Untitled

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 2024

AND REPORT OF THE RÉVISEUR

D’ENTREPRISES AGRÉÉ

Table of

contents

Report of the Board of Directors to the shareholders 3-8

Report of the réviseur d’entreprises agréé 9-13

Statement of the Board of Directors’ responsibilities for the preparation and approval of

annual accounts 14

Balance sheet as of 30 June 2024 15-16

Profit and loss account for the year ended 30 June 2024 17

Notes to the annual accounts 18-34

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 2024

Dear Shareholders,

The Board of Directors is pleased to present its report, which constitutes the Board of Directors report or management

report as defined by Luxembourg Law, together with audited annual accounts as of 30 June 2024, and for the year

then ended.

Corporate matters

Kernel Holding S.A. (the “Company”) was incorporated on 15 June 2005 as a Société Anonyme (“S.A.”) subject to

Luxembourg law on Commercial Companies for an unlimited period of time. The Company is the parent company of a

consolidated group (the “Group”).

The Company is registered with the “Registre de Commerce et des Sociétés” in Luxembourg under the number B109173

and has its registered office at 9, rue de Bitbourg, L-1273 Luxembourg.

On 13 April 2023, the Board of Directors announced the decision to withdraw the Company's shares from trading on the

Warsaw Stock Exchange's regulated market. However, as of 30 June 2024 and the date of these annual accounts, the

delisting process has not been completed.

As of 30 June 2024, and 30 June 2023 the Company does not have any branch and does not hold any of its shares.

Nature of the Company’s business

In accordance with its Articles of Incorporation, the Company’s objective is the acquisition, management, enhancement,

and disposal of participation. The Company may also take out loans and provide various forms of support, including

loans, advances, and guarantees, to its subsidiaries. Additionally, it is authorized to acquire and dispose of other

securities through subscription, purchase, exchange, sale, or other means.

The subsidiaries of Kernel Holding S.A. (forming together with the Company the “Group”) operate in farming, grain

origination, storage, transport, production, refining, bottling, and marketing of sunflower oil.

The Group’s goal is the continuous development of a profitable and sustainable business that enhances its position as 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 these annual accounts, the Board of Directors is responsible for assessing both 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 of Directors either intends to liquidate the Company or to cease operations or has

no realistic alternative but to do so.

Performance overview

The Company’s profit for the financial year was USD 53,050,713.15 (2023: USD 121,198,956.75), reflecting an increase

primarily due to higher other operating income and dividends received from affiliated undertakings (Note 8). However,

the profit was negatively affected by other operating expenses (Note 12).

The Board of Directors of the Company intends to propose to the Annual General Meeting of the Shareholders of the

Company to allocate the result carried forward in the amount of USD 610,305,704.42.

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 2024

Key performance indicators, both financial and non-financial, are integrated within the Group and are not managed

separately. For more details, please refer to the annual report of the Group, which is available on the official website of

the Group: www.kernel.ua.

The Company did not undertake any research and development activities during the financial years ended 30 June 2024

and 30 June 2023.

Key developments

The main developments of the Group for the year ended 30 June 2024 were as follows:

Completion of renewable energy investment program

In FY2024, we completed strategic investment projects initiated back in FY2018, which had been delayed due to the

COVID-19 pandemic and the war in Ukraine. The project involved installing co-generation heat and power (CHP) units

at our oil-extraction plants to burn sunflower husks, a biomass by-product, and generating electricity for both grid sale

and internal use, as well as steam for sunflower oil production. This asset portfolio strengthens our resilience to power

outages and supports the profitability of the Oilseed Processing segment. The project is strategically important nowadays,

contributing to Ukraine’s energy security, reducing power outage and business interruption risks for Kernel, and

promoting environmental sustainability.

Brand-new oilseed processing plant

In February 2024, the Group commissioned its state-of-the-art oilseed processing plant in the Khmelnytskyi region,

western Ukraine. With an annual processing capacity of 1 million tons of sunflower seeds, it is the largest facility of its

kind in Ukraine. By the end of the reporting period, the plant was operating at full capacity, processing both sunflower

seeds and rapeseed.

