Annual financial statement
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TerraCom Limited Level 6, 307 Queen Street Contact: ABN 35 143 533 537 Brisbane QLD 4000 investors@terracom. au Australia terracom. au pg. 1 31 Aug 2026 ASX Announcement FY2026 Appendix 4E and Preliminary Financial Report TerraCom Limited (ASX: TER) ( TerraCom or Company ) is pleased to provide a copy of the Appendix 4E and Preliminary Financial Report in respect of the result for the twelve months ended 30 June 202 6. The results are in the process of being audited. The Group is also finalising its impairment assessment, which remains subject to completion of the audit process and Board approval. Any resulting adjustments will be reflected in the audited Financial Report. For the purposes of ASX Listing Rule 15.5, this announcement was authorised for lodgement by the Board. For further enquiries please contact: Richard Clarke Gareth Quinn Chief Financial Officer and Company Secretary Investor and Media Relations E: investors@terracom.au E: gareth@republicir.com.au P: +61 7 4983 2038 M: +61 417 711 108 About TerraCom Limited TerraCom Limited (ASX: TER) is an Australian based mining resources company with a global footprint, comprising a large portfolio of operating assets in Australia and South Africa within the coal sectors. We are a renowned low - cost producer focused on delivering exceptional outc omes from our high yielding diversified asset portfolio for its investors. To learn more about TerraCom visit terracom. au.
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TerraCom Limited Annual Report FY 2026 1 ASX: TER | terracom.au Financial Report Appendix 4E and Preliminary Financial Report For the year ended 30 June 2026 FY2026 Authorised for release by the Board of TerraCom Limited ABN 35 143 533 537 Level 6, 307 Queen Street Brisbane City Queensland, Australia 4000
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2 Contents Corporate Directory 02 Appendix 4E 3 Review of Operations 04 Preliminary Consolidated Financial Statements 12 Consolidated statement of profit or loss and other comprehensive income 14 Consolidated statement of financial position 15 Consolidated statement of changes in equity 17 Consolidated statement of cash flows 18 Notes to the financial statements 19 Corporate Directory Board of Directors Andrew Coles (Non-Executive Chairman) Glenn Splatt (Non-Executive Director) Stephen Barber (Non-Executive Director) Executive Management Chris Bourke (Interim Chief Executive Officer) Richard Clarke (Chief Financial Officer & Company Secretary) Registered Office and Principal Business Office Level 6, 307 Queen Street Brisbane City Queensland, Australia 4000 Postal Address PO Box 131 Clermont Queensland, Australia 4721 Telephone +61 7 4983 2038 Website terracom.au Email admin@terracom.au Share Registry MUFG Corporate Markets (AU) Limited Liberty Place, Level 41, 161 Castlereagh St, Sydney, NSW, Australia, 2000 Telephone: +61 1300 554 474 Email: support@cm.mpms.mufg.com Auditor BDO Audit Pty Limited Level 18, 360 Queen Street Brisbane, Queensland, 4000, Australia Securities Exchange Listing Australian Securities Exchange Ltd ASX Code: TER ABN 35 143 533 537
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3 Appendix 4E and Preliminary Annual Financial Report Name of Entity: TerraCom Limited ABN: 35 143 533 537 Reporting Period: For the year ended 30 June 2026 Previous Period: For the year ended 30 June 2025 Results for announcement to the market for the year ended 30 June 2026 Revenue from ordinary activities A$’000 FY2026 A$178,918 Down 21.1% FY2025 A$226,671 Loss from ordinary activities for the year after income tax A$’000 FY2026 (A$45,630) Down 5.1% FY2025 (A$43,418) Loss for the year after income tax attributable to the owners of TerraCom Limited A$’000 FY2026 (A$45,501) Down 6.5% FY2025 (A$42,724) Net tangible assets per ordinary security FY2026 7.35c Down 50.8% FY2025 14.94c Dividends No dividends were paid to shareholders during the year ended 30 June 2026 (2025: A$8.010 million) Declared after end of year: Nil Control gained or lost over entities There has been no change in control gained or lost over entities since the Previous Period. Audit qualification or review The Preliminary Financial Report is based on statutory financial statements that are in the process of being audited. Attachments and additional information Additional information can be obtained from the attached Preliminary Financial Report. 2026 Annual General Meeting The proposed date for the 2026 Annual General Meeting is 26 November 2026. Based on proposed timing, the closing date for Director Nominations is no later than 8 October 2026.
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4 Review of Operations
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5 Blair Athol Project Queensland, Australia Located in Clermont within the Bowen Basin, Queensland, TerraCom’s flagship Blair Athol Coal Mine is an open-pit operation producing high -quality, low-impurity thermal coal for export primarily to Japan and South Korea for their power generation markets and to India’s sponge iron market. At current production rates, the mine has an estimated life of six to seven years. The adjacent Moorlands development project remains at an early stage. If developed, Blair Athol is intended to serve as the processing and infrastructure hub for that production. Figure 1. Blair Athol Project is located in Queensland’s Bowen Basin and delivers coal to export markets via the Dalrymple Bay Coal Terminal near Mackay.
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6 Blair Athol Mine The Blair Athol Mine remained TerraCom’s principal operating asset during FY2026. The operating environment was challenging throughout the year, with lower international thermal coal prices, adverse weather in Central Queensland and intermittent supply chain disruptions. Production and sales both finished below the prior year, and sales finished below the guidance maintained during the year. Throughout the year, management remained focused on preserving margins through mine planning, cost control and operational efficiency . Blair Athol continued to supply high -quality thermal coal to long -standing customers across Asia. The financial year commenced in line with the mine plan, with continued work on product quality and coal recovery. During the September 2025 quarter the Company announced an updated JORC Resource and Reserve Statement, extending the mine life to 2033. During the December 2025 quarter, production moderated as mine sequencing progressed through planned lower -yield areas and seasonal weather affected mining and logistics. FY2026 sales guidance of approximately 1.6 million tonnes was maintained at that time on the expectation of a stronger second half. That guidance was not achieved. Conditions deteriorated further during the March 2026 quarter as significant rainfall across Central Queensland disrupted mining and rail logistics. Coal sales fell to 253,000 tonnes, the lowest quarter of the year. The Company completed an A$60 million entitlement offer during the year, which supported the balance sheet through the period of cyclical weakness in thermal coal markets. Sales volumes recovered in the June 2026 quarter to 390,000 tonnes, although the operation continued to be affected by equipment availability and workforce availability. Blair Athol finished FY2026 with coal sales of approximately 1.45 million tonnes, belo w the 1.6 million tonne guidance maintained during the year. The shortfall reflected the cumulative effect of weather, mine sequencing and equipment and workforce availability across the second half. Total ROM Coal Mined FY2026 1.94 Mt Total Coal Sales1 FY2026 1.45 Mt Coal Sales Outlook FY2027 2-2.2 Mt Blair Athol Mine Snapshot Life of Mine ~6-7 years
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7 Production snapshot Blair Athol (tonnes) Q1 Sept 25 Q2 Dec 25 Q3 Mar 26 Q4 Jun 26 FY2026 FY2025 Run of Mine coal mined 653 429 410 446 1,938 2,047 Saleable production 463 373 302 336 1,474 1,505 Coal sales 440 369 253 390 1,452 1,537 Inventory 95 63 134 69 69 46 Safety remained a core operational priority throughout the year, with continued work on safety systems, workforce engagement and operational discipline across the Blair Athol operation. The Company is planning for FY2027 coal sales in the range of 2.0 to 2.2 million tonnes. Equipment to support that volume is already in place: a third 350-tonne excavator is on site and operating in a dedicated pit, where it is completing the pre-strip needed to expose further coal. Moorlands Development Project The Moorlands Development Project continued to advance during FY2026 as TerraCom progressed key technical, commercial and regulatory workstreams in partnership with Wintime Energy Group Co. Ltd. The project is intended to use the established processing and infrastructure base at Blair Athol. Under the current development strategy, Blair Athol would become the central processing precinct for coal produced from Moorlands, reducing the capital required to develop the project. No development decision has been made. Throughout the financial year, the joint venture continued to progress environmental approvals, project planning and commercial negotiations necessary to support future development. Work remained focused on advancing the project through the approvals process and refining development plans. The Board regards Moorlands as a potential source of production beyond the current Blair Athol mine life. Progress remains dependent on regulatory approvals, market conditions and commercial agreement.
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8 South African Operations Mpumalanga, South Africa TerraCom, via its 100% ownership of Universal Coal Limited (Universal), holds an interest in a portfolio of producing, development and exploration assets located across South Africa’s major coalfields. These operations provide high-quality coal to South Africa’s government-owned power utility Eskom, as well as international customers via the Richards Bay Port. TerraCom’s South African portfolio comprises two operating coal mines , North Block Complex and New Clydesdale Colliery, the non-operating Ubuntu coal mine, and the Kangala/Eloff development project, which remains subject to finalisation of a commercially viable Coal Sales Agreement with Eskom. TerraCom’s South African operations produced 6.07 million tonnes of run -of-mine coal and sold 4.45 million tonnes during FY2026, in each case below the prior year. The operating environment was affected by softer international coal prices, domestic logistical constraints and ongoing cost inflation across the South African mining sector. The Company’s producing South African assets, the New Clydesdale Colliery and North Block Complex in Mpumalanga Province, operated throughout the financial year, with continued focus on mine planning, cost management, safety, plant reliability and coal quality. Figure 2. TerraCom holds an interest in a portfolio of producing, development and exploration assets located across South Africa’s major coalfields.
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9 During FY2026, mining activities focused on the extraction sequence and utilisation of mining equipment and processing infrastructure. Production was supported by the Company’s contract mining model and coal handling and preparation plant, which delivered saleable product meeting customer specifications for both domestic and export markets. Sales during the year reflected demand from domestic industrial customers together with export sales where market conditions supported realised pricing. International thermal coal prices moderated from the highs of previous years. The Company continued to balance domestic and export sales. Operational priorities throughout FY2026 centred on preserving operating margins through productivity improvements, management of mining costs and plant performance, against continuing industry -wide cost inflation affecting labour, fuel, explosives and consumables. Safety remained a core operational priority. Management continued to reinforce safety culture through workforce engagement, training and risk management programs, with emphasis on critical risk controls across mining, processing and mobile equipment operat ions. Rehabilitation activities progressed alongside mining operations in accordance with approved mine plans. Throughout the financial year, TerraCom continued to assess mining schedules, operating efficiencies and capital allocation across its South African asset base. The South African operations continue to provide geographic diversification to TerraCom’s production profile, complementing the Company’s Australian assets while providing exposure to both domestic South African energy demand and international export markets. For FY2027, management is focused on maintaining production, preserving margins through operational improvement and using established infrastructure. Global thermal coal markets remain volatile and realised pricing will continue to influence the contributi on of the South African business. Total ROM Coal Mined FY2026 6.07 Mt Total Coal Sales1 FY2026 4.45 Mt South Africa Operations Snapshot
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10 Production snapshot South Africa (tonnes) Q1 Sept 25 Q2 Dec 25 Q3 Mar 26 Q4 Jun 26 FY2026 FY2025 Run of Mine coal mined 1,582 1,507 1,355 1,622 6,066 7,689 Saleable production 1,347 1,005 863 1,203 4,418 4,836 Coal sales 1,385 996 985 1,085 4,451 5,065 Inventory 222 434 405 284 284 413 New Clydesdale Colliery | 49% Equity Interest The New Clydesdale Colliery (NCC), located in the Kriel district of Mpumalanga Province, approximately 149km from Johannesburg, comprises the Roodekop and Diepspruit West operations. NCC incorporates both open -cut and underground mining and produces a range of coal products for domestic consumption and export markets. The colliery is located near Eskom’s Kriel Power Station.
