KERNEL HOLDING S.A.
Société Anonyme
9, rue de Bitbourg
L-1273 Luxembourg
R.C.S. Luxembourg B 109173
ANNUAL ACCOUNTS AS AT
AND FOR THE YEAR ENDED
30 JUNE 2022
AND REPORT OF THE RÉVISEUR
D’ENTREPRISES AGRÉÉ
Table of
contents
Report of the board of directors to the shareholders 3-11
Report of the réviseur d’entreprises agréé 12-16
Statement of the Board of Directors’ responsibilities for the preparation and approval of
annual accounts 17
Balance sheet as at 30 June 2022 18-19
Profit and loss account for the year ended 30 June 2022 20
Notes to the annual accounts 21-44
3
KERNEL HOLDING S.A.
9, rue de Bitbourg
L-1273 Luxembourg
R.C.S. Luxembourg B 109173
Report of the Board of directors to the shareholders
Annual
accounts for the year ended
30 June 2022
Dear Shareholders,
Kernel Holding S.A., (the “Company”) was incorporated in Luxembourg on 15 June 2005 as a Société Anonyme
(“S.A.”) subject to the Luxembourg law for an unlimited period of time.
The Company is registered with the “Registre de Commerce et des Sociétés” in Luxembourg under the number
B 109173.
The subsidiaries of Kernel Holding S.A. (forming together with the Company, the “Group”) holds assets primarily in
Ukraine and operate across the agricultural value chain.
The Group operates in farming, grain origination, storage, transport, and in the production, refining, bottling and
marketing of sunflower oil.
The Group’s goal is the continuous development of profitable and sustainable business that enhances its position a
leader in the field of low-cost production, sourcing, processing and handling of agricultural commodities, bridging
the resource-rich Black Sea region with large international consumer markets.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing both the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Group or
to cease operations, or has no realistic alternative but to do so.
Overview
Kernel Holdings S.A. being a holding company with no operational activity, the overview below is mainly done from
the Group perspective, taking into account the performance of Kernel Holding S.A. as well as its subsidiaries.
During the year ended 30 June 2022, the Group generated USD 220 million EBITDA (down by 73% y-o-y) and net
loss attributable to shareholders of Kernel Holding S.A. USD 41 million (30 June 2021: profit USD 513 million ).
Acquisitions/ disposals
During the year ended 30 June 2022, Etrecom Investments Limited issued and allotted additional ordinary shares
for a total amount of EUR 86,309,300.00 (equivalent to USD 102,000,000.00). In fact, the increase in authorized
capital of Etrecom Investments Limited was conducted in two stages: 16
th
August 2021 by 42,258,600 fully paid
ordinary shares totalling EUR 42,258,600.00 (equivalent to USD 51,000,000.00) and 11
th
October 2021
by 44,050,700 fully paid ordinary shares totalling EUR 44,050,700.00 (equivalent to USD 51,000,000.00). The
payments of shares in full were settled in cash in several tranches.
During the year ended 30 June 2022, the Company acquired and disposed participation interest in Avere
Commodities S.A. On 1 October 2021, the Company entered into two separate share purchase agreements,
whereby it acquired a total of 250 ordinary shares for an aggregate amount of USD 88,023,404.00. On 30
November 2021, the Company subscribed to an additional 50 fully paid ordinary shares totalling CHF 5,000.00
(equivalent to USD 5,369.00) and 375 fully paid participation certificates totalling CHF 3,750.00 (equivalent to USD
4,027.00). On 14 December 2021, the Company entered into a Contribution Agreement, whereby, it contributed
375 participation certificates held in Avere Commodities S.A., to Baobab Capital S.A. for a total value of CHF
81,861,765.00 (equivalent to USD 88,023,404.00).
4
KERNEL HOLDING S.A.
9, rue de Bitbourg
L-1273 Luxembourg
R.C.S. Luxembourg B 109173
Report of the Board of directors to the shareholders
Annual
accounts for the year ended
30 June 2022
Acquisitions/ disposals (continued)
On 1 December 2021, the Company incorporated a new affiliated undertaking, Baobab Capital S.A. with a
subscribed capital of CHF 100,000.00 (equivalent to USD 107,344.00). On 14 December 2021, the Company
entered into a Contribution Agreement, whereby, it contributed 375 participation certificates held in Avere
Commodities S.A., to Baobab Capital S.A. for a total value of CHF 81,861,765.00 (equivalent to USD
88,023,404.00). On 15 December 2021, the Company entered into a Share Purchase and recharge agreement,
whereby it sold all of its holding in Baobab Capital S.A., amounting to CHF 81,961,765.00 (equivalent to USD
88,130,748.00).
On 9 March 2022, the minority shareholders of Avere Commodities S.A. exercised put options, whereby, it obliged
the Company to acquire their participation interest in Avere Commodities S.A. The consideration amount was
USD 64,626,348.00, out of which USD 32,000,000.00 was paid as of 30 June 2022, which resulted in increased to
100% ownership in Avere Commodities S.A. As of 30 June 2022, the outstanding amount equalled
USD 32,626,348.00.
Both the investments held by the Company, Chorna Kamianka LLC and Urozhai Agricultural LLC, at amounts of
USD 6,215,549.01 and UAH 28,320,960.00 (equivalent to USD 2,740,328.51) respectively, have been merged into
Ahrofirma Khliborob LLC.
During the year ended 30 June 2022, the Company increased value of its participation interest through additional
financial contributions to the following companies:
• Estron Corporation LTD for an amount of EUR 200,000.00 (equivalent to USD 236,280.00).
• Starokonstiantynivskyi OEZ LLC for an amount of USD 54,188,730.00 in accordance with the agreement
dated 1 December 2021.
• Sentix Polska for an amount of PLN 8,000.00 (equivalent to USD 1,873.21) in accordance with the share
purchase agreement dated 6 June 2022.
As of 30 June 2022, considering the financial situation of some subsidiaries, the management decided to record
the following impairments and reversals of value adjustment:
• USD 164,129,530.73 in relation to its participation held in Etrecom Investments Limited reducing the
net book value of investment from USD 329,014,080.63 to USD 164,884,549.90.
• USD 41,650.43 in relation to its participation held in Cherkaskyi, Public Joint Stock Company reducing
the net book value of investment from USD 486,789.42 to USD 445,138.99.
• USD 410,040.00 in relation to its participation held in Bilovodskyi Kombinat Khliboprodyktiv reducing
the net book value of investment from USD 3,909,048.00 to USD 3,499,008.00
• USD 1,873.21 in relation to its participation held in Sentix Polska reducing the net book value of
investment from USD 1,873.21 to USD 0.00.
• USD 50,227,497.43 in relation to its participation held in Kernel Trade LLC reducing the net book
value of investment from USD 231,867,105.22 to USD 181,639,607.79.
• USD 1,343,625.03 in relation to its participation held in Kernel Capital LLC reducing the net book
value of investment from USD 354,283,302.49 to USD 352,939,677.46.
5
KERNEL HOLDING S.A.
9, rue de Bitbourg
L-1273 Luxembourg
R.C.S. Luxembourg B 109173
Report of the Board of directors to the shareholders
Annual
accounts for the year ended
30 June 2022
1. Income statement highlights
The Group generated USD 5,332 million revenue in FY2022, down 5% y-o-y on the back of lower sunflower oil and
meal sales volumes due to difficulties with exporting produce from Ukraine in March-June 2022.
The Group recognized a USD 13 million gain from net change in fair value of biological assets and agricultural
produce in FY2022, compared to a USD 133 million gain a year ago.
Costs of sales in FY2022 decreased by 3% y-o-y, to USD 4,692 million, and includes US$ 98 million loss from
reduction of net realizable value of inventories below cost. Adjusting for such loss, cost of sales declined by 5% y-
o-y, in line with the revenue reduction during FY2022.
Other operating income, net of other operating expenses in FY2022 was USD 19 million, comprising primarily
gains on contracts wash-out and stock-take, related mostly to the Group’s subsidiary Avere Commodities S.A.
trading operations in comparison and losses incurred as a result of Group’s operations with securities and
derivatives.
General and administrative expenses in FY2022 reduced by 28% y-o-y, to USD 230 million, as the result of
recognized additional payroll related expenses in FY2021 related to accounting of profit-shares arrangements in
Avere Commodities S.A.
Additionally, the net impairment losses on financial assets reached US$ 33 million, primarily related to expected
credit losses on Group’s accounts receivable.
Reflecting the direct impact of war, Kernel recognized the loss on impairment of assets of US$ 317 million in
FY2022, comprising the impairment of PP&E, goodwill, intangible assets, assets held for sale, write-off of
inventories destroyed, allowance created for inventories located at the temporary occupied territories.
Finance costs in FY2022 curtailed by 12% y-o-y, to USD 131 million, primarily driven by the reduced interest on
bonds due to the redemption of Group’s 2022 bonds. Such savings on interest were partially offset by increased
interest payments on bank debt as a result of the postponement of the seasonal bank loans principal repayment
due to stretched situation with sales and liquidity after 24 February 2022. Together with that, the Group generated
USD 11 million finance income in FY2022 up by 1.9x y-o-y.
The Group also recognized a USD 10 million foreign exchange gain following the Ukrainian hryvnia depreciation
against USD over the reporting period.
Other expenses, net, amounted to USD 25 million, mostly driven by all-time high social spending of
USD 26 million, but also reflects USD 3 million gain on the disposal of PP&E.
With the loss before income tax generated, Group recognized income tax benefit of USD 3 million in FY2022 and
ended the year with USD 41 million net loss attributable to share-holders of Kernel Holding S.A. Considering the
financial results achieved, uncertainties around the outcome of the war in Ukraine, stretched liquidity position,
ongoing negotiations with Group’s creditors on the postponement of the debt principal repayment, and the
presence of restrictive covenants in the additional agreements already signed with the lenders, the Board of
Directors recommended the general meeting of shareholders to declare a dividend at nil for the year ended on 30
June 2022
6
KERNEL HOLDING S.A.
9, rue de Bitbourg
L-1273 Luxembourg
R.C.S. Luxembourg B 109173
Report of the Board of directors to the shareholders
Annual
accounts for the year ended
30 June 2022
1. Income statement highlights (continued)
The Group is presenting its segment results within three operating segments: Oilseed Processing, Infrastructure
and Trading, and Farming. For a detailed explanation of operating and financial performance for operations, please
refer to the annual report of Kernel Group available at kernel.ua.
2. Allocation of results
The Company’s financial year as of 30 June 2022 ends with a gain of USD 10,385,435.50.
The board of directors of the Company intends to propose to the Annual General Meeting of the Shareholders of
the Company the following allocation of this result, taking into account the annual dividends:
Result brought forward (before dividends)
USD
459,739,460.22
Statutory dividends for year end 30 June 2021
USD
(34,068,861.20)
Result brought forward (after dividends)
USD
425,670,599.02
Profit for the year ended 30 June 2022
USD
10,385,435.50
Result carried forward
USD
436,056,034.52
3. The Company’s business has developed normally during the financial year under review. During the year
ended 30 June 2022, the Company did not exercise any development activity, neither has a branch nor
acquired its own shares.
4. Details on corporate governance and other required information disclosures according to Law of
10 December 2010 (Art. 68ter) are available on the Company website http://www.kernel.ua and in the
consolidated annual report of the Company for the year ended 30 June 2022, available at the Company
website.
5. Principal risks and uncertainties
At Kernel Holding S.A., management defines risk as an event, action or lack of action, which can lead to non-
achievement of the Company’s objectives. As a result of the latest review cycle, the Board approved Top-10 risks
faced by the Group for FY2023.
Strategic (Business) risks:
1. Logistics disruption
2. Loss of critical infrastructure
3. Low global soft commodities prices
4. Loss of inventories
5. Shortfall of proceeds from renewable energy sale
Financial risks:
6. Liquidity associated risks
7
KERNEL HOLDING S.A.