War impact

The ongoing war in Ukraine has had a profound impact on our operations, manifesting in several areas:

• Assets destruction. At the start of FY2024, two of our oilseed processing plants in the Kharkiv region, with a

combined annual processing capacity of 0.5 million tons of sunflower seeds, remained shut down due to

their proximity to active hostilities and frequent missile and artillery attacks. These facilities have been closed

since FY2022. Many employees were relocated and redeployed at other Company plants, and valuable

equipment was transferred to other facilities. However, by the end of FY2024, our Vovchansk oilseed

processing plant in the Kharkiv region was completely destroyed following a Russian offensive and heavy

fighting in the town. Our second plant in the region, located in Prykolotne, sustained severe damage from

bombardments, tragically resulting in the loss of two employees and injuries to three more.

• Logistics disruptions. At the beginning of FY2024, Russia’s unilateral termination of the Black Sea Grain

Initiative and subsequent attacks on Ukraine's port infrastructure severely disrupted our logistics. With the

blockage of seaborne exports, especially for sunflower meal, our oilseed processing operations were

threatened. Stockpiling of sunflower meal led to plant stoppages, and during Q1 FY2024, we shipped only

159 thousand tons of meal. Fortunately, the Black Sea was de-blocked by the Ukrainian navy in autumn

2023, allowing exports to resume. In Q2 FY2024 (October–December 2023), we shipped 399 thousand tons

of meal, returning to a normal export pace. A more prolonged blockade would have severely disrupted our

oilseed processing operations, as sunflower meal sales are crucial to the business, and it is unsustainable

to export only sunflower oil without sunflower meal.

• Power outages. In the second half of FY2024, Russian attacks on Ukraine's energy infrastructure

intensified, causing widespread blackouts and power outages. These outages, along with power surges,

led to temporary stoppages of machinery and equipment. In some instances, it took several days to

restore operations to normal, further impacting on our production capacity.

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 2024

• Conscription of employees. The ongoing war has also impacted our workforce, as employee conscription

into the Ukrainian military created significant labor shortages at our crushing plants. Finding and retaining

qualified personnel has become increasingly difficult, especially in high-risk regions. The need to frequently

replace conscripted employees disrupted operations and added pressure to the remaining workforce,

affecting plant productivity and efficiency.

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.

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 of the

Directors in accordance with Article 441-1 of the law of 10 August 1915.

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 its 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 relevant trading venues and Stock Exchange and the Listing

Rules of the Warsaw Stock Exchange.

Risk management

The Group is exposed to financial risk as the result of the normal course of business and includes the following risks:

market risks including foreign exchange risk and interest rate risk, credit risk, and liquidity risk.

The principal risks and uncertainties that the Company is facing are the following:

Financial risks:

• Liquidity associated risk which is the risk that the Company will encounter difficulties in meeting

obligations arising from its financial liabilities as they fall due.

• Market risks, including:

o Currency risk. The presentation currency of the Company is US Dollar ("USD"). Currency risk is

a risk of financial impact due to exchange rate fluctuations related to transactions and balances

in currencies other than functional currency.

o Interest rate risk. The Company’s interest rate risk arises from borrowings and lease liabilities

with variable rates, which expose the Company to cash flow interest rate risk.

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 2024

Operational risk:

• Credit and counterparty risk which is the risk of financial loss to the Company if a 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

The principal risks and uncertainties are integrated with the Group’s risks and uncertainties and are not managed by the

Company separately.

Details of the financial risk management policy and internal control system are provided in the annual report of the Group

for the year ended 30 June 2024.

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 measures 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.

Details on corporate governance, including the corporate governance code are available on the official website of the

Group and in the annual report of the Group for the year ended 30 June 2024, available on the Group’s website:

www.kernel.ua.

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 2024

Board of Directors

The Board of Directors is composed of eight Directors, of whom two are independent. 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 and member of the nomination and remuneration committee,

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.

(2) Mr. Andrii Miski-Oglu was re-elected to the Board as an independent non-executive director for a one-year term by

the shareholders at the general meeting of the shareholders held on 11 December 2023. Mr. Miski-Oglu has 21 years’

experience in public accounting and audit in Ernst&Young, and is involved in major EY Global audit-related initiatives.

Mr. Miski-Oglu is a Certified Public Accountant in the US since 2011 and a member of The American Institute of Certified

Public Accountants (AICPA). Mr. Andrii Miski-Oglu is chairman of the audit committee and a member of the nomination

and remuneration committee.