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11 Production During the financial year, NCC delivered 2. 42 million tonnes of run -of-mine (ROM) coal (FY202 5: 2.73 million tonnes), and achieved total coal sales of 1. 87 million tonnes (FY2025: 1.89 million tonnes). Logistics constraints continued to limit export volumes, which affected financial results for NCC. Domestic demand supported the balance of production. NCC (tonnes) Q1 Sept 25 Q2 Dec 25 Q3 Mar 26 Q4 Jun 26 FY2026 FY2025 Run of Mine coal mined 582 501 603 733 2,419 2,733 Saleable production 448 344 421 456 1,669 1,726 Coal sales 532 387 528 418 1,865 1,889 Inventory 126 218 65 118 118 202 North Block Complex | 49% Equity Interest The North Block Complex (NBC) is located in Belfast in the Mpumalanga Province, approximately 200km north -east of Johannesburg. Open-cut mining is currently undertaken in the Paardeplaats section, which was developed in FY2020. NBC is a multi-product open-cut operation and a long-standing supplier of coal to Eskom, the country’s primary power utility. It also supports the local economy through employment and procurement. During the financial year, NBC delivered 3.65 million tonnes of run -of-mine (ROM) coal (FY2025: 4.96 million tonnes), and achieved total coal sales of 2.58 million tonnes (FY2025: 3.18 million tonnes). The colliery met its offtake commitments to Eskom, with domestic coal sales of 2.34 million tonnes for the year. Export sales totalled 0.24 million tonnes, constrained by logistics. NBC (tonnes) Q1 Sept 25 Q2 Dec 25 Q3 Mar 26 Q4 Jun 26 FY2026 FY2025 Run of Mine coal mined 1,001 1,006 752 889 3,648 4,956 Saleable production 899 661 442 747 2,749 3,110 Coal sales 853 609 457 667 2,586 3,176 Inventory 96 216 340 166 166 211 Ubuntu Colliery | 48.9% Equity Interest Ubuntu has remained on care and maintenance since February 2023, following the conclusion of the Eskom Coal Supply Agreement in December 2022. Management continues to evaluate alternative domestic coal sales opportunities with the objective of returning the colliery to an operational state, while also pursuing potential divestment opportunities as part of the Group’s broader portfolio strategy.
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12 CONSOLIDATED FINANCIAL STATEMENTS COVER Preliminary Consolidated Financial Statements For the year ended 30 June 2026
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13 GENERAL INFORMATION The preliminary financial statements are presented in Australian dollars (AUD), which is the presentation currency of TerraCom Limited. The functional currency of TerraCom Limited, its Australian exploration subsidiaries and United Kingdom subsidiaries is Australian dollars (AUD), the South African subsidiaries and associates functional currency is South African Rand (ZAR). TerraCom Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is at Level 6, 307 Queen Street, Brisbane City, QLD 4000.
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TERRACOM LIMITED 14 30-Jun-26 30-Jun-25 Note $‘000 $‘000 Revenue 3 178,918 226,671 Cost of goods sold 4 (202,895) (222,290) Gross profit (23,977) 4,381 Other income 786 - Other operating and administration expenses 5 (19,303) (26,855) Share of profit of associates and joint ventures 39 141 (3,412) Foreign exchange gain / (loss) 1,212 (122) Finance income 3,280 3,215 Finance expenses 6 (8,680) (6,667) Depreciation and amortisation expense (573) (300) Impairment of assets 7 - (22,131) Profit / (loss) before taxation (47,114) (51,891) Income tax (expense) / benefit 28 1,484 8,473 Profit / (loss) after taxation (45,630) (43,418) Profit / (loss) attributable to: Owners of TerraCom Limited (45,501) (42,724) Non-controlling interest (129) (694) (45,630) (43,418) Other comprehensive income: Items that may be reclassified to profit or loss: Exchange differences on translating foreign operations 2,482 2,690 Total comprehensive income / (loss) (43,148) (40,728) Total comprehensive income / (loss) attributable to: Owners of TerraCom Limited (42,847) (40,065) Non-controlling interest (301) (663) Total comprehensive income / (loss) (43,148) (40,728) Earnings per share for profit/ (loss) attributable to the owners of TerraCom Limited Basic earnings per share (cents) 9 (3.69) (5.33) Diluted earnings per share (cents) 9 (3.69) (5.33) PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026 The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. Consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2026
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TERRACOM LIMITED 15 30-Jun-26 30-Jun-25 Note(s) $‘000 $‘000 ASSETS Current Assets Cash and cash equivalents 10 8,381 13,382 Trade and other receivables 11 16,467 24,025 Inventories 12 13,918 9,499 Current tax asset 577 2,549 39,343 49,455 Non-Current Assets Trade and other receivables 11 2,381 2,211 Restricted cash 13 54,441 58,221 Investments accounted for using the equity method 39 80,556 77,723 Other financial assets 14 3,537 3,019 Property, plant and equipment 15 63,469 82,049 Deferred tax asset 29 - 1,224 Other non-current assets 17 8,978 12,171 213,362 236,618 Total Assets 252,705 286,073 LIABILITIES Current Liabilities Trade and other payables 18 35,898 49,879 Provisions 22 6,017 6,544 Borrowings 19 - 747 Deferred revenue 20 16,378 19,499 Lease liabilities 21 2,329 1,933 60,622 78,602 Non-Current Liabilities Lease liabilities 21 7,608 8,316 Provisions 22 50,600 59,724 Deferred revenue 20 - 19,804 58,208 87,844 Total Liabilities 118,830 166,446 Net Assets 133,875 119,627 Consolidated statement of financial position as at 30 June 2026 PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026
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TERRACOM LIMITED 16 30-Jun-26 30-Jun-25 Note(s) $ ‘000 $ ‘000 EQUITY Issued capital 23 433,407 376,011 Reserves 25 27,246 24,592 Accumulated losses 26 (325,919) (280,418) Equity Attributable to equity holders of parent 134,734 120,185 Non-controlling interest 27 (859) (558) Total equity 133,875 119,627 PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026 Consolidated statement of financial position as at 30 June 2026 The above consolidated statement of financial position should be read in conjunction with the accompanying notes
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TERRACOM LIMITED 17 Consolidated statement of changes in equity for the year ended 30 June 2026 $ ‘000 $ ‘000 $ ‘000 $ ‘000 $ ‘000 $ ‘000 Balance at 1 July 2024 376,011 21,933 (229,684) 168,260 (412) 167,848 Profit for the year after income tax - - (42,724) (42,724) (694) (43,418) Other comprehensive income - 2,659 - 2,659 31 2,690 Total comprehensive income for the year - 2,659 (42,724) (40,065) (663) (40,728) Dividends paid to shareholders of TerraCom Limited - - (8,010) (8,010) - (8,010) Deconsolidation of deregistered entities - - - - 517 517 Balance at 30 June 2025 376,011 24,592 (280,418) 120,185 (558) 119,627 Balance at 1 July 2025 376,011 24,592 (280,418) 120,185 (558) 119,627 Profit for the year after income tax - - (45,501) (45,501) (129) (45,630) Other comprehensive income - 2,654 - 2,654 (172) 2,482 Total comprehensive income for the year - 2,654 (45,501) (42,847) (301) (43,148) - - - - - - Shares issued – capital raising (net of transaction costs)57,396 - - 57,396 - 57,396 Balance at 30 June 2026 433,407 27,246 (325,919) 134,734 (859) 133,875 The above consolidated statement of changes in equity should be read in conjunction with the notes to the consolidated financial statements. PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026 Dividends paid to shareholders of TerraCom Limited Non- controlling interest Total equityIssued capital Foreign currency translation reserve Accumulated losses Total Equity Attributable to the owners of TerraCom Limited
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TERRACOM LIMITED 18 30-Jun-26 30-Jun-25 Notes $ ‘000 $ ‘000 Cash receipts from customers (including GST/VAT) 160,068 266,035 Cash paid to suppliers and employees (including GST/VAT) (223,946) (207,060) (63,878) 58,975 Interest received 2,812 4,168 Interest paid (4,902) (4,153) Tax refunds/(payments) 5,102 (40,806) Net cash (used in) / from operating activities 31 (60,866) 18,184 Investing Payments for property, plant and equipment (5,173) (4,730) Proceeds from sale of property, plant and equipment - 193 Other asset investments - (255) Proceeds from secured deposits 3,193 954 Loan to associates and joint ventures - (51) Repayment of loans by associates 760 2,973 Release of restricted cash 3,749 - Net cash from / (used in) investing activities 2,529 (916) Financing Repayment of borrowings (760) (3,274) Repayment of principal component of lease liabilities 21 (3,154) (1,355) Dividends paid to shareholders of TerraCom Limited 32 - (8,010) Proceeds from issue of shares 57,396 - 53,482 (12,639) Movement in cash (4,855) 4,629 Opening cash at bank 13,382 8,351 Effects of foreign exchange impacting cash (146) 402 Total cash and cash equivalents at end of the year 8,381 13,382 Net cash from / (used in) financing activities FOR THE YEAR ENDED 30 JUNE 2026 Consolidated statement of cashflows for the year ended 30 June 2026 PRELIMINARY FINANCIAL REPORT Operating The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated financial statements.