9, rue de Bitbourg
L-1273 Luxembourg
R.C.S. Luxembourg B 109173
Report of the Board of directors to the shareholders
Annual
accounts for the year ended
30 June 2022
5. Principal risks and uncertainties (continued)
Operational risks:
7. Trade position management issues
8. Credit and counterparty risks
9. Investment projects issues
10. Information security and IT
Other risks identified by the Company’s management include (but are not limited to):
• Weak harvest in Ukraine;
• Failure to maintain the integrity of the leasehold farmland bank;
• Fraudulent activities;
• COVID-19 related risks;
• Human capital risks;
• Increase in competition;
• Sustainability-related risks: non-compliance with environmental standards; undermined profitability due to
more severe environmental requirements applicable to farming and oilseed processing related with
implementation of European Green Deal; low sustainability rating of Kernel may increase cost of capital;
• Weak economic growth, either globally or in the Group’s key markets;
• Economic policy, political, social, and legal risks and uncertainties in countries other than Ukraine in which
Kernel Holding S.A. operates;
• Any loss or diminution in the services of Mr. Andrii Verevskyi, Kernel Holding S.A.’s chairman of the Board
of Directors;
• The risk that changes in the assumptions underlying the carrying value of certain assets, including those
occurring as a result of adverse market conditions, could result in the impairment of tangible and intangible
assets, including goodwill;
• The risk of fluctuations in the exchange rate of the Ukrainian hryvnia to the US dollar;
• The risk of disruption or limitation of natural gas or electricity supply;
• The risk of disruptions in Kernel Holding S.A.’s manufacturing operations;
• The risk of product liability claims;
• The risk of potential liabilities from investigations, litigation, and fines regarding antitrust matters;
• The risk that Kernel Holding S.A.’s governance and compliance processes may fail to prevent regulatory
penalties or reputational harm, both at operating subsidiaries and in joint ventures; and
• The risk that Kernel Holding S.A.’s insurance policies may provide inadequate coverage.
The principal risks and uncertainties which the Company is facing relate to the recoverability of shares in affiliated
undertakings and amounts owed by affiliated undertakings.
In accordance with the Luxembourg law, the Board confirms that to the best of its knowledge; the annual accounts
for the year ended 30 June 2022 give a true and fair view of the assets, liabilities, financial position and profit and
loss of the Company.
The report of the Board of Director’s gives a true and fair view of the position as per 30 June 2022 and the
developments during the financial year of the Company and describes the principal risks the Company is facing.
8
KERNEL HOLDING S.A.
9, rue de Bitbourg
L-1273 Luxembourg
R.C.S. Luxembourg B 109173
Report of the Board of directors to the shareholders
Annual
accounts for the year ended
30 June 2022
5. Principal risks and uncertainties (continued)
Credit risk
Credit risk is the risk of the financial loss to the Company if counterparty fails to meet its contractual obligations and
arises principally from the Company's credit linked assets. The Company's principal financial assets are amounts
owed by affiliated undertakings, other debtors, other investments and cash at bank and in hand, which represent
the Company's maximum exposure to credit risk in relation to financial assets.
As of 30 June 2022, the Board of the Company are of the opinion that there is currently no indication of an
impairment of the abovementioned financial assets.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulties in meeting obligations arising from its financial
liabilities as they fall due, mainly related to Eurobonds.
Market risk
Market risk is the risk that changes in prices, foreign exchange rates and interest rates will affect the Company's
income or its value of its financial assets.
Market risk embodies the potential for both gains and losses and includes currency risk, interest rate risk and price
risk.
(a) Currency risk
The presentation currency of the Company is US Dollar ("USD").
Currency risk is the risk which arises due to the assets and liabilities of the Company held in foreign currencies,
which will be affected by fluctuations in foreign exchange rates and limited to balances of cash in bank and in hand.
(b) Interest rate risk
Interest rate risk is the risk that the Company does not receive adequate interest from the Loans to secure interest
payments on the Notes. The Company is not exposed to any interest risk since both the Loans and Notes bear
almost the same terms and conditions.
(c) Price risk
No specific risks for the Company identified.
Financial Reporting Process
The Board is responsible for establishing and maintaining adequate internal control and risk management systems
of the Company in relation to the financial reporting process. Such systems are designed to manage rather than
eliminate the risk of failure to achieve the Company's financial reporting objectives and can only provide
reasonable and not absolute assurance against material misstatement or loss.
9
KERNEL HOLDING S.A.
9, rue de Bitbourg
L-1273 Luxembourg
R.C.S. Luxembourg B 109173
Report of the Board of directors to the shareholders
Annual
accounts for the year ended
30 June 2022
5. Principal risks and uncertainties (continued)
The Board assesses the performance of the Company as well as the recoverability of shares in affiliated
undertakings, amounts owed by affiliated undertakings and other investments, reporting preparation process as
well as before approving the Annual Accounts. From time to time the Board also examines and evaluates the
external auditors' performance, qualifications, and independence.
Powers of Directors
The Board is responsible for managing the business affairs of the Company in accordance with the Articles of
Association. The Board may delegate certain functions to other parties, subject to the supervision and direction by
the Directors.
Internal control
The Board is responsible for the establishment and adequate functioning of internal control in the Company.
Consequently, the Board has implemented a range of processes designed to provide control by the Board of
Directors over the Company's operations. These processes and procedures include measure regarding the general
control environment as well as specific internal control measures.
All these processes and procedures are aimed at ensuring a reasonable level of assurance that the Board has
identified and managed the significant risks of the Company and that it meets the operational and financial
objectives in compliance with applicable laws and regulations.
6. Corporate governance statement
The Company is subject to and complies with the relevant applicable laws and regulations, including the
Luxembourg Law of 10 August 1915 on commercial companies as amended, and the regulations applied by the
relevant trading venues and Stock Exchange and the Listing Rules of the Warsaw Stock exchange. The Company
does not apply additional requirements in addition to those required by the above. Each of the service providers
engaged by the Company is subject to their own corporate governance requirements.
With regard to the appointment and replacement of Directors, the Company is governed by its Articles of
Association, the relevant applicable laws and regulations, including the Luxembourg Law of 10 August 1915 on
commercial companies as amended, and the regulations applied by the by the relevant trading venues and Stock
Exchange and the Listing Rules of the Warsaw Stock exchange.
10
KERNEL HOLDING S.A.
9, rue de Bitbourg
L-1273 Luxembourg
R.C.S. Luxembourg B 109173
Report of the Board of directors to the shareholders
Annual
accounts for the year ended
30 June 2022
7. Board of Directors
The board of Directors is formed of eight Directors, of whom three are independent directors. All eight Directors
were elected to the Board by the Shareholders at General Meetings of the Shareholders:
(1) Mr. Andrii Verevskyi, chairman of the board of directors, was reappointed for a five-year term at the general
meeting of shareholders held on 11 December 2020. Mr. Verevskyi founded the Group’s business in 1995, holding
various executive positions within the Group. Presently, he oversees the strategic development and overall
management of the Group. Member of the nomination and renumeration committee.
(2) Mr. Andrii Miski-Oglu was appointed as independent non-executive director until ratification thereto by the next
general meeting of shareholders of the Company, and with effect as of 15 April 2022. Mr. Miski-Oglu has 20 years’
experience in public accounting and audit in Ernst&Young, involved in major EY Global audit-related initiatives.
Mr. Miski-Oglu is Certified Public Accountant in the US since 2011 and a member of The American Institute of
Certified Public Accountants (AICPA). Chairman of the audit committee.
(3) Mrs. Daria Danilczuk was appointed as independent non-executive director until ratification thereto by the next
general meeting of shareholders of the Company, and with effect as of 22 May 2022. Mrs. Danilczuk experienced
in agricultural commodity brokerage, specialized in Black Sea commodity markets, experienced in international
trade and biofuels trade and regulatory framework. Member of the audit committee and chairman of the nomination
and renumeration committee.
(4) Mr. Mykhaylo Mishov was appointed as independent non-executive director until ratification thereto by the next
general meeting of shareholders of the Company, and with effect as of 14 September 2022. Mr. Mishov has over
17 years’ experience in consulting, including Ernst & Young, Deloitte and KPMG, leading numerous strategy and
performance improvement projects for agribusiness clients. Member of the audit committee and member of the
nomination and renumeration committee.
(5) Mrs. Viktoriia Lukianenko was re-elected to the Board for a one-year term at the general meeting of
shareholders held on 10 December 2021. Mrs. Lukianenko is responsible for providing legal advice and
counselling in all aspects of Group’s business operations.
(6) Mr. Yevgen Osypov was re-elected to the Board for a one-year term by the shareholders at the general meeting
of the shareholders held on 10 December 2021. Mr. Osypov is responsible for the day-to-day management of the
Company’s subsidiaries, execution of strategy, budgets, and the Board decisions.
(7) Mrs. Anastasiia Usachova was re-elected to the Board for a one-year term by the shareholders at the general
meeting of the shareholders held on 10 December 2021. Mrs. Usachova has served the Group since 2003, and
today oversees the Group’s financial reporting, auditing, budgeting, financial planning and risk assessment.
(8) Mr. Yuriy Kovalchuk was re-elected to the Board for a one-year term by the shareholders at the general
meeting of the shareholders held on 10 December 2021. Mr. Kovalchuk oversees investor relations and new
investment opportunities for the Group.
11
KERNEL HOLDING S.A.
9, rue de Bitbourg
L-1273 Luxembourg
R.C.S. Luxembourg B 109173
Report of the Board of directors to the shareholders
Annual
accounts for the year ended
30 June 2022
8. Looking ahead:
For a detailed outlook for the financial year ending 30 June 2022, please refer to the annual report of the Group
which is available on web-site www.kernel.ua.
There are subsequent events as disclosed in Note 21.
The Board of Directors
By:
Mr. Andrii Verevskyi
By:
Mr. Andrii Miski-Oglu
By:
Mrs. Daria Danilczuk
By:
Mr. Mykhaylo Mishov
By:
Mrs. Viktoriia Lukianenko
By:
Mr. Yevgen Osypov
By:
Mrs. Anastasiia Usachova
By:
Mr. Yuriy Kovalchuk
17
KERNEL HOLDING S.A.
9, rue de Bitbourg
L-1273 Luxembourg
R.C.S. Luxembourg B 109173
Statement of the Board of Directors’ responsibilities for the
preparation and approval of annual accounts
For the year ended 30 June 2022
Annual
accounts for the year ended
30 June 2022
The Board of Directors (“the Board”) is responsible for the preparation, publication and fair presentation of the annual
accounts in accordance with Luxembourg legal and regulatory requirements relating to the preparation and
presentation of the annual accounts, and for such internal control as the Board determines is necessary to enable the
preparation of annual accounts that are free from material misstatement, whether due to fraud or error.
In preparing the annual accounts, the Board is responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the Board either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do
so.
We confirm that to the best of our knowledge and belief:
→ The annual accounts of Kernel Holding S.A. (the ‘Company’) presented in this Annual Report and established
in accordance with Luxembourg legal and regulatory requirements under the historical cost convention give a true and
fair view of the balance sheet, profit and loss accounts for the year then ended, and notes to the annual accounts,
including a summary of significant accounting policies; and
→ The Report of the Board of Directors includes a fair review of the development and performance of the
business and position of the Company and the undertakings included, together with a description of the principal risks
and uncertainties it faces.
14 November 2022
On behalf of the Board of Directors
Andrii Verevskyi Anastasiia Usachova
Chairman of the Board of Directors Director, Chief Financial Officer
18
KERNEL HOLDING S.A.
9, rue de Bitbourg
L-1273 Luxembourg
R.C.S. Luxembourg B 109173
Balance sheet as of 30 June 2022
Annual
accounts for the year ended
30 June 2022
The accompanying notes form an integral part of the annual accounts
ASSETS
Notes
30.06.2022
30.06.2021
USD
USD
B.
FORMATION EXPENSES
---
---
C.
FIXED ASSETS
1,104,350,491.22
1,099,442,080.84
III.
