of any assets held jointly, (ii) its share of any liabilities incurred jointly, (iii) revenue from the sale of its share of the output arising from the joint operation, (iv) its share of any expenses incurred jointly. In accordance with requirements of the relevant agreements, participants buy output of joint operations equally in accordance with their 50% ownership interest. If participants of the joint operations do not comply with this requirement during a period, a liability or receivable under joint operations is recognised for an amount equivalent to the corresponding gross margin. The liability/receivable is settled either when participants satisfy the parity requirements or participants mutually agree to discharge the liabilities/receivables, and a corresponding loss/gain is recognised in profit and loss. Receivables and payables between participants of the joint operations are presented on a gross basis in the financial statements. No revenue from joint operations is recognised in the financial statements until the Group sells the output to third parties. (vi) Disposals of subsidiaries, associates or joint ventures When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity, are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate. Foreign currency translation The functional currency of each of the Group’s consolidated entities is the currency of the primary economic environment in which the entity operates. The functional currency of the Company and its Kazakhstan subsidiaries, and the Group’s presentation currency, is the national currency of Kazakhstan, Kazakhstani Tenge. Exchange restrictions and currency controls exist in relation of converting Tenge into other currencies. Currently, Tenge is not freely convertible outside of the Republic of Kazakhstan. Monetary assets and liabilities are translated into each entity’s functional currency at the official exchange rate at the respective end of the reporting period. The official exchange rate of Kazakhstan Stock Exchange (KASE) as of 31 December 2022 was Tenge 462.65 per 1 US Dollar (2021: Tenge 431.80 per 1 US Dollar). Foreign exchange gains and losses resulting from the settlement of the transactions and from the translation of monetary assets and liabilities into each entity’s functional currency at year-end official exchange rates are recognised in profit or loss. Translation at year-end does not apply to non-monetary items that are carried at historic costs. Loans between Group entities and related foreign exchange gains or losses are eliminated upon consolidation. However, where the loan is between Group entities that have different functional currencies, the foreign exchange gain or loss cannot be eliminated in full and is recognised in the consolidated profit or loss, unless the loan is not expected to be settled in the foreseeable future and thus forms part of the net investment in foreign operation. In such a case, the foreign exchange gain or loss is recognised in other comprehensive income. The results and financial position of Group entities, which have financial statements with different functional currencies, are translated into the presentation currency as follows: • assets and liabilities for each statement of financial position are translated at the closing rate at the end of the respective reporting period; • income and expenses are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); • components of equity are translated at the historic rate; • all resulting exchange differences are recognised in other comprehensive income. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 13 3 Significant Accounting Policies (Continued) When control over a foreign operation is lost, the exchange differences recognised previously in other comprehensive income are reclassified to profit or loss for the year as part of the gain or loss on disposal. On partial disposal of a subsidiary without loss of control, the related portion of accumulated currency translation differences is reclassified to non-controlling interest within equity. Revenue recognition Revenue is income arising in the course of the Group’s ordinary activities. Revenue is recognised in the amount of transaction price. Transaction price is the amount of consideration to which the Group expects to be entitled in exchange for transferring control over promised goods or services to a customer, excluding the amounts collected on behalf of third parties. Revenue is recognised net of discounts, returns and value added taxes, export duties, other similar mandatory payments. (i) Sales of goods (uranium, tantalum, beryllium, niobium and other products) Sales are recognised when control of the good has transferred, being when the goods are delivered to the customer, the customer has full discretion over the goods, and there is no unfulfilled obligation that could affect the customer’s acceptance of the goods. Delivery occurs when the goods have been delivered to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the goods in accordance with the contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied. Revenue from the sales with discounts is recognised based on the price specified in the contract, net of the estimated volume discounts. Accumulated experience is used to estimate and provide for the discounts, using the expected value method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. No element of financing is deemed present as the sales are made with an average credit term of 30-270 days, which is consistent with market practice. A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due. Delivery of uranium, tantalum and beryllium products vary depending on the individual terms of a sale contract usually in accordance with the Incoterms classification. Delivery of uranium products occurs: at the date of physical delivery in accordance with Incoterms or at the date of book-transfer to an account with a convertor specified by the customer. A book-transfer operation represents a transaction whereby the uranium account balance of the transferor is decreased with a simultaneous allocation of uranium to the transferee’s uranium account with the same specialised conversion / reconversion entity. (ii) Sales of services (transportation, drilling and other) The Group may provide services under fixed-price and variable price contracts. Revenue from providing services is recognised in the accounting period in which the services are rendered. For fixed-price contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided because the customer receives and uses the benefits simultaneously. Where the contracts include multiple performance obligations, the transaction price is allocated to each separate performance obligation based on the stand-alone selling prices. Where these are not directly observable, they are estimated based on expected cost plus margin. Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management. In case of fixed-price contracts, the customer pays the fixed amount based on a payment schedule. If the services rendered by the Group exceed the payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised.If the contract includes variable consideration, revenue is recognised only to the extent that it is highly probable that there will be no significant reversal of such consideration. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 14 3 Significant Accounting Policies (Continued) (iii) Financing components The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money. (iv) Barter transactions and mutual cancellations A portion of sales and purchases are settled by mutual cancellations, barter or non-cash settlements. These transactions are generally in the form of direct settlements by dissimilar goods and services from the final customer (barter), cancellation of mutual balances or through a chain of non-cash transactions involving several companies. Sales and purchases that are expected to be settled by mutual settlements, barter or other non-cash settlements are recognised based on the management’s estimate of the fair value to be received or given up in non-cash settlements. The fair value is determined with reference to observable market information. Non-cash transactions have been excluded from the cash flow statement. Investing and financing activities and the total of operating activities represent actual cash flows. Interest income Interest income is recorded for all debt instruments, other than those at FVTPL, on an accrual basis using the effective interest method. This method defers, as part of interest income, all fee received between the parties to the contract that are an integral part of the effective interest rate, all other premiums or discounts. Interest income on debt instruments at FVTPL calculated at nominal interest rate is presented within ‘finance income’ line in profit or loss. Fees integral to the effective interest rate include origination fees received or paid by the Group relating to the creation or acquisition of a financial asset (for example, fees for evaluating creditworthiness, evaluating and recording guarantees or collateral, negotiating the terms of the instrument and for processing transaction documents). For financial assets that are originated or purchased credit-impaired, the effective interest rate is the rate that discounts the expected cash flows (including the initial expected credit losses) to the fair value on initial recognition (normally represented by the purchase price). As a result, the effective interest is credit-adjusted. Interest income is calculated by applying the effective interest rate to the gross carrying amount of financial assets, except for (i) financial assets that have become credit impaired (Stage 3), for which interest revenue is calculated by applying the effective interest rate to their AC, net of the ECL provision, and (ii) financial assets that are purchased or originated credit impaired, for which the original credit-adjusted effective interest rate is applied to the AC. Income taxes Income taxes have been provided for in the consolidated financial statements in accordance with legislation enacted by the end of the reporting period. The income tax charge/(credit) comprises current tax and deferred tax and is recognised in profit or loss for the year, except if it is recognised in other comprehensive income or directly in equity because it relates to transactions that are also recognised, in the same or a different period, in other comprehensive income or directly in equity. Current tax is the amount expected to be paid to, or recovered from, the taxation authorities in respect of taxable profits or losses for the current and prior periods. Taxable profits or losses are based on estimates if consolidated financial statements are authorised prior to filing relevant tax returns. Taxes other than on income are recorded within operating expenses. Deferred income tax is provided using the balance sheet liability method for tax loss carry forwards and temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. In accordance with the initial recognition exemption, deferred taxes are not recorded for temporary differences on initial recognition of an asset or a liability in a transaction other than a business combination if the transaction, when initially recorded, affects neither accounting nor taxable profit. Deferred tax liabilities are not recorded for temporary differences on initial recognition of goodwill, and subsequently for goodwill which is not deductible for tax purposes. Deferred tax balances are measured at tax rates enacted at the end of the reporting period, which are expected to apply to the period when the temporary differences will reverse or the tax loss carry forwards will be utilised. Deferred tax assets and liabilities are netted only within the individual companies of the Group. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 15 3 Significant Accounting Policies (Continued) Deferred tax assets for deductible temporary differences and tax loss carry forwards are recorded only to the extent that it is probable that the temporary difference will reverse in the future and there is sufficient future taxable profit available against which the deductions can be utilised. The Group controls the reversal of temporary differences relating to taxes chargeable on dividends from subsidiaries or on gains upon their disposal. The Group does not recognise deferred tax liabilities on such temporary differences except to the extent that management expects the temporary differences to reverse in the foreseeable future. The Group’s uncertain tax positions are reassessed by management at the end of each reporting period. Liabilities are recorded for income tax positions that are determined by management as more likely than not to result in additional taxes being levied if the positions were to be challenged by the tax authorities. The assessment is based on the interpretation of tax laws that have been enacted by the end of the reporting period, and any known court or other rulings on such issues. Liabilities for penalties, interest and taxes other than on income are recognised based on management’s best estimate of the expenditure required to settle the obligations at the end of the reporting period. Property, plant and equipment (i) Recognition and measurement of property, plant and equipment Property, plant and equipment are stated at cost, less accumulated depreciation and provision for impairment, where required. Cost comprises purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, and any costs directly attributable to bringing the asset to the location and condition necessary for its intended use. The cost of self-constructed assets includes the cost of materials, direct labour and an appropriate proportion of production overheads. The individual significant parts of an item of property, plant and equipment (components), whose useful lives are different from the useful life of the given asset as a whole are depreciated individually, applying depreciation rates reflecting their anticipated useful lives. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Specialised spare parts and servicing equipment with a significant initial value and a useful life of more than one year are recognised as an item of property, plant and equipment. Other spare parts and auxiliary equipment are recognised as inventories and accounted for in profit and loss for the year as retired. Costs of minor repairs and day-to-day maintenance are expensed when incurred. Cost of replacing major parts or components of property, plant and equipment items are capitalised and the replaced part is disposed. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss for the year. (ii) Depreciation Land is not depreciated. Depreciation of items within buildings category that are used in extraction of uranium and its preliminary processing is charged on a unit-of-production (UoP) method in respect of items for which this basis best reflects the pattern of consumption. Depreciation on other items of property, plant and equipment is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives: Useful lives in years Buildings 10 to 50 Machinery and equipment 3 to 50 Vehicles 3 to 10 Other 3 to 20 Each item’s estimated useful life depends on its own useful life limitations and/or term of a subsurface use contract and the present assessment of economically recoverable reserves of the mine property at which the item is located. The residual value of an asset is the estimated amount that the Group would currently obtain from the disposal of the asset less the estimated costs of disposal, if the asset was already of the age and in the condition expected at the end of its useful life. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 16 3 Significant Accounting Policies (Continued) Mine development assets Mine development assets are stated at cost, less accumulated depreciation and provision for impairment, where required. Mine development assets comprise reclassified exploration and evaluation costs, the capitalised costs of pump-in and pump-out well drilling, main external tying of the well with surface piping, equipment, measuring instruments, ion-exchange resin, estimated site restoration, acid costs and other development costs. Under existing production method the wellfields are progressively established over the orebody as uranium is depleted by blocks. Mine development assets are amortised at the mine or block level using the unit-of-production method. Unit-of- production rates are based on proved and probable reserves, except for capitalised development costs that are amortised based on ready for extraction volumes. Ready for extraction volumes represent a portion of proved and probable reserves that management estimates to extract from a block/mine as a result of available capitalised costs. The estimate of proved and probable reserves is based on reserve reports which are an integral part of each subsoil use contract. These reserve reports are incorporated into feasibility models which are approved by the government and detail the total proven reserves and estimated scheduled extraction by year. Since 2017, the Group uses reserve reports prepared by an independent consultant (Note 4). Intangible assets (i) Recognition and measurement of intangible assets The Group’s intangible assets other than goodwill have definite useful lives and primarily include capitalised production technology development costs, computer software, patents, and licences. Acquired computer software licences and patents are initially measured at costs incurred to acquire and bring them to use. (ii) Amortisation of intangible assets Intangible assets are amortised using the straight-line method over their useful lives: Useful lives in years Licences and patents 3 to 20 Software 1 to 14 Other 2 to 15 If impaired, the carrying amount of intangible assets is written down to the higher of value in use and fair value less costs to sell. Intangible assets not ready for use is not amortised being part of intangible assets under development. (iii) Goodwill Goodwill is carried at cost less accumulated impairment losses, if any. The Group tests goodwill for impairment at least annually and whenever there are indications that goodwill may be impaired. Goodwill is allocated to the cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the business combination. Such units or groups of units represent the lowest level at which the Group monitors goodwill and are not larger than an operating segment. Gains or losses on disposal of an operation within a cash-generating unit to which goodwill has been allocated include the carrying amount of goodwill associated with the disposed operation, generally measured on the basis of the relative values of the disposed operation and the portion of the cash-generating unit which is retained. (iv) Research and development costs Research expenditure is recognised as an expense when incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when it is probable that the project will be a success considering its commercial and technological feasibility, and costs can be measured reliably. Other development expenditures are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Development costs with a finite useful life that have been capitalised are amortised from the commencement of the commercial production of the product on a straight-line basis over the period of its expected benefit. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 17 3 Significant Accounting Policies (Continued) Mineral rights Mineral rights are stated at cost, less accumulated depreciation and provision for impairment, where required. Mineral rights acquired as part of business combinations are recognised at fair value. The capitalised cost of acquisition of mineral rights comprises subscription bonus, commercial discovery bonus, the cost of subsurface use rights and capitalised historical costs. The Group is obliged to reimburse historical costs incurred by the State in respect of mining rights prior to licence or subsoil use contracts being issued. These historical costs are recognised as part of the acquisition cost with a corresponding liability equal to the present value of payments made during the licence period or subsoil use contract. Mineral rights are amortised using unit-of-production method based upon proved and probable reserves commencing when uranium first starts to be extracted. The estimate of proved and probable reserves is based on reserve reports, which are an integral part of each subsoil use contract. These reserve reports are incorporated into feasibility models, which are approved by the government and detail the total proven reserves and estimated scheduled extraction by year. Since 2017, the Group uses reserve reports prepared by an independent consultant (Note 4). Exploration and evaluation assets Exploration and evaluation assets are measured at cost less provision for impairment, where required. The Group classifies exploration and evaluation assets as tangible or intangible according to the nature of the assets acquired. Exploration and evaluation assets comprise the capitalised costs incurred by the Group prior to proving that viable production is possible and include geological and geophysical costs, the costs of exploratory wells and directly attributable overheads associated with exploration activities. The decision to enter into or renew a subsoil use contract after the expiration of the exploration and appraisal period is subject to the success of the exploration and appraisal of mineral resources and the Group's decision to proceed to the production (development) stage. Tangible exploration and evaluation assets are transferred to mine development assets upon demonstration of commercial viability of uranium production and amortised using unit-of-production method based upon proved reserves. Once commercial reserves (proved or commercial reserves) are found, intangible exploration and evaluation assets are transferred to mineral rights. Accordingly, the Group does not amortise exploration and evaluation assets before commercial reserves (proved or commercial reserves) are found. If no commercial reserves are found, exploration and evaluation assets are expensed. Exploration and evaluation assets are tested by the Group for impairment whenever facts and circumstances indicate assets’ impairment. An impairment loss is recognised for the amount by which exploration and evaluation assets’ carrying amount exceeds their recoverable amount. The recoverable amount is higher of the exploration and evaluation assets’ fair value less costs to sell and their value in use. One or more of the following facts and circumstances indicate that the Group should test its exploration and evaluation assets for impairment (the list is not exhaustive): • the period for which the Group has the right to explore in the specific area has expired during the period or will expire in the near future, and is not expected to be renewed; • substantive expenditure on further exploration for and evaluation of mineral reserves in the specific area is neither budgeted nor planned; • exploration for and evaluation of mineral reserves in the specific area have not led to the discovery of commercially viable quantities of mineral reserves and the Group has decided to discontinue such operations in the specific area; • sufficient data exist to indicate that, although development works in the specific area are likely to proceed, the carrying amount of the exploration and evaluation assets is unlikely to be recovered in full resulting from efficient development or by sale. Costs associated with activities undertaken prior to exploration such as design, technical and economical assessments are expensed as incurred. