Financial statements (Novatek FS 12m2025 ENG)

CONTENTS Page

Independent Auditor's Report 3

Disclosable Consolidated Statement of Financial Position 6

Disclosable Consolidated Statement of Income 7

Disclosable Consolidated Statement of Comprehensive Income 8

Disclosable Consolidated Statement of Cash Flows 9

Disclosable Consolidated Statement of Changes in Equity 10

Notes to the Disclosable Consolidated Financial Statements:

Note 1. Organization and principal activities 11

Note 2. Basis of preparation 11

Note 3. Cash and cash equivalents 12

Note 4. Taxes other than income tax 12

Note 5. Employee compensation 12

Note 6. Fair value measurement of financial instruments 12

Note 7. Material accounting policy information 12

Note 8. Critical accounting estimates and judgments 18

Note 9. New accounting pronouncements 20

Contact Information 21

Joint-Stock Company

"Technologies of Trust - Audit" ("Technologies of Trust - Audit" JSC)

https://www.tedo.ru

Ferro-Plaza Business Centre,

14/3 Krzhizhanovsky street, bldg. 5/1, Akademichesky municipal district, Moscow, Russian Federation, 117218

T: +7 495 967 60 00

Independent Auditor's Report

To the Shareholders and Board of Directors of Joint Stock Company "NOVATEK":

Opinion

In our opinion, the disclosable consolidated financial statements of Joint Stock Company "NOVATEK" and its subsidiaries (together - the "Group") for the year ended 31 December 2025, are prepared, in all material respects, in accordance with the basis of preparation described in Note 2 to the disclosable consolidated financial statements.

What we have audited

The Group's disclosable consolidated financial statements comprise:

• the disclosable consolidated statement of financial position at 31 December 2025;

• the disclosable consolidated statement of income for the year then ended;

• the disclosable consolidated statement of comprehensive income for the year then ended;

• the disclosable consolidated statement of cash flows for the year then ended;

• the disclosable consolidated statement of changes in equity for the year then ended; and

• the notes to the disclosable consolidated financial statements, which include material accounting policy information and other disclosable explanatory information.

  Basis for opinion

  We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the disclosable consolidated financial statements section of our report.

  We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence

  We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), as applicable to audits of financial statements of public interest entities, and the ethical requirements of Federal Law of 30 December 2008 No. 307-FZ "On Auditing Activity", the Auditor's Professional Ethics Code and Auditor's Independence Rules that are relevant to audits of financial statements of public interest entities in the Russian Federation. We have also fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.

  Emphasis of matter - Basis of preparation

  We draw attention to Note 2 to the disclosable consolidated financial statements, which describes the basis of preparation. The disclosable consolidated financial statements are prepared to present the consolidated financial position and consolidated financial results of the Group, disclosure of which does not cause damage to the Group and (or) its counterparties. As a result, the disclosable consolidated financial statements may not be suitable for another purpose.

  Disclosable consolidated financial statements do not comprise financial statements prepared in accordance with IFRS Accounting Standards since the disclosable consolidated financial statements, prepared with exclusion of certain information, do not contain all information which is required to be disclosed in accordance with IFRS Accounting Standards.

  Our opinion is not modified in respect of this matter.

  Other matter

  The Group has prepared a separate set of consolidated financial statements for the year ended 31 December 2025 in accordance with IFRS Accounting Standards, on which we issued a separate auditor's report, in which we expressed unmodified opinion on those consolidated financial statements, to the Shareholders and Board of Directors of Joint Stock Company "NOVATEK" dated 10 February 2026.

  Other information

  Management is responsible for the other information. The other information comprises Securities Issuer's Report for the 12 months of 2025 (but does not include the disclosable consolidated financial statements and our auditor's report thereon), which is expected to be made available to us after the date of this auditor's report.