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TERRACOM LIMITED 19 Notes to the Consolidated Financial Statements PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026 1.3 Investments and other financial assets Investments and other financial assets are initially measured at fair value. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless an accounting mismatch is being avoided. Impairment of financial assets The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the consolidated entity's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. 1. Material accounting policies The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those applied in the previous year, unless otherwise stated. The financial statements cover TerraCom Limited as a consolidated entity consisting of TerraCom Limited and the entities it controlled at the end of, or during the year. TerraCom Limited, the Company or the Parent entity, and its subsidiaries together are referred to in these financial statements as the 'Group'. 1.1 New or amended Accounting Standards and Interpretations adopted The Group has adopted all the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are mandatory for the current reporting period. The adoption of these new or amended Accounting Standards and Interpretations did not have a material impact on the consolidated financial statements. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. In June 2024, the AASB issued AASB 18 Presentation and Disclosure in Financial Statements to improve how entities communicate in their financial statements, specifically introducing new categories and subtotals in the statement of comprehensive income, disclosure of management-defined performance measures and new requirements for the location, aggregation and disaggregation of financial information. The standard replaces AASB 101 Presentation of Financial Statements and is effective from annual reporting periods beginning on or after 1 January 2027. The Group is currently in the process of assessing the impact of the new standard 1.2 Basis of preparation These general purpose consolidated financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the AASB and the Corporations Act 2001 (Cth), as appropriate for for-profit oriented entities. These consolidated financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. The consolidated financial statements have been prepared on an accrual basis and are based on historical costs. Going Concern The consolidated financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business. As at 30 June 2026 the Group had a net current asset deficiency of $21.279 million (30 June 2025: $29.147 million). During the period the Group generated a loss after tax of $45.630 million and cash outflows from operating activities of $60.866 million. The coal prepayment arrangement entered into in April 2025 has since been fully repaid and the Group is currently debt free. The Group has prepared a cash flow forecast, based on a cost base aligned to FY2027 forecast coal sales of 2.0-2.2MtMt, which indicates it will be able to meet its liabilities as and when they fall due, subject to the assumptions below. Production at Blair Athol has been below plan during the early part of FY2027, deferring some coal deliveries and reducing sales volumes in the period. The forecast assumes production returns to planned rates and that the Group secures additional working capital funding to bridge the timing impact of those lower near-term volumes. The Company is progressing a number of initiatives to that end, including potential coal prepayment arrangements, further cost reductions and other capital management measures. No binding coal prepayment agreement had been entered into as at the date of this report, however active discussions continue to secure such an agreement with term sheets expected imminently. Based on those discussions, and noting that future outcomes cannot be assured, the directors presently expect that the Company will be able to secure a suitable arrangement on acceptable terms. The Group will need to explore additional funding solutions to supplement any prepayment arrangement that may be entered into in order to strengthen its balance sheet and reduce liquidity risks The directors have concluded that it remains appropriate to prepare the financial statements on the going concern basis, having regard to the initiatives described above and the Group's debt free position (excluding lease commitments). The financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts, or to the amounts or classification of liabilities, that might be necessary should the Group not continue as a going concern. The assessment remains subject to completion of the audit process and Board consideration. Any resulting changes will be reflected in the audited Financial Report.
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TERRACOM LIMITED 20 Notes to the Consolidated Financial Statements 1. Material accounting policies (Continued) 1.3 Investments and other financial assets (Continued) 2. Critical accounting judgements, estimates and assumptions The amount of the provision relating to rehabilitation of mine infrastructure and dismantling obligations is recognised at the commencement of the mining project and/or construction of the assets where a legal or constructive obligation exists at that time. The provision is recognised as a liability with a corresponding asset included in mine development assets. At each reporting date, the rehabilitation liability is re-measured in line with changes in discount rates, and timing or amount of the costs to be incurred. Changes in the liability relating to rehabilitation of mine infrastructure and dismantling obligations are added to or deducted from the related asset, other than the unwinding of the discount which is recognised as a finance expense in the consolidated statement of profit or loss as it occurs. For closed mines, changes to estimated costs are recognised immediately in the consolidated statement of profit or loss. The amount of the provision relating to rehabilitation of environmental disturbance caused by on-going production and extraction activities is recognised in the consolidated statement of profit or loss as incurred. 1.7 Rounding The Company is of a kind referred to in Corporations Instrument 2016/183, issued by the Australian Securities and Investments Commission, relating to 'rounding off'. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar. Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter. The Group's right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life. 1.5 Exploration and evaluation assets Exploration and evaluation expenditure in relation to separate areas of interest for which rights of tenure are current is carried forward as an asset in the consolidated statement of financial position where it is expected that the expenditure will be recovered through the successful development and exploitation of an area of interest, or by its sale; or exploration activities are continuing in an area and activities have not reached a stage which permits a reasonable estimate of the existence or otherwise of economically recoverable reserves. Where a project or an area of interest has been abandoned, the expenditure incurred thereon is written off in the year in which the decision is made. 1.6 Restoration and rehabilitation Provisions are made for the estimated cost of rehabilitation relating to areas disturbed during the mine’s operation up to the reporting date but not yet rehabilitated. Provision has been made in full for all disturbed areas at the reporting date based on current estimates of costs to rehabilitate such areas, discounted to their present value based on expected future cashflows. The estimated costs of rehabilitation include the current cost of re-contouring, topsoiling and revegetation based on legislative requirements. Changes in estimates are dealt with on a prospective basis as they arise. Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. For financial assets mandatorily measured at fair value through other comprehensive income, the loss allowance is recognised in other comprehensive income with a corresponding expense through profit or loss. In all other cases, the loss allowance reduces the asset's carrying value with a corresponding expense through profit or loss. Freehold land Not depreciated N/A Plant and machinery Straight line and units of 1-10 years PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026 Mine development Units of production Right of Use of assets Straight line Duration of lease 1.4 Property, plant and equipment Plant and equipment are stated at historical cost less accumulated depreciation and impairment. Depreciation is calculated on a straight-line basis with expected useful lives as follows: Item Depreciation method Average Useful Life The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the consolidated financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.
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TERRACOM LIMITED 21 Notes to the Consolidated Financial Statements 2. Critical accounting judgements, estimates and assumptions (Continued) Carrying value of mining assets The Group assesses at the end of each reporting period whether there is any indication that a mining asset may be impaired. If any such indication exists, the Group estimates the recoverable amount of the mining assets. The recoverable amount of an individual asset, or cash generating unit is determined based on the higher of fair value less cost of disposal (FVLCD) or value in use (VIU). These calculations require the use of estimations and assumptions. Refer to Note 15 for further information. Estimated future cash flows used to determine FVLCD are inherently uncertain and could materially change over time. They are significantly affected by several factors including reserves and production estimates, together with economic factors including future coal prices, discount rates, foreign exchange rates, future costs of production, stripping ratios, and future capital expenditure. These assumptions are likely to change over time, which may then impact the estimated life of mine, and the associated fair value less cost of disposal (FVLCD). Carrying value of investments accounted for using equity method The Group assesses at the end of each reporting period whether there is any indication that carrying amount of an investment might not be recoverable. If any such indication exists, the Group estimates the recoverable amount of the investment. The recoverable amount of investment is determined based on the higher of fair value, less cost of disposal (FVLCD) or value in use (VIU). These calculations require the use of estimations and assumptions. Refer to Note 39 for further information. Carrying value of exploration and evaluation assets Exploration and evaluation costs have been capitalised on the basis that the Group will commence commercial production in the future, from which time the costs will be amortised in proportion to the depletion of the mineral resources. Key judgements are applied in considering costs to be capitalised which includes determining expenditures directly related to these activities and allocating overheads between those that are expensed and capitalised. In addition, costs are only capitalised that are expected to be recovered either through successful development or sale of the relevant mining interest. Factors that could impact the future commercial production at the mine include the level of reserves and resources, future technological changes, which could impact on the cost of mining, future legal changes and changes in commodity prices. To the extent that capitalised costs are determined not to be recoverable in the future, they will be written off in the period in which this determination is made. Refer to Note 16 for further information. Mineral reserves and resources The estimated quantities of economically recoverable Reserves and Resources are based upon interpretations of geological and geophysical models and require assumptions to be made requiring factors such as estimates of future operating performance, future capital requirements, and coal prices. The Group is required to determine and report Reserves and Resources under the Australian Code for Reporting Mineral Resources and Ore Reserves December 2012 (JORC code). The JORC code requires the use of reasonable investment assumptions to calculate reserves and resources. Changes in reported reserves and resources can impact the life of mine, which impacts the carrying value of mine development asset, rehabilitation provisioning and amortisation and depreciation. Rehabilitation provision A provision has been made for the present value of anticipated costs for future rehabilitation of land explored or mined. The Group's mining and exploration activities are subject to various laws and regulations governing the protection of the environment. The Group recognises management's best estimate for assets retirement obligations and site rehabilitation in the period in which they are incurred. Actual costs incurred in the future periods could differ materially from the estimates. Additionally, future changes to environmental laws and regulations, life of mine estimates and discount rates could affect the carrying amount of this provision. Refer to Note 22 for further information. PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026 Estimated future cash flows used to determine FVLCD are inherently uncertain and could materially change over time. They are significantly affected by several factors including reserves and production estimates, together with economic factors including future coal prices, discount rates, foreign exchange rates, future costs of production, stripping ratios, and future capital expenditure. These assumptions are likely to change over time, which may then impact the estimated life of mine, and the associated fair value less cost of disposal (FVLCD). Income tax The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on the Group's current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made. To the extent assumptions regarding future profitability change, there can be an increase or decrease in the amounts recognised in respect of deferred tax assets as well as in the amounts recognised in income in the period in which the change occurs. The most significant assumptions as part of the future probability estimate include; future production profiles, future commodity prices, expected operating costs, future development costs necessary to produce the reserves and value attributable to additional resource. All available evidence is considered when determined by forecast assumptions, including approved budgets, forecasts and business plans, impact of climate change policy (enacted and future) and, in certain cases, analysis of historical operating results.
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TERRACOM LIMITED 22 Notes to the Consolidated Financial Statements 3 Identification of reportable operating segments Types of products and services Accounting policies adopted Operating segment information 2026 Australia South Africa Unallocated Total Consolidated - Year ended 30 June 2026 $ ‘000 $ ‘000 $ ‘000 $ ‘000 Revenue - sales to external customers 178,918 - - 178,918 Cost of goods sold (202,895) - - (202,895) Gross Profit / (loss) (23,977) - - (23,977) Other income - 786 - 786 Other operating and administration expenses (5,698) (1,810) (11,795) (19,303) Share of profit / (loss) of associate - 141 - 141 Foreign exchange gain / (loss) 1,316 - (104) 1,212 Net finance income / (expense) (5,154) (529) 283 (5,400) Depreciation and amortisation expense - (220) (353) (573) Profit / (loss) before taxation (33,513) (1,632) (11,969) (47,114) Profit / (loss) before taxation (47,114) Income tax benefit 1,484 Profit / (loss) after taxation (45,630) Consolidated - 30 June 2026 Assets Segment assets 158,792 85,403 8,510 252,705 Total assets 158,792 85,403 8,510 252,705 Total assets include additions and acquisitions of non-current assets Property, plant and equipment 62,039 402 1,028 63,469 62,039 402 1,028 63,469 Liabilities Segment liabilities 97,545 13,834 7,451 118,830 Total liabilities 97,545 13,834 7,451 118,830 FOR THE YEAR ENDED 30 JUNE 2026 The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (Chief Operating Decision Makers, or CODM) in assessing performance and determining the allocation of resources. Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic characteristics and are also similar with respect to the following: • the products sold and/or services provided by the segment; • the geographical location of the segment; and • any external regulatory requirements. The CODM reviews gross profit/loss (a measured of earnings before interest, tax, depreciation and amortization of non-operating assets, impairment of exploration assets, profit/loss and impairment of associates). The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the consolidated financial statements. The information reported to the CODM is on a monthly basis. Operating segments PRELIMINARY FINANCIAL REPORT The reporting segments are organised according to the nature of the activities undertaken and geographically local of the activities as outlined below: Australia - Coal exploration and extraction activities within Australia South Africa - Coal exploration and extraction activities in South Africa Unallocated - Various business development and corporate support activities that are not allocated to operating segments. All amounts reported to the Board of Directors, being the CODM with respect to operating segments, are determined in accordance with accounting policies that are consistent to those adopted in the annual consolidated financial statements of the Group. Several inter-segment transactions, receivables, payables, or loans occurred during the period, or existed at reporting date. In addition, corporate re charges were allocated to the reporting segments.