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 18 3 Significant Accounting Policies (Continued) Impairment of non-financial assets The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, management estimates the recoverable amount, which is determined as the higher of an asset’s fair value less costs to sell (the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date) and its value in use (being the net present value of expected future cash flows of the relevant cash-generating unit). In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted. If it is not possible to estimate the recoverable amount of the individual asset, the Group determines the recoverable amount of the cash-generating unit to which the asset belongs. A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Basis for determination of cash-generating units is presented in Note 4. The estimates used for impairment reviews are based on detailed life of mine plans and operating budgets, modified as appropriate to meet the requirements of IAS 36 “Impairment of Assets”. Future cash flows are based on: • estimates of the volumes of the reserves for which there is a high degree of confidence of economic extraction; • future production and sales quantities; • future commodity prices (assuming the current market prices will revert to the Group’s assessment of the long term average price, generally over a period of three to five years); and • future costs of production and other operating and capital expenditures. If the carrying amount of the asset exceeds its recoverable amount, the asset is impaired and an impairment loss is charged to profit and loss for the year so as to reduce the carrying amount in the consolidated statements of financial position to its recoverable amount. An impairment loss recognised for an asset in prior years is reversed where appropriate if there has been a change in the estimates used to determine the asset’s value in use or fair value less costs to sell. This reversal is recognised in profit and loss for the year, and is limited to the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognised in prior years. Investment property Investment property is property held by the Group to earn rental income or for capital appreciation, or both and which is not occupied by the Group. Investment properties are stated at cost less accumulated depreciation and provision for impairment, where required. If any indication exists that investment properties may be impaired, the Group estimates the recoverable amount as the higher of value in use and fair value less costs of disposal. The carrying amount of an investment property is written down to its recoverable amount through a charge to profit or loss for the year. An impairment loss recognised in prior years is reversed if there has been a subsequent change in the estimates used to determine the asset’s recoverable amount. Subsequent expenditure is capitalised only when it is probable that future economic benefits associated with the item will flow to the Group, and the cost can be measured reliably. All other repairs and maintenance costs are expensed when incurred. If an investment property becomes owner-occupied, it is reclassified to property, plant and equipment. Earned rental income is recorded in profit or loss for the year within other income. Gains or losses on disposal of investment property are calculated as proceeds less the carrying amount. If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment, and its carrying amount at the date of reclassification becomes its deemed cost for accounting purposes. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 19 3 Significant Accounting Policies (Continued) Assets classified as held for sale Assets and disposal groups (which may include both non-current and current assets) are classified in the consolidated statements of financial position as ‘Assets of disposal groups classified as held for sale’ if their carrying amount will be recovered principally through a sale transaction (including loss of control of a subsidiary holding the assets) within twelve months after the reporting period. Assets are reclassified when all of the following conditions are met: (a) the assets are available for immediate sale in their present condition; (b) the Group management approved and initiated an active programme to locate a buyer; (c) the assets are actively marketed for sale at a reasonable price; (d) the sale is expected within one year; and (e) it is unlikely that significant changes to the plan to sell will be made or that the plan will be withdrawn. Non-current assets or disposal groups classified as held for sale in the current period’s consolidated statements of financial position are not reclassified or re-presented in the comparative statements of financial position to reflect the classification at the end of the current period. A disposal group is a group of assets (current or non-current) to be disposed of, by sale or otherwise, together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction. Goodwill is included if the disposal group includes an operation within a cash-generating unit to which goodwill has been allocated on acquisition. Non-current assets are assets that include amounts expected to be recovered or collected more than twelve months after the reporting period. If reclassification is required, both the current and non-current portions of an asset are reclassified. Held for sale disposal groups as a whole are measured at the lower of their carrying amount and fair value less costs to sell. Held for sale property, plant and equipment are not depreciated. Reclassified non-current financial instruments are not subject to write down to the lower of their carrying amount and fair value less costs to sell. Liabilities directly associated with the disposal group that will be transferred in the disposal transaction are reclassified and presented separately in the consolidated statements of financial position. Financial instruments Key measurement terms Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The best evidence of fair value is the price in an active market. An active market is one in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. Fair value of financial instruments traded in an active market is measured as the product of the quoted price for the individual asset or liability and the number of instruments held by the entity. This is the case even if a market’s normal daily trading volume is not sufficient to absorb the quantity held and placing orders to sell the position in a single transaction might affect the quoted price. Valuation techniques such as discounted cash flow models or models based on recent arm’s length transactions or consideration of financial data of the investees are used to measure fair value of certain financial instruments for which external market pricing information is not available. Fair value measurements are analysed by level in the fair value hierarchy as follows: (i) level one are measurements at quoted prices (unadjusted) in active markets for identical assets or liabilities, (ii) level two measurements are valuations techniques with all material inputs observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices), and (iii) level three measurements are valuations not based on solely observable market data (that is, the measurement requires significant unobservable inputs). Transfers between levels of the fair value hierarchy are deemed to have occurred at the end of the reporting period. (i) Transaction costs Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial instrument. An incremental cost is one that would not have been incurred if the transaction had not taken place. Transaction costs include fees and commissions paid to agents (including employees acting as selling agents), advisors, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Transaction costs do not include debt premiums or discounts, financing costs or internal administrative or holding costs. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 20 3 Significant Accounting Policies (Continued) (ii) Amortised cost Amortised cost (“AC”) is the amount at which the financial instrument was recognised at initial recognition less any principal repayments, plus accrued interest, and for financial assets less any allowance for expected credit losses (“ECL”). Accrued interest includes amortisation of transaction costs deferred at initial recognition and of any premium or discount to the maturity amount using the effective interest method. Accrued interest income and accrued interest expense, including both accrued coupon and amortised discount or premium (including fees deferred at origination, if any), are not presented separately and are included in the carrying values of the related items in the consolidated statement of financial position. (iii) The effective interest method The effective interest method is a method of allocating interest income or interest expense over the relevant period, so as to achieve a constant periodic rate of interest (effective interest rate) on the carrying amount. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts (excluding future credit losses) through the expected life of the financial instrument or a shorter period, if appropriate, to the gross carrying amount of the financial instrument. The effective interest rate discounts cash flows of variable interest instruments to the next interest repricing date, except for the premium or discount which reflects the credit spread over the floating rate specified in the instrument, or other variables that are not reset to market rates. Such premiums or discounts are amortised over the whole expected life of the instrument. The present value calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate. For assets that are purchased or originated credit impaired (“POCI”) at initial recognition, the effective interest rate is adjusted for credit risk, i.e. it is calculated based on the expected cash flows on initial recognition instead of contractual payments. Financial instruments – initial recognition Financial instruments at FVTPL are initially recorded at fair value. All other financial instruments are initially recorded at fair value adjusted for transaction costs. Fair value at initial recognition is best evidenced by the transaction price. A gain or loss on initial recognition is only recorded if there is a difference between fair value and transaction price which can be evidenced by other observable current market transactions in the same instrument or by a valuation technique whose inputs include only data from observable markets. After the initial recognition, an ECL allowance is recognised for financial assets measured at AC and investments in debt instruments measured at FVOCI, resulting in an immediate accounting loss. All purchases and sales of financial assets that require delivery within the time frame established by regulation or market convention (“regular way” purchases and sales) are recorded at trade date, which is the date on which the Group commits to deliver a financial asset. All other purchases are recognised when the entity becomes a party to the contractual provisions of the instrument. Financial assets – classification and subsequent measurement (i) Measurement categories The Group classifies financial assets in the following measurement categories: FVTPL, FVOCI and AC. The classification and subsequent measurement of debt financial assets depends on: (i) the Group’s business model for managing the related assets portfolio and (ii) the cash flow characteristics of the asset. (ii) Business model The business model reflects how the Group manages the assets in order to generate cash flows – whether the Group’s objective is: (i) solely to collect the contractual cash flows from the assets (“hold to collect contractual cash flows”,) or (ii) to collect both the contractual cash flows and the cash flows arising from the sale of assets (“hold to collect contractual cash flows and sell”) or, if neither of (i) and (ii) is applicable, the financial assets are classified as part of “other” business model and measured at FVTPL. Business model is determined for a group of assets (on a portfolio level) based on all relevant evidence about the activities that the Group undertakes to achieve the objective set out for the portfolio available at the date of the assessment. Factors considered by the Group in determining the business model include the purpose and composition of a portfolio, past experience on how the cash flows for the respective assets were collected, how risks are assessed and managed, how the assets’ performance is assessed and how managers are compensated. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 21 3 Significant Accounting Policies (Continued) (iii) Cash flow characteristics Where the business model is to hold assets to collect contractual cash flows or to hold contractual cash flows and sell, the Group assesses whether the cash flows represent solely payments of principal and interest (“SPPI”). Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are consistent with the SPPI feature. In making this assessment, the Group considers whether the contractual cash flows are consistent with a basic lending arrangement, i.e. interest includes only consideration for credit risk, time value of money, other basic lending risks and profit margin. Where the contractual terms introduce exposure to risk or volatility that is inconsistent with a basic lending arrangement, the financial asset is classified and measured at FVTPL. The SPPI assessment is performed on initial recognition of an asset and it is not subsequently reassessed. Financial assets – reclassification Financial instruments are reclassified only when the business model for managing the portfolio as a whole changes. The reclassification has a prospective effect and takes place from the beginning of the first reporting period that follows after the change in the business model. The entity did not change its business model during the current and comparative period and did not make any reclassifications. Financial assets impairment – credit loss allowance for ECL The Group assesses, on a forward-looking basis, the ECL for debt instruments measured at AC and FVOCI and for the exposures arising from loan commitments and financial guarantee contracts, for contract assets. The Group measures ECL and recognises Net impairment losses on financial and contract assets at each reporting date. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money and (iii) all reasonable and supportable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions. Debt instruments measured at AC and contract assets are presented in the consolidated statement of financial position net of the allowance for ECL. For loan commitments and financial guarantees, a separate provision for ECL is recognised as a liability in the consolidated statement of financial position. For debt instruments at FVOCI, changes in amortised cost, net of allowance for ECL, are recognised in profit or loss and other changes in carrying value are recognised in OCI as gains less losses on debt instruments at FVOCI. The Group applies a three stage model for impairment, based on changes in credit quality since initial recognition. A financial instrument that is not credit-impaired on initial recognition is classified in Stage 1. Financial assets in Stage 1 have their ECL measured at an amount equal to the portion of lifetime ECL that results from default events possible within the next 12 months or until contractual maturity, if shorter (“12 Months ECL”). If the Group identifies a significant increase in credit risk (“SICR”) since initial recognition, the asset is transferred to Stage 2 and its ECL is measured based on ECL on a lifetime basis, that is, up until contractual maturity but considering expected prepayments, if any (“Lifetime ECL”). Refer to Note 40 for a description of how the Group determines when a SICR has occurred. If the Group determines that a financial asset is credit-impaired, the asset is transferred to Stage 3 and its ECL is measured as a Lifetime ECL. The Group’s definition of credit impaired assets and definition of default is explained in Note 40. For financial assets that are purchased or originated credit-impaired (“POCI Assets”), the ECL is always measured as a Lifetime ECL. Note 40 provides information about inputs, assumptions and estimation techniques used in measuring ECL, including an explanation of how the Group incorporates forward-looking information in the ECL models. Financial assets – write-off Financial assets are written-off, in whole or in part, when the Group exhausted all practical recovery efforts and has concluded that there is no reasonable expectation of recovery. The write-off represents a derecognition event. Indicators that there is no reasonable expectation of recovery include (i) court decision, (ii) liquidation of entity from which financial asset was acquired, (iii) overdue period of 3 years and more. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 22 3 Significant Accounting Policies (Continued) Derivative financial instruments Derivative financial instruments are carried at their fair value. All derivative instruments are carried as assets when fair value is positive and as liabilities when fair value is negative. Changes in the fair value of derivative instruments are included in profit or loss for the year. The Group does not apply hedge accounting. Certain derivative instruments embedded in financial liabilities and other non-financial contracts are treated as separate derivative instruments when their risks and characteristics are not closely related to those of the host contract. Financial assets – derecognition The Group derecognises financial assets when (a) the assets are redeemed or the rights to cash flows from the assets otherwise expire or (b) the Group has transferred the rights to the cash flows from the financial assets or entered into a qualifying pass-through arrangement whilst (i) also transferring substantially all the risks and rewards of ownership of the assets or (ii) neither transferring nor retaining substantially all the risks and rewards of ownership but not retaining control. Control is retained if the counterparty does not have the practical ability to sell the asset in its entirety to an unrelated third party without needing to impose additional restrictions on the sale. Financial assets – modification The Group sometimes renegotiates or otherwise modifies the contractual terms of the financial assets. The Group assesses whether the modification of contractual cash flows is substantial considering, among other, the following factors: any new contractual terms that substantially affect the risk profile of the asset, significant change in interest rate, change in the currency denomination, new collateral or credit enhancement that significantly affects the credit risk associated with the asset or a significant extension of a loan when the borrower is not in financial difficulties. If the modified terms are substantially different, the rights to cash flows from the original asset expire and the Group derecognises the original financial asset and recognises a new asset at its fair value. The date of renegotiation is considered to be the date of initial recognition for subsequent impairment calculation purposes, including determining whether a SICR has occurred. The Group also assesses whether the new loan or debt instrument meets the SPPI criterion. Any difference between the carrying amount of the original asset derecognised and fair value of the new substantially modified asset is recognised in profit or loss, unless the substance of the difference is attributed to a capital transaction with owners. In a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to make the originally agreed payments, the Group compares the original and revised expected cash flows to assets whether the risks and rewards of the asset are substantially different as a result of the contractual modification. If the risks and rewards do not change, the modified asset is not substantially different from the original asset and the modification does not result in derecognition. The Group recalculates the gross carrying amount by discounting the modified contractual cash flows by the original effective interest rate (or credit-adjusted effective interest rate for POCI financial assets), and recognises a modification gain or loss in profit or loss. Financial liabilities – measurement categories Financial liabilities are classified as subsequently measured at AC, except for (i) financial liabilities at FVTPL (derivatives, financial liabilities held for trading, e.g. short positions in securities), contingent consideration recognised by an acquirer in a business combination and other financial liabilities designated as such at initial recognition and (ii) financial guarantee contracts and loan commitments. Financial liabilities – derecognition Financial liabilities are derecognised when they are extinguished, i.e. when the obligation specified in the contract is discharged, cancelled or expires. An exchange between the Group and its original lenders of debt instruments with substantially different terms, as well as substantial modifications of the terms and conditions of existing financial liabilities, are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability. In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes in the type of interest rate, new conversion features attached to the instrument and change in loan covenants are also considered. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 23 3 Significant Accounting Policies (Continued) If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability. Modifications of liabilities that do not result in extinguishment are accounted for as a change in estimate using a cumulative catch up method, with any gain or loss recognised in profit or loss, unless the economic substance of the difference in carrying values is attributed to a capital transaction with owners. Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement of financial position only when there is a legally enforceable right to offset the recognised amounts, and there is an intention to either settle on a net basis, or to realise the asset and settle the liability simultaneously. Such a right of set off (a) must not be contingent on a future event and (b) must be legally enforceable in all of the following circumstances: (i) in the normal course of business, (ii) in the event of default and (iii) in the event of insolvency or bankruptcy. Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, and bank deposits with original maturities of three months or less. Cash and cash equivalents are carried at AC because: (i) they are held for collection of contractual cash flows and those cash flows represent SPPI, and (ii) they are not designated at FVTPL. Restricted balances are excluded from cash and cash equivalents. Balances restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period are included in other non-current assets. Cash and cash equivalents also include reverse repurchase transaction (reverse repo), an investment in highly liquid government securities with the agreement to sell them at a higher price within 1 to 30 days. Repo transactions are readily convertible to cash and cash equivalents and are subject to insignificant risk of changes in value as they are backed by the government of the Republic of Kazakhstan. Trade and other receivables Trade and other receivables are recognised initially at fair value and are subsequently carried at amortised cost using the effective interest method. Inventories Inventories are recorded at the lower of cost and net realisable value. The cost of inventory is determined on the weighted average basis. The cost of finished goods and work in progress comprises raw material, direct labour, other direct costs and related production overheads (based on the normal operating capacity) but excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and selling expenses. Inventory loans The Group enters into inventory loan agreements, according to which one party (the lender) undertakes to provide the other party (the borrower) with products, and the borrower obliges to return to the lender an identical amount of uranium products. The Group obtains inventory loans to facilitate the performance of its uranium supply obligations. The Group classifies inventory loans received as a non-financial liability. Upon receipt of the inventory loan, the Group accounts for the inventory at the contracted cost. Liability arising from inventory loan are recognised as part of other liabilities at the fair value of the uranium products at the reporting date. Subsequent revaluation of the inventory loan is carried out through profit or loss as part of other income/expenses in accordance with changes in the fair value of uranium products. Prepayments Prepayments are carried at cost less provision for impairment. A prepayment is classified as non-current when the goods or services relating to the prepayment are expected to be obtained after one year, or when the prepayment relates to an asset which will itself be classified as non-current upon initial recognition. Prepayments for assets are transferred to the carrying amount of the asset once the Group has obtained control of the asset and it is probable that future economic benefits associated with the asset will flow to the Group. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 24 3 Significant Accounting Policies (Continued) Other prepayments are written off to profit or loss when the goods or services relating to the prepayments are received. If there is an indication that the assets, goods or services relating to a prepayment will not be received, the carrying value of the prepayment is written down accordingly and a corresponding impairment loss is recognised in profit or loss for the year. Non-current prepayments are not discounted. Value added tax Value added tax (VAT) related to sales is payable to the tax authorities when goods are shipped or services are rendered. Purchase VAT can be offset against sales VAT upon the receipt of a tax invoice from a supplier. Tax legislation allows the settlement of VAT on a net basis. Accordingly, VAT related to sales and purchases unsettled at the reporting date is stated in the consolidated statements of financial position on a net basis separately for each consolidated entity. Recoverable VAT is classified as non- current if its settlement is not expected within one year after the reporting period. Non-current VAT is not discounted. Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. Any excess of the fair value of consideration received over the par value of shares issued is recorded as share premium in equity. Additional paid-in capital primarily represents capital contributions made by non-controlling interests in excess of their ownership. Dividends Dividends are recorded as a liability and deducted from equity in the period in which they are declared and approved. Any dividends declared after the reporting period and before the financial statements are authorised for issue are disclosed in the subsequent events note. Leases Liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the fixed payments (including in-substance fixed payments) less any lease incentives receivable. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases of the Group, the Group’s incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, collateral and conditions. Lease payments are allocated between principal and finance costs. The finance costs are charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture with value of Tenge 500 thousand or less. Operating leases Where the Group is a lessor in a lease which does not transfers substantially all the risks and rewards incidental to ownership to the lessee (i.e. operating lease), lease payments from operating leases are recognised as other income on a straight-line basis. Loans and borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred and are subsequently carried at AC using the effective interest method. Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial time to get ready for intended use or sale (qualifying assets) are capitalised as part of the costs of those assets. The commencement date for capitalisation is when (a) the Group incurs expenditures for the qualifying asset; (b) it incurs borrowing costs; and (c) it undertakes activities that are necessary to prepare the asset for its intended use or sale. Capitalisation of borrowing costs continues up to the date when the assets are substantially ready for their use or sale. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 25 3 Significant Accounting Policies (Continued) The Group capitalises borrowing costs that could have been avoided if it had not made capital expenditure on qualifying assets. Borrowing costs capitalised are calculated at the Group’s average funding cost (the weighted average interest cost is applied to the expenditures on the qualifying assets), except to the extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset. Where this occurs, actual borrowing costs incurred on the specific borrowings less any investment income on the temporary investment of these borrowings are capitalised. Preference shares Preference shares, which are mandatorily redeemable on a specific date, are classified as liabilities. The dividends on these preference shares are recognised in the statement of profit or loss and other comprehensive income as interest expense. Provisions for liabilities and charges Provisions for liabilities and charges are non-financial liabilities of uncertain timing or amount. They are accrued when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. The Group’s provisions include site restoration, environment protection and other provisions (Note 34). Provisions for asset retirement obligations Provisions for assets retirement obligations include site restoration and environment protection provisions. Asset retirement obligations are recognised when it is probable that the costs would be incurred and those costs can be measured reliably. Asset retirement obligations include the costs of rehabilitation and costs of liquidation (demolition of buildings, constructions and infrastructure, dismantling of machinery and equipment, transportation of the residual materials, environmental clean-up, monitoring of wastes and land restoration). Provision for the estimated costs of liquidation, rehabilitation and restoration are established and charged to the cost of corresponding asset in the reporting period when an obligation arises from the respective land disturbance in the course of mine development or environment pollution, based on the discounted value of estimated future costs. Site restoration provisions are charged fully to the cost of mine development assets despite some of the costs might include decommissioning of property, plant and equipment in accordance with site liquidation plans and materiality grounds. Movements in the provisions for asset retirement obligations, resulting from updated cost estimates, changes to the estimated term of operations and revisions to discount rates are capitalised within mine development assets. These amounts are then depreciated under unit of production method based on the produced volumes during the period, including losses, to the total number of proved reserves for each deposit. Provisions for asset retirement obligations do not include any additional obligations which are expected to arise from future disturbances. The costs are estimated on the basis of a closure and restoration plan. The cost estimates are calculated annually during the course of the operations to reflect known developments, including updated cost estimates revised subsoil use terms and estimated lives of operations, and are subject to formal reviews on a regular basis. Although the final cost to be incurred is uncertain, the Group estimates its costs based on feasibility and engineering studies using current restoration standards and techniques for conducting restoration and retirement works (Note 4). The amortisation or “unwinding” of the discount applied in establishing the net present value of provisions is charged to profit and loss in each reporting period. The amortisation of the discount is disclosed as finance costs. Financial guarantees Financial guarantees require the Group to make specified payments to reimburse the holder of the guarantee for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. Financial guarantees are initially recognised at their fair value, which is normally evidenced by the amount of fees received. This amount is amortised on a straight line basis over the life of the guarantee. At the end of each reporting period, the guarantees are measured at the higher of (i) the amount of the loss allowance for the guaranteed exposure determined based on the expected loss model and (ii) the remaining unamortised balance of the amount at initial recognition. In addition, an ECL loss allowance is recognised for fees receivable that are recognised in the consolidated statement of financial position as an asset. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 26 3 Significant Accounting Policies (Continued) Trade and other payables Trade payables are accrued when the counterparty performs its obligations under the contract and are recognised initially at fair value and subsequently carried at amortised cost using the effective interest method. Employee benefits (i) Long-term employee benefits The Group entities provide long-term employee benefits to employees in accordance with the provisions of the collective agreement. The agreements provide for financial aid for employees’ disability, retirement, funeral aid and other payments to the Group’s employees. The entitlement to some benefits is usually conditional on the employee remaining employed until the retirement age and the completion of a minimum service period. The Group does not have any funded post-employment plans. Liability recognised at each reporting date represents the present value of the plan liabilities. Actuarial gains and losses on post-employment obligations such as experience adjustments and the effects of changes in actuarial assumptions recognised in other comprehensive income in the period occurred. Other movements in the present value of the plan liabilities are also recognised in the profit or loss for the year, including current service cost. The most significant assumptions used in accounting for defined benefit obligations are the discount rate, staff turnover and the mortality assumptions. The discount rate is used to determine the net present value of future liabilities and each year the unwinding of the discount on those liabilities is charged to profit or loss for the year. The mortality assumption is used to project the future stream of benefit payments, which is then discounted to arrive at a net present value of liabilities. Employee benefits, including financial aid for employees’ disability and funeral aid to the Group’s employees and other payments, are considered as other long-term employee benefits. The expected cost of these benefits is accrued over the period of employment using the same accounting methodology as used for the defined benefit plan. The Group recognises changes in actuarial assumptions for other long-term employee benefits in profit or loss for the year. The Group receives services from an independent qualified actuary to evaluate long-term employee benefits on an annual basis. (ii) Payroll costs and related contributions Wages, salaries, contributions to pension and social insurance funds, paid annual leave and sick leave, bonuses, and non-monetary benefits are accrued in the year in which the associated services are rendered by the employees of the Group. In this case, the Group applies the Defined Contribution Plans scheme. In accordance with the legal requirements of the Republic of Kazakhstan, the Group withholds pension contributions from employees’ salary and transfers them into the united pension fund. Upon retirement of employees, all pension payments are administered by the united pension fund. The Group does not have any legal or constructive obligation to pay additional contributions other than pension contributions withheld from the salaries of the Group's employees. Earnings per share Earnings per share are determined by dividing the profit or loss attributable to owners of the Company by the weighted average number of participating shares outstanding during the reporting year adjusted for share split. Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s chief operating decision maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments. Reportable segments whose revenue, result or assets are ten percent or more of all the segments are reported separately. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 27 3 Significant Accounting Policies (Continued) Change in presentation Certain amounts in the consolidated statement of cash flows for 2021 have been reclassified in accordance with the presentation applied in 2022. The effect on comparative information for the year ended 31 December 2021 is as follows: In millions Tenge As originally presented Reclassification As reclassified for 2021 Cash receipts from customers 782,316 (2,335) 779,981 Payments to suppliers (503,301) 14,418 (488,883) Payments to employees (51,856) (11,380) (63,236) Interest paid (3,265) (54) (3,319) Other taxes paid (55,227) 4,345 (50,882) Social payments - (3,166) (3,166) Net other (payments)/receipts (1,499) (1,828) (3,327) Certain amounts in the consolidated statement of financial position as at 31 December 2021 have been reclassified in accordance with the presentation applied as at 31 December 2022 as follows: In millions Tenge As originally presented Reclassification As reclassified as at 31 December 2021 Non-current assets Investment property 2,065 (2,065) - Right-of-use assets 838 (838) - Loans to related parties 5,493 (5,493) - Other financial assets - 23,671 23,671 Other non-financial assets - 24,258 24,258 Other non-current assets 39,533 (39,533) - Current assets Loans to related parties 3,357 (3,357) - Short-term securities 4,986 (4,986) - Term deposits 43,220 (43,220) - Other current assets 7,823 (7,823) - Other financial assets - 52,249 52,249 Other non-financial assets - 7,137 7,137 4 Critical Accounting Estimates and Judgements in Applying Accounting Policies The Group makes estimates and assumptions that affect the amounts recognised in the financial statements including the carrying amounts of assets and liabilities. Estimates and judgements are continually evaluated and are based upon management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Management also makes certain judgements, apart from those involving estimations, in the process of applying the accounting policies. Judgements that have the most significant effect on the amounts recognised in the financial statements and estimates that can cause a significant adjustment to the carrying amount of assets and liabilities include: Ore reserves (estimates) Uranium reserves are a critical component of the Group’s projected cash flow estimates that are used to assess the recoverable values of relevant assets as well as depreciation and amortisation expense. Estimates of uranium reserves also determine the life of mines, which in turn affect asset retirement obligation calculations. On an annual basis the Group engages an independent consultant to assess the Group’s ore reserves and mineral resources in accordance with the Australasian Code for reporting on geological exploration works, mineral resources and ore reserves (hereinafter JORC Code). Independent assessment of reserves and resources was carried out as of 31 December 2022 and 2021. The consultant reviewed all key information upon which the reported mineral resource and ore reserve statements for the mining assets of the Group are based. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 28 4 Critical Accounting Estimates and Judgements in Applying Accounting Policies (Continued) The consultant’s reports contain an assessment of the tons of uranium contained in ore which has the potential to be extracted by the existing and planned mining operations (the mineral resource), and also the tons of uranium contained in ore currently planned to be extracted as envisaged by the respective life-of-mine plans (the ore reserve). The Group used the ore reserves data for calculation of impairment of long-term assets, unit of production depreciation for each of the Group’s mines as well as asset retirement obligation calculations. Impairment of non-financial assets (estimates) At the end of each reporting period, management assesses whether there is any indication of impairment of individual assets (or cash-generating units). If any such indication exists, management estimates the recoverable amount, which is determined as the higher of an asset’s fair value less costs to sell and its value in use. An impairment loss is recognised for the amount by which carrying amount exceeds recoverable amount. The Group tests goodwill for impairment at least annually. The calculation of value in use requires management to make estimates regarding the Group’s future cash flows. The estimation of future cash flows involves significant estimates and assumptions regarding commodity prices (uranium and other products), the level of production and sales, discount rates, growth rates, operating costs and other factors. The impairment review and calculations are based upon assumptions that are consistent with the Group’s business plans. Due to its subjective nature, these estimates could differ from future actual results of operations and cash flows; any such difference may result in impairment in future periods which would decrease the carrying value of the respective asset. Goodwill Refer to Note 20 for details of the Group’s impairment testing for goodwill at 31 December 2022. Assets related to uranium production Assets related to uranium mines include property, plant and equipment, mine development assets, mineral rights, exploration and evaluation assets, investments in associates, investments in joint ventures, and other investments. For the purpose of impairment testing, assets are grouped at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets (termed as ‘cash- generating units’). The Group has identified each mine (contract territory) as a separate cash-generating unit unless several mines are technologically connected with single processing plant in which case the Group considers such mines as one cash-generating unit. As at 31 December 2022, management conducted an analysis and did not find any impairment indicators of assets (cash generating units) associated with the production of uranium products. Provision for asset retirement obligations (estimates) Site restoration provisions for mining assets In accordance with environmental legislation and the subsurface use contracts, the Group has a legal obligation to remediate damage caused to the environment from its operations and to decommission its mining assets and landfills and restore landfill sites after closure of mining activities. Provision is made based upon the net present values of estimated site restoration and retirement costs as soon as the obligation arises from past mining activities. The provision for asset retirement obligations is estimated based upon the Group’s interpretation of current environmental legislation in the Republic of Kazakhstan and the Group’s related programme for liquidation of subsurface use consequences on the contracted territory and other operations supported by the feasibility study and engineering research in accordance with the applicable restoration and retirement standards and techniques. Provisions for asset retirement obligations are subject to potential changes in environmental regulatory requirements and the interpretation of the legislation. Provisions are recognised when there is a certainty of incurring of such liabilities and when it is possible to measure the amounts reliably. The scope of work stipulated by the legislation and included in the calculations of the asset retirement obligations contains the dismantling of facilities and infrastructure (pumping, injection and observation wells, technological units for acidification and distribution of solutions, pipelines, access roads, technological sites, landfills, buildings and other facilities) and subsequent restoration of land. The calculation of the provision for production assets retirement as at 31 December 2022 was performed by the Group’s internal specialists and reviewed by an independent consultant. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 29 4 Critical Accounting Estimates and Judgements in Applying Accounting Policies (Continued) At 31 December 2022, site restoration provision for mining assets was Tenge 38,116 million (2021: Tenge 31,431 million) (Note 34). The increase is mainly attributable to the update of prices for liquidation works that reflect the current economic environment, as well as the impact of introducing a unified calculation methodology across the Group mining entities that resulted in re-estimates of required liquidation works, including low radioactive waste management, dismantlement of process units and handling of construction debris. Principal assumptions used in the estimations include: • a discount rate that reflects the current market estimates of the time value of money and those risks specific to the liability not reflected in the best estimate of the costs. The discount rate is based on a risk-free rate determined by reference to the interest rate on government bonds with maturity matching the average period of the Group’s subsoil use contracts, 11.55% (2021: 9.85%); • average long-term inflation rate applied to the nominal costs calculated at current prices of 5.99% in 2022 (2021: 5.12%); • discounting period in accordance with the estimated life of mines and reserves depletion period. • low radioactive waste management program assumes removal and disposal at special landfills owned by the Group. Sensitivity analysis of the principal assumptions as of 31 December 2022 is as follows: In millions of Kazakhstani Tenge (Decrease)/Increase of assumptions (Decrease)/Increase of decommissioning provisions Inflation rate -1% (4,469) +1% 5,288 Discount rate -1% 5,052 +1% (4,229) Sensitivity analysis of the principal assumptions as of 31 December 2021 is as follows: In millions of Kazakhstani Tenge (Decrease)/Increase of assumptions (Decrease)/Increase of decommissioning provisions Inflation rate -1% (4,360) +1% 5,139 Discount rate -1% 4,948 +1% (4,152) Provision for environment protection - decommissioning of Ulba metallurgical plant The Group has previously recognised an obligation only for the disposal of radioactive waste, landfill restoration and asset remediation for Ulba Metallurgical Plant JSC (Note 34). In 2021 the Ecological Code of the Republic of Kazakhstan (the Code) came into effect. The Code stipulates that operators of assets that are considered to have a negative impact on the environment have an obligation to decommission such assets in accordance with the requirements of the legislation. Liquidation measures will depend on the assets’ nature and the degree of their impact on the environment. The Group has recognised for the first time a decommissioning provision as of December 31, 2022 of Tenge 7,624 million based on its current interpretation of the relevant legislation and technical analysis performed. The liability recognised includes dismantlement of facilities and infrastructure located at production facility sites (technological sites, landfills, buildings and other facilities), radioactive waste disposal and subsequent land restoration. Principal assumptions used in the estimations include: • current prices are inflated using the expected long-term inflation rate (of 7.7% for assets with liquidation term until 2027, 4.6% for assets with liquidation term until 2042, 3.93% for assets with liquidation term after 2044), and subsequently discounted; • the discount rate for calculation of the provision as at 31 December 2022 is 14.4% for assets with liquidation term until 2027, 11.3% for assets with liquidation term until 2042, 10% for assets with liquidation term after 2044. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 30 4 Critical Accounting Estimates and Judgements in Applying Accounting Policies (Continued) • the discounting period equates to the remaining useful life of buildings and constructions, of not less than 50 years. All buildings and constructions are subject to annual technical reviews to determine required capital and operating expenditure requirements. Total provision for the Ulba Metallurgical Plant JSC as of 31 December 2022 amounted to Tenge 9,243 million (2021: Tenge 1,339 million). Sensitivity analysis of the principal assumptions as of 31 December 2022 is as follows: In millions of Kazakhstani Tenge (Decrease)/Increase of assumptions (Decrease)/Increase of decommissioning provisions Inflation rate -1% (3,148) +1% 4,950 Discount rate -1% 4,665 +1% (2,986) Discount period -10% 2,682 +10% (2,044) Based on the Group’s analysis of current regulation, management concluded that certain other Ulba metallurgical plant’s assets should be excluded from asset retirement obligations as of 31 December 2022 since there is no reasonable calculation method for these types of assets and/or the potential amount of such liabilities is not significant. This judgement is based on the following: • such assets do not have a significant negative impact on the environment and ecological legislation does not require financial provision for the assets, • production processes involving these assets do not lead to consequences that would require dismantlement and recultivation works to mitigate the negative environmental impact. As the requirements of the Environmental Code are relatively new, there is no practice of applying these requirements and there are ambiguities in the legislation, management has applied significant judgment in terms of assessing liabilities and their amounts. In case of changes in environmental legislation, its interpretation and practice of its application, as well as in the judgments and in the Group's estimates, such liabilities may be revised in the future. Tax and transfer pricing legislation (judgements) Kazakhstan tax and transfer pricing legislation is subject to varying interpretations (Note 37). Swap transactions (judgements) The Group sells part of its uranium products under swap transactions with separate agreements with the same counterparty, being for sales and purchase of the same volume of uranium for the same price at different delivery points or different timeframes. Effectively, this results in the exchange of own uranium (produced or purchased from the Group’s entities) with purchased uranium. Normally, under a swap transaction, the Group delivers physical uranium to one destination point, and purchases the same volume of uranium at a third-party converter for sale to end customers. Swap transactions are entered into primarily to reduce transportation costs for uranium delivery from Kazakhstan to end customers. Despite the fact that swap agreements are not formally related to each other, management concluded that these transactions are in substance linked and would not have occurred on an isolated basis, driven by the existing market demand and supply forces. In management’s view, supply of the same volume of homogeneous product (uranium) for the same price represents an exchange of products, which should be presented on a net basis in the consolidated financial statements, reflecting the economic substance of the transaction. Interpretation of terms and approach to the accounting for swap transactions requires judgement. In 2022, the Group did not recognise sales revenue from swap transactions of Tenge 195,958 million and related cost of sales of Tenge 207,789 million. In 2021, the Group did not recognise sales revenue from swap transactions of Tenge 146,910 million, and cost of sales of Tenge 135,158 million. The Group has recognised liabilities under swap transactions in the amount of Tenge 4,709 million as of 31 December 2022 (2021: Tenge 15,355 million) for the volume of uranium that would be returned under swap transactions (Note 36) post balance date. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 31 4 Critical Accounting Estimates and Judgements in Applying Accounting Policies (Continued) Control over DP Ortalyk LLP (judgement) On 22 July 2021 the Group completed the sale of a 49% interest in DP Ortalyk LLP (Note 39). The Group retains a 51% ownership interest and majority voting rights in the Supervisory Board of that entity. Sales activities of DP Ortalyk LLP are governed by the Marketing agreement, any amendments to which would require consent by both owners. The Group governs production activity within the 20% limit permitted by law through its power to approve the entity’s budget by simple majority vote. Decisions about financing of DP Ortalyk LLP are made by unanimous consent of both owners. Сurrently, DP Ortalyk LLP does not rely on shareholders’ or external financing. All production volumes are committed to be purchased by the Group and the minority shareholder based upon market prices. Production volumes and costs have a significant impact on financial results and are considered to be the most relevant activities for the purpose of the control assessment. Based on these facts, the Group management has concluded that the Group retains control over DP Ortalyk LLP. 5 Adoption of New or Revised Standards and Interpretations The following amendments became effective from 1 January 2022, but did not have any material impact on the Group: Proceeds before intended use, Onerous contracts – cost of fulfilling a contract, Reference to the Conceptual Framework – narrow scope amendments to IAS 16, IAS 37 and IFRS 3, and Annual Improvements to IFRSs 2018-2020 – amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41 (issued on 14 May 2020 and effective for annual periods beginning on or after 1 January 2022). • The amendment to IAS 16 prohibits an entity from deducting from the cost of an item of PPE any proceeds received from selling items produced while the entity is preparing the asset for its intended use. The proceeds from selling such items, together with the costs of producing them, are now recognised in profit or loss. An entity will use IAS 2 to measure the cost of those items. Cost will not include depreciation of the asset being tested because it is not ready for its intended use. The amendment to IAS 16 also clarifies that an entity is ‘testing whether the asset is functioning properly’ when it assesses the technical and physical performance of the asset. The financial performance of the asset is not relevant to this assessment. An asset might therefore be capable of operating as intended by management and subject to depreciation before it has achieved the level of operating performance expected by management. • The amendment to IAS 37 clarifies the meaning of ‘costs to fulfil a contract’. The amendment explains that the direct cost of fulfilling a contract comprises the incremental costs of fulfilling that contract; and an allocation of other costs that relate directly to fulfilling. The amendment also clarifies that, before a separate provision for an onerous contract is established, an entity recognises any impairment loss that has occurred on assets used in fulfilling the contract, rather than on assets dedicated to that contract. • IFRS 3 was amended to refer to the 2018 Conceptual Framework for Financial Reporting, in order to determine what constitutes an asset or a liability in a business combination. Prior to the amendment, IFRS 3 referred to the 2001 Conceptual Framework for Financial Reporting. In addition, a new exception in IFRS 3 was added for liabilities and contingent liabilities. The exception specifies that, for some types of liabilities and contingent liabilities, an entity applying IFRS 3 should instead refer to IAS 37 or IFRIC 21, rather than the 2018 Conceptual Framework. Without this new exception, an entity would have recognised some liabilities in a business combination that it would not recognise under IAS 37. Therefore, immediately after the acquisition, the entity would have had to derecognise such liabilities and recognise a gain that did not depict an economic gain. It was also clarified that the acquirer should not recognise contingent assets, as defined in IAS 37, at the acquisition date. • The amendment to IFRS 9 addresses which fees should be included in the 10% test for derecognition of financial liabilities. Costs or fees could be paid to either third parties or the lender. Under the amendment, costs or fees paid to third parties will not be included in the 10% test. • Illustrative Example 13 that accompanies IFRS 16 was amended to remove the illustration of payments from the lessor relating to leasehold improvements. The reason for the amendment is to remove any potential confusion about the treatment of lease incentives. • IFRS 1 allows an exemption if a subsidiary adopts IFRS at a later date than its parent. The subsidiary can measure its assets and liabilities at the carrying amounts that would be included in its parent’s consolidated financial statements, based on the parent’s date of transition to IFRS, if no adjustments were made for consolidation procedures and for the effects of the business combination in which the parent acquired the subsidiary. IFRS 1 was amended to allow entities that have taken this IFRS 1 exemption to also measure cumulative translation differences using the amounts reported by the parent, based on the parent’s date of transition to IFRS. The amendment to IFRS 1 extends the above exemption to cumulative translation differences, in order to reduce costs for first-time adopters. This amendment will also apply to associates and joint ventures that have taken the same IFRS 1 exemption. • The requirement for entities to exclude cash flows for taxation when measuring fair value under IAS 41 was removed. This amendment is intended to align with the requirement in the standard to discount cash flows on a post-tax basis. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 32 6 New Accounting Pronouncements Certain new standards and interpretations have been issued that are mandatory for annual periods beginning on or after 1 January 2023 or later, and which the Group has not early adopted. These are: • Deferred tax related to assets and liabilities arising from a single transaction – Amendments to IAS 12 (issued on 7 May 2021 and effective for annual periods beginning on or after 1 January 2023). • Classification of liabilities as current or non-current, deferral of effective date – Amendments to IAS 1 (originally issued on 23 January 2020 and subsequently amended on 15 July 2020 and 31 October 2022, ultimately effective for annual periods beginning on or after 1 January 2024). • Amendments to IAS 8: Definition of Accounting Estimates (issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023). • Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting policies (issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023). The Group is currently assessing the impact of the amendments on its financial statements. • Amendment to IFRS 16 – Leases on sale and leaseback (issued on 20 September 2022 and effective for annual periods beginning or after 1 January 2023). • IFRS 17 “Insurance Contracts” (issued on 18 May 2017 and effective for annual periods beginning on or after 1 January 2023). Amendments to IFRS 17 and an amendment to IFRS 4 (issued on 25 June 2020 and effective for annual periods beginning on or after 1 January 2023). • Transition option for insurers applying IFRS 17 – Amendments to IFRS 17 (issued on 9 December 2021 and effective for annual periods beginning on or after 1 January 2023). Unless otherwise described above, the new standards and interpretations are not expected to affect significantly the Group’s consolidated financial statements. 7 Segment Information Operating segments are components that engage in business activities that may earn revenues or incur expenses, whose operating results are regularly reviewed by the chief operating decision maker (CODM) and for which discrete financial information is available. The CODM is the person or group of persons who allocates resources and assesses the performance for the entity. The CODM has been identified as the Management Board of the Group headed by the CEO. (a) Description of products and services from which each reportable segment derives its revenue The Group is a vertically integrated business involved in the production chain of end products – from geological exploration, mining of uranium and nuclear fuel production, to marketing and auxiliary services (transportation and logistics, procurement, research and other). The Group is organised on the basis of two main business segments: • Uranium – uranium mining and processing from the Group’s mines, purchases of uranium from joint ventures and associates, external sales and marketing of produced and purchased uranium. This segment includes the Group’s share in the net results of joint ventures and associates engaged in uranium production, as well as the Group’s head office (NAC Kazatomprom JSC); • UMP (Ulba Metallurgical Plant JSC) – production and sales of products containing beryllium, tantalum and niobium, hydrofluoric acid and by-products, processing of uranium on tolling basis for the Group’s uranium entities and production of uranium powders and pellets to external markets and its joint venture, Ulba-FA LLP. The revenues and expenses of some of the Group’s subsidiaries, which primarily provide services to the uranium segment (such as drilling, transportation, security and geological), are not allocated to the results of this operating segment. These Group’s businesses are not included within reportable operating segments as their financial results do not meet the quantitative threshold. The results of these and other minor operations are included in the “Other” caption. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 33 7 Segment Information (Continued) (b) Factors that management used to identify the reportable segments The Group’s segments are strategic business units that focus on different customers. They are managed separately because of the differences in the production processes, the nature of products produced and required marketing and investment strategies. Segment financial information reviewed by the CODM includes: • information about income and expenses by business units (segments) based on IFRS figures on a quarterly basis; • assets and liabilities as well as capital expenditures by segment on a quarterly basis; • operating data (such as production and inventory volumes) and revenue data (such as sales volumes per type of product, average sales price) are also reviewed by the CODM on a monthly and quarterly basis. (c) Measurement of operating segment profit or loss, assets and liabilities The CODM evaluates performance of each segment based on gross and net profit. Segment financial information is prepared on the basis of IFRS financial information and measured in a manner consistent with that in these consolidated financial statements. Revenues from other segments include transfers of raw materials, goods and services from one segment to another, amount is determined based on market prices for similar goods. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 34 7 Segment Information (Continued) (d) Information about reportable segment profit or loss, assets and liabilities Segment information for the reportable segments for the years ended 31 December 2022 and 2021 is set out below: In millions of Kazakhstani Tenge Uranium UMP Other Eliminations Total 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 External revenue 856,952 616,860 114,555 55,323 29,664 18,828 - - 1,001,171 691,011 Revenues from other segments 63,141 4,846 6,855 4,908 70,008 54,083 (140,004) (63,837) - - Cost of sales (409,158) (350,052) (94,672) (42,534) (97,190) (65,175) 125,923 54,794 (475,097) (402,967) Gross profit 510,935 271,654 26,738 17,697 2,482 7,736 (14,081) (9,043) 526,074 288,044 Net reversal/(impair ment losses) (22) (5,791) (297) (200) 421 1,978 206 - 308 (4,013) Share of results of associates and joint ventures 89,442 52,341 (1,748) (1,932) 1,382 1,174 - - 89,076 51,583 Net foreign exchange gain 16,625 2,845 672 488 7 12 - - 17,304 3,345 Finance income 15,626 6,390 743 246 958 441 - - 17,327 7,077 Finance expense (6,754) (6,237) (1,447) (464) (332) (195) 108 184 (8,425) (6,712) Income tax expense (105,947) (58,759) (4,165) (2,606) (630) (253) - - (110,742) (61,618) Profit/(loss) for the year 467,382 212,963 12,803 7,085 (2,920) 4,222 (4,302) (4,244) 472,963 220,026 Depreciation and amortisation charge (77,951) (63,348) (2,066) (1,924) (4,914) (4,718) 3,553 728 (81,378) (69,262) National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 35 7 Segment Information (Continued) Segment information for the reportable segments for the years ended 31 December 2022 and 2021 is set out below (Continued): In millions of Kazakhstani Tenge Uranium UMP Other Eliminations Total 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Investments in associates and joint ventures 186,961 142,920 957 2,705 10,414 9,070 - - 198,332 154,695 Total reportable segment assets 2,361,914 2,061,161 155,011 111,224 89,774 77,142 (385,016) (299,236) 2,221,683 1,950,291 Assets of disposal groups classified as held for sale - - - - 850 1,213 - - 850 1,213 Total assets 2,361,914 2,061,161 155,011 111,224 90,624 78,355 (385,016) (299,236) 2,222,533 1,951,504 Total liabilities 813,577 657,916 71,798 36,630 25,957 19,057 (385,302) (299,200) 526,030 414,403 Capital expenditure 59,059 45,096 4,794 3,631 8,123 4,783 - - 71,976 53,510 Capital expenditure represents additions to non-current assets other than financial instruments, deferred tax assets, post-employment benefits assets and rights arising under insurance contracts. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 36 7 Segment Information (Continued) (e) Analysis of revenues by products and services The Group’s revenues are analysed by products and services in Note 9. Information about finance income and costs is disclosed in Note 17. (f) Geographical information The Group’s main assets are located in the Republic of Kazakhstan. Distribution of the Group’s sales between countries on the basis of the customer’s country of domicile was as follows: In millions of Kazakhstani Tenge 2022 2021 China 272,291 191,212 Canada 160,278 115,163 United Kingdom (including Jersey and Cayman Islands) 150,427 156,928 USA 112,590 94,114 Kazakhstan 109,595 25,113 Russia 87,877 10,952 France 68,054 50,134 Other countries 40,059 47,395 Total consolidated revenues 1,001,171 691,011 Major customers The Group has a group of customers under common control that accounts for more than 10% of the Group’s consolidated revenue. This revenue in the amount of Tenge 324,509 million (2021: Tenge 236,204 million) is reported under the Uranium segment. 8 Balances and Transactions with Related Parties Parties are generally considered to be related if the parties are under common control or if one party has the ability to control the other party or can exercise significant influence or joint control over the other party in making financial and operational decisions. In considering each possible related party relationship, management has regard to the substance of the relationship, not merely the legal form. Entities under common control include companies under control of Samruk-Kazyna JSC. Transactions with other government owned entities are not disclosed when they are entered into in the ordinary course of business with terms consistently applied to all public and private entities, when they are not individually significant, if the Group’s services are provided on standard terms available for all customers, or where there is no choice of supplier of services such as electricity transmission services and telecommunications. At 31 December 2022, the outstanding balances with related parties were as follows: In millions of Kazakhstani Tenge Accounts receivable and other assets Other financial assets Accounts payable and other liabilities Loans and borrowings Associates 4,447 5,933 43,703 7,002 Joint ventures 6,559 94 48,428 - Entities under common control 362 9,274 1,119 - Controlling shareholder - - 17 - Associates of the controlling shareholder 12 - 1,236 - Total 11,380 15,301 94,503 7,002 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 37 8 Balances and Transactions with Related Parties (Continued) Transactions with related parties for the year ended 31 December 2022 were as follows: In millions of Kazakhstani Tenge Sale of goods and services Dividends received Purchase of goods and services Dividends to the Shareholder Finance and other income Finance and other costs Associates 12,321 38,503 152,580 - 699 9 Joint ventures 53,111 6,934 39,490 - 28 - Entities under common control 41 - 11,582 - 1,090 7,543 Controlling shareholder - - - 170,541 - 1 Associates of the controlling shareholder 150 - 13,041 - - - Total 65,623 45,437 216,693 170,541 1,817 7,553 From December 2015, JV Khorasan-U LLP (over which the Group obtained control in 2019) is a co-borrower and guarantor of a loan to Kyzylkum LLP given by the Company in 2010 in the amount of Tenge 5,945 million (2021: Tenge 8,716 million). In June 2021, the Group provided to Uranenergo LLP repayable financial aid secured by that entity’s property in the form of a revolving credit line with a term until 30 June 2023 in the amount of Tenge 187 million. As of December 31, 2022, the remaining amount repayable is Tenge 94 million (Note 28). The Group is a guarantor for loans obtained by SKZ-U LLP in the amount of Tenge 1,864 million (2021: Tenge 5,220 million) and Ulba-FA LLP in the amount of Tenge 17,072 million (2021: Tenge 15,934 million) (Note 36). In 2022 the Group transfers obligatory pension payments for its employees to the state-owned Unified Accumulative Pension Fund JSC in the amount of Tenge 7,543 million (2021: Tenge 5,329 million) (Note 16). At 31 December 2021, the outstanding balances with related parties were as follows: In millions of Kazakhstani Tenge Accounts receivable and other assets Other financial assets Accounts payable and other liabilities Loans and borrowings Associates 1,458 8,663 29,961 10,514 Joint ventures 4,270 187 18,508 - Entities under common control 238 - 606 - Controlling shareholder - - 127 - Associates of the controlling shareholder 11 - 1,013 - Total 5,977 8,850 50,215 10,514 Transactions with related parties for the year ended 31 December 2021 were as follows: In millions of Kazakhstani Tenge Sale of goods and services Dividends received Purchase of goods and services Dividends to the Shareholder Finance and other income Finance and other costs Associates 7,833 15,028 90,966 - 912 - Joint ventures 12,291 2,080 29,051 - - - Entities under common control 79 - 5,867 - - - Controlling shareholder - - - 112,561 - 90 Associates of the controlling shareholder 130 - 5,599 - - - Total 20,333 17,108 131,483 112,561 912 90 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 38 8 Balances and Transactions with Related Parties (Continued) Key management personnel is represented by personnel with authority and responsibility in planning, management and control of the Group's activities, directly or indirectly. Key management personnel includes all members of the Management Board and the members of the Board of Directors. The table below represents remuneration of the key management personnel, paid by the Group in exchange for services provided. This remuneration includes salaries, bonuses, as well as associated taxes and payments. No remuneration is paid or payable to representatives of the Controlling shareholder in the Board of Directors. In millions of Kazakhstani Tenge 2022 2021 Expense Accrued liability Expense Accrued liability Short-term benefits Salaries and bonuses 983 55 1,088 60 Total 983 55 1,088 60 9 Revenue The Group’s revenue arises from contracts with customers where performance obligations are satisfied mostly at a point in time. In millions of Kazakhstani Tenge 2022 2021 Sales of uranium 851,427 606,109 Sales of uranium products 57,806 18,939 Sales of beryllium products 31,986 26,119 Sales of tantalum products 23,171 15,777 Sales of purchased goods 15,164 5,860 Sales of other services 11,147 6,459 Drilling services 3,730 4,357 Transportation services 3,586 3,413 Sales of materials and other goods 2,815 3,713 Research and development 339 265 Total revenue 1,001,171 691,011 10 Cost of Sales In millions of Kazakhstani Tenge 2022 2021 Materials and supplies 261,825 241,695 Depreciation and amortisation 79,037 66,429 Payroll costs 49,348 33,294 Taxes other than income tax 32,216 25,474 Processing and other services 31,361 17,404 Transportation expenses 5,787 4,982 Maintenance and repair 5,082 4,918 Utilities 1,678 1,703 Rent expenses 234 210 (Reversal of inventory provision)/write off to net realizable value (190) 615 Other 8,719 6,243 Total cost of sales 475,097 402,967 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 39 11 Distribution Expenses In millions of Kazakhstani Tenge 2022 2021 Shipping, transportation and storage 20,331 11,110 Payroll costs 1,744 1,456 Commissions 952 502 Rent 214 105 Materials and supplies 199 306 Depreciation and amortisation 56 65 Other 2,109 2,162 Total distribution expenses 25,605 15,706 12 General and Administrative Expenses In millions of Kazakhstani Tenge 2022 2021 Payroll costs 20,594 18,303 Consulting and information services 5,196 4,697 Compensation for overproduction 7,310 - Depreciation and amortisation 2,110 2,493 Fines and penalties 2,068 1,527 Insurance 822 788 Communication 509 495 Business trip expenses 497 251 Rent 460 352 Maintenance and repairs 451 390 Training expenses 416 401 Taxes other than income tax 355 661 Security 186 184 Materials and supplies 173 179 Utilities 159 187 Representative expenses 114 41 Other 3,087 3,156 Total general and administrative expenses 44,507 34,105 Compensation for overproduction relates to JV Akbastau JSC (Note 39) as a result of an assessed breach of the terms of subsoil use contract #2488 dated 20 November 2007. Although the entity had been involved in negotiations with the regulator over an extended period as it finalized its reserves assessment, the production volume exceeded the contracted level. In 2021 the entity had reached a draft agreement with the regulator which was to provide social support to the Turkistan region in the amount of Tenge 3,000 million as a compensation for the breach of license terms. An expense for this social support was recognised as other expense in 2021 (Note 15). However, in 2022 the regulator rejected the draft agreement and reassessed the amount payable to be compensation for the overproduction of uranium in the amount of Tenge 7,310 million. The compensation was determined as the fair value of 249 tones of overproduced uranium based on current uranium spot prices. As a result, during 2022 the Group reversed social expenses in the amount of Tenge 3,000 million (Note 14) and recognized an expense of Tenge 7,310 million. On 30 December 2022 JV Akbastau JSC signed addendum #4 to the subsoil use contract #2488 and paid the compensation. 