Financial assets
3
1,104,350,491.22
1,099,442,080.84
1.
Shares in affiliated undertakings
1,104,350,473.94
1,099,442,063.56
5.
Investments held as fixed assets
17.28
17.28
D.
CURRENT ASSETS
545,400,027.43
749,174,881.32
II.
Debtors
4
481,569,418.76
657,570,878.66
1.
Trade debtors
3,016,624.19
12,408.17
a)
becoming due and payable
within one year
3,016,624.19
12,408.17
2.
Amounts owed by affiliated
undertakings
476,369,159.07
594,383,554.46
a)
becoming due and payable
within one year
111,721,994.30
26,923,917.67
b)
becoming due and payable after
more than one year
364,647,164.77
567,459,636.79
4.
Other debtors
2,183,635.50
63,174,916.03
a)
becoming due and payable
within one year
1,183,635.50
56,198,916.03
b)
becoming due and payable after
more than one year
1,000,000.00
6,976,000.00
III.
Investments
5
63,280,324.35
90,741,194.67
3.
Other Investments
63,280,324.35
90,741,194.67
IV.
Cash at bank and in hand
550,284.32
862,807.99
E.
PREPAYMENTS
6
4,859,872.77
6,233,728.69
TOTAL ASSETS
1,654,610,391.42
1,854,850,690.85
19
KERNEL HOLDING S.A.
9, rue de Bitbourg
L-1273 Luxembourg
R.C.S. Luxembourg B 109173
Balance sheet as of 30 June 2022
Annual
accounts for the year ended
30 June 2022
The accompanying notes form an integral part of the annual accounts
LIABILITIES
Notes
30.06.2022
30.06.2021
USD
USD
A.
CAPITAL AND RESERVES
7
945,565,899.38
969,249,325.08
I.
Subscribed capital
2,218,928.64
2,218,928.64
II.
Share premiums and similar premiums
507,069,043.22
507,069,043.22
IV.
Reserves
221,893.00
221,893.00
1.
Legal reserve
221,893.00
221,893.00
V.
Profit or loss brought forward
425,670,599.02
552,146,900.92
VI.
Profit or loss for the financial year
10,385,435.50
(57,114,324.10)
VII.
Dividends
---
(35,293,116.60)
B.
PROVISIONS
8
38,386,501.26
36,216,890.16
3.
Other provisions
38,386,501.26
36,216,890.16
C.
CREDITORS
9
670,518,223.60
849,149,708.45
1.
Debenture loans
607,611,973.07
828,491,608.48
b)
Non-convertible loans
607,611,973.07
828,491,608.48
i)
becoming due and payable within one year
607,611,973.07
228,491,608.48
ii)
becoming due and payable after more than one year
---
600,000,000.00
4.
Trade creditors
1,264,094.08
1,139,207.15
a)
becoming due and payable within one year
1,264,094.08
1,139,207.15
6.
Amounts owed to affiliated undertakings
8,577,825.11
18,097,207.72
a)
becoming due and payable within one year
27,845.11
18,097,207.72
b)
becoming due and payable after more than one year
8,549,980.00
---
8.
Other creditors
53,064,331.34
1,421,685.10
a)
tax authorities
400,270.20
1,405,379.85
b)
social securities authorities
3,010.61
123.71
c)
other creditors
52,661,050.53
16,181.54
i)
becoming due and payable within one year
52,664,696.37
20,003.58
ii)
becoming due and payable after more than one year
(3,645.84)
(3,822.04)
D.
DEFERRED INCOME
10
139,767.18
234,767.16
TOTAL LIABILITIES
1,654,610,391.42
1,854,850,690.85
KERNEL HOLDING S.A.
9, rue de Bitbourg
L-1273 Luxembourg
R.C.S. Luxembourg B 109173
Profit and loss account for the year ended 30 June 2022
PROFIT AND LOSS ACCOUNT
Notes
From 01.07.2021 to
30.06.2022
From 01.07.2020 to
30.06.2021
USD
USD
4.
OTHER OPERATING INCOME
3
22,374,004.93
209,535.66
5.
RAW MATERIALS AND CONSUMABLES AND OTHER
EXTERNAL
EXPENSES
11
(7,281,534.19)
(6,802,792.62)
b)
Other external expenses
(7,281,534.19)
(6,802,792.62)
6.
STAFF
COSTS
12
(160,257.72)
(5,344.86)
a)
Wages and
salaries
(142,481.20)
(4,607.68)
b)
Social security costs
(17,441.90)
(564.13)
c)
Other staff costs
(334.62)
(173.05)
7.
VALUE ADJUSTMENTS
(5,976,000.00)
----
b)
in respect of current expenses
(5,976,000.00)
----
8.
OTHER OPERATING EXPENSES
14
(3,062,237.36)
(4,312,160.35)
9.
INCOME FROM PARTICIPATING INTERESTS
3
250,203,000.00
35,111,724.79
a)
derived from affiliated undertakings
250,203,000.00
35,111,724.79
10.
INCOME FROM OTHER INVESTMENTS AND LOANS FORMING
PART OF THE FIXED ASSETS
5
6,474,609.42
717,543.31
b)
other income not included under a)
6,474,609.42
717,543.31
11.
OTHER INTEREST RECEIVABLE AND SIMILAR INCOME
39,957,845.40
61,198,097.11
a)
derived from affiliated undertakings
38,865,256.23
61,020,804.16
b)
other interest and similar income
1,092,589.17
177,292.95
13
VALUE ADJUSTMENTS IN RESPECT OF FINANCIAL ASSETS
AND OF INVESTMENTS HELD AS CURRENT ASSETS
3
(216,154,216.83)
(49,946,062.88)
14.
INTEREST PAYABLE AND SIMILAR EXPENSES
(75,048,612.76)
(93,279,046.78)
a)
derived from affiliated undertakings
3
(22,359,182.22)
---
b)
other interest and similar expenses
(52,689,430.54)
(93,279,046.78)
15.
TAX ON PROFIT OR LOSS
(935,669.11)
---
16.
PROFIT OR LOSS AFTER TAXATION
10,390,931.78
(57,108,506.62)
17.
OTHER TAXES NOT SHOWN UNDER ITEMS 1 TO 16
(5,496.28)
(5,817.48)
18.
PROFIT OR (LOSS) FOR THE FINANCIAL YEAR
10,385,435.50
(57,114,324.10)
21
KERNEL HOLDING S.A.
9, rue de Bitbourg
L-1273 Luxembourg
R.C.S. Luxembourg B 109173
Notes to the annual accounts as at 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 1 – General information
Kernel Holding S.A. (the “Company”) was incorporated on 15 June 2005 and organized under the laws of Luxembourg
in the form of a “Société Anonyme” (“S.A.”) for an unlimited period of time.
The registered office is established at 9, rue de Bitbourg, L-1273 Luxembourg.
The Company’s financial year starts on 1 July and ends on 30 June of each year.
The Company is the holding company for a group of entities which together form the Kernel Group (the “Group”). The
subsidiaries of the Group own assets primarily in Ukraine and operate across the agricultural value chain.
The Company’s object is the acquisition, the management, the enhancement and the disposal of participations in
whichever form in domestic and foreign companies. The Company may also finance the Group entities via granting all
kinds of support, loans, advances and guarantees.
It may open branches in Luxembourg and abroad. Furthermore, the Company may acquire and dispose of all other
securities by way of subscription, purchase, exchange, sale or otherwise.
It may also acquire, enhance and dispose of patents and licenses, as well as rights deriving therefrom or supplementing
them.
In addition, the Company may acquire, manage, enhance and dispose of real estate located in Luxembourg or abroad.
On the basis of the offering prospectus (the “Prospectus”) approved on 25 October 2007 by the Commission de
Surveillance du Secteur Financier, shares in the Company were delivered to investors in either through a public offering
in Poland or an international offering by way of private placements to selected institutional investors in certain
jurisdictions outside of Poland.
On 23 November 2007, the Company made a listing on the Warsaw Stock Exchange (“WSE”).
As of 30 June 2022, the Company’s shares were allocated as follows: 38.05% (30 June 2021: 39.16%) held by Namsen
Limited Liability Company, 54.09% (30 June 2021: 60.84%) are in free-float, and 7.86% are own shares purchased by
other Group’s entity.
On 24 September 2021 and 3 February 2022, as the result of a share buy-back program, the Group purchased the
Company’s equity instruments (3,227,000 shares constituting 3.84% and 3,375,000 shares constituting 4.02% of the
total share capital, respectively) paying the consideration equal USD 96,897 thousand, including any directly attributable
incremental costs. The purchased shares will be retained by the Group without any voting or dividend rights.
The Company also prepares Group consolidated financial statements which are published on the basis of the law dated
10 August 1915, as amended. The consolidated annual report of the Company for the year ended 30 June 2022
available at the Company website, http://www.kernel.ua.
22
KERNEL HOLDING S.A.
9, rue de Bitbourg
L-1273 Luxembourg
R.C.S. Luxembourg B 109173
Notes to the annual accounts as at 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 2 – Significant accounting policies
2.1 General principles
These annual accounts have been prepared in accordance with Luxembourg legal and regulatory requirements under
the historical cost convention. Accounting policies and valuation rules are, besides the ones laid down by the Law of 19
December 2002 and 10 December 2010, determined and applied by the Board of Directors.
The preparation of these annual accounts requires the use of certain critical accounting estimates. It also requires the
Board of Directors to exercise significant judgment in the process of applying the accounting policies. Changes in
assumptions may have a significant impact on the annual accounts in the period in which the assumptions changed.
Management believes that the underlying assumptions are appropriate and that the annual accounts therefore present
the financial position and results fairly.
The Company makes estimates and assumptions that affect the reported amounts of assets and liabilities in the next
financial year. Estimates and judgments are continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the circumstances.
2.2 Comparative figures
A re-classification adjustment has been reflected in the profit & loss account, whereby USD 29,250.00 previously
disclosed under “Other external expenses” have now been moved under “Interest payable and similar expenses”. This
re-classification did not have an impact on the net equity and profit or loss of the year ended 30 June 2021. Moreover,
another re-classification adjustment was done to move USD 33,507,274.59 of interest from ‘Other interest receivable
and similar income’ sub section b) other interest and similar income, to sub section a) as it is derived from affiliated
undertakings.
2.3 Significant accounting policies
The following are the significant accounting policies and valuation rules adopted by the Company in the preparation of
these annual accounts.
2.3.1 Financial assets
Historical cost model
Shares in affiliated undertakings are valued at the lower of the purchase price including the expenses incidental thereto
or the market value. Investments held as fixed assets (“Investments”) shown under “Financial assets” are recorded at
their nominal value. Where, in the opinion of the Board of Directors, a dura le diminution in value of financial asset has
occurred, a value of adjustment is established. These value adjustments are not continued if the reasons for which the
value adjustments were made have ceased to apply.
2.3.2 Debtors
Debtors are valued at their nominal value. They are subject to value adjustments where their recovery is compromised.
These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to
apply.
23
KERNEL HOLDING S.A.
9, rue de Bitbourg
L-1273 Luxembourg
R.C.S. Luxembourg B 109173
Notes to the annual accounts as at 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 2 – Significant accounting policies (continued)
2.3.3 Investments
Transferable securities are valued at the lower of the purchase price including the expenses incidental thereto or at
the market value. The market value or recovery value corresponds to:
• For securities listed on a stock exchange or traded on another regulated market, the fair value is based on
the last available quote.
• For unlisted securities or securities that are not traded on another regulated market or where the last quote is
not representative, the fair value is based from the most probable market value estimated with due care and in good
faith by the Board of Directors.
2.3.4 Cash at bank and in hand
Cash is valued at its nominal value.
2.3.5 Foreign currency translation
The Company maintains its books and records in United-States dollar (“USD”). The balance sheet and the profit and
loss account are expressed in USD.
Transactions expressed in currencies other than USD are translated into USD using the exchange rates prevailing at
the dates of the transactions.