(3) Mrs. Daria Danilczuk was re-elected to the Board as a non-executive director for a one-year term by the shareholders

at the general meeting of the shareholders held on 11 December 2023. Mrs. Danilczuk is the chairwoman of the

sustainability committee and a member of the audit committee. Mrs. Danilczuk is experienced in agricultural commodity

brokerage, specialised in Black Sea commodity markets, and is experienced in international trade and biofuels trade and

regulatory framework.

(4) Mr. Mykhaylo Mishov was re-elected to the Board as an independent non-executive director for a one-year term by

the shareholders at the general meeting of the shareholders held on 11 December 2023. Mr. Mishov is chairman and

member of the nomination and remuneration committee, member of the audit committee, and member of the

sustainability committee. Mr. Mishov has over 18 years of experience in consulting, including Ernst & Young, Deloitte

and KPMG, leading numerous strategy and performance improvement projects for agribusiness clients.

(5) Mr. Sergiy Volkov was appointed as executive director until ratification thereto by the next general meeting of

shareholders of the Company and with effect as of 11 December 2023. Mr. Volkov is responsible for the overall financial

management of Kernel. Mr. Volkov holds CPA certification.

(6) Mr. Yevgen Osypov was re-elected to the Board as a Chief Executive Officer for a one-year term by the shareholders

at the general meeting of the shareholders held on 11 December 2023. Mr. Osypov is responsible for the day-to-day

management of the Company’s subsidiaries, execution of strategy, budgets, and Board decisions. Mr. Yevgen Osypov

is a member of the sustainability committee.

(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 11 December 2023. Mrs. Usachova is responsible for the overall financial oversight of the

Group. Mrs. Anastasiia Usachova is a member of the sustainability committee.

(8) Mr. Yuriy Kovalchuk was re-elected to the Board for a one-year term as an Executive Director by the shareholders at

the general meeting of the shareholders held on 11 December 2023. Mr. Kovalchuk contributes to strategy formulation

and is responsible for the execution of investment projects.

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 2024

Looking ahead:

For a detailed outlook for the Group’s financial year ending 30 June 2024, please refer to the annual report of the Group

which is available on the official website of the Group: www.kernel.ua.

There are subsequent events as disclosed in Note 19.

The Board of Directors

By:

Mr. Andrii Verevskyi

By:

Mr. Andrii Miski-Oglu

By:

Mrs. Daria Danilczuk

By:

Mr. Mykhaylo Mishov

By:

Mr. Sergiy Volkov

By:

Mr. Yevgen Osypov

By:

Mrs. Anastasiia Usachova

By:

Mr. Yuriy Kovalchuk

PricewaterhouseCoopers, Société coopérative, 2 rue Gerhard Mercator, B.P. 1443, L-1014 Luxembourg

T : +352 494848 1, F : +352 494848 2900, www.pwc.lu

Cabinet de révision agréé. Expert-comptable (autorisation gouvernementale n°10028256)

R.C.S. Luxembourg B 65 477 - TVA LU25482518

Audit report

To the Shareholders of

KERNEL HOLDING S.A.

Report on the audit of the annual accounts

Our opinion

In our opinion, the accompanying annual accounts give a true and fair view of the financial position of

KERNEL HOLDING S.A. (the “Company”) as at 30 June 2024, and of the results of its operations for

the year then ended in accordance with Luxembourg legal and regulatory requirements relating to the

preparation and presentation of the annual accounts.

Our opinion is consistent with our additional report to the Audit Committee or equivalent.

What we have audited

The Company’s annual accounts comprise:

• the balance sheet as at 30 June 2024;

• the profit and loss account for the year then ended; and

• the notes to the annual accounts, which include a summary of significant accounting policies.

Basis for opinion

We conducted our audit in accordance with the EU Regulation No 537/2014, the Law of 23 July 2016

on the audit profession (Law of 23 July 2016) and with International Standards on Auditing (ISAs) as

adopted for Luxembourg by the “Commission de Surveillance du Secteur Financier” (CSSF). Our

responsibilities under the EU Regulation No 537/2014, the Law of 23 July 2016 and ISAs as adopted

for Luxembourg by the CSSF are further described in the “Responsibilities of the “Réviseur d’entreprises

agréé” for the audit of the annual accounts” section of our report.

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

our opinion.