13 Net Reversal / (Impairment Loss) on non-financial assets The Group recognised impairment losses for the following non-financial assets: In millions of Kazakhstani Tenge 2022 2021 Property, plant and equipment (Note 21) (1) 356 Intangible assets (Note 20) - (2,169) Mine development assets - 199 Impairment of assets held for sale - (1,084) Other assets 177 (1,107) Net reversal / (impairment loss) on non-financial assets 176 (3,805) National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 40 14 Other Income In millions of Kazakhstani Tenge 2022 2021 Income from an associate development agreement (Note 25) 7,671 - Gain from joint operations 4,217 3,513 Reversal of social expenses (Note 12) 3,000 - Insurance receipt 1,981 - Income from disposal of property, plant and equipment 1,384 160 Income from a joint venture development agreement 985 - Gain from fines and penalties 306 138 Gain on disposal of subsidiary - 915 Other 2,173 2,799 Total other income 21,717 7,525 The Group has fulfilled its obligations under one of its joint operation agreements for the purchase of equal volume of uranium in 2022 and 2021; however, volatility of exchange rates and spot prices resulted in disproportionate Tenge amounts contributed by each participant and a gain in the amount of Tenge 4,217 million was recognised by the Group. The Group received an insurance payment for losses incurred in 2016 as a result of an accident in the Indian sea. 15 Other Expenses and Net Foreign Exchange Gain In millions of Kazakhstani Tenge 2022 2021 Remeasurement of non-financial liabilities, net of gain on disposal (Note 36) 1,906 2,872 Social expenses 1,130 4,537 Loss on suspension of production 1,126 1,626 Research expenses 887 725 Non-recoverable VAT 620 2,235 Depreciation and amortisation 175 275 Loss on disposal of property, plant and equipment 175 - Loss on disposal of intangible assets 93 - Loss on disposal of non-current assets - 411 Other 3,452 2,713 Total other expenses 9,564 15,394 Social expenses in 2021 include social sphere contributions to Turkistan region in the amount of Tenge 3,000 million (Note 12). Net foreign exchange gain In millions of Kazakhstani Tenge 2022 2021 Foreign exchange loss on financing activities, net (4,758) (1,696) Foreign exchange gain on operating activities, net 22,062 5,041 Total foreign exchange gain, net 17,304 3,345 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 41 16 Payroll Costs In millions of Kazakhstani Tenge 2022 2021 Wages and salaries 89,208 64,580 Including Pension contributions 7,543 5,329 Social tax and social payments 10,427 6,904 Total payroll costs 99,635 71,484 17 Finance Income and Costs In millions of Kazakhstani Tenge 2022 2021 Interest income calculated using the effective interest rate Cash and cash equivalents 10,433 3,087 Government securities 1,262 959 Loans at amortised cost 699 912 Term deposits 111 129 Other - 114 Other financial income Revaluation of other investments (Note 28) 4,699 - Financial derivative asset - 1,732 Other 123 144 Total finance income 17,327 7,077 Finance costs Interest expense on loans and borrowings 3,689 3,546 Unwinding of discount on provisions 2,892 2,259 Other 1,844 907 Total finance costs 8,425 6,712 18 Income Tax Expense (a) Components of income tax expense Income tax expense recorded in profit or loss comprises the following: In millions of Kazakhstani Tenge 2022 2021 Current income tax 118,853 85,345 Deferred income tax (8,111) (23,727) Total income tax expense 110,742 61,618 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 42 18 Income Tax Expense (Continued) The income tax rate applicable to the majority of the Group’s profits in 2022 and 2021 is 20%. Income tax in the amount of Tenge 33,466 million that relates to the sales of interest in subsidiary (Note 39) was recognised in equity directly in 2021. A reconciliation between the expected and the actual taxation charge is provided below: In millions of Kazakhstani Tenge 2022 2021 Profit before tax 583,705 281,644 Theoretical tax charge at statutory tax rate of 20% 116,741 56,329 Prior periods adjustments of income tax 2,065 5,401 Transfer pricing adjustment 7,298 5,371 Profit on income from controlled foreign company 294 1,383 Withholding tax on dividend payments 677 1,240 Share of results of joint ventures and associates (17,815) (10,317) Other items 1,482 2,211 Income tax expense 110,742 61,618 (b) Deferred taxes analysed by type of temporary difference Differences between IFRS and statutory taxation regulations in Kazakhstan give rise to temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and their tax bases. The tax effect of the movements in these temporary differences is detailed below at 20%. In millions of Kazakhstani Tenge 1 January 2022 Credited/ (charged) to profit or loss Exchange differences arising on translation of entities with foreign functional currency 31 December 2022 Tax effect of deductible/(taxable) temporary differences Property, plant and equipment, intangible assets and mineral rights (123,495) 4,442 11 (119,042) Accounts receivable (208) (164) - (372) Loans and borrowings 3 9 - 12 Provisions 1,572 (1,548) - 24 Accrued liabilities on vacation payments and bonuses 1,663 604 - 2,267 Taxes 1,509 318 - 1,827 Inventories 28,076 4,347 (4) 32,419 Other assets 158 88 1 247 Other liabilities 310 15 - 325 (90,412) 8,111 8 (82,293) Recognised deferred tax asset 30,689 3,818 8 34,515 Recognised deferred tax liabilities (121,101) 4,293 - (116,808) National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 43 18 Income Tax Expense (Continued) Management estimates that investments in subsidiaries, associates and joint ventures will be recovered primarily through dividends. Dividends from subsidiaries, associates and joint ventures are not taxable, accordingly the Group did not recognise deferred tax on undistributed earnings from investments. The tax effect of the movements in the temporary differences for the year ended 31 December 2021 is: In millions of Kazakhstani Tenge 1 January 2021 Credited/ (charged) to profit or loss Exchange differences arising on translation of entities with foreign functional currency Disposal of companies 31 December 2021 Tax effect of deductible/(taxable) temporary differences Property, plant and equipment, intangible assets and mineral rights (129,120) 5,483 6 136 (123,495) Accounts receivable (374) 166 - - (208) Loans and borrowings - 3 - - 3 Provisions 438 1,134 - - 1,572 Accrued liabilities on vacation payments and bonuses 1,155 508 - - 1,663 Taxes 916 593 - - 1,509 Inventories 12,513 15,563 - - 28,076 Other assets (111) 269 - - 158 Other liabilities 306 8 (4) - 310 (114,277) 23,727 2 136 (90,412) Recognised deferred tax asset 13,206 17,483 - - 30,689 Recognised deferred tax liabilities (127,483) 6,244 2 136 (121,101) In the context of the Group’s structure, tax losses of different Group companies may not be offset against current tax liabilities and taxable profits of other Group companies and, accordingly, taxes may accrue even where there is a consolidated tax loss. Therefore, deferred tax assets and liabilities are offset only when they relate to the same taxable entity. The Group has unrecognised deferred tax assets in respect of unused tax loss carry forwards of Tenge 1,274 million in 2022 (2021: Tenge 602 million) and excluded from the calculation the tax losses for the enterprises sold in 2022 with unrecognized tax losses. The tax loss carry forwards expire as follows: In millions of Kazakhstani Tenge 2022 2021 2030 - 368 2031 470 234 2032 804 - Total unrecognised deferred tax asset on tax losses 1,274 602 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 19 Earnings per Share Basic earnings per share is calculated by dividing the profit or loss attributable to owners of the Company by the number of ordinary shares in issue during the year (Note 32). The Company has no dilutive potential ordinary shares; therefore, the diluted earnings per share equals the basic earnings per share. Earnings per share from continuing operations is calculated as follows: In millions of Kazakhstani Tenge 2022 2021 Profit for the year for the year attributable to owners of the Company (in millions of Kazakhstani Tenge) 348,048 140,773 Number of ordinary shares (in thousands) 259,357 259,357 Earnings per share attributable to the owners of the Company, basic and diluted (rounded to Tenge) 1,342 543 The Company issued bonds which were included in the official list of Kazakhstan Stock Exchange JSC (hereinafter - the “KASE”). The Company is required to present information on the book value of one share calculated in accordance with the KASE Listing Rules. Book value per share is calculated as follows: In millions of Kazakhstani Tenge 2022 2021 Total assets of the Group (in millions Tenge) 2,222,533 1,951,504 Intangible assets (in millions Tenge) (59,159) (58,940) Total liabilities of the Group (in millions Tenge) (526,030) (414,403) 1,637,344 1,478,161 Number of ordinary shares (in thousands) 259,357 259,357 Book value of one share (Tenge per share) 6,313 5,699 44 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 45 20 Intangible Assets In millions of Kazakhstani Tenge Licences and patents Software Goodwill Other Total At 1 January 2021 Cost 2,322 12,219 54,953 1,216 70,710 Accumulated amortisation and impairment (1,065) (2,756) (6,459) (524) (10,804) Carrying value 1,257 9,463 48,494 692 59,906 Additions 204 631 - 19 854 Disposals (4) (218) - (13) (235) Depreciation charge and impairment losses on disposals/transfers 4 218 13 235 Amortisation charge (284) (1,163) - (96) (1,543) Impairment - (2,169) - (777) (2,946) Transfers from property, plant and equipment (Note 21) 2 834 - 1,833 2,669 At 31 December 2021 Cost 2,524 13,466 54,953 3,055 73,998 Accumulated amortisation and impairment (1,345) (5,870) (6,459) (1,384) (15,058) Carrying value 1,179 7,596 48,494 1,671 58,940 Additions 136 345 - 908 1,389 Disposals (328) (784) - (259) (1,371) Depreciation charge and impairment losses on disposals/transfers 289 188 - 35 512 Amortisation charge (284) (875) - (110) (1,269) Impairment reversal - 590 - 222 812 Transfers from right of use assets 737 - - - 737 Transfers to property, plant and equipment (Note 21) - - - (591) (591) Transfers - (1,706) - 1,706 - At 31 December 2022 Cost 3,069 11,321 54,953 4,819 74,162 Accumulated amortisation and impairment (1,340) (5,967) (6,459) (1,237) (15,003) Carrying value 1,729 5,354 48,494 3,582 59,159 Goodwill impairment test DP Ortalyk LLP, JV Akbastau JSC and Karatau LLP Goodwill relates to business combinations in prior periods being: Tenge 5,166 million relates to subsurface use operations of DP Ortalyk LLP at the area Central on Mynkuduk mine, Tenge 24,808 million relates to Karatau LLP and Tenge 18,520 million relates to JV Akbastau JSC, which independently perform subsurface use operations at the Budenovskoye mine. At least annually, goodwill is tested for impairment. The carrying value of goodwill applicable to each of these entities is allocated to their respective cash generating units and the recoverable amount was determined on a value in use basis from forecast cash flows over the term of subsurface use contracts. Forecast cash flows are based on the approved volume of proven reserves, estimated volumes of production and sales over a life of mine plan approved by management, using a discount rate of 18.49% for 2022 year (2021: 12.97%). Production volumes are consistent with those agreed with the competent authority and independent consultant’s report and are based on the production capacity of the cash-generating units. Key assumptions used in calculations include forecast sales prices, production costs and capital expenditures. Sales prices used in developing forecast cash flows were determined using an independent official source Ux Consulting LLC published in the fourth quarter of 2022. Production costs and capital expenditures are based on approved budgets for 2023-2027 and growth of 6.16% which approximates long-term average inflation rates. The estimated values in use significantly exceed the carrying amounts of the non-current assets of the three cash-generating units, including goodwill, and therefore even reasonably possible changes in key assumptions would not lead to impairment losses being recognised. At 31 December 2022, the Group had contractual commitments to acquire intangible assets for Tenge 544 million (2021: 425 million). National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 46 21 Property, Plant and Equipment Movements in the carrying amount of property, plant and equipment were as follows: In millions of Kazakhstani Tenge Land Railway infra- structure Buildings Machinery and equipment Vehicles Other Const- ruction in progress Total At 1 January 2021 Cost 413 2,035 139,335 90,655 22,015 6,777 11,183 272,413 Accumulated depreciation and impairment - (946) (37,938) (42,856) (12,528) (3,639) (1,759) (99,666) Carrying amount 413 1,089 101,397 47,799 9,487 3,138 9,424 172,747 Additions - - 47 3,997 2,987 414 11,450 18,895 Transfers - - 2,004 1,772 94 96 (3,966) - Depreciation charge - (89) (5,563) (6,802) (1,612) (799) - (14,865) Impairment loss - - - - - - (9) (9) Reversal of impairment losses recognised in prior periods - - 10 41 - - 314 365 Disposals (6) - (284) (1,486) (540) (220) (442) (2,978) Impairment disposals - - - - - - 2 2 Transfer from inventories - - - 271 - 9 659 939 Transfers to intangible assets (Note 20) - - - - - - (2,669) (2,669) Impairment in construction in progress (transfers to intangible assets) - - - - - - 777 777 Transfer from/(to) investment property - - 3 89 - (29) - 63 Depreciation charge and impairment losses on disposals/transfers - - 191 1,385 521 212 7 2,316 Changes in estimates (Note 34) - - (1,859) 13 - - - (1,846) Transfer to mine development assets (Note 22) - - - - - - (2,255) (2,255) Translation to presentation currency - - - - 4 1 - 5 At 31 December 2021 Cost 407 2,035 139,246 95,311 24,560 7,048 13,960 282,567 Accumulated depreciation and impairment - (1,035) (43,300) (48,232) (13,619) (4,226) (668) (111,080) Carrying amount 407 1,000 95,946 47,079 10,941 2,822 13,292 171,487 Additions 17 - 107 7,334 5,225 431 11,011 24,125 Transfers - 38 1,941 1,150 43 104 (3,276) - Depreciation charge - (89) (5,633) (6,742) (1,934) (732) - (15,130) Impairment loss - - - - - - (409) (409) Reversal of impairment losses recognised in prior periods - - 245 156 - - 7 408 Disposals - - (211) (1,765) (288) (143) (7) (2,414) Impairment disposals - - - - - - 2 2 Transfer from inventories - - 38 506 - 6 445 995 Transfers to intangible assets (Note 20) - - - 102 - - 489 591 Transfer from/(to) investment property - - (17) - - - - (17) Depreciation charge and impairment losses on disposals/transfers - - 207 1,525 369 136 - 2,237 Changes in estimates (Note 34) - - 8,630 585 - - - 9,215 Transfer to mine development assets (Note 22) - - - - - - (2,789) (2,789) Translation to presentation currency - - - - (1) - - (1) At 31 December 2022 Cost 424 2,073 150,996 101,960 28,082 7,446 19,833 310,814 Accumulated depreciation and impairment - (1,124) (49,743) (52,030) (13,727) (4,822) (1,068) (122,514) Carrying amount 424 949 101,253 49,930 14,355 2,624 18,765 188,300 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 47 21 Property, Plant and Equipment (Continued) Depreciation expense of Tenge 12,774 million (2021: Tenge 12,773 million) was charged to cost of sales, Tenge 56 million (2021: Tenge 65 million) to distribution expenses, Tenge 1,257 million (2021: Tenge 1,243 million) to general and administrative expenses, Tenge 137 million (2021: 170 million tenge) to other expenses. The remaining depreciation expense is included in finished goods, work-in-process and other inventory. At 31 December 2022 construction in progress included technical re-equipment of Ulba Metallurgical Plant JSC in the amount of Tenge 1,087 million (2021: Tenge 1,311 million),construction of a refinery in the amount of Tenge 3,267 million at JV Inkai LLP, construction of facilities for the development of a mine at Appak LLP in the amount of Tenge 681 million. At 31 December 2022, the Group had contractual capital expenditure commitments in respect of property, plant and equipment of Tenge 5,310 million (2021: Tenge 5,615 million). There are no capitalized borrowing costs in 2022 (2021: nil). At 31 December 2022, the gross carrying value of fully depreciated property, plant and equipment still in use was Tenge 34,870 million (2021: Tenge 25,943 million). Depreciation and amortisation charged on long-term assets for the years ended 31 December are as follows: In millions of Kazakhstani Tenge 2022 2021 Mine development assets 42,045 34,185 Mineral rights 28,237 27,917 Property, plant and equipment 15,130 14,865 Intangible assets 1,269 1,543 Right-of-use assets 19 148 Total accrued depreciation and amortisation 86,700 78,658 Depreciation and amortisation charged to profit or loss for the years ended 31 December are as follows: In millions of Kazakhstani Tenge 2022 2021 Cost of sales 79,037 66,429 General and administrative expenses 2,110 2,493 Distribution expenses 56 65 Other expenses 175 275 Total depreciation and amortisation charged to profit or loss 81,378 69,262 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 48 22 Mine Development Assets In millions of Kazakhstani Tenge Field preparation Site restoration costs Ion exchange resin Total At 1 January 2021 Cost 285,442 8,134 17,890 311,466 Accumulated depreciation and impairment (172,979) (4,310) (5,858) (183,147) Carrying amount 112,463 3,824 12,032 128,319 Third-party services 27,870 - - 27,870 Material used 6,823 - 867 7,690 Transfer from property, plant and equipment (Note 21) 2,255 - - 2,255 Transfer from exploration and evaluation assets (Note 24) 649 384 - 1,033 Depreciation charge (33,260) (193) (732) (34,185) Reversal of impairment - 199 - 199 Changes in accounting estimates (Note 34) 631 4,861 - 5,492 At 31 December 2021 Cost 317,560 13,532 18,757 349,849 Accumulated depreciation and impairment (200,129) (4,457) (6,590) (211,176) Carrying amount 117,431 9,075 12,167 138,673 Third-party services 43,649 - - 43,649 Material used 16,238 - 966 17,204 Transfer from property, plant and equipment (Note 21) 2,789 - - 2,789 Depreciation charge (40,940) (590) (515) (42,045) Changes in accounting estimates (Note 34) 693 1,211 - 1,904 At 31 December 2022 Cost 380,929 14,743 19,723 415,395 Accumulated depreciation and impairment (241,069) (5,047) (7,105) (253,221) Carrying amount 139,860 9,696 12,618 162,174 Estimated site restoration costs are capitalised when the Group recognises a provision for site restoration. The carrying value of the provision and site restoration assets is reassessed at each reporting period end (Notes 4 and 34). National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 49 23 Mineral Rights In millions of Kazakhstani Tenge At 1 January 2021 Cost 646,153 Accumulated amortisation and impairment (68,642) Carrying amount 577,511 Additions 2,466 Transfer from exploration and evaluation assets (Note 24) 897 Amortisation for the period (27,917) At 31 December 2021 Cost 649,452 Accumulated amortisation and impairment (96,495) Carrying amount 552,957 Additions 420 Amortisation for the period (28,237) At 31 December 2022 Cost 649,872 Accumulated amortisation and impairment (124,732) Carrying amount 525,140 24 Exploration and Evaluation Assets In millions of Kazakhstani Tenge Tangible assets Intangible assets Total At 1 January 2021 19,523 3,422 22,945 Additions 3,425 - 3,425 Transfer to mine development assets (Note 22) (1,033) - (1,033) Transfer to mineral rights (Note 23) - (897) (897) Changes in accounting estimates (62) - (62) At 31 December 2021 21,853 2,525 24,378 Additions 2,393 - 2,393 Changes in accounting estimates (228) - (228) At 31 December 2022 24,018 2,525 26,543 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 50 25 Investments in Associates The table below summarises the movements in the carrying amount of the Group’s investment in associates: In millions of Kazakhstani Tenge 2022 2021 Carrying value at 1 January 116,892 84,626 Share of results of associates 75,736 47,294 Dividends received from associates (38,504) (15,028) Carrying value at 31 December 154,124 116,892 The Group’s interests in its principal associates were as follows: 2022 2021 Country of incorpora- tion Principal activities % ownership interest held / % of voting rights Carrying value in millions of Tenge % ownership interest held / % of voting rights Carrying value in millions of Tenge JV KATCO LLP Kazakhstan Extraction, processing and export of uranium products 49% 113,920 49% 85,123 JV Zarechnoye JSC Kazakhstan Extraction, processing and export of uranium products 49.98% 18,197 49.98% 10,968 JV South Mining Chemical Company LLP Kazakhstan Extraction, processing and export of uranium products 30% 16,147 30% 13,196 Kyzylkum LLP Kazakhstan Extraction, processing and export of uranium products 50% 5,017 50% 6,616 Сaustiс JSC Kazakhstan Supply of caustic soda 28% - 40% - SSAP LLP Kazakhstan Production of sulphuric acid 9.89% 742 9.89% 693 JV Rusburmash Kazakhstan LLP Kazakhstan Geological exploration, drilling services 49% - 49% 183 Zhanakorgan- Transit LLP Kazakhstan Transportation 40% 101 40% 113 Total investments in associates 154,124 116,892 On 22 January 2018 JV KATCO LLP (“the Partnership”) received a new mining allotment for site #2 (Tortkuduk) where additional uranium reserves were found. Development of the South Tortkuduk project was approved by the participants during 2017-2018. However, no formal addendum to the Subsoil use contract was signed for the extension of the exploration period in 2015-2018. In November 2020 the Ministry of Energy refused application of the Partnership to conclude an addendum to the Subsoil use contract for commercial development of the South Tortkuduk field. In December 2020, the Partnership applied to the Supreme Court to appeal against the actions of the Ministry of Energy. On May 24, 2021, the Supreme Court issued a decision on leaving the Partnership’s claim without consideration. On November 19, 2021, the Partnership filed an appeal against this decision. On 17 January 2022, the Supreme Court of the Republic of Kazakhstan rejected the appeal. In 2021, the Partnership and the Government of the Republic of Kazakhstan represented by the Ministry of Energy and Ministry of Justice commenced negotiations to settle the dispute. As a result of the negotiations, on 16 August 2022, Addendum No. 10 to the Subsoil use contract was signed to extend the exploration period, a mining allotment was received and the work program was approved. Also on 31 December 2022, Addendum No. 11 to the Subsoil use contract was signed with an update of the work program. On 11 August 2022, the Partnership participants made amendments to the Partnership Agreement on further development of JV KATCO LLP dated 10 April 2017, under which the Group became entitled to compensation in the amount of Tenge 7,671 million from the second participant, which was recognized as income in 2022 (Note 14) and other receivables (Note 27). According to the Partnership Agreement, the Group also became entitled to an additional 11% of the Partnership's annual profit allocation starting from 2022 and until the end of JV KATCO LLP operations, with the ownership interest being unchanged. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 51 25 Investments in Associates (Continued) This additional 11% impacts the allocation of JV KATCO LLP dividends, therefore, in these consolidated financial statements the Group recognized a share in the results of the Partnership for 2022 in the amount of 60%. Net assets are still recognized as 49% in accordance with the participants initial agreement. Sales of share in Caustic JSC On 30 December 2021 the Group concluded an agreement for the sale of its 40% stake in Caustic JSC to Trade House "United Chemical Technologies" LLP, one of the major shareholders of Caustic JSC. The selling price is Tenge 1,214 million based upon an independent appraisal of fair market value. According to the terms of the sales contract, payment and corresponding transfer of the ownership shares is to be made in instalments. The first tranche of Tenge 363 million was received in January 2022. The act of transfer of ordinary shares equivalent to 12% of the Group’s holding in Caustic JSC was signed on February 2022. The remaining consideration must be paid by the buyer within 24 months from the date of signing the contract. As of 31 December 2022 the remaining 28% investment in Caustic JSC is presented as an asset held for sale in the amount of Tenge 850 million. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 52 25 Investments in Associates (Continued) Summarised financial information for 2022 in respect of each of the Group’s material associates is set out below. The summarised financial information below represents amounts shown in the associates’ financial statements prepared in accordance with IFRS, adjusted by the Group for equity accounting purposes. In millions of Kazakhstani Tenge Kyzylkum LLP JV KATCO LLP JV South Mining Chemical Company LLP JV Zarechnoye JSC Other Total Current assets 6,757 132,298 77,223 26,011 2,515 244,804 Including cash 5 97,300 13,855 7,147 338 118,645 Non-current assets 15,619 132,022 42,114 19,593 11,493 220,841 Total assets 22,376 264,320 119,337 45,604 14,008 465,645 Current liabilities (6,766) (8,822) (33,059) (4,068) (5,099) (57,814) Including financial liabilities net of trade and other accounts payable and provisions (3,397) (82) (21,920) (32) (894) (26,325) Incl. loan from the Company (3,397) - - (3,397) Non-current liabilities (4,038) (20,139) (10,060) (3,973) (1,308) (39,518) Including financial liabilities net of trade and other accounts payable and provisions (2,852) - (3,286) - (835) (6,973) Incl. loan from the Company (2,852) - - - - (2,852) Total liabilities (10,804) (28,961) (43,119) (8,041) (6,407) (97,332) Net assets 11,572 235,359 76,218 37,563 7,601 368,313 Group’s share of net assets of associates 5,786 115,326 22,865 18,774 390 163,141 Unrealised profit in the Group - (10,592) (6,719) (619) - (17,930) Additional allocation of profits - 9,118 - - - 9,118 Other (768) - - 42 371 (355) Goodwill - 68 - - 82 150 Carrying value of investments in associates 5,018 113,920 16,146 18,197 843 154,124 Total revenue 10,572 146,304 131,039 44,538 13,757 346,210 Depreciation and amortisation (682) (12,262) (6,328) (6,218) (643) (26,133) Finance income 162 127 655 109 87 1,140 Finance costs (435) (1,282) (1,393) (347) (314) (3,771) Foreign exchange gain/(loss) (642) 4,931 (1,331) (1,288) - 1,670 (Impairment losses)/reversal of impairment losses (2) 180 26 1 (1) 204 Income tax (368) (24,035) (21,706) (5,073) (338) (51,520) Profit for the year (1,039) 82,891 76,114 18,939 (567) 176,338 Total comprehensive income (1,039) 82,891 76,114 18,939 (567) 176,338 Unrealised profit - (2,141) (4,307) 777 - (5,671) Share in accumulated unrecognized losses - - - - 519 519 Share of result of associates (520) 47,593 18,528 10,242 (107) 75,736 Dividends received 1,080 18,796 15,576 3,013 39 38,504 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 53 25 Investments in Associates (Continued) Summarised financial information for 2021 in respect of each of the Group’s material associates is set out below. The summarised financial information below represents amounts shown in the associates’ financial statements prepared in accordance with IFRS, adjusted by the Group for equity accounting purposes. In millions of Kazakhstani Tenge Kyzylkum LLP JV KATCO LLP JV South Mining Chemical Company LLP JV Zarechnoye JSC Other Total Current assets 3,897 125,413 57,210 15,224 2,742 204,486 Including cash 2,243 88,359 31,079 5,610 461 127,752 Non-current assets 22,383 85,480 35,287 15,777 11,510 170,437 Total assets 26,280 210,893 92,497 31,001 14,252 374,923 Current liabilities (4,318) (10,192) (29,373) (4,671) (5,283) (53,837) Including financial liabilities net of trade and other accounts payable and provisions (3,171) (329) (22,143) (1,595) (3,266) (30,504) Incl. loan from the Company (3,169) - - - - (3,169) Non-current liabilities (7,192) (9,874) (11,099) (1,676) (408) (30,249) Including financial liabilities net of trade and other accounts payable and provisions (6,152) (64) (7,645) (27) - (13,888) Incl. loan from the Company (6,152) - - - - (6,152) Total liabilities (11,510) (20,066) (40,472) (6,347) (5,691) (84,086) Net assets 14,770 190,827 52,025 24,654 8,561 290,837 Group’s share of net assets of associates 7,384 93,506 15,608 12,321 1,052 129,871 Unrealised profit in the Group - (8,451) (2,412) (1,396) - (12,259) Other movements (768) - - 43 (145) (870) Goodwill - 68 - - 82 150 Carrying value of investments in associates 6,616 85,123 13,196 10,968 989 116,892 Total revenue 12,486 116,791 91,587 23,727 10,166 254,757 Depreciation and amortisation (672) (9,571) (5,904) (5,781) (612) (22,540) Finance income 66 18 381 - 31 496 Finance costs (510) (857) (1,263) (166) (430) (3,226) Net foreign exchange gain/(loss) (270) 2,032 (125) 126 - 1,763 (Impairment losses)/reversal of impairment losses (2) (1,542) (16) (11) 1 (1,570) Income tax (536) (16,130) (13,210) (1,818) (24) (31,718) Profit/(loss) for the year 2,385 61,016 52,477 6,853 101 122,832 Total comprehensive income 2,385 61,016 52,477 6,853 101 122,832 Unrealised profit - (620) (1,408) (872) - (2,900) Share of result of associates 1,193 29,278 14,334 2,553 (64) 47,294 Dividends received - - 12,459 2,569 - 15,028 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 54 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 55 26 Investments in Joint Ventures The table below summarises the movements in the carrying amount of the Group’s investment in joint ventures: In millions of Kazakhstani Tenge 2022 2021 Carrying value at 1 January 37,803 35,261 Share of results of joint ventures 13,340 4,289 Dividends received from joint ventures (6,935) (2,080) Other - 333 Carrying value at 31 December 44,208 37,803 The Group’s interests in its principal joint ventures were as follows: 2022 2021 Country of incorpora- tion Principal activity % ownership interest held Carrying value in millions of Tenge % ownership interest held Carrying value in millions of Tenge Semizbay-U LLP Kazakhstan Extraction, processing and export of uranium products 51.00% 28,252 51.00% 20,945 Ulba-FA LLP Kazakhstan Production of fuel assemblies and their components 51.00% 957 51.00% 2,705 JV Budenovskoe LLP Kazakhstan Extraction, processing and export of uranium products 51.00% 5,428 51.00% 6,071 Uranenergo LLP Kazakhstan Transfer and distribution of electricity, grid operations 79.23% 3,078 79.23% 3,095 SKZ-U LLP Kazakhstan Production of sulphuric acid 49.00% 6,493 49.00% 4,987 JV UKR TVS CJSC Ukraine Production of nuclear fuel 33.33% - 33.33% - Total investments in joint ventures 44,208 37,803 Ulba-FA LLP In December 2020 the Group together with China General Nuclear Power Corporation (CGNPC) finished construction of a fuel assembly plant in Kazakhstan with a capacity to supply Chinese nuclear power plants with up to 200 tons of enriched uranium per annum. The plant is owned by Ulba-Fa LLP, a joint-venture between subsidiaries of the Company and CGNPC with 51% and 49% respective interests. During 2021 the plant was certified by the owner of the technology for the production of fuel assemblies and was also recognised as a certified supplier of nuclear fuel to nuclear power plants in China from the end user of the plant's products (CGNPC Uranium Resources Company Limited (CGNPC-URC). A long-term contract for the supply of fuel assemblies between Ulba-FA LLP and CGNPC-URC was entered into in May 2021 and in 2022 the entity started its sales activities. Uranenergo LLP Management concluded that the Group does not have the ability to exercise control over Uranenergo LLP. Accordingly, this investment is classified as an investment in a joint venture. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 56 26 Investments in Joint Ventures (Continued) Summarised financial information on respect of the Group’s material joint ventures is set out below. The summarised financial information below represents amounts shown in the joint ventures’ financial statements prepared in accordance with IFRS, adjusted by the Group for equity accounting purposes. Semizbay-U LLP JV Budenovskoe LLP Ulba-FA LLP Other Total In millions of Kazakhstani Tenge 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Current assets 37,976 30,089 153 29 121,989 51,164 5,121 3,974 165,239 85,256 Including cash 18,725 13,132 114 22 19,791 5,747 1,164 219 39,794 19,120 Non-current assets 25,111 20,687 28,801 25,791 26,142 21,939 24,808 24,846 104,862 93,263 Total assets 63,087 50,776 28,954 25,820 148,131 73,103 29,929 28,820 270,101 178,519 Current liabilities (6,153) (7,090) (1,079) (296) (92,883) (35,769) (9,675) (9,735) (109,790) (52,890) Including financial liabilities net of trade and other accounts payable and provisions (66) (3,183) (31) (15) (4,147) (1,680) (3,219) (6,007) (7,463) (10,885) Non-current liabilities (6,100) (4,412) (5,320) (1,933) (53,373) (32,031) (2,354) (4,239) (67,147) (42,615) Including financial liabilities net of trade and other accounts payable and provisions - (66) (5,123) (1,933) (30,818) (31,241) - (2,877) (35,941) (36,117) Total liabilities (12,253) (11,502) (6,399) (2,229) (146,256) (67,800) (12,029) (13,974) (176,937) (95,505) Net assets 50,834 39,274 22,555 23,591 1,875 5,303 17,900 14,846 93,164 83,014 Group’s share of net assets of joint ventures 25,925 20,030 11,503 12,031 957 2,705 10,213 8,724 48,598 43,490 Goodwill 4,105 4,105 - - - - (1,374) (1,374) 2,731 2,731 Impairment losses - - - - - - (21) (21) (21) (21) Other 149 120 (115) - - - 753 753 787 873 Unrealised gain - - (5,960) (5,960) - - - - (5,960) (5,960) Unrealised profit in the Group (1,927) (3,310) - - - - - - (1,927) (3,310) Carrying value of investments in joint ventures 28,252 20,945 5,428 6,071 957 2,705 9,571 8,082 44,208 37,803 Total revenue 55,660 40,913 - - 22,929 - 15,708 12,769 94,297 53,682 Depreciation and amortisation (5,758) (4,836) (13) - (292) (559) (1,342) (1,337) (7,405) (6,732) Finance income 498 62 4 - 35 4 11 33 548 99 Finance costs (501) (501) (252) (1) (1,489) (1,466) (119) (107) (2,361) (2,075) Foreign exchange gain/(loss) 807 (146) (98) 5 (2,374) (592) (455) (236) (2,120) (969) Impairment losses (387) - (40) (14) (1) (11) (5) - (433) (25) Income tax (6,243) (3,978) (149) (61) (425) (397) (792) (642) (7,609) (5,078) Profit/(loss) for the year 25,215 15,569 (1,261) (280) (3,428) (3,788) 3,098 2,505 23,624 14,006 Other comprehensive income/(loss) - 34 - - - - - 2 - 36 Total comprehensive income/(loss) 25,215 15,603 (1,261) (280) (3,428) (3,788) 3,098 2,507 23,624 14,042 Other 1,382 (2,815) - - - - - - 1,382 (2,815) Share of results of joint ventures 14,242 5,125 (643) (142) (1,749) (1,932) 1,490 1,238 13,340 4,289 Dividends received 6,935 2,080 - - - - - - 6,935 2,080 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 57 27 Accounts Receivable In millions of Kazakhstani Tenge 2022 2021 Trade accounts receivable 251,697 215,483 Trade accounts receivable from related parties 7,024 4,713 Total gross trade accounts receivable 258,721 220,196 Provision for impairment of trade receivables (87) (148) Provision for impairment of trade receivables from related parties (3) (24) Total current net trade accounts receivable 258,631 220,024 Other accounts receivable 12,389 175 Other accounts receivable from related parties 81 44 Total gross other accounts receivable 12,470 219 Provision for impairment of other receivables (180) (105) Total net other accounts receivable 12,290 114 Total current accounts receivable 270,921 220,138 Other accounts receivable include: • joint operations receivable of Tenge 4,568 million that represent receivable of the Group from the second participant under the terms of the joint operations contractual agreements that require equal volumes of uranium to be purchased during the period by the participants. In 2022 the second participant of joint operation did not purchase the required volume; and • compensation from the second participant of JV KATCO LLP of Tenge 7,374 million, adjusted for foreign exchange loss from initial amount of Tenge 7,671 million (Note 25). Information on the Group’s exposure to credit and currency risks and provision for impairment for accounts receivable is disclosed in Note 40. 28 Other Financial Assets In millions of Kazakhstani Tenge 2022 2021 Non-current assets Restricted cash 29,044 17,654 Investment in ANU Energy 17,066 - Long-term debt securities 9,202 - Loans to related parties 2,536 5,493 Other 1,523 524 Total other non-current assets 59,371 23,671 Current assets Restricted cash 15,923 427 Loans to related parties 3,491 3,357 Short-term debt securities 72 4,986 Term deposit 930 43,220 Other 262 259 Total other current assets 20,678 52,249 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 58 28 Other Financial Assets (Continued) Restricted cash In accordance with the terms of its subsoil use contracts, the Group transfers cash to long-term bank deposits to finance future site restoration activities. As at 31 December 2022 the balance of restricted cash held in long-term bank deposits related to financing of future site restoration activities was Tenge 29,044 million (2021: Tenge 17,654 million). Short-term restricted cash includes payments of 32.3 million US Dollar, or Tenge 14,812 adjusted for foreign exchange gains and amounting to Tenge 14,956 million as at 31 December 2022, made by the Group in March 2022 to a uranium enrichment service provider whose Russian bank was subsequently included in the list of legal entities that fell under the sanctions of the Office of Foreign Assets Control of the US Department of the Treasury (OFAC).The correspondent bank which initially blocked the payment funds returned the amount to the Group (including interest) after the reporting period (Note 43). Investments in ANU Energy In accordance with the Framework Agreement signed on November 22, 2021, the Group and Genchi Global Limited, agreed to establish ANU Energy OEIC Ltd. The purpose of ANU Energy OEIC Ltd. is to store physical uranium as a long-term investment. The Group made an investment of 24.25 million US dollars in March 2022 (equivalent to Tenge 12,368 million), which is 32.7% of the entity's shares. The Group does not have representation in the governing body of the entity and does not take part in making decision key strategic issues of the entity. Accordingly, the Group does not have a significant impact on the management of the Fund, and therefore the Group recognizes this investment at fair value through profit or loss. As of December 31, 2022, the Group’s investment in ANU Energy OEIC Ltd. amounts to Tenge 17,066 and the Group recognized the fair value adjustment of Tenge 4,699 million as finance income (Note 17). In accordance with the Framework Agreement, the Group and ANU Energy OEIC Ltd. signed a short-term contract for the sale and purchase of natural uranium concentrates, under which the Group delivered natural uranium concentrates on May 12, 2022. Under the terms of the same Framework Agreement the Group has received a uranium loan from ANU Energy OEIC Ltd. in May 2022 (Note 36). Debt securities On May 12, 2022, in order to diversify its treasury portfolio, the Group invested in Eurobonds issued by Development Bank of Kazakhstan JSC, in the amount of 19.9 million US dollars, or Tenge 8,804 million with a maturity of 3 years and a coupon rate of 5.75%. The bonds are measured at amortized cost. As of 31 December 2022 the amount of the long-term investment is Tenge 9,274 million. The Group also purchases short-term debt securities. During the year the Group purchased Tenge 80,219 million and redeemed Tenge 86,006 million (2021: Tenge 126,331 and Tenge 127,341) of such securities, mainly issued by the National Bank of the Republic of Kazakhstan. As of 31 December 2021 short-term securities were represented by investment in corporate bonds of Eurasian Bank of Development JSC, denominated in Tenge with a maturity of 3 months expiring on 12 January 2022 with a discount rate of 9.6%. Loans to related parties In millions of Kazakhstani Tenge 2022 2021 Non-current Kyzylkum LLP 2,548 5,547 Provision for impairment (12) (54) Total non-current loans 2,536 5,493 Current Kyzylkum LLP 3,397 3,170 Uranenergo LLP 95 189 Provision for impairment (1) (2) Total current loans 3,491 3,357 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 59 28 Other Financial Assets (Continued) In 2010, the Group provided an interest-bearing long-term loan to Kyzylkum LLP with maturity to 2024. The loan is collateralised by the property of Kyzylkum LLP. From December 2015, JV Khorasan-U LLP is a co-borrower and guarantor of a loan to Kyzylkum LLP. In June 2021, the Group provided repayable financial assistance to Uranenergo LLP secured by property in the form of a revolving credit line with a term until June 30, 2023 to replenish working capital. As part of this line, cash tranches for up to 12 months can be provided.The weighted average annual interest rate on loans to related parties in 2022 was 8.5% (2021: 8.5%). According to internal estimates, the level of credit risk for these loans is at an acceptable level. 29 Other Non-Financial Assets In millions of Kazakhstani Tenge 2022 2021 Non-current VAT recoverable 8,725 11,315 Long-term inventories 7,299 7,247 Investment property 2,046 2,065 Advances for non-current assets 1,782 1,857 Prepaid expenses 789 926 Other assets 638 848 Total other non-current assets 21,279 24,258 Current Advances for goods and services 11,085 3,026 Advances to related parties for goods and services 3,834 1,244 Prepaid expenses 2,059 1,465 Prepaid insurance 1,309 1,025 Prepaid taxes other than income tax 443 371 Other assets 544 6 Total other current assets 19,274 7,137 30 Inventories In millions of Kazakhstani Tenge 2022 2021 Finished goods and goods for resale 309,950 223,750 Including uranium products 308,168 222,195 Work-in-process 40,899 30,409 Raw materials 19,633 14,879 Materials in processing 15,198 3,091 Other materials 7,486 5,709 Fuel 1,488 479 Spare parts 989 789 Provision for obsolescence and write-down to net realisable value (3,022) (3,250) Total inventories 392,621 275,856 Movements in the provision for obsolescence are as follows: In millions of Kazakhstani Tenge 2022 2021 Balance at 1 January (3,250) (2,755) Reversal of provision during the year 1,011 623 Inventory write off during the year 77 130 Accrual of provision during the year (821) (1,238) Translation of foreign currency (39) (10) National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 60 Balance at 31 December (3,022) (3,250) 31 Cash and Cash Equivalents In millions of Kazakhstani Tenge 2022 2021 Current bank accounts 131,260 138,867 Demand deposits 38,274 22,338 Cash in hand 14 8 Provision for impairment (12) (23) Total cash and cash equivalents 169,536 161,190 32 Share Capital At 31 December 2022 the total number of authorised and paid ordinary shares is 259,356,608 (2021: 259,356,608) of which 75% is owned by Samruk-Kazyna JSC and 25% of the shares/GDRs are freely floated with listing on the Astana International Exchange (AIX) and the London Stock Exchange (LSE). One GDR represents a share in one share. Each ordinary share carries the right to one vote. Registered share capital is Tenge 37,051 million. Dividends declared and paid during the year were as follows: In millions of Kazakhstani Tenge 2022 2021 Dividends payable at 1 January - - Dividends declared during the year 227,388 150,082 Dividends paid during the year (227,388) (150,082) Dividends payable at 31 December - - Dividends declared during the year per share, in Tenge 877 579 33 Loans and Borrowings In millions of Kazakhstani Tenge 2022 2021 Non-current Bonds 83,300 77,700 Total non-current loans and borrowings 83,300 77,700 Current Promissory notes issued 7,002 10,514 Bonds 24,016 803 Bank loans 23,953 - Total current loans and borrowings 54,971 11,317 Total loans and borrowings 138,271 89,017 The company placed US Dollar-indexed bonds on 27 September 2019 with a maturity of 27 October 2024 and a coupon of 4% per annum. The nominal value of one bond is Tenge 1,000, total volume is 70 million. In December 2022, the Company placed short-term commercial bonds in the amount of US Dollar 50 million on the trading floor of Kazakhstan Stock Exchange JSC (“KASE”) with a maturity in January 2023 and a coupon of 4.32% (Note 43). Current bank borrowings primarily include short-term loan from ForteBank JSC in amount 50 million US dollars with a maturity in January 2023. Bank loans were obtained for liquidity needs. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 61 33 Loans and Borrowings (Continued) Promissory notes were issued by a subsidiary of the Group JV Khorasan-U LLP in December 2014 to repay amounts owing for mine development assets. According to the terms, the promissory notes are payable on demand at an interest rate of 0.1%. As of 31 December 2022, the right of claim under these promissory notes belongs to Kyzylkum LLP, an associate of the Group (Note 8). Information about the Group’s loans and borrowings is presented as follows: In millions of Kazakhstani Tenge Currency Maturity 2022 2021 Bank loans Fortebank JSC US Dollar 2023 23,202 - Halyk Bank JSC Tenge 2023 751 - Total bank loans 23,953 - Bonds Bonds US Dollar 2024, 2023 107,316 78,503 Total bonds 107,316 78,503 Promissory notes issued Kyzylkum LLP Tenge on demand 7,002 10,514 Total promissory notes issued 7,002 10,514 The Group’s loans and borrowings were unsecured. In 2022, the Group’s weighted average interest rate on fixed interest rate loans was 3.62% (2021: 3.52%). Reconciliation of debt The table below shows an analysis of the debt amount and changes in the Group’s liabilities arising from financing activities for each of the periods presented: In millions Kazakhstani Tenge Loans and borrowings Lease liabilities Liability of ownership interest in a subsidiary Total Debt at 31 December 2020 97,826 746 - 98,572 Proceeds from loans and borrowings 65,525 - - 65,525 Foreign currency translation 1,749 7 - 1,756 Interest accrued 3,168 60 - 3,228 Repayment (76,108) (452) - (76,560) Interest paid (3,143) (122) - (3,265) Recognition of liability related to put option - - 185,210 185,210 De-recognition of liability related to put option (Note 39) - - (185,210) (185,210) Other non-cash changes - 52 - 52 Debt at 31 December 2021 89,017 291 - 89,308 Proceeds from loans and borrowings 70,905 - - 70,905 Foreign currency translation 4,760 (2) - 4,758 Interest accrued 3,689 20 - 3,709 Repayment (26,555) (162) - (26,717) Interest paid (3,545) (25) - (3,570) Other non-cash changes - 51 - 51 Debt at 31 December 2022 138,271 173 - 138,444 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 62 34 Provisions In millions of Kazakhstani Tenge Compensation for occupational diseases Environment protection Site restoration Other Total At 1 January 2021 Non-current 154 3,061 23,135 43 26,393 Current 77 96 706 - 879 Total 231 3,157 23,841 43 27,272 Provision for the year 14 (1) - 32 45 Unwinding of discount 23 241 1,993 2 2,259 Disposals - - (78) - (78) Provision used (72) - 272 - 200 Change in estimates - (2,040) 5,403 - 3,363 At 31 December 2021 Non-current 129 1,261 30,725 77 32,192 Current 67 96 706 - 869 Total 196 1,357 31,431 77 33,061 Provision for the year 45 28 - 197 270 Transfers - 77 - (44) 33 Unwinding of discount 19 128 2,745 - 2,892 Provision used (61) (10) - - (71) Change in estimates - 7,811 3,940 45 11,796 At 31 December 2022 Non-current 133 9,268 34,074 - 43,475 Current 66 123 4,042 275 4,506 Total 199 9,391 38,116 275 47,981 Provision for environmental protection The Group has a legal obligation to dispose of radioactive waste, eliminate and decommission contaminated items of property, plant and equipment after the closure of the facility (liquidation of the consequences of the operation of facilities). The amount of the provision for landfill restoration and asset remediation is determined using the nominal prices effective at the reporting dates, using the projected rate of long-term average inflation for the expected period of operation of landfills and the discount rate at the end of the reporting period. The change in estimate in 2022 mainly relates to inclusion of provision of Ulba Metallurgical Plant JSC as described in Note 4. The nominal cost of restoration of liquidation facilities as of 31 December 2022 is Tenge 134,438 million (2021: Tenge 5,710 million). Key assumptions used in estimations are described in Note 4. Provision for restoration of mine sites The Group estimates the site restoration costs for each mine operated by the Group. The nominal cost of restoration of mine sites as of 31 December 2022 is Tenge 84,209 million (2021: Tenge 63,989 million). The amount of provision for restoration of mine sites was calculated using current prices (the prices effective at the reporting date) for expenditures to be incurred and then inflated using the forecast inflation rate effective for the period until the settlement of restoration. In view of the long-term nature of provisions, there is uncertainty concerning the actual amount of expenses that will be incurred in performing site restoration activities for each mine (Note 4). Changes in estimates occur due to annual revision of costs for site liquidation including newly drilled wells, sand traps and other facilities subject to subsequent liquidation. In accordance with the terms of the subsurface use agreements the Group places cash in long-term bank deposits to finance future site restoration activities. As at 31 December 2022, the accumulated transfers to restricted deposits amounted to Tenge 33,371 million (2021: Tenge 21,963 million) (Note 28). National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 63 34 Provisions (Continued) Key assumptions which serve as the basis for determining the carrying value of the provision for restoration of mine sites provision are as follows: • there is a high probability that the Group will proceed to development and production stages for its fields which are currently under exploration. This creates a constructive obligation for the Group to recognise a site restoration provision for all mining and exploration licenses; • the expected term for future cash outflows for the mine sites is based on the life of the mines. A substantial part of the expenditures is expected to occur starting from 2045, at the end of the expected life of the mines. 35 Accounts Payable In millions of Kazakhstani Tenge 2022 2021 Trade accounts payable to related parties 58,668 33,620 Trade accounts payable 39,794 29,302 Total current trade accounts payable 98,462 62,922 Other accounts payable 346 3,092 Other accounts payable to related parties 1 - Total current other accounts payable 347 3,092 Total current accounts payable 98,809 66,014 The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 40. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 64 36 Other Liabilities In millions of Kazakhstani Tenge 2022 2021 Non-current Liabilities under contracts with customers 2,746 2,564 Advances received 2,276 3,740 Deferred income from subsidies received 1,820 1,356 Preferred shares 265 265 Issued financial guarantees 633 133 Liabilities under inventory loan agreements - 13,461 Other 1,573 1,901 Total non-current other liabilities 9,313 23,420 Current Liabilities under contracts with customers 35,139 16,598 Liabilities under inventory loan agreements 19,147 99 Accrued unused vacation payments and bonuses 11,453 8,425 Amounts due under uranium swap contracts (Note 4) 4,709 15,355 Joint operations liabilities 4,569 4,569 Wages and salaries payable 2,420 1,561 Social contributions payable 1,795 1,301 Advances received 1,795 1,280 Advances received from related parties 735 46 Issued financial guarantees 653 90 Dividends payable to other participants 259 263 Deferred income 161 166 Liability for social sphere contributions - 3,600 Other 1,048 3,985 Total current other liabilities 83,883 57,338 Liabilities under uranium loan agreements In 2020 the Group obtained uranium under commodity loans totalling US Dollar 21.9 million. A liability was initially recognised to return inventory at a cost of Tenge 8,597 million. This liability is subsequently measured at fair value in accordance with changes in market prices for uranium and foreign exchange rates. Accrued revaluation loss for the year ended 31 December 2022 amounted to Tenge 5,445 million (2021: Tenge 2,872 million). As of 31 December 2022, the Group reclassified inventory loans from long-term to short-term, as the repayment period is up to May and June 2023. The Group intends to extend the repayment period. On 19 May 2022 the Group obtained a uranium loan totalling US Dollar 113.5 million from ANU Energy OEIC Ltd. that was concluded under the Framework Agreement between the Group and Genchi Global Limited (Note 28). A liability was initially recognised to return inventory at a cost of Tenge 49,089 million and subsequently measured at fair value in accordance with changes in market prices for these goods and foreign exchange rates – the revaluation loss for the year ended 31 December 2022 amounted to Tenge 4,712 million. On 20 December the Group returned the inventory, the fair value of which amounted to Tenge 53,802 million on the date of return, which was greater than the cost of inventory returned for Tenge 8,251 million. Losses from revaluation of uranium loans to fair value as well as net gain from disposal of the loan returned to ANU Energy OEIC Ltd. are recognised in profit and loss and presented as other loss (Note 15). Uranium loans are part of the Group’s normal inventory management policy, required to mitigate logistical risks that could affect the timely delivery of Kazakhstani uranium to Western conversion enterprises due to the current unstable geopolitical situation. Joint operations liabilities Joint operations liabilities represent obligations of the Group under the terms of the joint operations contractual agreements that require equal volumes of uranium to be purchased during the period by the participants. In 2021 the Group did not purchase the required volume. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 65 36 Other Liabilities (Continued) The Group reports the following liabilities related to contracts with customers: In millions of Kazakhstani Tenge 2022 2021 Non-current contract liability 2,746 2,564 Current contract liability - advances received under contracts with customer for uranium pellets 35,139 16,598 37,885 19,162 Non-current contract liabilities are rights granted to the customers to acquire additional volumes of uranium. The Group expects that revenue will be recognized in future period(s) once the associated right is executed or expires. Current contract liabilities include advances for uranium pellets for Tenge 35,082 million under contracts with Ulba-FA LLP (2021: Tenge 16,420 million). During 2022, the Group has recognized revenue, which was included in the balance of advances received as at 31 December 2021 in the amount of Tenge 16,420 million (2021: none). 37 Contingencies and Commitments Compliance with Kazakhstan Tax legislation The tax environment in the Republic of Kazakhstan is subject to change and inconsistent application and interpretations. Kazakhstani tax legislation and practice is in a state of continuous development, and therefore is subject to varying interpretations and frequent changes, which may be retroactive. Tax periods remain open to retroactive review by the Kazakhstan tax authorities for five years. The Group’s management believes that its interpretation of the relevant legislation is appropriate and the Group’s tax positions will be sustained. In the opinion of the Group’s management, no material losses will be incurred in respect of existing and potential tax claims in excess of provision or disclosures that have been made in these consolidated financial statements. (a) Transfer pricing legislation In 2021 transfer pricing tax audits were started by the relevant Kazakhstan authorities across all subsoil use entities of the Group, but were not completed at 31 December 2022 due to the suspension of the audits by the tax authorities. During these audits, the tax authorities enquired into the documentary support for certain transport arrangements included in sales contracts of subsidiaries and affiliates. The legislation requires, in part, that Kazakhstani companies maintain and, if required, provide supporting evidence for the determination of prices used in international transactions. The Company received preliminary assessments for additional income tax in the amount of Tenge 5,754 million related to transfer pricing for the period 2016-2020. In addition, the tax authorities raised a transfer pricing matter common to the Group relating to documenting the transport differential in China for subsidiaries and affiliates, the maximum estimated amount of which is Tenge 10,764 million for 2016-2022 (2021: Tenge 9,135 million). The Group introduced amendments to transfer pricing methodology in 2021 to include supporting documentation for transportation differential on sales made to China but still uncertainty exists about tax authorities interpretations. To date, these tax audits were not finalised. Uncertainty exists as to the validity of the positions taken by the tax authorities regarding the preliminary assessments issued by and interpretations of the documentation requirements discussed above. The management of the Group believes that it will be able to sustain its position if the transfer pricing practices of the Group are challenged by the tax authorities. Accordingly, no liability has been recognised. The Group recognized additional income tax related to transfer pricing of Tenge 7,298 million in 2022 (2021: Tenge 5,371 million), which does not relate to 2016-2020, following a review by management of compliance with Group transfer pricing methodology. (b) Complex tax inspections of Group entities In 2021, most of the Group's entities underwent comprehensive tax audits, the results of which are reflected in the financial statements prepared as at 31 December 2021. Pending comprehensive tax audits at certain Group entities as of December 31, 2022 have been completed, the results of the audits are reflected in the financial statements as of December 31, 2022. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 66 37 Contingencies and Commitments (Continued) According to the results of the thematic audit of income tax at the source of payment from the income of non-residents for 2014-2018, completed in 2021, additional charges of JV KATCO LLP amounted to CIT on payments of dividends and loyalties in the amount of Tenge 10,482 million and penalties of Tenge 9,441 million. By decision of the Appellate Commission of the Ministry of Finance, the amount of the fine was reduced to Tenge 5,358 million. In 2022, JV KATCO LLP continued to appeal to the judiciary, and by the decisions of the court of first instance and the court of appeal, the amount of additional charges was reduced by Tenge 15,761 million. In November 2022, the State Revenue Department filed a complaint with the Supreme Court to overturn the decision of the Court of Appeal, and the issue is currently being considered. As at 31 December 2022, the entity or the Group did not record any liability in respect of these contested assessments. Compliance with subsoil use contractual obligations In accordance with the terms of the subsoil use contracts, the Group mining entities are required to comply with the obligations specified therein. Failure to comply with the conditions stipulated by subsoil use contracts may lead to negative consequences, including termination of contracts, fines and penalties. Under current subsoil use legislation, the payment of penalty does not relieve subsurface user from fulfillment of stated obligations in full. As of December 31, 2022, at some enterprises, the underproduction of uranium exceeds the legally allowed threshold of 20%, which is associated with a shortage of strategic materials. In addition, mining enterprises failed to meet their financial obligations under subsoil use contracts, which could result in penalties of 1% of the defaulted obligation or Tenge 150-200 million for 2022. The Group has not recognized additional liabilities in the financial statements as at 31 December 2022 as it plans to settle financial liabilities in future periods in accordance with revised work programs. Insurance The Kazakhstani insurance industry is in development stage, and many forms of insurance protection common in other countries are not yet available. Since 2021, the Corporate Property Insurance Program of the Company’s enterprises has been implemented against the “risks” of death, loss or damage as a result of accidental and unforeseen direct physical impact (excluding equipment breakdown/failure and interruption in production). The Company does not have full insurance coverage for risks related to mining activities and production facilities, including for damages caused by the stoppage of production or obligations incurred to third parties in connection with damages caused to the property or the environment resulting from accidents or operations. The Сompany provides Directors’ & Officers’ Liability insurance (D&O). D&O insurance policies offer liability cover for the Company’s managers to protect them from claims which may arise from decisions and actions taken (“alleged wrongful acts”) within the scope of their regular duties. The terms of the policy prohibit disclosure of the amount of the insurance coverage. Environmental obligations Changes in the Environmental Code In 2021, a new Environmental Code (hereinafter referred to as the “Code”) came into force. The Code provides for the division of objects that have a negative impact on the environment into four categories, depending on their level of impact, which implies the differentiation of environmental requirements for each of the categories. Operators of facilities that have a negative impact on the environment have obligations to eliminate the consequences of the operation of facilities in accordance with the requirements of the legislation of the Republic of Kazakhstan. The changes in the Code mainly affected non-mining companies of the first category, which include: Ulba Metallurgical Plant JSC (Note 4), JV SSAP LLP, SKZ-U LLP and Kyzylkum LLP. Following detailed technical and commercial assessments during the current year, the Group recognized in 2022 obligations to remediate the consequences of the operation of facilities (Note 34). According to the Code, category I companies, such as Ulba Metallurgical Plant JSC also have an obligation to provide financial security to the state until July 2024 for the full amount of provision (Note 34). The Management of the Group is currently in discussions with the competent authorities regarding the method and timing of funding the liability. As a result of the assessment of liabilities, non-mining enterprises of categories II-IV did not have significant obligations as of the reporting date. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 67 37 Contingencies and Commitments (Continued) Guarantees Guarantees are irrevocable assurances that the Group will make payments in the event that another party cannot meet its obligations. The maximum exposure to credit risk under financial guarantees provided to secure financing of certain related parties at 31 December 2022 is Tenge 18,937 million (2021: Tenge 21,154 million) (Note 8). Compliance with covenants The Group is subject to certain covenants related primarily to its liabilities under credit lines and guarantee agreements. The Group complied with all applicable covenants as of 31 December 2022 and 31 December 2021 and during the periods then ended. Legal proceedings Administrative offense of JV Inkai LLP in terms of environmental requirements The Department of Ecology imposed a fine in the amount of Tenge 1,639 million for the entity exceeding the permitted wastewater rate. JV Inkai LLP believes that there were errors in the calculation of the fine. JV Inkai LLP paid the fine, however, JV Inkai LLP is taking measures to dispute the fine through legal proceedings. 38 Non-controlling Interest The following table provides information about each significant subsidiary that has a non-controlling interest that is material to the Group at 31 December 2022: In millions of Kazakhstani Tenge Country of incorporation and principal place of business Ownership rights held by non-controlling interest Profit or loss attributable to non- controlling interest Accumulated non- controlling interest Name Ulba Metallurgical Plant JSC Kazakhstan 5.67% 819 8,088 Appak LLP Kazakhstan 35% 8,029 15,449 JV Inkai LLP Kazakhstan 40% 48,497 129,891 JV Khorasan-U LLP Kazakhstan 50% 24,044 112,584 Baiken-U LLP Kazakhstan 47.5% 17,452 77,558 DP Ortalyk LLP Kazakhstan 49% 26,195 42,730 Volkovgeologiya JSC Kazakhstan 1.04% (121) 159 Total 124,915 386,459 The following table provides information about each significant subsidiary that has non-controlling interest that is material to the Group at 31 December 2021: In millions of Kazakhstani Tenge Country of incorporation and principal place of business Ownership rights held by non-controlling interest Profit or loss attributable to non- controlling interest Accumulated non- controlling interest Name Ulba Metallurgical Plant JSC Kazakhstan 5.67% 568 7,491 Appak LLP Kazakhstan 35% 4,614 11,113 JV Inkai LLP Kazakhstan 40% 45,556 123,120 JV Khorasan-U LLP Kazakhstan 50% 11,839 110,290 Baiken-U LLP Kazakhstan 47.5% 9,034 60,106 DP Ortalyk LLP Kazakhstan 49% 7,780 34,857 Volkovgeologiya JSC Kazakhstan 3.38% (138) 281 Total 79,253 347,258 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 68 38 Non-controlling Interest (Continued) The summarised financial information of these subsidiaries is as follows: Ulba Metallurgical Plant JSC Appak LLP JV Inkai LLP Baiken-U LLP JV Khorasan-U LLP DP Ortalyk LLP Volkovgeologiya JSC In millions of Kazakhstani Tenge 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Current assets 112,643 74,957 24,853 17,164 133,314 108,441 86,830 44,227 90,905 89,727 59,750 54,052 9,097 8,042 Non-current assets 42,479 37,032 27,752 20,538 215,967 216,565 102,771 106,269 181,990 182,054 36,564 29,228 11,208 8,054 Current liabilities (57,444) (31,240) (4,088) (2,880) (11,812) (11,199) (6,629) (5,060) (14,560) (16,990) (4,781) (8,569) (15,954) (7,820) Non-current liabilities (14,355) (5,390) (4,218) (2,910) (34,053) (35,022) (19,529) (18,733) (33,004) (34,049) (4,329) (3,573) (162) (91) Equity, incl. 83,323 75,359 44,299 31,912 303,416 278,785 163,443 126,703 225,331 220,742 87,204 71,138 4,189 8,185 Equity attributable to the Group 75,235 67,868 28,850 20,799 173,525 155,665 85,885 66,597 112,747 110,452 44,474 36,281 4,030 7,904 Non-controlling interest 8,088 7,491 15,449 11,113 129,891 123,120 77,558 60,106 112,584 110,290 42,730 34,857 159 281 Revenue 121,435 60,254 45,050 30,902 165,966 131,866 74,579 49,981 90,156 63,117 95,240 59,195 29,742 23,513 Depreciation and amortisation (2,066) (1,924) (4,084) (3,184) (11,812) (10,913) (11,921) (12,694) (14,823) (13,842) (6,490) (4,971) (1,503) (1,424) Including depreciation and amortisation at fair value - - - - (3,088) (2,205) (5,996) (6,985) (8,588) (8,868) - - - - Finance income 855 360 576 278 633 127 619 340 217 116 26,375 8,045 61 22 Finance costs (1,864) (467) (428) (218) (1,114) (359) (244) (69) (203) (72) (26,469) (8,186) (85) (319) Income tax expense (4,165) (2,606) (5,688) (3,932) (26,047) (20,547) (11,082) (6,219) (14,162) (8,584) (13,982) (7,218) 69 61 Including tax effect of depreciation and amortisation of adjustments to fair val - - - - 616 441 1,202 1,404 1,718 1,774 - - - - Net foreign exchange gain 953 488 229 12 1,542 404 529 91 3,729 613 1,686 56 (4) - (Impairment losses)/reversal of impairment losses 1,054 (198) (20) 9 - (478) 57 (164) - - (41) 22 (18) 60 Profit for the year 12,699 5,606 22,940 13,183 96,995 76,693 36,740 19,019 48,089 23,679 53,458 27,016 (4,844) (1,511) Profit attributable to the owners of the Company 11,880 5,038 14,911 8,569 48,498 31,137 19,288 9,985 24,045 11,840 27,263 19,236 (4,723) (1,373) Profit attributable to non-controlling interest 819 568 8,029 4,614 48,497 45,556 17,452 9,034 24,044 11,839 26,195 7,780 (121) (138) Profit/(loss) for the year 12,699 5,606 22,940 13,183 96,995 76,693 36,740 19,019 48,089 23,679 53,458 27,016 (4,844) (1,511) Other comprehensive income/(loss) (726) 16 (7) 1 - - - (8) - - (11) 2 (16) (9) Total comprehensive income/(loss) for the year 11,973 5,622 22,933 13,184 96,995 76,693 36,740 19,011 48,089 23,679 53,447 27,018 (4,860) (1,520) Dividends declared to non-controlling interest 177 360 3,691 2,879 41,727 17,117 - 6,225 21,750 - 18,316 - 1 1 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 69 Net cash inflow/(outflow) from: - operating activities 9,777 7,561 18,166 13,376 87,391 26,366 27,041 13,777 48,124 12,606 40,252 17,440 1,719 109 - investing activities (2,383) (2,838) (10,287) (6,160) (10,649) (8,894) (7,433) (3,585) (13,525) (8,557) (12,488) (2,527) (3,837) (1,057) - financing activities (4,023) (3,812) (10,547) (8,278) (75,305) (28,832) - (11,869) (47,000) (3,504) (37,382) (3) 2,791 750 Net cash inflow/(outflow) 3,371 911 (2,668) (1,062) 1,437 (11,360) 19,608 (1,677) (12,401) 545 (9,618) 14,910 673 (198) National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 70 38 Non-controlling Interest (Continued) Allocation of profit between the non-controlling interest of JV Inkai LLP and the Group is impacted by the allocation of JV Inkai LLP dividends. The distribution of dividends is made in accordance with the amendment to the agreement between the parties, and is not based on ownership interests. For 2021, dividends were distributed between the non-controlling interest and the Company in the amount of 59.4% and 40.6%, respectively, for 2022 - in the amount of 50% and 50%, respectively. This amendment was agreed by the parties to compensate the non-controlling interest for losses due to a 20% reduction in production in 2021-2022. Accordingly, the amount reclassified from profit attributable to the Group to profit attributable to non-controlling interests during 2022-2020 amounted to Tenge 30,556 million (2021-2020: Tenge 20,857 million). 39 Principal Subsidiaries These consolidated financial statements include the following subsidiaries: Ownership Principal activity 2022 2021 KAP Technology JSC Communication services 100% 100% Qorgan-Security LLP Security services 100% 100% Appak LLP Exploration, production, processing and sale of uranium products 65% 65% Ulba Metallurgical Plant JSC Production and processing of uranium materials, production of rare metals and semiconductor materials 94.33% 94.33% Volkovgeologiya JSC Exploration and research of uranium reserves, drilling services, monitoring of radiation level and environment conditions 98.96% 96.62% High Technology Institute LLP Research, project, development and engineering consulting services 100% 100% DP Ortalyk LLP Exploration, production, processing and sale of uranium products 51% 51% RU-6 LLP Exploration, production, processing and sale of uranium products 100% 100% Kazatomprom-SaUran LLP Exploration, production, processing and sale of uranium products 100% 100% KAP Logistics LLP (former Trade and Transportation Company LLP) Procurement and transportation services 99.9999% 99.9999% Kazakatom TH AG Marketing function for sale of uranium, investment and administration of finances, goods and rights 100% 100% JV Inkai LLP Exploration, production, processing and sale of uranium products 60% 60% Baiken-U LLP Exploration, production, processing and sale of uranium products 52.5% 52.5% JV Khorasan-U LLP Exploration, production, processing and sale of uranium products 50% 50% These consolidated financial statements include the following joint operations: Ownership Principal activity 2022 2021 Karatau LLP Exploration, production, processing and sale of uranium products 50% 50% JV Akbastau JSC Exploration, production, processing and sale of uranium products 50% 50% Energy Asia (BVI) Limited (EAL) Commercial and investment activities 50% 50% All entities are incorporated and operate on the territory of the Republic of Kazakhstan, except for Kazakatom TH AG, which is incorporated in Switzerland and EAL that is registered in the British Virgin Islands. Disposal of a 49% non-controlling share in DP Ortalyk LLP In April 2021, a sale and purchase agreement was signed between the Company and CGNM UK Limited, where the value of a 49% stake in DP Ortalyk LLP was determined in the amount of 435 million US Dollar (equivalent to Tenge 186,437 million) based on fair value assessment by an independent appraiser. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 71 39 Principal Subsidiaries (Continued) On July 22, 2021, the sale of the share in DP Ortalyk LLP was completed after obtaining all state permits and fulfilling all the preconditions of the sale and purchase agreement. The management of the Company has concluded that the Company retains control over DP Ortalyk LLP, as the Group has significant rights to manage the enterprise's production activities and influence the profits earned. In millions of Kazakhstani tenge Selling price at the exchange rate as of April 22, 2021 186,437 Less foreign exchange loss (579) Consideration received 185,858 Net assets of the subsidiary at the date of disposal of the interest 55,258 Non-controlling interest, 49% 27,076 Selling price at the exchange rate as of April 22, 2021 186,437 Less Non-controlling interest (27,076) Minus corporate income tax (33,466) Increase in equity attributable to the owners of the Company 125,895 Mutual cooperation between the Group and CGNM and its related entities involved (CGNM Group) is governed by commercial agreements that contain put and call options. Call option grants the Group the right to demand CGNM Group to sell their interest in DP Ortalyk LLP and Ulba-FA LLP after occurrence of any of the following events: (1) there is a deadlock situation for a decision made by the Group and CGNM Group as participants of DP Ortalyk LLP and Ulba-FA LLP, (2) CGNM Group ceases to own its interest in Ulba- FA LLP, (3) CGNM Group submits a notice of liquidation, (4) CGNM Group causes a material breach of commercial terms of Ulba-FA LLP that has not been addressed, (5) Ulba-FA LLP does not complete any of its planned activities on the specified date because of unfulfilled liabilities by the CGNM Group, including shipment of fuel tablets within 24 months after the first order placed. CGNM Group has 60 days to eliminate an event occurred before the option is exercised. Call option is exercised at fair value of shares as of the date the notice of option exercise. Put option grants the CGNM Group the right to demand the Group to buy their interest in DP Ortalyk LLP and Ulba-FA LLP after occurrence of any of the following events: (1) there is a deadlock situation for a decision made by the Group and CGNM Group as participants of DP Ortalyk LLP and Ulba-FA LLP, (2) CGNM Group ceases to own its interest in DP Ortalyk LLP, (3) the Group submits a notice of liquidation, (4) the Group causes a material breach of commercial terms of Ulba-FA LLP that has not been addressed, (5) Ulba-FA LLP does not complete any of its planned activities on the specified date because of unfulfilled liabilities by the Group, including shipment of fuel tablets within 24 months after the first order placed. The Group has 60 days to eliminate an event occurred before the option is exercised. Put option is exercised at fair value of shares as of the date the notice of option exercise. With respect of valuation of derivative instruments relating to above mentioned put and calls options the Group determined that such value is immaterial as the exercise price is set at the fair value of the shares. The Group considered the impact of above mentioned call and put options on the financial statements. In particular the Group considered whether the existence of a put option requires recognition of financial liabilities at the amount equal to net present value of the redemption amount pursuant to requirement of IAS 32. Consequently, as at the date of transaction and as at 30 September 2021 the Group has recognised a liability in the amount of Tenge 185,210 million in accordance with the terms of the sale and purchase agreement of a 49% stake in DP Ortalyk LLP, which provides the right to CGNM to request the Group to buy back that entity’s ownership interest in DP Ortalyk LLP at fair value on the date of purchase if DP Ortalyk LLP does not receive a new subsoil use contract on the Zhalpak field by 31 December 2021. The Group assessed that obtaining that subsoil use contract was outside of control of the Group. The subsoil use contract was received on 14 December 2021 and accordingly the liability was derecognised. There was no material change to its fair value between initial recognition date and extinguishment date. As of 31 December 2022 and 2021 the Group has not recognised financial liability to purchase shares in DP Ortalyk LLP as required by IAS 32 because management believes that other conditions requiring purchase of shares listed above are under the Group’s control, i.e. the Group does not have unavoidable obligation to pay cash. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 72 39 Principal Subsidiaries (Continued) Sales of 100% interests in subsidiaries - KazPV project On 10 June 2021 the Group signed an agreement for the sale of the Group’s entire interest in Kazakhstan Solar Silicon LLP. The sale was completed on 12 July 2021 upon receipt of full payment of Tenge 323 million. On 16 July 2021 the Group signed an agreement for the sale of the Group's entire interest in Astana Solar LLP and on 23 August 2021 signed the act of acceptance after receiving full payment under the contract. The payment received amounted to Tenge 380 million. On 26 October 2021, an agreement for the sale of the Group's entire interest in MK Kazsilicon LLP was signed. On 19 November 2021 after receiving full payment under the contract the Group signed an act of acceptance certificate. The payment received amounted to Tenge 652 million. Total proceeds from sales of KazPV entities was Tenge 1,355 million less Tenge 16 million cash and cash equivalents of disposed entities at the disposal date. Liquidation of Kazatomprom-Damu LLP In April 2021, the Group liquidated Kazatomprom-Damu LLP. As a result of the liquidation, the Group wrote off additional paid-in capital of Tenge 2,254 million and the accumulated loss attributable to non-controlling interest of Tenge 377 million. 