  Our opinion on the disclosable consolidated financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

  In connection with our audit of the disclosable consolidated financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the disclosable consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

  When we read Securities Issuer's Report for the 12 months of 2025, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

  Responsibilities of management and those charged with governance for the disclosable consolidated financial statements

  Management is responsible for the preparation of the disclosable consolidated financial statements in accordance with the basis of preparation described in Note 2 to the disclosable consolidated financial statements, for determining that the basis of preparation is acceptable in the circumstances, and for such internal control as management determines is necessary to enable the preparation of disclosable consolidated financial statements that are free from material misstatement, whether due to fraud or error.

  In preparing the disclosable consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

  Those charged with governance are responsible for overseeing the Group's financial reporting process.

  Auditor's responsibilities for the audit of the disclosable consolidated financial statements

  Our objectives are to obtain reasonable assurance about whether the disclosable consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these disclosable consolidated financial statements.

  As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the disclosable consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the disclosable consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the group disclosable financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

The certified auditor responsible for the audit resulting in this independent auditor's report is Kriventsev Evgenii Nikolaevich.

10 February 2026

Moscow, Russian Federation

Kriventsev Evgenii Nikolaevich is authorised to sign on behalf of the General Director of Joint-Stock Company "Technologies of Trust - Audit" (Principal Registration Number of the Record in the Register of Auditors and Audit Organizations (PRNR) - 12006020338), certified auditor (PRNR - 21906099944)

.V. Mikhelson

: Management Board

0 February 2026

V.N. Belyakov

Deputy Chairman of the Management Board for Economics and Finance

Revenues

Year ended 31 December:

Notes 2025 2024

The accompanying notes are an integral part of these disclosable consolidated financial statements.

Year ended 31 December:

2025 2024

The accompanying notes are an integral part of these disclosable consolidated financial statements.

Year ended 31 December:

Notes 2025 2024

The accompanying notes are an integral part of these disclosable consolidated financial statements.

The accompanying notes are an integral part of these disclosable consolidated financial statements.

1. ORGANIZATION AND PRINCIPAL ACTIVITIES

   PAO NOVATEK (hereinafter referred to as "NOVATEK" or the "Company") and its subsidiaries (hereinafter jointly referred to as the "Group") is an independent oil and gas company engaged in the acquisition, exploration, development, production, processing, and marketing of hydrocarbons with its oil and gas operations located mainly in the Yamal-Nenets Autonomous District (hereinafter referred to as "YNAO") of the Russian Federation. The Group delivers its natural gas and its liquid hydrocarbons on both the Russian domestic and international markets.

   The Group's activities are considered by the chief operating decision maker (hereinafter referred to as "CODM", represented by the Management Board of NOVATEK) to comprise one operating segment: "exploration, production and marketing".

   The Group's management reviews financial information on the results of operations of the reporting segment prepared based on IFRS® Accounting Standards. The CODM assesses reporting segment performance based on profit comprising among others revenues, depreciation, depletion and amortization, income tax expense and other items as presented in the Group's disclosable consolidated statement of income. The CODM also reviews capital expenditures of the reporting segment for the period defined as additions to property, plant and equipment.

2. BASIS OF PREPARATION

   These disclosable consolidated financial statements have been prepared by the Group's management based on the consolidated financial statements for the year ended 31 December 2025 prepared by the Group in accordance with IFRS Accounting Standards by excluding (inter alia, through the aggregation method) information that can cause damage to the Group and/or its counterparties (hereinafter referred to as "sensitive information"). Disclosable consolidated financial statements do not comprise financial statements prepared in accordance with IFRS Accounting Standards since the disclosable consolidated financial statements prepared with exclusion of certain information do not contain all information which is required to be disclosed in accordance with IFRS Accounting Standards.