We are independent of the Company in accordance with the International Code of Ethics for Professional

Accountants, including International Independence Standards, issued by the International Ethics

Standards Board for Accountants (IESBA Code) as adopted for Luxembourg by the CSSF together with

the ethical requirements that are relevant to our audit of the annual accounts. We have fulfilled our other

ethical responsibilities under those ethical requirements.

To the best of our knowledge and belief, we declare that we have not provided non-audit services that

are prohibited under Article 5(1) of the EU Regulation No 537/2014.

The non-audit services that we have provided to the Company and its controlled undertakings, if

applicable, for the year then ended, are disclosed in Note 13 to the annual accounts.

Material uncertainty related to going concern

We draw attention to Note 18 to the annual accounts, which indicates that since 24 February 2022 the

Group's operations are significantly affected by the ongoing military invasion of Ukraine and the

magnitude of further developments or the timing of the cessation of these circumstances, are uncertain.

These events or conditions, along with other matters as set forth in Note 17, indicate that a material

uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going

concern. Our opinion is not modified in respect of this matter.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our

audit of the annual accounts of the current period. These matters were addressed in the context of our

audit of the annual accounts as a whole, and in forming our opinion thereon, and we do not provide a

separate opinion on these matters.

In addition to the matter described in the “Material Uncertainty Related to Going Concern” section above,

we have determined the matters described below to be the key audit matters to be communicated in our

report.

Key audit matter

How our audit addressed the key audit matter

Recoverability of shares in affiliated

undertakings, of investments and of

amounts owed by affiliated

undertakings

Shares in affiliated undertakings are

valued at cost, less impairment

where management considers it to

be of a durable nature. Amounts

owed by affiliated undertakings and

investments are recorded in the

balance sheet at their nominal value

and are subject to value

adjustments where their

recoverability is compromised.

Shares in affiliated undertakings,

amounts owed by affiliated

undertakings and investments

amounted to USD 1,981,162,849.35

in aggregate and represented

approximately 99.6% of total assets

of the Company as of 30 June 2024.

Our procedures over the recoverability of shares in affiliated

undertakings, of investments and of amounts owed by

affiliated undertakings included, but were not limited to the

following:

• We obtained an understanding of the management's

processes and controls over the assessment of

recoverability of shares in affiliated undertakings, of

investments and of amounts owed by affiliated undertakings;

• We obtained management’s assessment of recoverability

of shares in affiliated undertakings, of investments, and of

amounts owed by affiliated undertakings;

• We compared the carrying amounts of shares in affiliat

under

takings to the carrying amount of net assets of t

under

lying undertakings;

• In case where the carrying amount of net assets of a

under

lying undertaking was lower than the carrying amount

of shares in affiliated undertakings, we performed additional

procedures, such as leveraging on the audit work perfor

med

er the Group’s non-current assets valuation tests;

• We assessed the ability of the affiliated undertakings to

repay the amounts owed to the Company and the amount of

investments by analysing the financial data of the underlying

undertakings, as well as by verifying their compliance with

We considered the recoverability of

shares in affiliated undertakings, of

investments and of amounts owed

by affiliated undertakings to be a

key audit matter due to the

magnitude of the amounts and the

judgment involved in the

assessment of the recoverability of

those assets.

the repayment terms during the year ended 30 June 2024;

and

• We considered the appropriateness of the disclosures in

Note 2 (“Significant accounting policies”), Note 3 (“Financial

assets”), Note 4 (“Debtors”) and Note 5 (“Investments”) to

the annual accounts.

Other information

The Board of Directors is responsible for the other information. The other information comprises the

information stated in the Report of the Board of Directors to the shareholders and the Corporate

Governance Statement but does not include the annual accounts and our audit report thereon.

Our opinion on the annual accounts does not cover the other information and we do not express any

form of assurance conclusion thereon.

In connection with our audit of the annual accounts, our responsibility is to read the other information

identified above and, in doing so, consider whether the other information is materially inconsistent with

the annual accounts or our knowledge obtained in the audit, or otherwise appears to be materially

misstated. If, based on the work we have performed, we conclude that there is a material misstatement

of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Board of Directors and those charged with governance for the annual

accounts

The Board of Directors is responsible for the preparation and fair pr

esentation 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 of Directors 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 of Directors 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 of Directors either intends to liquidate the

Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting

process.

The Board of Directors is responsible for presenting the annual accounts in compliance with the

requirements set out in the Delegated Regulation 2019/815 on European Single Electronic Format

(“ESEF Regulation”).