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TERRACOM LIMITED 23 Notes to the Consolidated Financial Statements 3 Operating segment information (continued) South Unallocated Total 2025 Australia Africa Consolidated - Year ended 30 June 2025 $ ‘000 $ ‘000 $ ‘000 $ ‘000 Revenue - sales to external customers 226,671 - - 226,671 Cost of goods sold (221,592) (1,304) - (222,896) Gross Profit / (loss) 5,079 (1,304) - 3,775 Other operating and administration expenses (6,713) (173) (19,260) (26,146) Share of profit / (loss) of associate - (3,412) - (3,412) Foreign exchange gain / (loss) 788 (522) (388) (122) Net finance income / (expense) (3,000) (452) - (3,452) Depreciation and amortisation expense (63) (17) (237) (317) Impairment of assets - (20,416) (1,800) (22,216) Profit / (loss) before taxation (3,909) (26,296) (21,685) (51,890) Profit before taxation (51,890) Income tax expense 8,473 Profit / (loss) after taxation (43,417) Consolidated - 30 June 2025 Assets Segment assets 204,592 81,481 - 286,073 Total assets 204,592 81,481 - 286,073 Total assets include additions and acquisitions of non-current assets Property, plant and equipment 15,491 - - 15,491 15,491 - - 15,491 Liabilities Segment liabilities 154,035 12,411 - 166,446 Total liabilities 154,035 12,411 - 166,446 Major customers $ ‘000 % $'000 % Major customers Customer A * 84,155 47% 28,730 13% Customer B * 55,923 31% 138,284 61% Customer C * 35,412 20% 59,067 26% Other customers 3,428 2% 590 0% 178,918 100% 226,671 100% * Customers have not been identified for commercial and contractual reasons. Geographic information Sales to external customers Non-current assets Sales to external customers Non-current assets Australia 178,918 129,269 226,671 155,627 South Africa - 84,093 - 80,991 178,918 213,362 226,671 236,618 30-Jun-25 $ ‘000 $ ‘000 Year ended PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026 30-Jun-26 Year ended 30-Jun-25 Operating segments (continued) 30-Jun-26
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TERRACOM LIMITED 24 Notes to the Consolidated Financial Statements 4 Cost of goods sold 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Mining and processing 116,793 121,972 Selling and marketing 68,344 75,421 Other operating expenses 4,226 5,659 Depreciation and amortization- PPE and mining assets 13,532 19,238 202,895 222,290 5 Other operating and administration expenses 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Other operating and administration expenses 9,096 5,783 Consultant and professional fees 5,993 5,845 ASIC settlement fee - 8,500 Employee benefits excluding superannuation expense 3,908 6,408 Superannuation expense 306 319 19,303 26,855 6 Finance expenses 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Interest expense on interest bearing loans 21 309 Other interest and finance expenses * 8,659 6,358 8,680 6,667 * The increase in other interest and finance expenses is primarily attributable to interest incurred on the coal prepayment facilities. 7 Impairment Note 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Exploration and evaluation impairment 16 - 13,524 Investment in associates and joint ventures impairment 39 - 8,607 - 22,131 Below is a breakdown of investment in associates and joint ventures impairment 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Australian Operation(1) - 1,800 South Africa Operation - 6,807 - 8,607 As at the date of this preliminary report, the impairment assessment has not been finalised and no final impairment adjustment has been recognised for the year ended 30 June 2026. Any resulting adjustment will be reflected in the audited Financial Report. (1) During the previous year there was a 100% impairment to investment previously held as fair value through profit & loss (FVTPL). PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026
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TERRACOM LIMITED 25 Notes to the Consolidated Financial Statements 8 Remuneration of auditors 30-Jun-26 30-Jun-25 Audit or review of the consolidated financial statements 869,124 848,735 Other services 17,279 33,150 886,403 881,885 Audit and other services BDO (Australia) 886,403 779,420 BDO (South Africa) - 102,465 886,403 881,885 9 Earnings per share Basic earnings / (loss) per share 30-Jun-26 30-Jun-25 Basic earnings / (loss) per share (cents per share) (3.69) (5.33) 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Reconciliation of profit / (loss) for the year to basic earnings Profit / (loss) for the year attributable to equity holders of the parent (45,501) (42,724) (45,501) (42,724) Diluted earnings / (loss) per share 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Diluted earnings / (loss) per share (cents per share) (3.69) (5.33) No dilutive instruments were present at the year end 2026 (2025: none). 10 Cash and cash equivalents Cash and cash equivalents consist of: 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Cash at bank 8,381 13,382 Diluted earnings / (loss) per share was based on loss of $45.501 million (2025: loss of $42.724 million) and a weighted average number of ordinary shares of 1,233,351,491 (2025: 800,966,235). The following fees were paid or payable for services provided by BDO Audit Pty Ltd (TerraCom Limited Auditor) and BDO South Africa Incorporated (UCEHSA Group auditor), the auditors of the Group: Fees for auditing the statutory financial report of the parent covering the group and auditing the statutory financial reports of any controlled entities FOR THE YEAR ENDED 30 JUNE 2026 Basic earnings per share were based on loss of $45.501 million (2025: loss of $42.724 million) and a weighted average number of ordinary shares of 1,233,351,491 (2025: 800,966,235). Fees for other assurance and agreed-upon-procedures services under other legislation or contractual arrangements where there is discretion as to whether the service is provided by the auditor or another firm Basic earnings per share are determined by dividing profit (loss) attributable to the ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. PRELIMINARY FINANCIAL REPORT
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TERRACOM LIMITED 26 Notes to the Consolidated Financial Statements 11 Trade and other receivables 30-Jun-26 30-Jun-25 Split between current and non-current portions: $ ‘000 $ ‘000 Current Trade receivables 12,448 16,500 Loan receivables – related parties - 747 Prepayment 2,690 5,927 Other receivables 1,329 851 Total trade and other receivables - current 16,467 24,025 Non-Current Long service leave and other receivables 2,381 2,211 Total trade and other receivables – non-current 2,381 2,211 Total trade and other receivables 18,848 26,236 12 Inventories 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Coal Stock 8,025 2,432 Consumables and stores 5,893 7,067 13,918 9,499 Basis of measurement Cost Composition and Costing Method Consumables and Stores 13 Restricted Cash 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Bank deposit - 30 Security deposit 54,441 58,191 54,441 58,221 The secured deposit relates to the cash pledged as security for the issuance of an insurance bond to satisfy the financial assurance requirements with the Queensland Government Department of Environment and Science for the Blair Athol Coal Mine Environmental Authority. The security deposit is held by Westpac, which at reporting date was bearing an interest rate of 4.92% per annum. A portion of the security deposit was refunded during the year following the Queensland Government’s revised ERC decision for Blair Athol. The updated assessment reduced the required financial assurance, which in turn lowered the surety obligation held with Westpac. The reduction in restricted cash reflects this adjustment to the underlying surety bond requirement. PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026 At 30 June 2026, the coal stockpile inventory was measured at net realisable value, as the cost per tonne exceeded net realisable value. This resulted in a write‑down of $0.706 million, which has been recognised in profit or loss for the period. Inventories are measured and stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. Coal Stock: Cost is determined using the weighted average cost method. Cost comprises direct materials, direct labor, extraction and processing costs, and an appropriate proportion of fixed and variable overhead expenses directly incurred in bringing the coal stock to its present location and condition. Measured at purchase cost. Cost comprises the invoice purchase price, freight, handling, and other direct costs incurred in bringing each item to its present location and condition, net of trade discounts and rebates. The trade receivables balance relates to an outstanding amount with a long-standing customer. Given the well-established history with the customer, there is no credit loss expected. The loan receivables - related parties balance related to funds drawn against the loan with The Standard Bank of South Africa. As disclosed in Note 19, UCEHSA was the main borrower, on behalf of the South African entities and this has been settled during the year. The other receivables balance includes refundable Goods and Services Tax (GST), Diesel Rebate and Value Added Tax (VAT) receivable (applicable to South African entities only). Due to the short-term nature of these receivables, their carrying value is assumed to be approximate to their fair value. The Group does not hold any financial assets with terms that have been renegotiated, but which would otherwise be past due or impaired.