   The decisions on the disclosable financial statements preparation and sensitive information scope were made by the Group's management based on part 8 article 7 of Federal Law dated 27 July 2010 № 208-FZ "On consolidated financial statements", Resolutions of the Russian Federation Government dated 13 September 2023 № 1490 "On specific aspects of consolidated financial statements disclosure" (hereinafter referred to as "Government Resolution № 1490") and dated 4 July 2023 № 1102 "On specific aspects of disclosure and (or) provision of information, subject to disclosure and (or) provision in accordance with the requirements of the Federal Law "On Joint Stock Companies" and the Federal Law "On the Securities Market" (hereinafter referred to as "Government Resolution № 1102") and Presidential Decrees dated 27 November 2023 № 903 "On the temporary procedure for disclosing and providing information by some Russian business entities" (hereinafter referred to as "Presidential Decree № 903") and dated 11 November 2024 № 965 "On amendments to the list of the Russian business entities that have the right to independently determine the composition and (or) amount of information to be disclosed and (or) provided, approved by the Presidential Decree dated 27 November 2023 № 903". The sensitive information content not subject to disclosure was determined by the Group's management based on the Government Resolutions № 1490 and № 1102 and the Presidential Decree № 903.

   These disclosable consolidated financial statements have been prepared to present consolidated financial position and consolidated financial results of the Group, the disclosure of which does not cause damage to the Group and (or) its counterparties. Therefore, these disclosable consolidated financial statements may not be suitable for another purpose.

   Accounting policies.These disclosable consolidated financial statements are prepared based on the basis described above and accounting policies which are based on the provisions and principles of IFRS Accounting Standards, which were effective at 1 January 2025, and under the historical cost convention, as modified by the initial recognition of financial instruments based on fair value, and by the revaluation of financial instruments categorised at fair value through profit or loss or other comprehensive income. In the absence of specific IFRS Accounting Standards guidance for oil and gas producing companies, the Group has developed accounting policies in accordance with other generally accepted accounting principles for oil and gas producing companies, mainly US GAAP, insofar as they do not conflict with IFRS Accounting Standards principles. The Group disclosed material accounting policy information in Note 7.

   The disclosable consolidated financial statements are presented in Russian roubles, the Group's presentation currency and the functional currency for the Company and the majority of its subsidiaries.

3. CASH AND CASH EQUIVALENTS

   	At 31 December 2025	At 31 December 2024
   Cash at current bank accounts	85,203	82,500
   Bank deposits with original maturity of three months or less	252,722	95,936
   Total cash and cash equivalents	337,925	178,436

4. TAXES OTHER THAN INCOME TAX

   The Group is subject to a number of taxes other than income tax, which are detailed as follows:

   Year ended 31 December:

   2025 2024

   Unified natural resources production tax	185,529	214,745
   Property tax	8,283	7,165
   Other taxes	666	561
   Total taxes other than income tax	194,478	222,471

5. EMPLOYEE COMPENSATION

   The Group recorded expenses related to employee benefits for the years ended 31 December 2025 and 2024 in the amount of RR 82,307 million and RR 67,334 million, respectively, within the "Materials, services and other expenses" and "Other operating income (expense), net" line items of the disclosable consolidated statement of income.

6. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS

   The Group evaluates the quality and reliability of the assumptions and data used to measure fair value in accordance with IFRS 13, Fair Value Measurement, in the three hierarchy levels as follows:

   1. quoted prices in active markets (Level 1);

   2. inputs other than quoted prices included in Level 1 that are directly or indirectly observable in the market (externally verifiable inputs) (Level 2); or

   3. inputs that are not based on observable market data (unobservable inputs) and require applying judgment by the Group (Level 3).

      The fair value of long-term debt including its current portion was RR 305,080 million and RR 303,332 million at 31 December 2025 and 2024, respectively. The fair value of bonds was determined based on market quote prices (Level 1 in the fair value measurement hierarchy). The fair value of other long-term debts was determined based on future cash flows discounted at the estimated risk-adjusted discount rate (Level 3 in the fair value measurement hierarchy).

7. MATERIAL ACCOUNTING POLICY INFORMATION

Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated. Accounting policies of the Group's subsidiaries have been changed where necessary to ensure consistency with the Group's policies.

7 MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED)

Investments in joint ventures are accounted for using the equity method. With regard to joint operations, the Group records its share of assets, liabilities, revenues and expenses of its joint operations in the disclosable consolidated financial statements on a line-by-line basis.

Under the equity method, an investment in a joint venture is initially recognized at cost.