Responsibilities of the “Réviseur d’entreprises agréé” for the audit of the annual accounts

The objectives of our audit are to obtain reasonable assurance about whether the annual accounts as

a whole are free from material misstatement, whether due to fraud or error, and to issue an audit report

that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee

that an audit conducted in accordance with the EU Regulation No 537/2014, the Law of 23 July 2016

and with ISAs as adopted for Luxembourg by the CSSF will always detect a material misstatement when

it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic decisions of users taken on

the basis of these annual accounts.

As part of an audit in accordance with the EU Regulation No 537/2014, the Law of 23 July 2016 and

with ISAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain

professional scepticism throughout the audit. We also:

• identify and assess the risks of material misstatement of the annual accounts, whether due to fraud

or error, design and perform audit procedures responsive to those risks, and obtain audit evidence

that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material

misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve

collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

• obtain an understanding of internal control relevant to the audit in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the Company’s internal control;

• evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by the Board of Directors;

• conclude on the appropriateness of the Board of Directors’ use of the going concern basis of

accounting and, based on the audit evidence obtained, whether a material uncertainty exists related

to events or conditions that may cast significant doubt on the Company’s ability to continue as a

going concern. If we conclude that a material uncertainty exists, we are required to draw attention in

our audit report to the related disclosures in the annual accounts or, if such disclosures ar

nadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to

the date of our audit report. However, future events or conditions may cause the Company to cease

to continue as a going concern;

• evaluate the overall presentation, structure and content of the annual accounts, including the

disclosures, and whether the annual accounts represent the underlying transactions and events in a

manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned

scope and timing of the audit and significant audit findings, including any significant deficiencies in

internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant

ethical requirements regarding independence, and communicate to them all relationships and other

matters that may reasonably be thought to bear on our independence, and where applicable, actions

taken to eliminate threats or safeguards applied.

From the matters communicated with those charged with governance, we determine those matters that

were of most significance in the audit of the annual accounts of the current period and are therefore the

key audit matters. We describe these matters in our audit report unless law or regulation precludes

public disclosure about the matter.

We assess whether the annual accounts have been prepared, in all material respects, in compliance

with the requirements laid down in the ESEF Regulation.

Report on other legal and regulatory requirements

The Report of the Board of Directors to the shareholders is consistent with the annual accounts and has

been prepared in accordance with applicable legal requirements.

The Corporate Governance Statement is included in the Report of the Board of Directors to the

shareholders. The information required by Article 68ter Paragraph (1) Letters c) and d) of the Law of 19

December 2002 on the commercial and companies register and on the accounting records and annual

accounts of undertakings, as amended, is consistent with the annual accounts and has been prepared

in accordance with applicable legal requirements.

We have been appointed as “Réviseur d’Entreprises Agréé” by the General Meeting of the Shareholders

on 11 December 2023 and the duration of our uninterrupted engagement, including previous renewals

and reappointments, is 3 years.

We have checked the compliance of the annual accounts of the Company as at 30 June 2024 with

relevant statutory requirements set out in the ESEF Regulation that are applicable to annual accounts.

For the Company it relates to the requirement that annual accounts are prepared in a valid XHTML

format.

In our opinion, the annual accounts of the Company as at 30 June 2024 have been prepared, in all

material respects, in compliance with the requirements laid down in the ESEF Regulation.

PricewaterhouseCoopers, Société coopérative

Represented by

@esig

Andrei Chizhov

Luxembourg, 28 October 2024

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 2024

Annual

accounts for the year ended

30 June 2024

The Board of Directors is responsible for the preparation, publishing 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 of Directors 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 of Directors 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 of Directors 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. for the year ended 30 June 2024 presented in this report and

established per Luxembourg legal and regulatory requirements under the historical cost convention give a true

and fair view of the assets, liabilities, financial position and results of the Company; and

- The Management report or Board of Director’s report as of 30 June 2024 includes a fair review of the

development and performance of the business and position of the Company, together with a description of

the principal risks and uncertainties it faces.

28 October 2024

On behalf of the Board of Directors

Andrii Verevskyi

Sergiy Volkov

Chairman of the Board of Directors Chief Financial Officer of Kernel Holding S.A

group of companies

KERNEL HOLDING S.A.