Financial assets expressed in currencies other than USD are translated into USD at the exchange rate effective at
the time of the transaction. At the balance sheet date, these assets remain translated at their historical exchange
rates.
Cash at bank and in hand are translated at the exchange rate effective at the balance sheet date. Exchange losses
and gains are recorded in the profit and loss account of the year.
Other assets and liabilities are translated separately respectively at the lower or at the higher of the value converted
at the historical exchange rate or the value determined on the basis of the exchange rates effective at the balance
sheet date. The unrealized exchange losses are recorded in the profit and loss account. The realized exchange gains
are recorded in the profit and loss account at the moment of their realization.
Where there is an economic link between an asset and a liability, these are valued in total according to the method
described above and the net unrealized loss is recorded in the profit and loss account and the net unrealized gains
are not recognized.
2.3.6 Prepayments
Prepayments include expenditure items incurred during the financial year but relating to a subsequent financial year.
Loan issue costs included as part of prepayments is capitalized and amortized to the profit and loss account over the
period of the related loan.
2.3.7 Provisions
Provisions are intended to cover losses or debts which originate in the financial year under review or in the previous
financial year, the nature of which is clearly defined and which, at the date of the balance sheet, are either likely to be
incurred or certain to be incurred but uncertain as to their amount or the date they will arise.
24
KERNEL HOLDING S.A.
9, rue de Bitbourg
L-1273 Luxembourg
R.C.S. Luxembourg B 109173
Notes to the annual accounts as at 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 2 – Significant accounting policies (continued)
Provisions may also be created to cover charges which originate in the financial year under review or in a previous
financial year, the nature of which is clearly defined and which at the date of the balance sheet are either likely to be
incurred or certain to be incurred but uncertain as to their amount or the date on which they will arise.
Provisions for taxation corresponding to the tax liability estimated by the Company for the financial years for which
the tax return has not yet been filed are recorded under the caption “Creditors becoming due and payable within one
year”. The advance payments are shown in the assets of the balance sheet under the “Debtors becoming due and
payable within one year” item.
2.3.8 Creditors
Creditors are valued at their reimbursement value.
2.3.9 Deferred income
Deferred income includes income items received during the financial year but relating to a subsequent financial
period.
Note 3 – Financial assets
For assets following the historical cost model the movements of the year are as follows:
Share in affiliated
undertakings
Investments held
as fixed assets
Total
2022
USD
USD
USD
Gross book value – opening balance
1,152,825,980.42
49.00
1,152,826,029.42
Additions for the year
406,172,656.73
---
406,172,656.73
Disposals for the year
(185,110,029.52)
---
(185,110,029.52)
Transfers for the year
---
---
---
Gross book value – closing balance
1,373,888,607.63
49.00
1,373,888,656.63
Accumulated value adjustment – opening balance
(53,383,916.86)
(31.72)
(53,383,948.58)
Allocation for the year
(216,154,216.83)
---
(216,154,216.83)
Reversals for the year
---
---
---
Transfers for the year
---
---
---
Accumulated value adjustment – closing balance
(269,538,133.69)
(31.72)
(269,538,165.41)
Net book value – opening balance
1,099,442,063.56
17.28
1,099,442,080.84
Net book value – closing balance
1,104,350,473.94
17.28
1,104,350,491.22
During the year ended 30 June 2022, Etrecom Investments Limited issued and allotted additional ordinary shares for
a total amount of EUR 86,309,300.00 (equivalent to USD 102,000,000.00). In fact, the increase in authorized capital
of Etrecom Investments Limited was conducted in two stages: 16
th
August 2021 by 42,258,600 fully paid ordinary
shares totalling EUR 42,258,600.00 (equivalent to USD 51,000,000.00) and 11
th
October 2021 by 44,050,700 fully
paid ordinary shares totalling EUR 44,050,700.00 (equivalent to USD 51,000,000.00). The payments of shares in full
were settled in cash in several tranches.
25
KERNEL HOLDING S.A.
9, rue de Bitbourg
L-1273 Luxembourg
R.C.S. Luxembourg B 109173
Notes to the annual accounts as at 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 3 – Financial assets (continued)
During the year ended 30 June 2022, there were certain changes in Company’s participation interest in Avere
Commodities S.A. (“Avere”):
On 1 October 2021, the Company entered into two separate share purchase agreements, whereby it acquired 25% or
250 ordinary shares for an aggregate amount of USD 88,023,404.00 from minority shareholders (also management
of Avere), which resulted in increase of ownership in Avere to 85%.
On 30 November 2021, the Company subscribed to an additional 50 fully paid ordinary shares totalling CHF 5,000.00
(equivalent to USD 5,369.00) and 375 fully paid participation certificates totalling CHF 3,750.00 (equivalent to USD
4,027.00), after which capital of in Avere consisted of 1,125 shares (225 of which belonged to a minority shareholder)
and 375 participation certificates
On 1 December 2021, the Company incorporated in Switzerland a new affiliated undertaking, Baobab Capital S.A.
(“Baobab”) with a subscribed capital of CHF 100,000.00 (equivalent to USD 107,344.00). On 14 December 2021, the
Company entered into a Contribution Agreement, whereby, it contributed 375 participation certificates held in Avere,
to Baobab for a total value of CHF 81,861,765.00 (equivalent to USD 88,023,404.00). According to the updated
Charter of Avere, participation certificates have the same power for dividend distribution as ordinary shares.
On 15 December 2021, the Company entered into a Share Purchase and recharge agreement, whereby it sold all of
its holding in Baobab, amounting to CHF 81,961,765.00 (equivalent to USD 88,130,748.00) to previous holders of
Avere shares for the consideration equivalent of USD 65,870,148.00, considering a 25% discount, amounting to
USD 22,260,600.00. The discount was applied as the shares were sold without the transferring of the related voting
rights. This aforementioned discount has been treated as an expense for the Company under the classification of
Interest payable and similar expenses concerning affiliated undertakings. Similarly, the relating recharging income
from Avere Commodities S.A. of the same discount was disclosed under the classification of Other Operating
Income.
On 9 March 2022, the minority shareholders of Avere exercised put options, whereby, it obliged the Company to
acquire their participation interest in Avere. The consideration amount was USD 64,626,348.00, out of which
USD 32,000,000.00 was paid as of 30 June 2022, which resulted in increased to 100% ownership in Avere. As of
30 June 2022, the outstanding amount of USD 32,626,348.00 was presented in line “Other creditors” (Note 9).
During the year ended 30 June 2022, the Company increased value of its participation interest through additional
financial contributions to the following companies:
• Estron Corporation LTD for an amount of EUR 200,000.00 (equivalent to USD 236,280.00).
• Starokonstiantynivskyi OEZ LLC for an amount of USD 54,188,730.00 (equivalent to UAH 1,488,531,371.60).
As of 30 June 2021, an additional financial contribution to the authorized capital Starokonstiantynivskyi OEZ
LLC was presented as Contribution advances in Debtors balance sheet line. n accordance with the
agreement, the increase in investment arose from the moment of amendments displayed to the United State
Register of Legal Entities, Individual Entrepreneurs and Public Organizations.
• Sentix Polska for an amount of PLN 8,000.00 (equivalent to USD 1,873.21).
• Chorna Kamianka LLC and Urozhai Agricultural LLC have been merged into the absorbing affiliated
undertaking Ahrofirma Khliborob LLC.
26
KERNEL HOLDING S.A.
9, rue de Bitbourg
L-1273 Luxembourg
R.C.S. Luxembourg B 109173
Notes to the annual accounts as at 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 3 – Financial assets (continued)
As at 30 June 2022, considering the financial situation of some subsidiaries, the management decided to record the
following impairments and reversals of value adjustment:
• USD 164,129,530.73 in relation to its participation held in Etrecom Investments Limited reducing the net book
value of investment from USD 329,014,080.63 to USD 164,884,549.90.
• USD 41,650.43 in relation to its participation held in Cherkaskyi, Public Joint Stock Company reducing the
net book value of investment from USD 486,789.42 to USD 445,138.99.
• USD 410,040.00 in relation to its participation held in Bilovodskyi Kombinat Khliboprodyktiv reducing the net
book value of investment from USD 3,909,048.00 to USD 3,499,008.00
• USD 1,873.21 in relation to its participation held in Sentix Polska reducing the net book value of investment
from USD 1,873.21 to USD 0.00.
• USD 50,227,497.43 in relation to its participation held in Kernel Trade LLC reducing the net book value of
investment from USD 231,867,105.22 to USD 181,639,607.79.
• USD 1,343,625.03 in relation to its participation held in Kernel Capital LLC reducing the net book value of
investment from USD 354,283,302.49 to USD 352,939,677.46.
During the year ended 30 June 2022, the Company received the following dividends from its affiliated undertakings:
• Avere Commodities S.A. for an aggregate amount of CHF 193,032,089.90 (equivalent to USD
207,203,000.00);
• Inerco Trade S.A. for an amount of CHF 39,994,730.00 (equivalent to USD 43,000,000.00).
27
KERNEL HOLDING S.A.
R.C.S. Luxembourg B 109173
Notes to the Annual accounts for the year ended 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 3 – Financial assets (continued)
Undertakings in which the Company holds a percentage in their share capital or in which it is a general partner are as follows:
Name of
undertakings
Registered office
Direct
Ownership
%
Last
balance
sheet date
Currency
Net equity at the
balance sheet date
(unaudited)
Currency
(Loss)/Profit the
last financial year
(unaudited)
Currency
Net Book Value
Inerco Trade S.A.
Rue Jules Gachet 9, CH1260
Nyon, Switzerland
100.00%
30.06.2022
USD
$ 144,909,000.00
USD
$ 43,470,000.00
USD
$ 3,532,673.50
Kernel Capital LLC
3 Tarasa Shevchenka lane,Kyiv,
01001 Ukraine
99.97%
30.06.2022
USD
$ 245,712,300.71
USD
$ (3,000.00)
USD
$ 352,939,677.46
Kernel Trade LLC
3 Tarasa Shevchenka lane,
Kyiv, 01001 Ukraine
15.87%
30.06.2022
USD
$ 47,148,862.76
USD
$ 10,166,000.00
USD
$ 181,639,607.79
Ukragrobusiness
LLC
3 Tarasa Shevchenka lane,
Kyiv, 01001 Ukraine
100.00%
30.06.2022
USD
$ 341,955,000.00
USD
$ (4,000.00)
USD
$ 896,417.35
Estron Corporation
Ltd
29A, Annis Komninis, P.C.
,1061 Nicosia, Cyprus
100.00%
30.06.2022
USD
$ (82,037,402.66)
USD
$ (9,190,000.00)
USD
$ 97,762,995.48
Etrecom
Investments LTD
13, Agiou Prokopiou, 2406
Egkomi Cyprus
100.00%
30.06.2022
USD
$ 164,884,549.90
USD
$ (35,931,000.00)
USD
$ 164,884,549.90
Bilovodskyi
Kombinat
Khliboprodyktiv
2, Bilovodska Street, Romny
district, Sumy region, Bilovod
village, 42065, Ukraine
91.12%
30.06.2022
USD
$ 3,499,008.00
USD
$ (74,000.00)
USD
$ 3,499,008.00
Avere Commodities
SA
15 bis Rue des Alpes, 1201
Geneva, Switzerland
100.00%
30.06.2022
USD
$ 185,023,000.00
USD
$ 178,996,000.00
USD
$ 64,696,199.64
Filstar Limited
Prosfygon, 4, Agia Varvara,
2560, Nicosia, Cyprus
100.00%
30.06.2022
USD
$ (31,017.00)
USD
$ (13,000.00)
USD
$ -
Sentix Polska
Chmielna 73, 00-8021, Warsaw,
Poland
100.00%
30.06.2022
USD
$ (2,000.00)
USD
$ (3,000.00)
USD
$ -
Prydniprovskyi Krai
ALLC
52/3 Obuhova str, Zolotonosha,
Cherkasʹka region, 19700
Ukraine
99.99%
30.06.2022
USD
$ 159,182,248.98
USD
$ 93,868,000.00
USD
$ 7,512,088.26
Agroservise LLC
66410, Odessa region, Ananyev
district, village Stallions,
STREET PRIVOKZALNA,
building 4
99.99%
30.06.2022
USD
$ -
USD
$ -
USD
$ 1,170,213.96
Sub-total
$ 878,533,431.34
28
KERNEL HOLDING S.A.