Post-acquisition changes in the Group's share of net assets of a joint venture are recognized as follows: (a) the Group's share of profits or losses is recorded in the consolidated profit or loss for the year as share of financial result of joint ventures; (b) the Group's share of other comprehensive income or loss is recognized in other comprehensive income or loss and presented separately; (c) dividends received or receivable from a joint venture are recognized as a reduction in the carrying amount of the investment; (d) all other changes in the Group's share of the carrying value of net assets of a joint venture are recognized within retained earnings in the disclosable consolidated statement of changes in equity.

After application of the equity method, including recognizing the joint venture's losses, the entire carrying amount of the investment is tested for impairment as a single asset whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

When the Group's share of losses in a joint venture equals or exceeds its interest in the joint venture, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the joint ventures. The interest in a joint venture is the carrying amount of the investment in the joint venture together with any long-term interests that, in substance, form part of the Group's net investment in the joint venture, including receivables and loans for which settlement is neither planned nor likely to occur in the foreseeable future.

Unrealized gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group's interest in joint ventures; unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Accounting policies of joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group.

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 fair value of an interest in the acquiree held immediately before the acquisition date. Any negative amount ("negative goodwill") is recognized in profit or loss, after management reassesses whether it identified all the assets acquired and all liabilities and contingent liabilities assumed and reviews appropriateness of their measurement.

The consideration transferred for the acquiree is measured at the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed, including fair value of assets or liabilities from contingent consideration arrangements but excludes acquisition related costs such as advisory, legal, valuation and similar professional services.

If the ownership interest in a joint venture is reduced but joint control is retained or replaced with significant influence, the Group continues to apply the equity method and does not remeasure the retained interest.

7 MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED)

On consolidation the assets and liabilities (both monetary and non-monetary) of the Group's subsidiaries whose functional currency is not the Russian rouble are translated into Russian roubles at the closing exchange rate at each balance sheet date. All items included in the shareholders' equity, other than profit or loss, are translated at historical exchange rates. The financial results of these entities are translated into Russian roubles using exchange rates at the dates of the transactions or the average exchange rate for the period when this is a reasonable approximation. Exchange adjustments arising on the opening net assets and the profits for the reporting period are taken to other comprehensive income and reported in the disclosable consolidated statement of comprehensive income.

Exploration license acquisition costs and exploratory drilling costs are recognized as exploration assets within property, plant and equipment until it is determined whether proved reserves justifying their commercial development have been found. If no proved reserves are found, the relevant costs are charged to profit (loss). When proved reserves are determined, exploration license acquisition costs are reclassified to proved properties acquisition costs and exploratory drilling costs are reclassified to development expenditure categories within property, plant and equipment. Exploration license acquisition costs and exploratory drilling costs recognized as exploration assets are reviewed for impairment on an annual basis.

The costs of 3-D seismic surveys used to assist production, increase total recoverability and determine the desirability of drilling additional development wells within proved reservoirs are capitalized as development costs. All other seismic costs are expensed as incurred.

Production costs and overheads are charged to expense as incurred.

The cost of self-constructed assets includes the cost of direct materials, direct employee related costs, a pro-rata portion of depreciation of assets used for construction and an allocation of the Group's overhead costs.

Depreciation, depletion and amortization of oil and gas properties and equipment is calculated using the unit-of-production method for each field based upon total proved reserves for costs associated with acquisitions of proved properties and common infrastructure facilities, and proved developed reserves for other development costs, including wells.

Where unit-of-production method does not reflect useful life and pattern of consumption of particular oil and gas assets, such as processing facilities serving several properties, those assets are depreciated on a straight-line basis.

Property, plant and equipment, other than oil and gas properties and equipment, are depreciated on a straight-line basis over their estimated useful lives. Land and assets under construction are not depreciated.

7 MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED)

The estimated useful lives of the Group's property, plant and equipment depreciated on a straight-line basis are as follows:

Years

At each reporting date management assesses whether there is any indication of impairment in respect of property, plant and equipment. If any such indication exists, management estimates the recoverable amount, which is determined as the higher of an asset's fair value less selling costs and its value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units). The carrying amount is reduced to the recoverable amount and the impairment loss is recognized in profit or loss for the reporting period. An impairment loss recognized for an asset in prior years is reversed if there has been a change in the estimates used to determine the asset's recoverable amount.

