NOTES TO FINANCIAL STATEMENTS 31 December 2025 41 ACQUISITION OF SUBSIDIARIES (cont’d) Underpinning the fair value uplift based on the PPA exercise was management’s assessment of the appropriate valuation method for the measurement of the fair value through the discounted cash flow model (“DCF”), having taken into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use. In this instance, the value driver for MBJ was determined to be the rights on the development of the MBJ Integrated Infrastructure and the expected economic returns from the hauling road and jetty. The key assumptions used in the DCF includes (a) forecasted revenue and costs (b) discount rate and (c) timing of completion of the MBJ hauling road and ramp up of production of the TRA mine. The Group had entered into an EPC contract for the construction and development of the MBJ Integrated Infrastructure with a targeted completion in the first half of 2026. Identifiable assets acquired and liabilities assumed at the date of acquisition Non-controlling interest The non-controlling interest (41.30% ownership interest in MBJ) recognised at the acquisition date was measured by reference to the fair value of the non-controlling interest and amounted to US$11,016,235. Consideration transferred (at acquisition date fair values) Fair value changes on acquisition Based on the MBJ PPA, the fair value of the net identifiable assets acquired amounted to US$26,673,692. As the carrying amount of MBJ as an associate was US$Nil as at 1 August 2024, the fair value remeasurement of the previously held equity interest in MBJ of 33% amounting to US$8,802,319 at acquisition date was credited into profit or loss as gain on deemed disposal (Note 32). Gain on bargain purchase arising on acquisition The gain on bargain purchase was attributable to the assets being acquired at less than fair value. The key driver of the bargain purchase was the fair value uplift of the construction in progress which related to the expected future economic returns from the MBJ Integrated Infrastructure which is pivotal to the Group’s growth strategies to enhance logistics efficiency and coal production capabilities for its TRA coal mine. The Group has a capital expenditures contracted of US$150 million for the EPC in relation to the MBJ Integrated Infrastructure. Net cash inflow arising on acquisition 2024 US$ Current assets Cash and bank balances 63,373 Trade and other receivables 14,455 Deposits and prepayments 34,968 Inventories 253 Non-current assets Deposits and prepayments 4,400 Property, plant and equipment 44,775,367 Current liabilities Trade and other payables (10,305,156) Non-current liabilities Deferred tax liabilities (7,913,968) Net identifiable assets acquired 26,673,692 2024 US$ Cash 38,491 Call Option 936,000 Total 974,491 2024 US$ Consideration transferred 974,491 Add: Non-controlling interest 11,016,235 Add: Fair value of previously held equity interest 8,802,319 Less: Net identifiable assets acquired (26,673,692) Gain on bargain purchase arising on acquisition (5,880,647) 2024 US$ Cash and bank balances acquired 63,373 Less: Consideration paid in cash (38,491) Acquisition of subsidiary in the consolidated statement of cash flows 24,882 113 GEO ENERGY | ANNUAL REPORT 2025
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