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TERRACOM LIMITED 27 Notes to the Consolidated Financial Statements 14 Other financial assets 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Mining rehabilitation guarantees 3,537 3,019 3,537 3,019 15 Property, plant and equipment 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Property, plant and equipment 63,469 82,049 Consolidated Carrying value $ ‘000 Land and buildings 6,330 - 6,330 6,330 - 6,330 Plant and machinery 68,853 (46,435) 22,418 63,811 (37,938) 25,873 Mine development 156,373 (135,107) 21,266 167,832 (130,960) 36,872 16,885 (6,187) 10,698 15,062 (4,396) 10,666 Capital – work in progress 2,757 - 2,757 2,308 - 2,308 Total 251,198 (187,729) 63,469 255,343 (173,294) 82,049 Reconciliation of property, plant and equipment 30 June 2026 Opening balance $ ‘000 Additions $ ‘000 Disposals $ ‘000 Transfers $ ‘000 Derecognit- ion $ ‘000 Change in estimate $ ‘000 Exchange differences $ ‘000 Depreciation $ ‘000 Closing balance $ ‘000 Land and buildings 6,330 - - - - - - - 6,330 Plant and equipment 25,873 557 - 4,507 (29) - 7 (8,497) 22,418 Mine development 36,872 - - - - (11,459) - (4,147) 21,266 Right-of-use assets – plant & equipment 10,666 1,823 - - - - - (1,791) 10,698 Capital – work in progress 2,308 5,174 - (4,507) (218) - - - 2,757 82,049 7,554 - - (247) (11,459) 7 (14,435) 63,469 Reconciliation of property, plant and equipment 30 June 2025 Opening balance $ ‘000 Additions $ ‘000 Disposals $ ‘000 Transfers $ ‘000 Derecognit- ion $ ‘000 Change in estimate $ ‘000 Exchange differences $ ‘000 Depreciation $ ‘000 Closing balance $ ‘000 Land and buildings 6,330 - - - - - - - 6,330 Plant and equipment 28,142 - - 6,813 (55) - (5) (9,022) 25,873 Mine development 46,479 - - - - - (9,607) 36,872 Right-of-use assets – plant & equipment 535 11,041 - - - - (910) 10,666 Capital – work in progress 4,666 4,450 - (6,813) - - 5 - 2,308 86,152 15,491 - - (55) - - (19,539) 82,049 30-Jun-26 PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026 Cost $ ‘000 Cost $ ‘000 Accumulated depreciation $ ‘000 Right-of-use assets – plant and equipment Accumulated depreciation $ ‘000 Carrying Value $ ‘000 Right-of-use assets Right-of-use assets consist of mining plant and equipment and an office lease 30-Jun-25 Legislation stipulates that all mining operations within South Africa are required to make a provision for environmental rehabilitation during the life of mine and at closure. In line with this requirement, the Group has entered into policies with a reputable insurance broker to set aside funds for aforementioned purposes. On the back of these policies, the insurance broker provides the required mining rehabilitation guarantees which are accepted by the Department of Mineral Resources and Energy in South Africa. The Group makes annual premium payments towards structured products that will allow the matching of the environmental rehabilitation liability against the Group assets over a period of time. This financial asset comprises the premium paid to the insurer, plus interest, less charges and claims paid by the insurer to the Group and is measured at amortised cost, as the formula includes the effect of the time value of money.
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TERRACOM LIMITED 28 Notes to the Consolidated Financial Statements 15 Property, plant and equipment (Continued) Impairment 16 Exploration and evaluation assets Consolidated - - - 13,524 (13,524) - *Exploration and evaluation assets were fully written off in the prior year Exploration and evaluation As at the date of this preliminary report, the impairment assessment of property, plant and equipment has not been finalised and no final impairment adjustment has been recognised for the year ended 30 June 2026 (30 June 2025: NIL). Any resulting adjustment will be reflected in the audited Financial Report. 30-Jun-26 Cost $ ‘000 Impairment $ ‘000 Carrying value $ ‘000 The value‑in‑use calculation incorporated the following key assumptions: - Commodity prices: Based on forecast thermal coal price indices and contracted domestic and export sales volumes. - Production volumes: Based on Board‑approved mine plans and reserve estimates. - Operating costs: Based on current budgets and mine plans, reflecting expected cost profiles over the life‑of‑mine. - Discount rate: A post tax nominal discount rate derived using the Group’s weighted average cost of capital methodology, adjusted for risks not already reflected in the underlying cash flows. - Life‑of‑mine: Based on approved mine plans and estimated economically recoverable reserves. For the Australian CGU, management identified impairment indicators during the year ended 30 June 2026. These indicators included: - lower thermal coal prices compared to prior periods - supply chain disruptions affecting production and sales timing As a result, the Group performed an impairment assessment of the carrying amount of the CGU. The recoverable amount was determined using the value‑in‑use method, based on the present value of estimated future cash flows expected to be generated from the CGU over its remaining life‑of‑mine. FOR THE YEAR ENDED 30 JUNE 2026 PRELIMINARY FINANCIAL REPORT In the event that impairment testing is required for mining assets, the expected future cash flows are based on several factors, variables and assumptions. In most cases, the present value of future cash flows is most sensitive to estimates of future commodity prices, foreign exchange rates and discount rates. For the BA impairment assessment, the recoverable amount was determined using a value‑in‑use methodology, consistent with the requirements of AASB 136. The value‑in‑use calculation is based on estimates of economically recoverable coal reserves, forecast production profiles, commodity price assumptions, operating costs, future development capital required to access the reserves, and value attributable to additional resource and exploration opportunities based on the mine plan. Future commodity prices are based on the Group’s best estimate of future market prices with reference to external market analysts’ forecasts, current spot prices and forward curves. The Group’s coal price forecasts include the expected impact of climate change and potential policy responses as one of the many factors that can affect long term scenarios. The Group’s independent research into forecast coal consumption suggests that the global demand for the Group’s products will continue over the life of the respective assets. Future commodity prices are reviewed at least annually. Where volumes are contracted, future prices are based on the contracted price. 30-Jun-25 Cost $ ‘000 Carrying value $ ‘000 Impairment $ ‘000 The recoverability of the carrying amounts of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest. During the year ending 30 June 2025, it was determined to impair $13.524 million relating to an undeveloped project area at Universal Coal Development I Pty Ltd. This area was reported as an exploration and evaluation asset on acquisition of Universal Coal Plc back in FY2021 and after thorough assessment of current prospects, management has determined that the area is no longer economical to pursue. Exploration and evaluation
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TERRACOM LIMITED 29 Notes to the Consolidated Financial Statements 16 Exploration and evaluation assets (Continued) Location 2026 2025 EPC 1260 Northern Galilee (Clyde Park) Charters Towers, 64% 64% EPC 1300 Northern Galilee (Hughenden) Charters Towers, 100% 100% EPC 1394 Northern Galilee (Hughenden) Charters Towers, 100% 100% EPC 1477 Northern Galilee (Hughenden) Charters Towers, 100% 100% EPC 1478 Northern Galilee (Hughenden) Charters Towers, 100% 100% EPC 2049 Northern Galilee (Hughenden) Charters Towers, 100% 100% EPC 1890 Northern Galilee (Pentland) Rockhampton, Queensland, 100% 100% EPC 1892 Northern Galilee (Pentland) Rockhampton, Queensland, 100% 100% EPC 1893 Northern Galilee (Pentland) Rockhampton, Queensland, 100% 100% EPC 1964 Northern Galilee (Pentland) Rockhampton, Queensland, 100% 100% EPC 1674 Springsure (Springsure) 90% 90% MDL 3002 Springsure (Springsure) 90% 90% EPC 1103 Springsure (Fernlee) 100% 100% ML 1804 Blair Athol 100% 100% MP30/5/1/2/2/429M R Kangala Colliery 70.50% 70.50% LP30/5/1/2/3/2/1 (10131) MR Berenice Project (1) 50% 50% MP30/5/1/2/2/10027 MR Ubuntu Colliery (1) 49% 49% MP30/5/1/2/2/10169 MR Eloff Project (1) 49% 49% MP30/5/1/2/1/326M R 49% 49% MP30/5/1/2/2/10090 MR 49% 49% LP 30/5/1/2/2/10169MR Cygnus Project (1) 50% 50% (1) held through equity accounted investment 17 Other non-current assets 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Other deposits 8,978 12,171 18 Trade and other payables 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Trade creditors 19,672 20,944 ASIC settlement fee - 8,500 Final legal award relating to Kangala- South Africa - 1,133 Royalties 3,508 4,025 Accrued expenses 12,718 15,277 35,898 49,879 Fair value of trade and other payables Due to the short-term nature, the current trade and other payables have a carrying value which approximates their fair value. Emerald, Queensland, AustraliaEmerald, Queensland, Australia All Days (Waterpoort), Limpopo Province, South Africa Location 2026 Delmas, Mpumalanga Province, South Africa Waterpoort, Limpopo Province, South Africa Delmas, Mpumalanga Province, South Africa Delmas, Mpumalanga Province, South Africa 2025 Emerald, Queensland, AustraliaBlair Athol, Queensland, Australia Other deposits comprise mainly of refundable security deposits paid to Dalrymple Bay Coal Terminal and Aurizon Network for port and below rail contract security for the Blair Athol supply chain. The established history with these parties indicates an expected loss will be immaterial (less than 1%). PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026 Tenement No. Operation/Project Tenement No. Operation/Project North Block Complex (Glisa) (1) Belfast, Mpumalanga Province, South Africa Belfast, Mpumalanga Province, South Africa North Block Complex (Paardeplaats) (1)
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TERRACOM LIMITED 30 Notes to the Consolidated Financial Statements 19 Borrowings 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Current borrowings Standard Bank of South Africa facilities - 747 Standard Bank of South Africa facilities 20 Deferred Revenue 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Current deferred revenue 16,378 19,499 Non-current deferred revenue - 19,804 16,378 39,303 21 Lease liabilities 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 As at 1 July 10,249 563 Additions 1,943 10,761 Accretion of interest 898 280 Payments (3,153) (1,355) Closing as at 30 June 9,937 10,249 Current liabilities 2,329 1,933 Non-current liabilities 7,608 8,316 9,937 10,249 The following are the amounts recognised in profit or loss Depreciation expense 1,791 910 Interest expenses on lease liabilities 898 280 2,689 1,190 On 10 September 2020, UCEHSA entered into a financing agreement with The Standard Bank of South Africa (SBSA), wherein UCEHSA and its operating partners would have access to a financing facility of up to ZAR 600 million. PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026 Drawn funds from the facility bear interest at three-month JIBAR plus 3.9% per annum and following drawdown this is serviced quarterly. Repayments of capital commenced on 30 September 2021 and are scheduled to occur on a quarterly basis over 16 equal payments, ending 30 September 2025. The Group fully repaid the facility on 30 September 2025. As at 30 June 2026, no balance is outstanding and the security arrangements have been released. Security for the debt facilities includes first-ranking security over assets such as bonds on movable and immovable property, mining and surface rights in South Africa. Additionally, the equity holders of the operating subsidiaries have pledged their shares in the operating subsidiaries to SBSA as security. The facility requires the Group to comply with leverage, debt service cover ratio, and interest coverage financial covenants. The Group met all these covenants during the financial year. During the previous year, the Group entered into coal prepayment contracts with two major customers, under which it received advance consideration totalling USD $40.00 million, to be satisfied through the future delivery of coal shipments. As of 30 June 2026, the remaining obligation still to be delivered is equivalent to AUD $16.378 million and has been recognised as deferred revenue in the statement of financial position. This has been settled in July 2026 as disclosed in Note 37 - Events after reporting date.