Changes in the asset retirement obligation relating to a change in the expected pattern of settlement of the obligation, or in the estimated amount of the obligation or in the discount rates, are treated as a change in an accounting estimate in the current period. Such changes are reflected as adjustments to the carrying value of property, plant and equipment and the corresponding liability. Changes in the obligation resulting from the passage of time are recognized in the disclosable consolidated statement of income within the line item "Other income (expense), net".

Right-of-use assets are initially measured at cost and depreciated by the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The cost of right-of-use assets comprises initial measurement of the lease liability, any lease payments made before or at the commencement date and initial direct costs. After the commencement date, the right-of-use assets are carried at cost less accumulated depreciation and impairment losses in accordance with IAS 16, Property, Plant and Equipment.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date and subsequently measured at amortised cost with the interest expense recognized within the line item "Other income (expense), net" in the disclosable consolidated statement of income.

In accordance with IFRS 16, Leases, the Group elected not to apply accounting requirements under this standard to short-term leases.

Lease contracts where the Group acts as the lessor are classified as operating leases when substantially all the risks and rewards incidental to ownership do not transfer to the lessee. Lease payments under such contracts are recognized on a straight-line basis within other revenue in the disclosable consolidated statement of income.

7 MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED)

Under the lease contracts where the Group acts as the lessor and substantially all the risks and rewards incidental to ownership of an underlying asset are transferred to the lessee, the underlying assets are presented in the disclosable consolidated statement of financial position in the amount equal to the net investment in the lease. Income arising from the lease is recognized over the lease term, using the net investment method, based on a pattern reflecting a constant periodic rate.

Materials and supplies are carried at amounts which do not exceed their respective recoverable amounts in the normal course of business.

Financial assets are classified as at amortised cost only if both of the following criteria are met: the asset is held within a business model with the objective of collecting the contractual cash flows, and the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding.

Certain loans provided by the Group include embedded derivatives that modify cash flows of the loans based on financial (market interest rates) and non-financial (interest rate on borrowings of the lender and free cash flows of the borrower) variables. The risks relating to these variables are interrelated; therefore, terms and conditions of each of these loans related to those variables were defined as a single compound embedded derivative. The Group classified these loans as financial assets at fair value through profit or loss.

Other loans provided by the Group, trade and other financial receivables, and cash and cash equivalents, are classified as at amortised cost. The Group does not have financial assets classified as at fair value through other comprehensive income.

The difference between the loans provided to joint ventures and the fair value at initial recognition is recorded as the Group's investment in the joint ventures.

The Group's non-derivative financial liabilities are measured at amortised cost. Derivatives are classified as at fair value through profit or loss. The Group does not apply hedge accounting.

Where there is an active market for a commodity, commodity contracts are accounted for as derivatives except for contracts that were entered into for the purpose of the receipt or delivery of a commodity in accordance with the Group's expected purchase, sale or usage requirements. Gains or losses arising from changes in the fair value of commodity derivatives are recognized within the line item "Other operating income (expense), net" in the disclosable consolidated statement of income.

An allowance for expected credit losses ("ECL") shall be recorded for financial assets classified as at amortised cost. Loss allowances are measured on either of the following bases: 12-month ECLs that result from possible default events within the 12 months after the reporting date; and lifetime ECLs that result from all possible default events over the expected life of a financial instrument.

Non-financial guarantees contracts issued by the Group meet the definition of insurance contracts and are accounted in accordance with IFRS 17, Insurance Contracts. Recognition and measurement of groups of insurance contracts is performed at a risk-adjusted present value of the future cash flows to fulfill these contracts that is consistent with observable market information, plus an amount representing an unearned profit under these contracts (the contractual service margin).

7 MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED)

Financial guarantees contracts issued are initially recognized as a liability at fair value. They are subsequently measured at the higher of two amounts: the amount of the loss allowance determined in accordance with IFRS 9, Financial Instruments, and the amount initially recognized less, where applicable, the accumulated income recognized in accordance with IFRS 15, Revenue from Contracts with Customers.