R.C.S. Luxembourg B 109173
Notes to the Annual accounts for the year ended 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 3 – Financial assets (continued)
Name of
undertakings
Registered office
Direct
Ownership
%
Last
balance
sheet date
Currency
Net equity at the
balance sheet
date (unaudited)
Currency
(Loss)/Profit the
last financial year
(unaudited)
Currency
Net Book Value
Ahrofirma Khliborob
LLC
Nalyvayka, Holovanivsʹkyy district,
Kirovohradsʹka region, 26512 Ukraine
99.99%
30.06.2022
USD
$ 154,852,257.00
USD
$ 62,239,000.00
USD
$ 21,460,728.58
Hovtva Agricultural
LLC
38400, Poltava oblast, Reshetilovsky
district, Reshetilovka city, POLTAVSKA
STREET, building 96
99.99%
30.06.2022
USD
$ 82,211,218.11
USD
$ 25,543,000.00
USD
$ 4,478,278.36
Enselco Agro LLC
59 Tsentralʹna str, Sakhnivtsi,
Starokostiantynivsʹkyy district,
Khmelnitskyi region, 31134 Ukraine
99.99%
30.06.2022
USD
$ 233,672,630.40
USD
$ 126,060,000.00
USD
$ 742,196.36
Druzhba-Nova
Agricultural LLC
59 Komarova str., Varva, Varvynskyi
district, Chernihiv region, 17600
Ukraine
100.00%
30.06.2022
USD
$ 372,818,883.81
USD
$ 93,115,000.00
USD
$ 76,452,610.43
Agropolis LLC
1 Ivana Franka str, Zavodsʹke,
Chortkivsʹkyy district,Ternopilʹsʹka
region, 48523 Ukraine
99.93%
30.06.2022
USD
$ 44,057,138.40
USD
$ 18,980,000.00
USD
$ 346,464.80
Cherkaskyi Public
Joint Stock Company
Retsyukivshchyna, Drabivsʹkyy district,
Cherkasʹka region, 19836 Ukraine
65.08%
30.06.2022
USD
$ 445,138.99
USD
$ (54,000.00)
USD
$ 445,138.99
Mriia Agricultural
LLC
Petrivka, Krasnohradsʹkyy district,
Kharkivsʹka region, 63340 Ukraine
99.97%
30.06.2022
USD
$ 41,386,580.30
USD
$ 5,621,000.00
USD
$ 9,361,531.52
Ahro Lohistyka
Ukraina LLC
24 Pavlenkivska square, Poltava,
Poltava region, 36014 Ukraine
100.00%
30.06.2022
USD
$ 5,630,000.00
USD
$ 10,000.00
USD
$ 5,006,000.00
Starokonstiantynivsky
i OEZ LLC
31100, Khmelnytskyi oblast,
Starokostiantyniv city, VESNYANSKE
SHOSE STREET, building 5
78.54%
30.06.2022
USD
$ 53,813,995.17
USD
$ 643,000.00
USD
$ 60,204,180.73
Prydniprovskyi
Oliinoekstraktsiinyi
Zavod LLC
Murmanska street, building 53,
Kropyvnytskyi city, Kirovohrad oblast,
25014
34.92%
30.06.2022
USD
$ 33,420,733.71
USD
$ (2,762,000.00)
USD
$ 37,000,000.00
Transgrainterminal
Investments
Odessa region, Chernomorsk city,
Transportna street, house 44
22.82%
30.06.2022
USD
$ 8,879,233.59
USD
$ 1,053,000.00
USD
$ 10,319,912.83
JV
TransBulkTerminal
LLC
Ukraine, 68000, Odesskaya district,
city Illichivsk, 58, Sukhomlinskaya str.
<0.01%
30.06.2022
USD
$ 17.58
USD
$ (130,00.00)
USD
$ 17.28
Sub-total
$ 225,817,059.88
Total
$ 1,104,350,491.22
29
KERNEL HOLDING S.A.
R.C.S. Luxembourg B 109173
Notes to the annual accounts for the year ended 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 4 – Debtors
Debtors are mainly composed of:
becoming due
and payable
within one year
becoming due
and payable
after more than
one year
Total
30.06.2022
Total
30.06.2021
USD
USD
USD
USD
Amounts owed by affiliated undertakings
111,721,994.30
364,647,164.77
476,369,159.07
594,383,554.46
Loans to affiliated undertakings (indirect
shareholding)
26,773,852.19
229,528,308.75
256,302,160.94
232,159,261.23
Loans to affiliated undertakings (direct
shareholding)
84,921,035.44
135,118,856.02
220,039,891.46
362,197,186.56
Current receivable from affiliated undertakings
(direct shareholding)
27,106.67
---
27,106.67
27,106.67
Trade debtors
3,016,624.19
---
3,016,624.19
12,408.17
Deferred account - TAG Aviation Malta
2,990,604.17
---
2,990,604.17
---
Receivable from suppliers
26,020.02
---
26,020.02
12,408.17
Other debtors
1,183,635.50
1,000,000.00
2,183,635.50
63,174,916.03
Receivable - Khmelnytskkhleboproduct -
24,9% *
---
---
---
3,124,794.37
Receivable - Stiomi - Holding 24,9% *
---
---
---
2,851,205.63
Contribution advances to
Starokonstiantynivskyi Oliinoekstraktsiinyi
Zavod
---
---
---
54,188,730.00
Loans to related party
783,986.29
1,000,000.00
1,783,986.29
1,768,986.30
VAT receivable
387,563.34
---
387,563.34
1,207,246.88
Receivable from third party
7,084.53
---
7,084.53
28,562.46
Advance Net Wealth Tax 2022
5,001.34
---
5,001.34
---
Advance Net Wealth Tax 2020
---
---
---
5,390.39
Total
115,922,253.99
365,647,164.77
481,569,418.76
657,558,470.49
30
KERNEL HOLDING S.A.
R.C.S. Luxembourg B 109173
Notes to the annual accounts for the year ended 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 4 – Debtors (continued)
Loans to affiliated undertakings
(direct shareholding)
Interest
Rate %
Maturity
Currency
Interest Income for
the year ending
30.06.22
Accrued Interest
30.06.22
Outstanding
Principal
30.06.22
Accrued Interest
30.06.21
Outstanding
Principal
30.06.21
Inerco Trade S.A. (#17/10)
6,50%
31.12.2023
USD
5,240,363.14
6,368,344.43
80,789,464.82
1,127,981.29
76,889,464.82
Etrecom Investment Limited (w/n)
6,80%
31.12.2023
USD
2,354,558.69
567,928.54
32,590,000.00
4,231,835.63
35,000,000.00
Inerco Trade S.A. (#01/09)
6,50%
31.12.2023
USD
1,484,426.84
156,712.33
20,000,000.00
---
---
Etrecom Investment Limited (#04-08)
6,80%
31.12.2023
USD
482,556.78
---
---
---
---
Etrecom Investment Limited (#24/10)
9,80%
31.12.2023
USD
185,485.70
---
---
1,548,337.60
2,310,500.00
Inerco Trade S.A. (#1)
8,75%
31.12.2023
USD
152,196.75
234,712.74
1,739,391.20
82,515.99
1,739,391.20
Inerco Trade S.A. (#10/12)
6,50%
31.05.2023
USD
4,675,026.09
5,669,858.53
71,923,478.87
994,832.44
71,923,478.87
Kernel Trade LLC - Credit Line
7,50%
15.10.2021
USD
1,745,156.08
---
---
16,780,355.57
149,568,493.15
16,319,770.07
12,997,556.57
207,042,334.89
24,765,858.52
337,431,328.04
Loans to affiliated undertakings
(indirect shareholding)
Interest
Rate %
Maturity
Currency
Interest Income for
the year ending
30.06.22
Accrued Interest
30.06.22
Outstanding
Principal
30.06.22
Accrued Interest
30.06.21
Outstanding
Principal
30.06.21
Restomon Limited (Inerco)
9,80%
31.12.2023
USD
16,084,209.74
13,438,879.38
164,119,109.34
1,432,725.21
164,619,109.34
Restomon Limited (Jerste)
9,80%
31.12.2023
USD
6,410,101.52
4,733,817.91
65,409,199.41
698,227.27
65,409,199.41
Estron Corporation Limited (#25-02)
6,50%
15.02.2023
USD
4,380.38
4,380.38
199,980.00
---
---
Restomon Limited (#03-03)
5,00%
31.01.2023
USD
46,794.52
46,794.52
8,350,000.00
---
---
22,545,486.16
18,223,872.19
238,078,288.75
2,130,952.48
230,028,308.75
Loan to related party
Interest
Rate %
Maturity
Currency
Interest Income for
the year ending
30.06.22
Accrued Interest
30.06.22
Outstanding
Principal
30.06.22
Accrued Interest
30.06.21
Outstanding
Principal
30.06.21
Emmark Capital Ltd – 17th May 2018
9,50%
20.12.2023
USD
94,999.98
---
1,000,000.00
---
1,000,000.00
Emmark Capital Ltd – 26th March 2020
2,00%
31.03.2023
USD
14,999.99
33,986.29
750,000.00
18,986.30
750,000.00
109,999.97
33,986.29
1,750,000.00
18,986.30
1,750,000.00
I I
31
KERNEL HOLDING S.A.
R.C.S. Luxembourg B 109173
Notes to the annual accounts for the year ended 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 4 – Debtors (continued)
Loans to affiliated undertakings (direct shareholding)
Inerco Trade S.A. (#17/10)
During the financial year, the Company issued a loan for an aggregate amount of USD 3,900,000.00.
Etrecom Investment Limited (w/n)
During the financial year, the Company has received aggregate repayments amounting to USD 8,428,465.78 out of
which USD 2,410,000.00 was for the principal amount and USD 6,018,465.78 for the accrued interest.
Inerco Trade S.A. (#01/09)
On 1 September 2021, the Company entered into a new loan agreement #01/09 with Inerco Trade S.A. and granted
loan for an aggregate amount of USD 193,505,968.39, out of which USD 173,505,968.39 were repaid till
30 June 2022. Also, during the year, the Company received interest repayments for an aggregate amount of
USD 1,327,714.51.
Etrecom Investment Limited (#04-08)
On 4 August 2021, the Company entered into a new loan agreement #04-08 with Etrecom Investment Limited. During
the financial year, the Company has received aggregate repayments amounting to USD 36,482,496.78 out of which
USD 35,999,940.00 was for the principal amount and USD 482,556.78 for the accrued interest.
As of 30 June 2022, the loan principal and interest accrued were fully repaid.
Etrecom Investment Limited (#24/10)
During the financial year, the Company has received aggregate repayments amounting to USD 4,044,323.30 out of
which USD 2,310,500.00 was for the principal amount and USD 1,733,823.30 for the accrued interest.
As of 30 June 2022, the loan principal and interest accrued were fully repaid.
Inerco Trade S.A. (#1)
There were no principal and interest repayments during the year ended 30 June 2022. The interest income for the
year ended 30 June 2022 amounted to USD 152,196.75.
Inerco Trade S.A. (#10/12)
There were no principal and interest repayments during the year ended 30 June 2022. The interest income for the
year ended 30 June 2022 amounted to USD 4,675,026.09.
Kernel Trade LLC – Credit Line
During the financial year, the Company has received aggregate repayments amounting to USD 168,094,004.80, out
of which USD 149,568,493.15 was for the principal amount and USD 18,525,511.65 for the accrued interest.
As at 30 June 2022, the loan principal and interest accrued were fully repaid.