40 Financial Risk Management Accounting policies and disclosures in respect of financial instruments are applied to the following classes of financial instruments: In millions of Kazakhstani Tenge Note 2022 2021 Financial assets Trade accounts receivable 27 258,631 220,024 Current bank accounts 31 131,248 138,844 Restricted cash 28 44,967 18,081 Demand deposits 28 38,274 22,338 Investments in debt securities 28 9,274 4,986 Investment in ANU Energy 28 17,066 - Other accounts receivable 27 12,290 114 Loans to related parties 28 6,027 8,850 Term deposits 28 946 43,220 Cash in hand 31 14 8 Other 28 1,785 783 Total financial assets 520,506 457,248 Financial liabilities Bonds 33 107,316 78,503 Trade and other accounts payable 35 98,809 66,014 Bank loans 33 23,953 - Promissory note issued 33 7,002 10,514 Issued financial guarantees 36 1,286 133 Preferred shares 36 265 265 Dividends payable to other participants 36 259 263 Lease liabilities 33 173 291 Historical costs liabilities 36 - 437 Liability for social sphere contributions 36 - 3,600 Total financial liabilities 239,063 160,020 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 73 40 Financial Risk Management (Continued) Financial risks are monitored by the Group’s risk management function and comprise market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The objectives of the Group’s financial risk management policy are to establish risk limits, and then ensure that exposure to risks stays within these limits. Risk management policies and systems are regularly analysed for the need of revision due to changes in market conditions and the Group operations. The Group’s risk management function monitors compliance with approved policies and procedures. This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s policy for management of capital. Further quantitative disclosures are included throughout these consolidated financial statements. The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Management Board has established a Risk Management Committee, which is responsible for developing and monitoring the Group’s risk management policies. The committee reports regularly to the Management Board and the Board of Directors on its activities. Credit risk The Group has exposure to credit risk, which is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Exposure to credit risk arises as a result of the Group’s sales of products on credit terms and other transactions with counterparties giving rise to financial assets. Financial assets, which potentially expose the Group to credit risk, consist mainly of trade and other receivables, cash and cash equivalents, term deposits, investments in securities and loans to related parties. The Group’s maximum exposure to credit risk by class of assets is reflected in the carrying amounts of financial assets in the statements of financial position and the nominal amount of financial guarantees (Note 37). The table below shows credit ratings of banks where the Group had financial assets as at 31 December 2022: In millions of Kazakhstani Tenge Rated Standard & Poor’s AAA to A- Rated Standard & Poor’s BBB+ to BBB- Rated Standard & Poor’s BB+ to B- Total Current bank accounts 33,291 17,183 80,774 131,248 Restricted cash 9,908 2,842 32,217 44,967 Demand deposits 2,968 3,216 32,090 38,274 Term deposits - - 946 946 Investment in debt securities - 9,274 - 9,274 Total 46,167 32,515 146,027 224,709 The table below shows credit ratings of banks where the Group had financial assets as at 31 December 2021: In millions of Kazakhstani Tenge Rated Standard & Poor’s AAA to A- Rated Standard & Poor’s BBB+ to BBB- Rated Standard & Poor’s BB+ to B- Total Restricted cash 7,449 1,206 9,426 18,081 Term deposits - - 43,220 43,220 Current bank accounts 49,430 27,613 61,801 138,844 Demand deposits 3,024 337 18,977 22,338 Investment in debt securities - - 4,986 4,986 Total 59,903 29,156 138,410 227,469 The Group applies the simplified approach permitted in IFRS 9 to measure expected credit losses which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The expected loss rates are based on the payment profiles of sales over a period of 24 month before 31 December 2022 or 31 December 2021 respectively and the corresponding historical credit losses experienced within this period. The historical loss rates are not adjusted to reflect forward-looking information on macroeconomic factors because those factors do not significantly affect the risk profile. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 74 40 Financial Risk Management (Continued) The credit loss allowance for trade receivables is determined according to provision matrix presented in the table below. The provision matrix is based the number of days that an asset is past due. In millions of Kazakhstani Tenge Loss rate Gross carrying amount Lifetime ECL 2022 Trade receivables - current 0.03% 258,607 (70) - less than 30 days overdue 10.53% 38 (4) - 30 to 90 days overdue 20% 30 (6) - 90 to 180 days overdue 20% 46 (10) Total trade receivables (gross carrying amount) 258,721 Credit loss allowance (90) Total trade receivables from contracts with customers (carrying amount) 258,631 In millions of Kazakhstani Tenge Loss rate Gross carrying amount Lifetime ECL 2021 Trade receivables - current 0.06% 220,084 (132) - less than 30 days overdue 32.04% 104 (32) - over 360 days overdue 100% 8 (8) Total trade receivables (gross carrying amount) 220,196 Credit loss allowance (172) Total trade receivables from contracts with customers (carrying amount) 220,024 The following table explains the changes in the credit loss allowance for trade and other receivables between the beginning and the end of 2022 as well as impairment provision for trade and other receivables during 2021: In millions of Kazakhstani Tenge Trade accounts receivable Other accounts receivable Provision at 1 January 2021 109 74 Provision for the year 184 34 Recalculation of foreign currency 1 - Reversal (121) (2) Amounts written-off (1) - Provision at 31 December 2021 172 106 Provision for the year 90 76 Reversal (172) - Amounts written-off - (2) Provision at 31 December 2022 90 180 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 75 40 Financial Risk Management (Continued) The Group’s exposure to credit risk in respect of trade accounts receivable is influenced mainly by the individual characteristics of each customer. The demographics of the Group’s customer base, including the default risk of the industry and country, in which customers operate, has no significant influence on credit risk. The Group is exposed to concentrations of credit risk. Approximately 75% of the Group’s revenue for 2022 (84% of trade receivables as of 31 December 2022) is attributable to sales transactions with eleven main customers (2021: 65% of Group’s revenues and 53% of trade receivables attributable to seven customers). The Group defines counterparties as having similar characteristics if they are related entities. The Group applies a credit policy under which each new customer is analysed individually for creditworthiness before the Group’s standard payment and delivery terms and conditions are offered. The Group does not require collateral in respect of trade and other receivables. The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was: In millions of Kazakhstani Tenge 2022 2021 China 143,154 68,397 Canada 54,239 60,276 United Kingdom 30,712 11,929 Russia 12,989 20,134 USA 8,338 46,564 Kazakhstan 8,100 5,792 Japan 696 1,287 European Union 403 5,645 Total 258,631 220,024 The average credit period on sales of goods is 30 days. No interest is charged on receivables for the first 30 days from the date of the invoice. Credit risk exposure in respect of loans to related parties (Note 28) arises from possibility of non-repayment of loans. For loans to joint ventures and associates, the Group manages the credit risk by requirement to provide collateral in lieu of borrowers’ property. Borrowers do not have a credit rating. Expected Credit Loss (ECL) measurement Measurement of ECLs is an estimate that involves determination methodology, models and data inputs. The following components have a major impact on credit loss allowance: definition of default, SICR, probability of default (“PD”), exposure at default (“EAD”), and loss given default (“LGD”), as well as models of macro-economic scenarios. The Group regularly reviews and validates the models and inputs to the models to reduce any differences between expected credit loss estimates and actual credit loss experience of issued loans and guarantees. The Group used supportable forward looking information for measurement of ECL, primarily an outcome of its own macro- economic forecasting model. Several assumptions that are easily interpretable can be selected for analysis: GDP growth rate, inflation rate, exchange rate, crude oil price and current economic indicator. Final macroeconomic scenario includes only historically observed values of the inflation rate and the share of overdue loans. Forward-looking information is included in parameters of PD within the horizon of the next year after the reporting date. In addition, to calculate credit losses, the corporate average cumulative default probabilities are updated annually according to S&P's Annual Global Corporate Default Study and Rating. Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Group is exposed to daily calls on its available cash resources. Liquidity risk is managed by the treasury department of the Group. Management monitors monthly rolling forecasts of the Group’s cash flows. The Group seeks to maintain a stable funding base primarily consisting of borrowings, trade and other payables and debt securities. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities as they fall due, under both normal and stressful conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group invests available cash funds in diversified portfolios of liquid assets, in order to be able to respond quickly to unforeseen liquidity requirements. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 76 40 Financial Risk Management (Continued) The Group ensures that it has sufficient cash on demand to meet expected operational expense or financial obligations which excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. Below is a summary of the Group’s undrawn borrowing facilities and available cash and cash equivalents, including current term deposits, which are the important instruments in managing the liquidity risk: In millions of Kazakhstani Tenge 2022 2021 Current bank accounts 131,248 138,844 Undrawn borrowing facilities 84,665 177,902 Current term deposits 39,204 65,558 Total 255,117 382,304 The table below shows liabilities at the reporting date by their remaining contractual maturity. The amounts disclosed in the maturity table are the contractual undiscounted cash flows. Such undiscounted cash flows differ from the amount included in the statements of financial position because the statement of financial position amount is based on discounted cash flows. When the amount payable is not fixed, the amount disclosed is determined by reference to the conditions existing at the end of the reporting period. Foreign currency payments are translated using the spot exchange rate at the end of the reporting period. The following are the contractual maturities of financial liabilities at 31 December 2022: In millions of Kazakhstani Tenge Carrying value Contractual cash flows On demand and less than 1 month From 1 to 3 months From 3 months to 1 year From 1 to 5 years Over 5 years Bonds 107,316 114,706 - 23,216 861 90,629 - Trade and other accounts payable 98,809 98,809 - 98,809 - - - Bank loans 23,953 24,161 - 24,161 - - - Promissory note issued 7,002 7,002 7,002 - - - - Issued financial guarantees 1,286 18,937 18,937 - - - - Preferred shares 265 265 - - - 265 - Dividends payable to other participants 259 259 - - 259 - - Lease liabilities 173 259 - 12 38 154 55 Total 239,063 264,398 25,939 146,198 1,158 91,048 55 The following are the contractual maturities of financial liabilities at 31 December 2021: In millions of Kazakhstani Tenge Carrying value Contractual cash flows On demand and less than 1 month From 1 to 3 months From 3 months to 1 year From 1 to 5 years Over 5 years Bonds 78,503 88,550 - - 3,080 85,470 - Trade and other accounts payable 66,014 66,014 - 66,014 - - - Promissory note issued 10,514 10,514 10,514 - - - - Liability for social sphere contributions 3,600 3,600 - - 3,600 - - Historical costs liabilities 437 437 - 90 271 76 - Lease liabilities 291 350 - 52 156 102 40 Issued financial guarantees 133 21,154 21,154 - - - - Preferred shares 265 265 - - - 265 - Dividends payable to other participants 263 263 - 263 - - - Total 160,020 191,147 31,668 66,419 7,107 85,913 40 National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 77 40 Financial Risk Management (Continued) Market risk The Group has exposure to market risks. Market risk is the risk that changes in market prices will have a negative impact on the Group’s income or the value of its financial instrument holdings. Market risks arise from open positions in (a) foreign currencies, (b) interest bearing assets and liabilities and (c) equity products, all of which are exposed to general and specific market movements. The objective of market risk management is to monitor and control market risk exposures within acceptable limits, while optimising the return on investments. Management sets limits on the value of risk that may be accepted, which is monitored on a daily basis. However, the use of this approach does not prevent losses outside of these limits in the event of more significant market movements. Sensitivities to market risks included below are based on a change in a factor while holding all other factors constant. In practice this is unlikely to occur and changes in some of the factors may be correlated – for example, changes in interest rate and changes in foreign currency rates. Currency risk The Group is exposed to currency risk on sales, purchases and borrowings which are denominated in currencies other than the functional currency. Borrowings are denominated in currencies that match the cash flows generated by operating entities in the Group. Therefore, in most cases, economic hedging is achieved without derivatives. In respect of other monetary assets and liabilities denominated in foreign currencies, the Group ensures that its net exposure is kept to an acceptable level by planning future expenses taking into consideration the currency of payment. The Group is mainly exposed to the risk of US Dollars currency fluctuations. The Group’s exposure to currency risk was as follows: In millions of Kazakhstani Tenge 2022 2021 Denominated in US Dollars Trade accounts receivable 248,201 207,325 Current bank accounts 97,471 95,630 Other investments 26,487 - Other accounts receivable 7,508 1 Loans to related parties 5,933 8,663 Term deposits 922 43,212 Demand deposits 385 - Other assets 1,646 17,252 Total assets 388,553 372,083 Bonds (107,316) (78,503) Bank and non-bank loans (23,202) - Trade and other accounts payable (6,350) (13,110) Other financial liabilities (21,740) (34,048) Total liabilities (158,608) (125,661) Net exposure to currency risk 229,945 246,422 * - loan given to Kyzylkum LLP and bonds are nominated in Tenge, but are subject to indexation for changes in US Dollar/Tenge exchange rate. A 21% weakening and 21% strengthening of Tenge against US Dollar as at 31 December 2022 (2021: 13% weakening and 10% strengthening) would increase/(decrease) equity and profit or loss by the amounts shown below. In millions of Kazakhstani Tenge 2022 2021 US Dollar strengthening by 21% (2021: 13%) 38,631 25,628 US Dollar weakening by 21% (2021:10%) (38,631) (19,714) Movements of Tenge against US Dollar above represent reasonably possible changes in market risk estimated by analysing annual standard deviations based on the historical market data for 2022 and 2021. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 78 40 Financial Risk Management (Continued) Price risk on uranium products The Group is exposed to the effect of fluctuations in the price of uranium, which is quoted in US Dollar on the international markets. The Group prepares an annual budget based on future uranium prices. Uranium prices historically fluctuate and are affected by numerous factors outside of the Group’s control, including, but not limited to: • demand for uranium used as fuel by nuclear power stations; • depleting levels of secondary sources such as recycling and blended down highly enriched stocks available to close the gap of the excess demand over supply; • impact of regulations by the International Agency on Nuclear Energy; • other factors related specifically to uranium industry. At the end of the reporting period there was no significant impact of commodity price risk on the Group’s financial assets and financial liabilities except for investments in ANU Energy OEIC Ltd. (Note 28). A 40% weakening and 40% strengthening of Tenge against spot price as at 31 December 2022 would increase/(decrease) equity and profit or loss by the amounts shown below. In millions of Kazakhstani Tenge 2022 Spot price increase by 40% 5,324 Spot price increase by 40% (5,324) Interest rate risk Changes in interest rates impact loans and borrowings by changing either their fair value (fixed rate debt) or their future cash flows (floating rate debt). At the time of raising new loans or borrowings, management uses its judgement to decide whether it believes that a fixed or a floating rate would be more favourable to the Group over the expected period until maturity. As at 31 December 2022 approximately 100% (2021: 100%) of the Groups borrowings have a fixed interest rate. At the reporting date, the interest rate profile of the Group’s interest-bearing financial instruments was: In millions of Kazakhstani Tenge 2022 2021 Fixed rate instruments Restricted cash 44,967 18,081 Demand deposits 38,274 22,338 Securities 9,274 - Loans to related parties 6,027 8,850 Term deposits 946 43,235 Bonds (107,316) (78,503) Bank loans (23,953) - Promissory note issued (7,002) (10,514) Net position (38,783) 3,487 Fair value sensitivity analysis for fixed rate instruments The Group has only fixed rate instruments. The Group does not account for any fixed rate financial assets and financial liabilities at fair value through profit or loss. Therefore a change in interest rates at the reporting date would not affect profit or loss. However, fixed rate financial assets and financial liabilities are exposed to fair value risk from change in interest rates. Reasonably possible changes in interest rates do not significantly affect fair values of those financial assets and financial liabilities. National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 79 40 Financial Risk Management (Continued) Capital management The Group’s policy is to maintain a strong capital base so as to safeguard the Group’s ability to continue as a going concern, to maintain investor, creditor and market confidence, to provide returns for shareholders, to maintain an optimal capital structure to reduce the cost of capital, and to sustain future development of the business. Capital includes all capital and reserves of the Group as recorded in the consolidated statements of financial position. The Group’s loan agreements with banks include covenants, pursuant to which the Group must comply with applicable laws and regulations, cannot create or permit any security over its assets or dispose assets, unless allowed by the loan agreements, and must obtain the lenders’ approval for any acquisitions, mergers and disposals. The Group may also sell uranium for non-military purposes and only to customers residing in countries which signed the Nuclear Non-Proliferation Treaty and are members of the International Agency on Nuclear Energy. In addition, the Group must maintain certain key financial covenants based on the Group’s consolidated financial information, such as: • the debt to equity ratio; • the debt ratio to earnings before interest, taxes, depreciation and amortisation (Debt/EBITDA). The Group’s internal quantitative capital management targets are similar to externally imposed requirements. The Group applies the Policy on borrowings and financial sustainability management, which is aimed to manage financial risks by adopting common principles and rules of debt management and financial sustainability for non-financial organisations. The Group has complied with all externally and internally imposed capital requirements during 2022 and 2021, requirements associated with borrowing facilities. 41 Fair Value Disclosures Fair value measurements are analysed by level in the fair value hierarchy as follows: (i) level one are measurements at quoted prices (unadjusted) in active markets for identical assets or liabilities, (ii) level two measurements are valuations techniques with all material inputs observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices), and (iii) level three measurements are valuations not based on observable market data (that is, unobservable inputs). Management applies judgement in categorising financial instruments using the fair value hierarchy. If a fair value measurement uses observable inputs that require significant adjustment, that measurement is a Level 3 measurement. The significance of a valuation input is assessed against the fair value measurement in its entirety. Financial assets carried at amortised cost Estimate of all financial assets carried at amortised cost is level 3 measurement, except for cash and cash equivalents, which is in Level 2. The estimated fair value of fixed interest rate instruments is based on estimated future cash flows expected to be received discounted at current interest rates for new instruments with similar credit risks and remaining maturities. Discount rates used depend on the credit risk of the counterparty. All financial assets of the Group as of the end of the reporting period are carried at amortised cost except as disclosed below. Financial assets carried at FVTPL Financial assets carried at FVTPL include derivative asset and investment in ANU Energy OEIC Ltd. (Note 28) that are recognised at fair value through profit and loss. Fair value measurements for both assets fall in Level 2. The Group estimates fair value of investment in ANU Energy OEIC Ltd. as a percentage of Group’s owned share multiplied by the fair value of uranium held by the entity as of the date. The main inputs used in fair value estimation are spot prices of uranium as of the reporting date. Fair value of a derivative asset are determined based on binominal model with uranium spot price forecasts. Liabilities carried at amortised cost Fair values of other liabilities were determined using valuation techniques. The estimated fair value of fixed interest rate instruments with stated maturities were estimated based on expected cash flows discounted at current interest rates for new instruments with similar credit risks and remaining maturities. The fair value of liabilities repayable on demand or after a notice period (“demandable liabilities”) is estimated as the amount payable on demand, discounted from the first date on which the amount could be required to be paid. The weighted average discount rate is 4.94% p.a (2021: 4.5%). National Atomic Company Kazatomprom JSC Notes to the Consolidated Financial Statements – 31 December 2022 80 41 Fair Value Disclosures (Continued) Fair values versus carrying amounts With the exception of instruments specified in the following table, the Group believes that the carrying value of financial assets and financial liabilities are recognised in the consolidated financial statements approximate their fair value: 2022 2021 In millions of Kazakhstani Tenge Carrying value Fair value Carrying value Fair value Financial liabilities Bonds 83,300 82,288 77,700 76,305 Historical costs liabilities - - 437 326 Total 83,300 82,288 78,137 76,631 In assessing fair values, management uses the following major methods and assumptions: (a) for interest free financial liabilities and financial liabilities with fixed interest rate, financial liabilities were discounted at effective interest rate which approximates the market rate; (b) for financial liabilities with floating interest rate, the fair value is not materially different from the carrying amount because the effect of the time value of money is immaterial. 42 Presentation of Financial Instruments by Measurement Category For the purposes of measurement, IFRS 9 Financial Instruments classifies financial assets into the following categories: (a) financial assets at FVTPL; (b) debt instruments at FVOCI, (c) financial assets at AC. Financial assets at FVTPL have two sub-categories: (i) assets mandatorily measured at FVTPL, and (ii) assets designated as such upon initial recognition or subsequently. All of the Group’s financial assets as of the end of reporting period fell into the category AC, except for the financial derivative asset and investment in ANU Energy OEIC Ltd. (Note 28), classified as FVTPL upon initial recognition. All of the Group’s financial liabilities were carried at AC. Fair value is approximate to carrying amount and there were no reclassifications during the period. 43 Events after the Reporting Period Restricted cash On 13 January 2023 the Office of Foreign Assets Control of the US Department of the Treasury (OFAC) issued a license to return blocked funds. On 30 January 2023 the correspondent bank returned the funds in the amount of 32.7 million US Dollars, including 0.4 million US Dollars of accrued interest. Commercial bonds issue Short-term commercial bonds issued in 2022 were redeemed on 23 January 2023. 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