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TERRACOM LIMITED 31 Notes to the Consolidated Financial Statements 22 Provisions $ ‘000 $ ‘000 $ ‘000 $ ‘000 $ ‘000 $ ‘000 Mine rehabilitation and closure Blair Athol 54,204 (11,458) 1,491 (158) - 44,079 Australian exploration assets 864 - - - - 864 Kangala 4,656 271 482 - 248 5,657 59,724 (11,187) 1,973 (158) 248 50,600 $ ‘000 $ ‘000 $ ‘000 $ ‘000 $ ‘000 $ ‘000 Mine rehabilitation and closure Blair Athol 54,315 (541) 2,037 (1,607) - 54,204 Australian exploration assets 864 - - - - 864 Kangala 4,035 - - 621 4,656 59,214 (541) 2,037 (1,607) 621 59,724 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Current Provision Annual leave 3,678 4,333 Long service leave 2,339 2,211 6,017 6,544 Non-current ProvisionRehabilitation 50,600 59,724 50,600 59,724 23 Issued Capital 30-Jun-26 30-Jun-25 30-Jun-26 30-Jun-25 Issued Shares Shares $ ‘000 $ ‘000 Ordinary shares - fully paid 1,822,523,150 800,966,235 433,407 376,011 Movements in ordinary share capital Issue price 2026 Opening balance 01-July-2025 800,966,235 - 376,011 Issue of shares* 27-January-2026 1,002,271,609 0.06 56,312 Issue of shares* 24-February-2026 19,285,306 0.06 1,084 Closing balance 30-June-2026 1,822,523,150 433,407 *During the year, the Company issued 1,021,556,915 ordinary shares at $0.06 per share, raising $57.4 million, net of transaction costs in new equity. 2025 Opening balance 01-July-2024 800,966,235 - 376,011 Closing balance 30-June-2025 800,966,235 - 376,011 Rehabilitation The rehabilitation provision represents the present value of rehabilitation costs relating to mine sites, which are expected to be incurred over the life of the estimated life of the mine (up to 25 years), which is when the producing mine properties are expected to cease operations. These provisions have been calculated based on the Group’s internal estimates. Assumptions based on the current economic environment have been made, which management believes are a reasonable basis upon which to estimate the future liability. These estimates are reviewed regularly to consider any material changes to the assumptions. However, actual rehabilitation costs will ultimately depend upon future market prices for the necessary rehabilitation work required that will reflect market conditions at the relevant time. Furthermore, the timing of rehabilitation is likely to depend on when the mines cease to produce at economically viable rates. Date $ ‘000 PRELIMINARY FINANCIAL REPORT The movement in the rehabilitation provision reflects updated macro‑economic assumptions for the Blair Athol rehabilitation obligation, specifically changes in the inflation and discount rate inputs. In addition, the Progressive Rehabilitation and Closure Plan (PRCP) was formally approved this year, resulting in revised trimming and updated cost estimates incorporated into the provision. Exchange differences Change in estimate Unwinding of discount Rehabilitation Exchange differences 1-Jul-24 1-Jul-25 Change in estimate Unwinding of discount FOR THE YEAR ENDED 30 JUNE 2026 30-Jun-25 30-Jun-26 Shares
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TERRACOM LIMITED 32 Notes to the Consolidated Financial Statements 23 Issued Capital (Continued) Ordinary shares On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Share buy-back There is no current on-market share buy-back. Capital risk management The capital risk management policy remains unchanged from the 2025 Annual Report. 24 Share-based payments Directors and Executive KMP There were no share-based payments during the year (2025: nil) and no performance rights were granted during the year (2025: nil). 25 Foreign currency translation reserve Movements in the Foreign currency translation reserve during the current and previous financial year are set out below: 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 At the beginning of the financial year 24,592 21,933 Foreign currency translation through other comprehensive income 2,654 2,659 27,246 24,592 26 Accumulated losses 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Accumulated losses at the beginning of the financial year (280,418) (229,684) Profit / (Loss) after income tax for the year (45,501) (42,724) Dividends paid - (8,010) Accumulated losses at the end of the financial year (325,919) (280,418) 27 Other non-controlling interest 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Non-controlling interest (859) (558) Opening balance (558) (412) Loss attributable to non-controlling interest (129) (694) NCI attributed to deconsolidation of deregistered entities - 517 Other comprehensive income/(loss) (172) 31 (859) (558) PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026 The Group would look to raise capital when an opportunity to invest in a business or Company was seen as value adding relative to the current Company's share price at the time of the investment. Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital. The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital. Capital is regarded as total equity, as recognised in the consolidated statement of financial position, plus net debt. Net debt is calculated as total borrowings, less cash and cash equivalents. To maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group is subject to certain financing arrangements and covenants as noted in Note 19 and meeting these is given priority in all capital risk management decisions. There have been no events of default on the financing arrangements during the financial year (2025: no default). The reserve is used to recognise exchange differences arising from the translation of the consolidated financial statements of foreign operations to Australian dollars.
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TERRACOM LIMITED 33 Notes to the Consolidated Financial Statements 28 Taxation Reconciliation of the tax (benefit) / expense 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Current tax expense - 120 Deferred tax expense / (benefit) (610) (8,411) Prior period under / (over) provision (874) (182) (1,484) (8,473) Reconciliation of the tax (benefit) / expense Reconciliation between accounting profit and tax (benefit) / expense. Profit/(loss) before income tax (benefit) / expense (47,114) (51,891) Tax at the applicable tax rate of 30% (2025: 30%) (14,134) (15,568) Tax effect amounts which are not deductible/(taxable) in calculating taxable income Non-taxable items (42) 4,104 Adjustments in respect of current income tax of previous years 543 441 Foreign Exchange 311 2,550 Tax losses / temporary differences not recognised as deferred tax assets 11,838 - (1,484) (8,473) Difference in overseas tax rates - - Income tax (benefit) / expense (1,484) (8,473) 30-Jun-26 30-Jun-25 Deferred Deferred income tax income tax Opening balance 1,224 (7,005) Charged to income – corporate tax 610 8,411 Adjustment for prior periods (1,834) (182) Closing balance - 1,224 30-Jun-26 30-Jun-25 $’000 $’000 Tax losses relating to entities outside the tax consolidated group 4,914 4,233 29 Deferred Tax 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Deferred tax assets comprise temporary differences attributable to: Provision 14,438 19,880 Leases 2,695 3,075 Other 1,910 1,211 Tax losses 15,545 - Deferred tax assets not brought to account as realisation is not probable (11,838) - 22,750 24,166 Offset of deferred tax liability (22,750) (22,942) - 1,224 Amounts recognised in equity Transaction costs on share issue - - Deferred tax asset – net - 1,224 PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026
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TERRACOM LIMITED 34 Notes to the Consolidated Financial Statements 29 Deferred Tax (Continued) 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Deferred tax liability comprises temporary differences attributable to: Property, plant and equipment (2,186) (9,397) Secured deposits (16,905) (9,972) Consumables - - Leases (3,174) (3,459) Other (485) (114) (22,750) (22,942) Offset of deferred tax asset 22,750 22,942 Deferred tax asset (liability) – net - - 30 Key management personnel disclosures 30-Jun-26 30-Jun-25 Compensation to Executive KMP and Non-Executive Directors of the Group $ $ Short-term employee benefits* 2,316,634 4,102,134 Contributions to superannuation plans 175,348 125,101 Termination benefit 926,923 - Long-term employee benefits 3,542 102,011 Total compensation 3,422,447 4,329,246 TerraCom Limited and its wholly owned Australian controlled entities are part of a tax-consolidated group under Australian taxation law. The head entity, TerraCom Limited and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. The Group has applied the Group allocation approach in determining the appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated group. In addition to its own current and deferred tax amounts, TerraCom Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group. Unrecognised deferred tax assets As at 30 June 2026, no net deferred tax asset has been recognised in respect of temporary differences and tax losses, pending completion of the Group’s assessment under AASB 112 Income Taxes. Any resulting adjustment will be reflected in the audited Financial Report. PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026 *Short‑term benefits for the previous year includes the FY24 LTI award, which was cash‑settled within 12 months. No LTI was awarded for FY25. The FY24 award vested in FY25 and was paid in FY26.