Loans to affiliated undertakings (indirect shareholding)
Restomon Limited (Inerco)
During the financial year, the Company received aggregate repayments for an amount of USD 4,578,055.57, out of
which USD 500,000.00 was for principal amount and USD 4,078,055.57 was for accrued interest.
Restomon Limited (Jerste)
During the financial year, the Company received interest payments for an aggregate amount of USD 2,374,510.88.
Estron Corporation Limited (#25-02)
On 25 February 2022, the Company entered into a new loan agreement #25-02 with Estron Corporation Limited and
granted loan for an aggregate amount of USD 199,980.00.
32
KERNEL HOLDING S.A.
R.C.S. Luxembourg B 109173
Notes to the annual accounts for the year ended 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 4 – Debtors (continued)
Restomon Limited (#03-03)
On 3 March 2022, the Company entered into a new loan agreement #03-03 with Restomon Limited and granted loan
for an aggregate amount of USD 8,350,000.00.
Loans to related party
Emmark Capital Ltd - 17
th
May 2018
As at 30 June 2022, the outstanding loan balance is that of USD 1,000,000.00 and the interest income for the year
amounted to USD 94.999,98. There were no repayments during the year ended 30 June 2022.
Emmark Capital Ltd - 26
th
March 2020
As at 30 June 2022, the outstanding loan balance is that of USD 750,000.00 and the interest income for the year
amounted to USD 14,999.99. There were no repayments during the year ended 30 June 2022.
Note 5 – Investments
Investments becoming due and payable within one year are composed of the following:
30.06.2022
30.06.2021
USD
USD
Non-convertible loans
Investment certificates
63,280,324.35
90,741,194.67
Total
63,280,324.35
90,741,194.67
During the financial year, the Company traded in two different ‘Investment certificates – Nominal Shares’ investments.
During the financial year, the Company purchased investment certificates with ISIN code UA4000125959 for an
aggregate amount of USD 8,275,570.00 and further sold all investments certificates.
The Company purchased investment certificates with ISIN code UA4000179790 for an aggregate amount of USD
94,825,097.40 and further sold part of it in amount of USD 121,789,552.13.
In aggregate, for the year ending 30 June 2022, the Company made a gain on disposal on its investment certificates
for an amount of USD 6,474,609.42 (30 June 2021: nil).
33
KERNEL HOLDING S.A.
R.C.S. Luxembourg B 109173
Notes to the annual accounts for the year ended 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 6 – Prepayments
Prepayments are composed of:
30.06.2022
30.06.2021
USD
USD
Eurobonds issuance fees
---
1,329,646.47
Eurobonds issuance fees - Amortisation
---
(1,174,521.06)
Eurobonds repayment premium
---
1,057,025.60
Eurobonds repayment premium - Amortisation
---
(933,705.94)
Issuance Cost/Discount - Eurobonds ($300m)
4,234,732.33
4,234,732.33
Issuance Cost/Discount - Eurobonds issued 27.10.2020
3,039,419.17
3,039,419.17
Issuance Cost/Discount - Amortisation
(1,959,026.70)
(1,186,104.54)
Issuance Cost/Discount - Amortisation
(455,252.03)
(132,763.34)
Total
4,859,872.77
6,233,728.69
The above prepayments originate related to Eurobonds issued by the Company, for which these are disclosed under
Note 9.
Note 7 – Capital and Reserves
Subscribed
Capital
Share
premiums and
similar
premiums
Legal reserve
Profit or loss
brought
forward
Result for the
financial
year
Dividends
Total
USD
USD
USD
USD
USD
USD
USD
As at 30 June 2021
2,218,928.64
507,069,043.22
221,893.00
552,146,900.92
(57,114,324.10)
(35,293,116.60)
969,249,325.08
Movements for the year:
• Allocation of prior
year's result
---
---
---
(92,407,440.70)
57,114,324.10
35,293,116.60
---
• Profit for the year
---
---
---
---
10,385,435.50
---
10,385,435.50
• Dividend payments /
allocation
---
---
---
(34,068,861.20)
---
---
(34,068,861.20)
As at 30 June 2022
2,218,928.64
507,069,043.22
221,893.00
425,670,599.02
10,385,435.50
---
945,565,899.38
The allocation of prior year’s results was approved by the General Shareholders’ Meeting of 10 December 2021.
Subscribed capital
The Company’s share capital as of 30 June 2022 and 2021 amounts to USD 2,218,928.64 divided into 84,031,230
shares without indication of a nominal value.
Share premium and similar premiums
The share premium account as of 30 June 2022 and 2021 amounts to USD 507,069,043.22.
Legal reserve
Under Luxembourg law, the Company is obliged to allocate to a legal reserve a minimum of 5% of its annual net profit
until this reserve reaches 10% of the subscribed share capital. This reserve is not available for distribution.
As of 30 June 2022 and 2021, the legal reserve of the Company amounts to USD 221,893.00, and is fully allocated.
34
KERNEL HOLDING S.A.
R.C.S. Luxembourg B 109173
Notes to the annual accounts for the year ended 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 7 – Capital and Reserves (continued)
Dividends
On 10 December 2021, the Company declared a dividend at USD 0.44 per ordinary share for the financial year ended
on 30 June 2021, dividends were fully repaid during the financial year.
Note 8 – Provisions
Provisions are made up as follows:
30.06.2022
30.06.2021
USD
USD
Provision for legal claims
38,386,501.26
36,216,890.16
During the financial year, the Company has increased the carrying amount of the provision to legal claims from
USD 36,216,898.16 to USD 38,386,501.26. There were no payments for respective legal claims during the financial
year, for the details on the provision nature, please refer to Note 18.
Note 9 – Creditors
Amounts due and payable for the accounts shown under “Creditors” are as follows:
Due and
payable within
one year
Due and
payable after
more than
one year
Total
30.06.2022
Total
30.06.2021
USD
USD
USD
USD
Non-convertible loans
607,611,973.07
---
607,611,973.07
828,491,608.48
Eurobonds - Guaranteed notes (Principal
amount)
600,000,000.00
---
600,000,000.00
813,110,000.00
Eurobonds - Guaranteed notes (Accrued
interest)
7,611,973.07
---
7,611,973.07
15,381,608.48
Amounts owed to affiliated undertakings
27,845.11
8,549,980.00
8,577,825.11
18,097,207.72
Trade creditors
1,264,094.08
---
1,264,094.08
1,139,207.15
Tax authorities
400,270.20
---
400,270.20
1,405,379.85
Other creditors
52,667,706.98
(3,645.84)
52,664,061.14
16,305.25
Total
661,971,889.44
8,546,334.16
670,518,223.60
849,149,708.45
35
KERNEL HOLDING S.A.
R.C.S. Luxembourg B 109173
Notes to the annual accounts for the year ended 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 9 – Creditors (continued)
Non-convertible loans
In the table below presented aggregate information on guaranteed notes issued on the Irish stock exchange and
principal outstanding amounts as at reporting dates:
30.06.2022
30.06.2021
Date of issuance
Maturity Date
ISIN Code
USD
USD
Non-convertible loans
Guaranteed Notes - 6.75% Eurobonds
27 October 2020
27 October 2027
XS2244927823
300,000,000.00
300,000,000.00
Guaranteed Notes - 6.50% Eurobonds
17 October 2019
17 October 2024
XS2010040983
300,000,000.00
300,000,000.00
Guaranteed Notes - 8.75% Eurobonds
31 January 2017
31 January 2022
XS1533923238
---
213,110,000.00
Total
600,000,000.00
813,110,000.00
During the financial year, the Company also proceeded with interest payments for:
• ‘8.75% Eurobonds’: USD 16,575,695.80, out of which USD 7,252,133.30 paid by Avere Commodities S.A. as
Company set-off respective amount against a dividend receivable from Avere Commodities S.A. and the
remaining USD 9,323,562.50 was paid in cash;
• ‘6.50% Eurobonds’: USD 19,500,000.00, out of which USD 9,750,000.00 was paid by Inreco Trade S.A. as
Company set-off respective amount against a dividend receivable from Inerco Trade S.A. and the remaining
USD 9,750,000.00 was paid in cash;
• ‘6.75% Eurobonds’: USD 20,250,000.00 was paid in cash.
For the year ended 30 June 2022, the interest expense accrued on the guaranteed notes amounted to
USD 48,556,060.39 (2021: USD 60,187,549.55), whereas:
• USD 20.250.000,00 was accrued for the ‘6.75% Eurobonds’ (2021: USD 13,741,071.00);
• USD 19,500,000.00 was accrued for the ‘6.50% Eurobonds’ (2021: USD 19,500,000.00);
• USD 8,806,060.39 was accrued for the ‘8.75% Eurobonds’ (2021: USD 26,946,478.55).
On 20 December 2021, the Company has fully repaid the ‘8.75% Eurobonds’ principal for an amount of
USD 213,110,000.00.
As of 30 June 2022, being the relevant covenant testing date, the Group’s subsidiaries had exceeded certain ratios for
the purposes of financial covenants in certain of its bank loans. Although effective waivers were in place, such waivers
had an expiry date within 12 months of 30 June 2022, and, accordingly, such could trigger a cross-acceleration event
of default under the Company’s outstanding Eurobonds. As result, the Company does not have an unconditional right
to defer settlement of Eurobonds for 12 month or longer from 30 June 2022, therefore Eurobonds balance was
reclassified in line “due and payable within one year” amounting to USD 600,000,000.00
Amounts owed to affiliated undertakings
Inerco Trade S.A. (#15-02)
On 15 February 2022, the Company entered into a loan agreement #15-02 with Inerco Trade S.A. and received loan
for an aggregate amount of USD 8,549,980.00.
As at 30 June 2022, the outstanding loan balance is that of USD 8,549,980.00 and the interest expense for the year
amounted to USD 19,676.11.
36
KERNEL HOLDING S.A.
R.C.S. Luxembourg B 109173
Notes to the annual accounts for the year ended 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 9 – Creditors (continued)
Other creditors
Sale transaction
On 26 April 2022, the Company, as a “Seller”, entered into legally binding share purchase agreement for sale of two
of its affiliated undertakings to the related party directly controlled by Mr. Andrii Verevskyi, for the consideration
amounting to USD 210,000,000.00 subject to fulfilment of certain conditions. According to share purchase agreement
terms amount of USD 20,000,000.00 should be paid to the Company as a “prepayment” before sale transaction
occurrence. Following “prepayment” amount was received by the Inerco Trade S.A. and the balance has been
considered as an additional loan principal issued under the agreement (#01/09). As of 30 June 2022, the sale
transaction did not occur as certain conditions stated in share purchase agreement were not met.
Avere Commodities S.A. minority participation acquisition
The unpaid amount of the consideration for the acquisition of the participation interest in Avere Commodities S.A.
from the minority shareholders USD 32,626,348.00 and based on contractual terms classified in line “Due and
payable within one year”, for more details refer to Note 3.
Note 10 – Deferred Income
Deferred income is made up as follows:
30.06.2022
30.06.2021
USD
USD
Deferred Income
Deferred accrued interest on loans
139,767.18
234,767.16
Total
139,767.18
234,767.16
37
KERNEL HOLDING S.A.
R.C.S. Luxembourg B 109173
Notes to the annual accounts for the year ended 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 11 – Other external expenses
The other external expenses are composed as follows:
2022
2021
USD
USD
Business trips expenses
(2,660,372.39)
(3,742,797.68)
Legal fees
(1,661,785.94)
(647,130.47)
Accounting and audit fees
(760,646.34)
(1,312,864.96)
Insurances costs
(555,317.30)
(245,074.40)
Bank charges
(295,967.31)
(187,859.29)
Professional fees - Arendt Services
(135,063.95)
(166,472.12)
Tax advisory fees
(76,765.74)
(21,504.47)
Legal fees*
-
(70,037.95)
Contributions to professional associations
(41,408.36)
(36,776.77)
Rental of buildings
(22,066.40)
(22,717.13)
Investment fees
(12,648.00)
-
Translation fees
-
(2,329.53)
Telephone and other telecommunication costs
(6.30)
(540.78)
Other sundry external charges
(73,836.48)
(102,135.27)
Other fees
(985,649.68)
(244,551.80)
Total
(7,281,534.19)
(6,802,792.62)
Note 12 – Staff
During the financial year ended 30 June 2022, the Company had an average of 2 employees (2021: 1).