Current tax is the amount expected to be paid to or recovered from the tax authorities in respect of taxable profits or losses for the current and prior periods.

Deferred income tax assets and liabilities are recognized for temporary differences between the carrying amounts of assets and liabilities and their respective tax bases. Deferred tax balances are measured at tax rates enacted or substantively enacted at the balance sheet date which are expected to apply to the period when the temporary differences will reverse or when the tax loss carry forwards will be utilized. In measuring temporary differences relating to right-of-use assets and long-term lease liabilities, the Group determines whether tax deductions are attributable to lease assets or to lease liabilities, having considered the applicable tax law. When tax deductions are attributable to lease assets, no temporary differences arise at the lease initial recognition. Deferred tax assets for deductible temporary differences and tax loss carry forwards are recorded only to the extent that it is probable that future taxable profit will be available against which the deductions can be utilized.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes balances relate to the same taxation authority and the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. Deferred tax assets and liabilities are netted with respect to individual companies of the Group.

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 recognize deferred tax liabilities on such temporary differences except to the extent that management expects the temporary differences to reverse in the foreseeable future.

Revenues from sales of hydrocarbons are recognized when control over such products has transferred to a customer, which refers to ability to direct the use of, and obtain substantially all of the remaining benefits from the products. The Group considers indicators of the transfer of control, which include, but are not limited to the following: the Group has a present right to payment for the products; the Group has transferred physical possession of the products; the customer has legal title to the products; the customer has the significant risks and rewards of ownership of the products; the customer has accepted the products. Not all of the indicators have to be met for management to conclude that control has transferred and revenue could be recognized. Management uses judgment to determine whether factors collectively indicate that the customer has obtained control over the products. Revenues from services are recognized in the period in which the services are rendered.

When the consideration includes a variable amount, minimum amounts must be recognized that are not at significant risk of reversal. If sales contract includes the variability associated with market price it represents a separated embedded derivative that is treated as part of revenue. Accordingly, at the date of sale the sales price is determined on a provisional basis, and the fair value of the final sales price adjustment is re-estimated continuously with changes in fair value recognized as an adjustment to revenue.

7 MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED)

Trade receivables are recognized when the goods are transferred as this is the point in time that the consideration is unconditional and only the passage of time is required before the payment is due. No significant element of financing is deemed present as the sales are made with short-term credit terms consistent with market practice.

The Group assessed the requirements of IAS 20 and applied judgement in decision to account for the reverse excise on raw oil on an accruals basis within the line item "Other operating income (expense), net" in the disclosable consolidated statement of income, in which most of the Group's raw oil costs are recorded.

8 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Preparation of the disclosable consolidated financial statements requires management to make estimates which the Group's management reviews on a continuous basis, by reference to past experience and other factors considered as reasonable. Adjustments to accounting estimates and assumptions are recognized in the period in which the estimate is revised if the change affects only that period or in the period of the revision and subsequent periods, if both are affected. The Group's management also makes certain judgments, apart from those involving estimations, in the process of applying the Group's accounting policies.

Judgments and estimates that have the most significant effect on the amounts reported in the disclosable consolidated financial statements are described below.

For commodity derivative contracts where observable information is not available, fair value estimations are determined using mark-to-market analysis and other acceptable valuation methods, for which the key inputs include future prices, volatility, price correlation, counterparty credit risk and market liquidity.

In some cases, judgment is required to determine whether contracts to buy or sell commodities meet the definition of a derivative. Contracts to buy or sell LNG are not considered to meet the definition of a derivative, as they are not considered capable of being net settled. Therefore, such contracts are not within the scope of IFRS 9, Financial Instruments, and are accounted for on an accruals basis.

Fair value estimation of loans provided is determined using benchmark interest rates adjusted for the borrower credit risk and free cash flows from the borrower's strategic plans.