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TERRACOM LIMITED 35 Notes to the Consolidated Financial Statements 31 Cash flow information 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Profit / (loss) after income tax for the year (45,630) (43,418) Adjustments for non-cash items: Depreciation and amortisation 14,435 19,539 Write off of assets 247 - Impairment expense - 22,131 Foreign exchange differences 1,212 122 Share of loss/(profit) of investments accounted for using the equity method (141) 3,412 Profit / (loss) on disposal of fixed assets - (188) Profit / (loss) on deregistration / deconsolidation (16) 206 Changes in assets and liabilities: Movement in tax balances 3,196 (49,130) (Increase) / decrease in inventories (4,419) (399) (Increase) / decrease in trade and other receivables 6,661 11,229 (Increase) / decrease in other assets - (3,984) Increase / (decrease) in trade and other payables (15,293) 17,538 Increase / (decrease) in deferred revenue (22,925) 39,303 Increase / (decrease) in provisions 1,807 1,823 Net Cash (used in) / from operating activities (60,866) 18,184 Non cash financing activities Share issue cost netted off from share raising capital proceeds 3,897 - Changes in liabilities arising from financing activities 2026 Interest bearing loans and borrowings (excluding items listed below) 747 (760) 13 - Lease liabilities 10,249 (3,154) 2,842 9,937 10,996 (3,914) 2,855 9,937 2025 Interest bearing loans and borrowings (excluding items listed below) 3,613 (3,274) 408 747 Lease liabilities 563 (1,355) 11,041 10,249 4,176 (4,629) 11,449 10,996 32 Dividends paid $0.01 $0.01 6 December 2024 No dividends were declared or paid to shareholders for the financial year ended 30 June 2026. Dividends totalling $8.010 million were declared in respect of the financial year ended 30 June 2025. Franking Account Balance Franking account balance as at 30 June 2026 was $72.232 million (2025: $76.026 million). 30 September 2024 31 October 2024 Amount (cents per share) Franked Amount (cents per share) Consolidated Declaration Date Date of Payment PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026 Closing $ ‘000 Opening $ ‘000 Cash flows $ ‘000 FX and other movements $ ‘000 Closing $ ‘000 Cash flows $ ‘000 FX and other movements $ ‘000 Opening $ ‘000
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TERRACOM LIMITED 36 Notes to the Consolidated Financial Statements 33 Financial Instruments Categories of financial assets and fair value information 11 16,158 16,158 10 8,381 8,381 13 54,441 54,441 14 3,537 3,537 17 8,978 8,978 91,495 91,495 11 20,309 20,309 10 13,382 13,382 13 58,221 58,221 14 3,019 3,019 17 12,171 12,171 107,102 107,102 18 35,898 35,898 21 9,937 9,937 45,835 45,835 18 49,879 49,879 19 747 747 21 10,249 10,249 60,875 60,875 Trade and other receivables Cash and cash equivalents Restricted cash Other financial asset Lease liabilities Other non-current asset (deposit) Trade and other payables Fair value $ ‘000 Trade and other receivables Cash and cash equivalents Restricted cash Other financial asset Other non-current asset (deposit) 30-Jun-25 30-Jun-26 Note Carrying value at amortised cost $ ‘000 Note Carrying value at amortised cost $ ‘000 Fair value $ ‘000 PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026 Note Carrying value at amortised cost $ ‘000 Fair value $ ‘000 30-Jun-26 Trade and other payables Borrowings Lease liabilities Financial risk management objectives The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. Risk management is carried out by senior finance executives (Finance) under policies approved by the Board of Directors (the Board). These policies include identification and analysis of the risk exposure of the Group and appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the Group’s operating units. Finance reports to the Board on a monthly basis. Market risk The Group’s plans for any revenue are to be derived mainly from the sale of coal and/or coal products. Consequently, the Group’s financial position, operating results and future growth will closely depend on the market price of each of these commodities. Market prices of coal products are subject to large fluctuations in response to changes in demand and/or supply and various other factors. These changes can be the result of uncertainty or several industry and macroeconomic factors beyond the control of the Group, including political instability, governmental regulation, forward selling by producers, climate, inflation, interest rates and currency exchange rates. If market prices of the commodities sold by the Group were to fall below production costs for these products and remain at that level for a sustained period of time, the Group would be likely to experience losses, having a material adverse effect on the Group. The Group does not currently hedge against coal price and foreign exchange. 30-Jun-25 Note Carrying value at amortised cost $ ‘000 Fair value $ ‘000
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TERRACOM LIMITED 37 Notes to the Consolidated Financial Statements 33 Financial Instruments (Continued) 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Trade and other receivables 16,158 20,309 Cash and cash equivalents 8,381 13,382 Restricted cash 54,441 58,221 Other financial asset 3,537 3,019 Other non-current asset (deposit) 8,978 12,171 91,495 107,102 30-Jun-26 Non-interest bearing Non-interest bearing trade payables 0% 35,898 - - 35,898 Interest bearing – variable Lease liabilities 4.50% 2,329 7,608 - 9,937 38,227 7,608 - 45,835 Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has a strict code of credit, including obtaining agency credit information, confirming references and setting appropriate credit limits. The Group obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the consolidated statement of financial position and notes to the consolidated financial statements. The Group does not hold any collateral. The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative across all customers of the Group based on recent sales experience, historical collection rates and forward-looking information that is available. Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater than 1 year. In addition, receivable balances are monitored on an ongoing basis. The Group does not hold any credit derivatives to offset its credit exposure. The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures including an assessment of their independent credit rating, financial position, past experience and industry reputation. Risk limits are set for each individual customer in accordance with parameters set by the board. These risk limits are regularly monitored. Credit risk is managed on a group basis. For banks and financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted. The Group’s maximum exposure is equal to the carrying amount of the financial assets, as outlined below: FOR THE YEAR ENDED 30 JUNE 2026 Liquidity risk Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable. The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities. Remaining contractual maturities The following tables detail the Group’s remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position. The maturity profile of contractual cash flows of non-derivative financial liabilities are presented in the following table. The cash flows are undiscounted contractual amounts. Interest Rates Less than 1 year $'000 1 to 5 years $ ‘000 Over 5 years $'000 Remaining contractual maturities $ ‘000 PRELIMINARY FINANCIAL REPORT
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TERRACOM LIMITED 38 Notes to the Consolidated Financial Statements 33 Financial Instruments (Continued) 30-Jun-25 Non-interest bearing Non-interest bearing trade payables 0% 49,879 - - 49,879 Interest bearing – variable Borrowings (excluding lease liabilities) 11.19% 768 - - 768 Lease liabilities 4.50% 2,764 9,973 - 12,737 53,411 9,973 - 63,384 Foreign currency sensitivity analysis 30-Jun-26 30-Jun-26 30-Jun-25 30-Jun-25 Increase or decrease in rate Impact on profit or loss before tax: Cash and cash equivalents 25 (25) 85 (87) Trade debtors 125 (128) 108 (110) Accounts payable 81 (82) - - 231 (235) 193 (197) Impact on equity: Cash and cash equivalents 25 (25) 85 (87) Trade debtors 125 (128) 108 (110) Accounts payable 81 (82) - - 231 (235) 193 (197) Increase or decrease in rate Consolidated Standard Bank of South Africa 11.36% 11.19% - 747 Net exposure to cash flow interest rate risk - 747 Interest Rates Less than 1 year $'000 1 to 5 years $ ‘000 Over 5 years $'000 Remaining contractual maturities $ ‘000 The table above reflects current contractual obligations however, the Group may settle these borrowings under a different repayment profile to that as disclosed in the above table. Foreign currency risk The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations. Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cashflow forecasting. The functional currency of the parent entity, its Australian exploration subsidiaries and United Kingdom subsidiaries is Australian dollars (AUD), the South African subsidiaries and associates functional currency is South African Rand (ZAR). As a result, currency exposure exists arising from the transaction and balances in currencies other than AUD and ZAR (Australian Dollars and South African Rand). The Group closely monitors its foreign exchange risk in Australia and South Africa to ensure it is at an acceptable level of risk. Exposure to foreign exchange risk may result in the fair value or future cash flows of a financial instrument fluctuating due to movement in the foreign exchange rates of currencies in which the Group holds financial instruments. PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026 AUD strengthened 1% $'000 AUD weakened 1% $'000 Interest rate risk The Group’s main interest rate risk arises from long-term borrowings. Borrowings obtained at variable rates expose the Group to interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk. Interest rate profile As at the reporting date, the Group had the following variable rate borrowings outstanding: AUD weakened 1% $'000 2026 % 2025 % 30 Jun 2026 $'000 30 Jun 2025 $'000 An analysis by remaining contractual maturities is shown in ‘liquidity and interest rate risk management’ above. Price risk Commodity price risk refers to the possibility that the fair value or future cash flows of a financial instrument may fluctuate due to changes in market prices, largely driven by supply and demand factors.The Group continues to monitor its exposure to this risk. As at the reporting date, the Group has chosen not to implement strategies to mitigate potential downside price movements. Once commodity prices stabilise and market uncertainty eases, the Group may consider adopting risk management strategies. Average interest rate Carrying amount AUD strengthened 1% $'000
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TERRACOM LIMITED 39 Notes to the Consolidated Financial Statements 34 Capital and leasing commitments 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Committed at the reporting date but not recognised as liabilities, payable: Within one year 976 1,532 One to five years 4,392 3,551 5,368 5,083 35 Contingent liabilities 36 Related parties Relationships Associates and Joint Ventures Related party balances 30-Jun-26 30-Jun-25 $ $ Receivables North Block Complex (Pty) Ltd loan payable to UCEHSA - 174,039 Universal Coal Development IV (Pty) Ltd loan payable to UCEHSA - 572,827 Universal Coal Development VII (Pty) Ltd loan payable to UCEHSA - - Payables Lewis Mining Consulting – Glen Lewis (director fees) - 14,667 Services from Insignia Mining Pty Ltd - Glenn Splatt 3,718 - Related party transactions Minority shareholder related parties in South Africa Interest earned from North Block Complex (Pty) Ltd 4,943 71,940 Interest earned from Universal Coal Development IV (Pty) Ltd 16,269 236,781 Directors with TerraCom or controlled subsidiaries of the Group Services from Lewis Mining Consulting (director fees) - Glen Lewis 122,310 167,500 Services from Insignia Mining Pty Ltd - Glenn Splatt 3,718 - Lewis Mining Consulting (Lewis Mining) Terms and conditions 37 Events after reporting period In July 2026, the Group fully settled outstanding customer prepayments totalling AUD 16.378 million (USD 11.25 million). Parent entity TerraCom Limited is the parent entity Subsidiaries Interests in subsidiaries are set out in Note 39 All transactions were made on normal commercial terms and conditions and at market rates. The Group has no contingent liabilities as at 30 June 2026. Loan Receivable PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026 Interests in associates and joint ventures include Universal Coal Development VI (Pty) Ltd, Universal Coal Development VII (Pty) Ltd and Universal Coal Logistics (Pty) Ltd In the interval between the end of the financial year and the date of this report there has not arisen any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years, other than the following: The loan receivable amounts owing from NBC and NCC consist of an amount relating to the Standard Bank borrowings in the name of UCEHSA, which has been on-lent to the associates. The facility is secured against the assets of the associates. These on‑lent amounts were fully settled during the current year (refer to Note 11). Loan receivable from Universal Coal Development VII (Pty) Ltd as at 30 June 2026 is $2,077,734, this has been fully impaired in books. The payments made by the Company to Lewis Mining are for the services of Mr. Glen Lewis acting as Non-Executive Director (appointed 23 December 2019 and resigned 12 March 2026) and for additional advisory services. The amount payable to Lewis Mining on 30 June 2026 is NIL (30 June 2025: $14,667).