38
KERNEL HOLDING S.A.
R.C.S. Luxembourg B 109173
Notes to the annual accounts for the year ended 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 13 – Emoluments granted to the members of the management and supervisory bodies
and commitments in respect of retirement pensions for former members of those bodies
The emoluments granted to the members of the management and supervisory bodies in that capacity are broken
down as follows:
2022
2021
USD
USD
Directors' fees: amounts accrued during the year
624,601.21
739,924.38
During the year ended 30 June 2022, a new management incentive plan was introduced, according to which the
Company shall grant to the management put options in a form of right to sell to the Company and the obligation to the
Company to purchase in total up to 2,792,435 ordinary shares of the Company. The consideration for each share will
be a minimum of (i) USD 23.80 and (ii) operating profit before working capital changes minus interest paid plus
interest received minus interest tax paid minus maintenance capital expenditures in the fixed amount of USD
155,000,000, where all amounts, except for the maintenance capital expenditures, are specified in United States
Dollars (USD) as appropriately classified and disclosed in the consolidated statement of cash flows of the audited
annual consolidated accounts of the Company and its subsidiaries for the Financial Years 2022-2024, divided by
three divided by 12% and divided by 84,031,230. The option exercise period is set for a period commencing on 1
November 2024 and expiring on 31 December 2025. As of 30 June 2022, the new management incentive plan
classified as off balance sheet commitments.
Note 14 – Other operating expenses
2022
2021
USD
USD
Other operating expenses
Fines, sanctions and penalties (Note 8)
(2,260,829.61)
(2,169,764.93)
Director's fees (Note 13)
(624,601.21)
(739,924.38)
Non-refundable VAT
(176,806.54)
(1,156,917.10)
Book value write-off of current receivables
---
(245,553.94)
Total
(3,062,237.36)
(4,312,160.35)
Note 15 – Audit fees
Audit fees are made up as follows:
2022
2021
USD
USD
Total audit fees
(430,710.57)
(925,511.89)
The fees of the PricewaterhouseCoopers Société cooperative for the audit of these annual accounts were
USD 25,000.
39
KERNEL HOLDING S.A.
R.C.S. Luxembourg B 109173
Notes to the annual accounts for the year ended 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 16 – Off balance sheet commitments
The financial commitments of the Company are as follows:
The Company is a Guarantor under two syndicate pre-export credit facilities with European banks for a total amount
of USD 620,000,000.00.
Also the Company guarantees all the obligations under long-term CapEX financing from European Investment Bank
and European Bank for Reconstruction and Development Bank for the total amount of USD 306,000,000.00. As of
30 June 2022, outstanding principal amount under these financing stated USD 187,388,888.04 and
USD 47,040,000.00, respectively.
The Company has commitment as a Guarantor under agreements signed between Avere Companies and European
banks for trading facility for the total amount of USD 264,000,000.00.
Additionally, the Company guarantees all the obligations under agreements in total amount of USD 327,959,353.82
signed by subsidiaries of Kernel Holding S.A. with Ukrainian subsidiaries of European banks (covering credit lines,
contrguarantees, letter of credit issuance and operations with non-deliverable forwards).
As of 30 June 2021, the Company has a commitment to execute options and buy Avere Commodities S.A. shares
from the minority shareholders if they ask to do so.
Note 17 – Tax Status
The Company is fully taxable under Luxembourg tax regulations.
Note 18 – Contingencies
Capital Commitments
As of 30 June 2022, the Group had commitments under contracts with a group of suppliers for a total amount of USD
32,595 thousand, mostly for the construction of an oilseed crushing plant (30 June 2021: USD 50,062 thousand,
mostly for the construction of an oilseed crushing plant).
Contractual Commitments on Sales
As of 30 June 2022, the Group had entered into commercial contracts for the export of 838,000 tons of grain, 50,572
tons of sunflower oil and 75,676 tons of sunflower meal and other related products, corresponding to an amount of
USD 244,633 thousand, USD 73,032 thousand and USD 32,733 thousand, respectively, in contract prices as of the
reporting date.
As of 30 June 2021, the Group had entered into commercial contracts for the export of 3,296,959 tons of grain,
198,077 tons of sunflower oil and 305,642 tons of sunflower meal and other related products, corresponding to an
amount of USD 784,281 thousand, USD 220,702 thou-sand and USD 112,012 thousand, respectively, in contract
prices as of the reporting date.
Taxation and Legal Issues
In April 2012, the Group entered into a call option agreement to acquire Stiomi Holding, a farming company located in
the Khmelnytskyi region of Ukraine. As of 30 June 2022, the consideration paid for Stiomi Holding by the Group
comprised USD 33,472 thousand. A final payment was due and payable only after fulfilment of certain conditions to
the satisfaction of the Group and subject to rights of set-off in respect of claims against the sellers. The Group
submitted several claims to the sellers (the “Stiomi Sellers”) in respect of the non-fulfilment of the Stiomi Sellers’
obligations. In December 2012, the Group received a request for arbitration from the Stiomi Sellers in which the Stiomi
Sellers claimed amounts alleged to be payable to them. The arbitral tribunal delivered its award in late February 2018.
That award was in part subject to challenge by the Group in the High Court in London. In March 2019, the High Court
remitted the award to the tribunal for reconsideration in certain respects and a further hearing took place before the
tribunal in September 2019. Pursuant to the tribunal’s revised award, which was delivered in December 2019, the
Group is required to pay the Stiomi Sellers an aggregate amount of approximately USD 30,300 thou-sand.
40
KERNEL HOLDING S.A.
R.C.S. Luxembourg B 109173
Notes to the annual accounts for the year ended 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 18 – Contingencies (continued)
The Stiomi Sellers have made further claims against the Group for interest on the amounts due to them at the rate of
10% per annum (corresponding to USD 5,944 per day since the date of the initial arbitral award in late February 2019)
and have initiated court proceedings in Luxembourg and Switzerland in respect of such interest due, as well as took
actions to enforce the payment of the arbitral award. The Group disputes the Stiomi Seller’s claims for interest due.
In Switzerland, the Stiomi Sellers have obtained attachment orders against certain bank accounts of the Group. The
proceeds of these attachments were allocated to the Stiomi Sellers by the debt collection office. The amount frozen,
however, did not exceed some tens of thousands Swiss Francs. The Stiomi Sellers have also obtained an attachment
on intergroup receivables. Furthermore, former counsel to the Stiomi Sellers has also obtained a Swiss attachment
order against one of the Stiomi Sellers on the basis of unpaid fees in an amount of close to EUR 6,000 thousand.
In Luxembourg, the Stiomi Sellers have initiated attachment proceedings to put in place conservatory measures
against Kernel’s bank accounts.
In early 2020, a third party brought claims both before Luxembourg and Ukrainian courts asserting that one of the
Stiomi Seller’s claims has been assigned to them, which the Stiomi Sellers dispute. As a result of these conflicting
claims and proceedings, the Group has been unable to discharge its payment obligations in respect of the arbitral
award to the Stiomi Sellers, pending the resolution of these issues.
Facing such uncertainty as to the identity of its creditors, the Group filed a request for discharge payment in March
2020 before the Swiss courts. After having heard all the parties involved, the Swiss court have rendered a judgement
in June 2021 granting the Group’s prayers for relief. Following an appeal launched by the third party, the above-
mentioned judgement has been confirmed and became enforceable in late January 2022.
On 16 December 2020, the Stiomi Sellers filed a bankruptcy petition against Kernel in Luxembourg. The judgment
was rendered on 15 January 2021 in favour of Kernel as the Luxembourg court agreed that the conditions of
bankruptcy were not fulfilled in the case at hand.
Meanwhile, criminal investigations have been conducted in Ukraine against this third-party. In this context, it appears
that the investigators have come to the conclusion that the signature of Mrs. Stadnyk on the power of attorney used
for the alleged assignment was genuine. The Stiomi Sellers challenge this finding.
On the other hand, the Group has discovered, in September 2021, that some of the Stiomi Sellers initiated criminal
proceedings against the third party, claiming that the assignment agreement is a forged document. Kernel also
discovered that the Stiomi Sellers have extended their complaint against Kernel and possibly Kernel officers. Swiss
jurisdiction has been confirmed and the investigation appears to be ongoing. So far, Kernel has not been auditioned
and has no possibility to access the file. Kernel has provided to the Public Prosecutor of Geneva a spontaneous letter
with the purpose of clarifying facts and to demonstrate that accusations against the Group are unfounded/contradicted
by robust evidence.
From a civil perspective, as of 30 June 2018, the Group recognized a provision regarding the arbitral and the related
proceedings. The provision represents the directors’ best estimate of the maximum future outflow that will be required
in respect of the award. The carrying amount of the payables for legal claims was USD 38,387 thousand as of 30
June 2022 (2021: USD 36,217 thousand), and related expenses in the amount of USD 2,170 thousand were
recognized within the year ended 30 June 2022 (2021: USD 2,170 thousand) and included within the line “Other
expenses, net”.
41
KERNEL HOLDING S.A.
R.C.S. Luxembourg B 109173
Notes to the annual accounts for the year ended 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 18 – Contingencies (continued)
As of 30 June 2022, one of the Group’s subsidiaries in Switzerland has uncertain tax positions which may result in
economic outflow although timing of this is uncertain due to early stage of this matter.
As of 30 June 2022, the Group’s management assessed its maximum exposure to tax risks related to VAT refunds
claimed by the Group, the deductibility of certain expenses for corporate income tax purposes and other tax issues for
total amount of USD 97,287 thousand (30 June 2021: USD 101,601 thousand ), from which USD 82,260 thousand
related to VAT recoverability (30 June 2021: USD 87,687 thousand), USD 14,777 thousand related to corporate
income tax (30 June 2021: USD 13,578 thou-sand) and USD 250 thousand related to other tax issues (30 June 2021:
USD 328 thousand ).
As of 30 June 2022, companies of the Group had ongoing litigations with the tax authorities concerning tax issues for
USD 89,796 thousand (30 June 2021: USD 21,702 thousand), included in the abovementioned amount. Out of this
amount, USD 4,787 thousand relates to cases where court hearings took place and where the court in either the first
or second instance has already ruled in favour of the Group (30 June 2021: USD 4,507 thousand). Management
believes that based on the past history of court resolutions of similar lawsuits by the Group, it is unlikely that a
significant settlement will arise out of such lawsuits and no respective provision is required in the Group’s financial
statements as of the reporting date.
Note 19 – Operating environment
As main investments of the Company and the Group’s operating assets located in Ukraine, the operating environment
of Ukraine has the most significant impact on the Group’s operations and therefore on the Company as well.
On 24 February 2022 the Russian Federation started a full-scale military invasion of Ukraine which, due to broad
security concerns, became challenging for the further stable development of economical and finance segments in
Ukraine, and the operating environment remains risky and with high levels of uncertainty since then.
Given the fast-moving nature of the situation and the unpredictability of war, it will likely take time to assess the
economic fallout. For now, the government has prioritized defence and social spending. In June 2022, annual inflation
in Ukraine had reached 21.5%. The Ukrainian economy experienced significant challenges and the government
heavily relied on international financial support.
The Ukrainian government received financing and donations from international organizations and various countries to
sup-port financial stability and to finance social related payments and military needs (International Monetary Fund,
European Un-ion, and directly from numerous countries).
It should be noted that starting from April 2022, economic activity began to restore itself; businesses and the
Ukrainian population showed adaptation to the new conditions. According to the National Bank of Ukraine (‘the NBU’)
reports, at the end of spring only 14% of enterprises working before the war remained idle.
The NBU increased the key policy rate to 25% in June 2022. According to its most recent forecast, the real GDP of
Ukraine is expected to fall by 33% for the calendar year 2022.