8 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONTINUED)

Fair value estimation of debt instruments that are not traded in active markets is determined by reference to the interest rates of financial instruments available to the Group in active markets. In the absence of such instruments, the effective interest rate is determined by reference to the interest rates of active market financial instruments available adjusted for the Group's specific risk premium estimated by management.

Depreciation rates on oil and gas assets using the unit-of-production method are based on proved developed reserves and total proved reserves estimated by the Group in accordance with rules promulgated by the Securities and Exchange Commission (SEC) for proved reserves. The Group also uses estimated probable and possible reserves to calculate future cash flows from oil and gas properties, which serve as an indicator in determining their economic lives and whether or not property impairment is present.

A portion of the reserves estimated by the Group includes reserves expected to be produced beyond license expiry dates. The Group's management believes that there is requisite legislation and past experience to extend mineral licenses at the initiative of the Group and, as such, intends to extend its licenses for properties expected to produce beyond the current license expiry dates.

Due to the inherent uncertainties and the limited nature of reservoir data, estimates of underground reserves are subject to change over time as additional information becomes available, such as from development drilling and production activities or from changes in economic factors, including product prices, contract terms or development plans. In general, estimates of reserves for undeveloped or partially developed fields are subject to greater uncertainty than estimates of reserves for fields that are substantially developed and depleted.

When value in use calculations are undertaken, management estimates the expected future cash flows from the asset or cash generating unit and chooses a suitable discount rate in order to calculate the present value of those cash flows.

The Group's management believes that due to the absence or the limited history of gas and gas condensate processing plants activities, the useful lives of these assets are indeterminable (while certain of the operating components and equipment have definite useful lives). Because of these reasons, and the lack of clear legal requirements as to the recognition of obligations, the present value of an asset retirement obligation for such processing facilities cannot be reasonably estimated and, therefore, legal or contractual asset retirement obligations related to these assets are not recognized.

1. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONTINUED)

   In accordance with the guidelines of IFRIC 1, Changes in Existing Decommissioning, Restoration and Similar Liabilities, the amount recognized as a provision is the best estimate of the expenditures required to settle the present obligation at the reporting date based on current legislation where the Group's respective operating assets are located, and is subject to change because of revisions and changes in laws and regulations and their interpretation thereof. Estimating asset retirement obligations is complex and requires management to make estimates and judgments with respect to removal obligations that will occur many years in the future.

2. NEW ACCOUNTING PRONOUNCEMENTS

The following new standards and amendments to standards that may be relevant to the Group's operations have been issued, which the Group has not early adopted:

IFRS 18, Presentation and Disclosure in Financial Statements (issued in April 2024 and effective for annual periods beginning on or after 1 January 2027, early adoption is permitted). IFRS 18 will replace IAS 1, Presentation of Financial Statements, leaving many requirements unchanged. The new standard introduces three categories for income and expenses in the statement of profit or loss (operating, investing and financing), requires to disclose reconciliations of alternative performance measures defined by management and non-GAAP measures to the subtotals required by IFRS Accounting Standards, and sets out principles for grouping and determining the level of detail needed for the information (aggregation and disaggregation).

Amendments to IFRS 10, Consolidated Financial Statements, and IAS 28, Investments in Associates and Joint Ventures (issued in September 2014, in November 2015 the effective date was postponed indefinitely). These amendments address an inconsistency between the requirements in IFRS 10 and those in IAS 28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The amendments stipulate that a full gain or loss is recognized when a transaction involves a business. A partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these assets are held by a subsidiary.

The Group is considering the implications of the new standards and the amendments to the existing standards for the Group's disclosable consolidated financial statements, and the timing of their adoption by the Group.

PAO NOVATEK (Joint Stock Company "NOVATEK") was incorporated as a joint stock company in accordance with the Russian law and is domiciled in the Russian Federation.

Registered office is:

Ulitsa Pobedy 22a 629850 Tarko-Sale

Yamal-Nenets Autonomous District Russian Federation

Office in Moscow is:

Leninskiy prospect 90/2 119313 Moscow Russian Federation

Telephone: 7 (495) 730-60-00

Fax: 7 (495) 721-22-53

https://www.novatek.ru