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TERRACOM LIMITED 40 Notes to the Consolidated Financial Statements 38 Interest in subsidiaries Australia 100.00% 100.00% Australia 100.00% 100.00% Australia 100.00% 100.00% Australia 100.00% 100.00% Australia 64.40% 64.40% Australia 100.00% 100.00% Australia 100.00% 100.00% Australia 90.07% 90.07% Australia 90.07% 90.07% Singapore 100.00% 100.00% United Kingdom 100.00% 100.00% South Africa 100.00% 100.00% South Africa 70.50% 70.50% South Africa 74.00% 74.00% United Arab Emirates 100.00% 100.00% Clyde Park Coal Pty Ltd Australia Exploration 64.40% 64.40% 35.60% 35.60% Springsure Mining Pty Ltd Australia Exploration 90.07% 90.07% 9.93% 9.93% Springsure Centre of Excellence Pty Ltd Australia Holding Company 90.07% 90.07% 9.93% 9.93% Universal Coal Development I (Pty) Ltd South Africa Care & Maintenance 70.50% 70.50% 29.50% 29.50% Twin Cities Trading 374 (Pty) Ltd(1) South Africa Holding Company - 74.00% - 26.00% Episolve (Pty) Ltd(1) South Africa Holding Company - 74.00% - 26.00% Epsimax (Pty) Ltd South Africa Company Holding 74.00% 74.00% 26.00% 26.00% Bold Moves 1765 (Pty) Ltd(1) South Africa Holding Company - 74.00% - 26.00% Universal Coal Logistics (Pty) Ltd(1) South Africa Holding Company - 49.00% - 51.00% Principal place of business/ Country of incorporation Parent PRELIMINARY FINANCIAL REPORT Clermont Logistics Pty Ltd (1) Sierra Coal Pty Ltd The consolidated financial statements incorporate the assets, liabilities and results of a number of subsidiaries. The Group’s remaining interest in subsidiaries remains unchanged from the consolidated annual financial report for the year ended 30 June with the exception of some dormant entities deregistered during the year. As noted elsewhere in this report, there has been no economic or equity interest change for the equity holders of the Company. % holding 2026 % holding 2025 FOR THE YEAR ENDED 30 JUNE 2026 Name Principal place of business / Country of Ownership interest 2025 % (1) These subsidiaries entered into a Class Instrument 2016/785 dated 27 June 2023 and related deed of cross guarantee with TerraCom Limited (2)Twin Cities Trading 374 (Pty) Ltd and Episolve (Pty) Ltd were deregistered effective 30 June 2025. Bold Moves 1765 (Pty) Ltd and Universal Coal Development VI (Pty) Ltd were deregistered effective 04 February 2025, Universal Coal Power Generation (Pty) Ltd was deregistered effective 08 February 2025, and Universal Coal Logistics (Pty) Ltd was deregistered effective 10 February 2025. These entities were dormant and had no material impact to the group on deregistration. (3) TerraCom Resources DMCC was deregistered on 18 July 2026, subsequent to year end, with no material impact on the Group. Clyde Park Coal Pty Ltd Guildford Infrastructure Pty Ltd Terra Mining Services Pty Ltd (1) Springsure Mining Pty Ltd Springsure Centre of Excellence Pty Ltd TCIG Resources Pte Limited FTB (QLD) Pty Ltd Orion Mining Pty Ltd (1) Non-controlling interest (1) Twin Cities Trading 374 (Pty) Ltd and Episolve (Pty) Ltd were deregistered effective 30 June 2025. Bold Moves 1765 (Pty) Ltd and Universal Coal Development VI (Pty) Ltd were deregistered effective 04 February 2025, Universal Coal Power Generation (Pty) Ltd was deregistered effective 08 February 2025, and Universal Coal Logistics (Pty) Ltd was deregistered effective 10 February 2025. Universal Coal Limited Universal Coal and Energy Holdings South Africa (Pty) Ltd Universal Coal Development I (Pty) Ltd Epsimax (Pty) Ltd Set out below is summarised financial information for each subsidiary that has non-controlling interests that are material to the Group. The amounts disclosed for each subsidiary are before inter-company eliminations. Principal activities TerraCom Resources DMCC (3) Ownership interest 2026 % Ownership interest 2026 % Ownership interest 2025 %
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TERRACOM LIMITED 41 Notes to the Consolidated Financial Statements 38 Interest in subsidiaries (Continued) Summarised statement of financial position Current assets 197 Non-current assets 3,939 Current liabilities (4,864) Non-current liabilities (17,375) Summarised statement of profit or loss and other comprehensive income Revenue - Profit / (Loss) (431) Summarised statement of financial position Current assets 232 Non-current assets 3,236 Current liabilities (5,960) Non-current liabilities (14,605) Summarised statement of profit or loss and other comprehensive income Revenue - Profit / (Loss) (2,336) 39 Investment in associates and joint ventures Consolidated 30-Jun-26 30-Jun-25 Non-current assets $ ‘000 $ ‘000 Investment in associates and joint ventures 80,556 77,723 30-Jun-26 30-Jun-25 $ ‘000 $ ‘000 Carrying amount at beginning of financial year 77,723 85,011 Share of profit/(loss) 141 (3,412) Effect of foreign exchange 2,692 2,931 Impairment - (6,807) Closing carrying amount 80,556 77,723 Summarised statement of financial position as at 30 June 2026 for South African operations (1) UCD VII NBC Berenice Cygnus Eloff & NCC Ubuntu (2) UCD8 Total $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'001 Current assets Cash and cash equivalents - 4,012 - - 1,377 - 6 5,395 Other current assets 1,104 27,672 20 - 15,746 15,232 31 59,805 Total current assets 1,104 31,684 20 - 17,123 15,232 37 65,200 Non-current assets - 76,893 4,665 880 103,632 9,378 106 195,554 Current liabilities Financial liabilities (excluding trade payables) - - - - - - - - Other current liabilities 6 19,493 21 7 18,769 15,922 31 54,249 Total current liabilities 6 19,493 21 7 18,769 15,922 31 54,249 Non-current liabilities Other non-current liabilities 2,078 30,830 - - 62,227 48,372 - 143,507 Total non-current liabilities 2,078 30,830 - - 62,227 48,372 - 143,507 Net assets (980) 58,254 4,664 873 39,759 (39,684) 112 62,998 Group interest % 50% 49% 50% 50% 49% 49% 49% 49% Group interest $ - 28,545 2,332 437 19,482 - 55 50,851 Goodwill - 2,430 2,742 609 30,958 - - 36,739 Impairment (Refer note 7) - - - - (7,034) - - (7,034) Carrying amount - 30,975 5,074 1,046 43,406 - 55 80,556 PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026 30 June 2026 30 June 2026 The tables below provide summarised financial information for those associates and joint ventures that are material to the Group. The information disclosed reflects the amounts presented in the financial statements of the relevant associates and joint ventures and not the Group’s share of those amounts. They have been amended to reflect adjustments made by the Group when using the equity method, including fair value adjustments and modifications for differences in accounting policy. 30 June 2026 Universal Coal Development I (Pty) Ltd $'000 30 June 2026 30 June 2025 Reconciliation of the carrying amounts at the beginning and end of the current and previous financial year are set out below: 30 June 2026 30 June 2026 30 June 2026 30 June 2026 30 June 2026
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TERRACOM LIMITED 42 Notes to the Consolidated Financial Statements 39 Investment in associates and joint ventures (Continued) UCD VII NBC Berenice Cygnus Eloff & NCC Ubuntu (2) UCD8 Total $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Revenue - 186,226 - - 152,729 77 - 339,032 Cost of goods sold - (171,030) - - (140,064) (25) - (311,119) - (9,715) - - (11,708) (222) - (21,645) - 5,481 - - 957 (170) - 6,268 - (93) - - (51) (19) - (163) Net finance expenses - (1,321) - - (3,839) (2,079) - (7,239) - 4,067 - - (2,933) (2,268) - (1,134) Income tax expense - (1,078) - - 231 (19) - (866) - 2,989 - - (2,702) (2,287) - (2,000) - 2,989 - - (2,702) (2,287) - (2,000) - 2,989 - - (2,702) (2,287) - (2,000) Group interest % 50% 49% 50% 50% 49% 49% 49% Group interest $ - 1,464 - - (1,323) - - 141 - - - - - - - - Summarised statement of financial position as at 30 June 2025 for South African operations (1) NBC Berenice Cygnus Eloff & NCC Ubuntu (2) UCD8 Total $'000 $'000 $'000 $'000 $'000 $'000 $'001 Current assets Cash and cash equivalents 23,940 - - 7,129 83 6 31,158 Other current assets 28,922 20 - 14,912 14,753 30 58,637 Total current assets 52,862 20 - 22,041 14,836 36 89,795 Non-current assets 76,638 4,515 852 101,756 9,035 103 192,899 Current liabilities 174 - - 573 - - 747 Other current liabilities 46,236 150 83 26,546 15,679 30 88,724 Total current liabilities 46,410 150 83 27,119 15,679 30 89,471 Non-current liabilities Other non-current liabilities 29,646 - - 55,547 44,354 - 129,547 Total non-current liabilities 29,646 - - 55,547 44,354 - 129,547 Net assets 53,444 4,385 769 41,131 (36,162) 109 63,676 Group interest % 49% 50% 50% 49% 49% 49% 49% Group interest $ 26,188 2,193 384 20,155 - 53 48,973 Goodwill 2,352 2,653 590 29,962 - - 35,557 Impairment (Refer note 7) - - - (6,807) - - (6,807) Carrying amount 28,540 4,846 974 43,310 - 53 77,723 PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026 (1) Income statement amounts are converted from ZAR to AUD using the average rate prevailing for the relevant period. (2) Losses recorded for Ubuntu are nil as the losses exceed the Company’s interest and therefore there is no legal or constructive obligations to make payments on the associates’ behalf. (3) During FY2026, management reassessed the accounting classification of UCD VII and determined that the entity was jointly controlled under the contractual arrangements that were already in place in the prior reporting period. The FY2025 comparative information has therefore been corrected to account for UCD VII as a joint venture rather than a subsidiary. The impact of the correction is immaterial to the Group. Profit before income tax expense Depreciation and amortisation expense Net profit before income tax Profit after income tax expense Statutory and underlying result for the year Statutory total comprehensive Dividends received from associates & joint ventures 30 June 2025 30 June 2025 30 June 2025 30 June 2025 30 June 2025 30 June 2025 30 June 2025 (1) Statement of financial position amounts are converted from ZAR to AUD using the spot rate as at the reporting date. (2) Losses recorded for Ubuntu are nil as the losses exceed the Company’s interest and there is no legal or constructive obligation to make payments on the associates and joint ventures behalf. 30 June 2026 30 June 2026 30 June 2026 30 June 2026 30 June 2026 30 June 2026 30 June 2026 Other operating and administrative expense 30 June 2026 Summarised statement of profit or loss and other comprehensive income for the year ended 30 June 2026 for South African operations (1) Financial liabilities (excluding trade payables)
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TERRACOM LIMITED 43 Notes to the Consolidated Financial Statements 39 Investment in associates and joint ventures (Continued) NBC Berenice Cygnus Eloff & NCC Ubuntu (2) UCD8 Total $'000 $'000 $'000 $'000 $'000 $'000 $'000 Revenue 224,925 - - 132,914 74 - 357,913 Cost of goods sold (200,363) - - (134,754) (81) - (335,198) Other operating and administrative expense (10,519) (9) (6) (14,881) 441 (2) (24,976) Profit before income tax expense 14,043 (9) (6) (16,721) 434 (2) (2,261) Depreciation and amortisation expense (155) - - (15) (23) - (193) Net finance expenses (2,829) - - (3,957) (2,097) - (8,883) Net profit before income tax expense 11,059 (9) (6) (20,693) (1,686) (2) (11,337) Income tax expense (2,901) - - 5,588 (10) - 2,677 Profit after income tax expense 8,158 (9) (6) (15,105) (1,696) (2) (8,660) Statutory and underlying result for the year 8,158 (9) (6) (15,105) (1,696) (2) (8,660) Statutory total comprehensive income 8,158 (9) (6) (15,105) (1,696) (2) (8,660) - - - - - - - Group interest % 49% 50% 50% 49% 49% 49% Group interest $ 3,998 (5) (3) (7,401) - (1) (3,412) Dividends received from associates & joint ventures - - - - - - - As at the date of this preliminary report, the impairment assessment of investments in associates and joint ventures has not been finalised and no final impairment adjustment has been recognised for the year ended 30 June 2026 (30 June 2025: $6.807 million). Any resulting adjustment will be reflected in the audited Financial Report. PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2026 30 June 2025 30 June 2025 30 June 2025 30 June 2025 30 June 2025 30 June 2025 30 June 2025 (1) Statement of financial position amounts are converted from ZAR to AUD using the spot rate as at the reporting date. (2) Losses recorded for Ubuntu are nil as the losses exceed the Company’s interest and there is no legal or constructive obligation to make payments on the associates and joint ventures behalf.