The NBU has imposed certain restrictions regarding withdrawals hryvnia by customers and switched from a flexible to
a fixed exchange rate regime at UAH 29.25 for 1 USD (UAH 36.57 for 1 USD starting from 21 July 2022) on the
foreign currency ex-change market to ensure the sound and stable operation of the country’s financial system. As a
result, commercial interbank quotes remained close to the officially imposed by the NBU, and bid rate was fixed as
UAH 29.25 for USD 1, at a maximum point. The NBU stated that as soon as the economy and financial system of
Ukraine return to normal operation regime, the floating exchange rate will be restored. Moreover, the NBU has
determined that the ban on transactions in Ukraine using the accounts of residents of Russia or Belarus and legal
entities whose ultimate beneficial owners are based in Russia or Belarus, does not apply to social benefits, wages,
utilities, taxes, fees, and other required payments. Despite the current unstable situation, the banking system remains
stable, with sufficient liquidity even as martial law continues, and all banking services are available to its customers,
both legal entities and individuals. Companies operating in Ukraine are paying taxes and money is still flowing through
its financial system.
42
KERNEL HOLDING S.A.
R.C.S. Luxembourg B 109173
Notes to the annual accounts for the year ended 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 19 – Operating environment (continued)
Months after the initial full-scale military attack, fighting continues in and around several major Ukrainian cities in the
East and South of Ukraine, causing tens of thousands of civilian casualties. Russian attacks are targeted for
destroying civilian infra-structure all over Ukraine, including hospitals and residential complexes. At the same time,
logistics routes in occupied territories were damaged and there is no access to them. Other railway and car logistic
routes are available for usage as Ukraine has an extensive road and railway network. Assets belonging to different
businesses, except those located on temporary occupied territory, were not destroyed materially, based on available
information, as air attacks and missile strikes primarily destroyed military infrastructures, objects, airfields, and civilian
buildings.
Upon the start of the invasion, all Ukrainian Black Sea ports stopped work due to armed conflict in the territory of
Ukraine, including seas’ areas and fully froze exports made via Ukrainian seaports. According to the deal brokered on
22 July by the United Nations and Turkey, also referred as “grain deal”, three Ukrainian Black Sea ports (Odesa,
Chornomorsk and Pivdenyi) were unblocked beginning in August.
In the face of the invasion, the Ukrainian government has imposed export restrictions for meat and livestock, rye, oats,
millet, buckwheat, sugar and dietary salt. Furthermore, the Ukrainian Ministry of Economy will issue export permits for
the group of products, subjected for licensing: wheat, chicken meat and eggs.
Recent multiple Russian missile attacks on the Ukrainian civil energy infrastructure damaged the Ukrainian power
stations and electricity distribution infrastructure, which caused power supply outages. The risk for the most exposed
Oilseed Processing business is partially mitigated by the Group’s recent investments in co-generation heat and power
facilities, four of which had been already constructed at the crushing plants and now allow to fully cover the
consumption needs of the respective oilseed processing operations. In addition, any massive power outages for
railway infrastructure as well as export terminals or key silos may disrupt the grain export capabilities.
In 2020, a new coronavirus disease (COVID-19) has begun rapidly spreading all over the world, resulting in the
announcement of the pandemic status by the World Health Organization in March 2020. The Management assesses
that COVID-19 had low effect on the Group’s and Company’s operations during the year ended 30 June 2022, as
Group’s business model of supplying food commodities to global markets is resilient to some extent to COVID-19-
related risks and disruptions given the consistent demand for food and feed worldwide.
Note 20 – Going concern
On 24 February 2022 Russian Federation launched a full-scale military invasion of Ukraine, which had a disruptive
affect in Ukraine, causing an economical and humanitarian crisis.
The Group considers the direct and indirect exposures to the impacts arising from the war on the business, as
mentioned below:
• For the period after the Russian invasion of Ukraine 1150 employees joined Ukrainian military forces and
territorial defence, approximately 350 of them were demobilized. Personnel of oil plant production activities
and farming business remained in their working area.
• The Group's critical facilities or infrastructure have not suffered any significant damage. The amount of
partially or fully damaged fixed assets is USD 592 thousand. Two oilseed crushing plants (Vovchansk and
Prykolotne), one district of the agro company with the total land bank 1.5 thousand ha and 290 rail cargo were
in the occupied parts of Kharkiv region, with the book value equals to USD 50,300 thousand, as at 30 June
2022. However, as the result of successful counter actions of Ukrainian military forces, Ukraine regained
control over this territory. The Group recognized the write-off of inventories, due to the suspension of export
and subsequent expiration date of the goods as well as destruction as a result of military actions.
• Export sales of the company consist of 97 % of total external sales, but due to the war, export flow via
Ukrainian ports was reduced significantly. Alternative export routes are limited by capacity of the railways and
significantly more expensive in comparison with sea. Domestic sales significantly increased, driven by the
moderate availability to export goods in ordinary way.
43
KERNEL HOLDING S.A.
R.C.S. Luxembourg B 109173
Notes to the annual accounts for the year ended 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 20 – Going concern (continued)
• On 22 July 2022 Ukraine together with Turkey and UNN signed Initiative on the Safe Transportation of Grain
and Foodstuffs from Ukrainian ports (ISTGFUP), but huge uncertainty remains over its continuation.
• Logistics difficulties and restriction of access to the market led to the lack of crops protection, fuel, fertilizers.
• Oil extraction plants operated partially due to the temporary inability to export sunflower oil via Ukrainian
Black Sea ports, two of them Vovchansk and Prykolotne were ceased due to the occupation as of 30 June
2022.
• Military activity in the southern part of Ukraine remains too risky for resuming export operations through
seaports, operations of which are partially opened and, consequently, the Group stopped procurement of
grain and oilseeds from farmers.
• Group’s liquidity position goes under the pressure due to the reduction of revenue and growth of logistic cost
for alternative ways of export.
• Bank facilities appeared to be limited.
• Considering the disruptions described above the Group’s ability to service debt suffered. The Group
successfully negotiated with the banks waivers on the repayment of the loan principal for the period ending 30
September 2022. Respective waivers were obtained prior 30 June 2022 and the Group settled interest
payments in a timely manner. As at the date of these consolidated financial statements issue, the Group
obtained waivers to extend the terms of repayment of principal of USD 626,694 thousand with the lenders and
waiving of the debt covenants and some other conditions by 30 June 2023 and USD 246,353 thousand are in
the process of formalizing their waivers.
• As of 30 June 2022, the Group classified its long-term bank borrowings as short-term. As at 30 June 2022
(being the relevant covenant testing date), the Group had exceeded certain ratios for purposes of financial
covenants in certain of its bank facilities. Although an effective waiver was in place, such waiver had an expiry
date within 12 months of 30 June 2022, and, accordingly, the Group did not have an unconditional right to
defer settlement for 12 months or longer with respect to its bank facilities as at 30 June 2022. Accordingly,
there was a risk that such loans would be accelerated and become due and payable at a future date within 12
months of the end of the reporting period, which could in turn trigger a cross-acceleration event of default
under the Group’s outstanding bonds. As a result, the Group also did not have an unconditional to defer
settlement of its bonds for 12 months or longer. The Group therefore classified its long-term bonds as short-
term as well as the Company in these annual accounts.
Management has reorganized the business process in response to abovementioned impacts:
• The Group’s key priority is the safety and security of its employees and their families. The Group is
coordinating, to the extent possible, the evacuation of employees from regions engaged in active military
action and is covering associated relocation costs and providing additional assistance needed. The business
processes have been reorganized to adjust to the existing challenges and to provide continuity to the Group’s
activities.
• The Group’s land bank accounts 494 thousand hectare and the Group managed to plant 95% of its land bank.
The Group finished harvesting of winter crops, and started harvesting of sunflower seeds, the other crops can
be harvested in due course.
• In autumn sowing, the Group plans to change the crop structure and increase the area of wheat and
soybeans in order to reduce costs for the production of grain crops. As usual corn production requires more
fertilizes to grow and more natural gas to dry after harvest.
• Management set up new logistics routes for grain and oil export through Poland, Romania, Lithuania by truck
and railway including usage of own railway wagons (accessible quantity is 2,8 thousand). Applying new
logistic routes via land borders for the period when the Black Sea ports were closed till 30 June 2022, the
Group exported goods for amount USD 120 million for 4th quarter of FY 2022.
• Moreover, on July 22 an Initiative was signed in Istanbul to create a humanitarian corridor for the safe
transportation of grain and food products from Ukrainian ports. The Group exported through the corridor 930
thousand tons of grain and 153 thousand tons of meal till 20th of October 2022.
44
KERNEL HOLDING S.A.
R.C.S. Luxembourg B 109173
Notes to the annual accounts for the year ended 30 June 2022
Annual
accounts for the year ended
30 June 2022
Note 20 – Going concern (continued)
• The Group is fully compliant with all sanction’s rules and regulations against Russia and Belarus, including
those imposed or published by various countries and organizations. Besides, the Group refrains from dealing
with person or organization listed in the list of sanction. In this situation the Group does not expect any
influence on the supplying chain and payments flow.
• The Group suspended the implementation of several investment projects and reduced the investments in
non-current assets.
• The Group's subsidiary Avere keeps operating in the usual mode.
• The Group intends to continue paying interests to its lenders and the coupon to the bondholders while there
won’t be the repayment of principal amount due to renegotiated terms and continue paying coupons to the
bondholders.
The management prepared two scenarios of cash flow forecasts for the next 12 months from the date of the approval
of these consolidated financial statements, assuming full operation of the “Grain Corridor” and its suspension from
November 2022. The following assumptions were used in the scenarios:
• the “Grain Corridor” deal will continue to be in force until the end of November 2022 and neither of the parties
will withdraw from the deal. Respectively, selling prices and transportation costs will be kept at the current
level. Under the second scenario, selling prices will be increased as well as transportation cost due to reliance
largely on the overland’s means of transportation;
• availability of alternative export routes via land borders and other ports;
• availability of railway roads and roads;
• spring sowing and harvesting campaigns will be successful;
• maintaining minimum sales level domestically and export to cover minimum operational expenses level and
debt servicing.
• repayment of the loans principal occurs according to the renegotiated terms;
• purchase of grains from the market to maximize its trading margins; under the second scenario, released
cash flows will be used to cover increased transportation costs;
Although the Group’s financial performance was strong in 2021 calendar year, military actions occurring after 24
February 2022 create material uncertainty for the Group in the future, including the risk of damage of assets (and
insurance unlikely to meet the replacement costs), loss of inventory as a result of military actions, ability of Black Sea
ports to continue its operations, availability of alternative export routes and disruptions of the farming and oil
processing business for the Group and for Ukraine in general. The full extent of the impact of further development of
military actions on the Group’s business is unknown, but its magnitude might be severe.
Management acknowledges that future development of military actions and their duration represent a single source of
material uncertainty which may cast significant doubt about the Group’s ability to continue as a going concern and,
therefore, the Group may be unable to realize its assets and discharge its liabilities in the normal course of business.
Further, as the Company is holding company assessment of its ability to continue as a going concern is highly
dependent on the Group’s ability to going concern, therefore material uncertainty exists that may cast significant doubt
on the Company’s ability to continue as going concern.
Note 21 – Subsequent events
In addition to the subsequent events disclosed in Notes 19 and 20 there were the following subsequent events.
As of 31 August 2022, the Company, as the buyer, entered into a share purchase sale agreement to acquire 24% of
shares in the authorized capital of the LLC Transshipservice with the net book value of UAH 16,800.00. In accordance
with the agreement the price of share is USD 6,435,533.21.
On 23 September 2022, the Extraordinary General Meeting of Shareholders was held. According to one of the
adopted resolutions, the Company approved the creation of an authorized share capital of Kernel Holding S.A.,
excluding the current issued share capital, of an amount of USD 5,704 thousand consisting of 216,000,000 shares
without nominal value.