9, rue de Bitbourg

L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Balance sheet as of 30 June 2024

Annual

accounts for the year ended

30 June 2024

The accompanying notes form an integral part of the annual accounts

ASSETS

Notes

30.06.2024

30.06.2023

USD

FIXED ASSETS

1,335,390,422.32

1,010,431,838.25

III. Financial assets

1,335,390,422.32 1,010,431,838.25

Shares in affiliated undertakings

1,335,390,422.32 1,003,996,298.76

Participating interests

---

6,435,522.21

Investments held as fixed assets

---

17.28

CURRENT ASSETS

650,865,788.35

759,903,843.92

II.

Debtors

584,726,663.88

695,925,190.86

Amounts owed by affiliated undertakings

581,377,728.33

602,726,546.63

a) becoming due and payable within one year

225,386,790.96 556,972,046.43

becoming due and payable after more than

one year

355,990,937.37 45,754,500.20

Other debtors

3,348,935.55 93,198,644.23

a) becoming due and payable within one year

3,345,677.23 93,198,644.23

becoming due and payable after more than

one year

3,258.32 ---

III. Investments

64,394,698.70 63,280,324.35

Other Investments

64,394,698.70

63,280,324.35

IV.

Cash at bank and in hand

1,744,425.77

698,328.71

PREPAYMENTS

2,318,390.27

3,687,479.82

TOTAL ASSETS

1,988,574,600.94

1,774,023,161.99

KERNEL HOLDING S.A.

9, rue de Bitbourg

L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Balance sheet as of 30 June 2024

Annual

accounts for the year ended

30 June 2024

The accompanying notes form an integral part of the annual accounts

LIABILITIES

Notes

30.06.2024

30.06.2023

USD

CAPITAL AND RESERVES

1,179,798,769.30

1,066,764,856.13

Subscribed capital

7,748,292.23

2,218,928.64

II.

Share premium account

561,348,547.24

507,069,043.22

IV.

Reserves

396,225.41

221,893.00

Legal reserve

221,893.00 221,893.00

Other reserves, including the fair value reserve

174,332.41

---

b) other non available reserves

174,332.41 ---

Profit or loss brought forward

557,254,991.27

436,056,034.52

VI.

Profit or loss for the financial year

53,050,713.15

121,198,956.75

PROVISIONS

44,958,203.50

---

Other provisions

44,958,203.50

---

CREDITORS

763,817,628.14

707,213,538.66

Debenture loans

607,611,973.07

Non-convertible loans

607,611,973.07

becoming due and payable within one year

607,611,973.07

Amounts owed to credit institutions

130.52

---

becoming due and payable within one year

130.52

---

Trade creditors

963,797.43

964,448.78

becoming due and payable within one year

963,797.43

964,448.78

Amounts owed to affiliated undertakings

137,599,879.43

57,087,991.91

becoming due and payable within one year

137,599,879.43

41,988,011.91

becoming due and payable after more than one year

---

15,099,980.00

Other creditors

17,641,847.69

41,549,124.90

tax authorities

1,099,850.84

938,632.36

social securities authorities

2,216.77

20,267.44

other creditors

16,539,780.08

40,590,225.10

becoming due and payable within one year

16,539,780.08

40,590,225.10

ii)

becoming due and payable after more than one year

---

DEFERRED INCOME

---

44,767.20

TOTAL CAPITAL, RESERVES AND LIABILITIES

1,988,574,600.94

1,774,023,161.99

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 2024

Annual

accounts for the year ended

30 June 2024

The accompanying notes form an integral part of the annual accounts

PROFIT AND LOSS ACCOUNT

Notes

From 01.07.2023

to 30.06.2024

From 01.07.2022

to 30.06.2023

USD

OTHER OPERATING INCOME

32,588,451.49

9,999,000.00

RAW MATERIALS AND CONSUMABLES AND OTHER EXTERNAL EXPENSES

(8,148,307.19)

(9,066,529.05)

Other external expenses

(8,148,307.19)

(9,066,529.05)

STAFF COSTS

(185,067.12)

(12,828,351.44)

Wages and salaries

(165,359.13)

(12,810,342.58)

Social security costs

(19,707.99)

(17,973.97)

i) relating to pensions

(19,707.99)

(17,973.97)

Other staff costs

---

(34.89)

VALUE ADJUSTMENTS

---

in respect of current expenses

---

OTHER OPERATING EXPENSES

(29,912,100.10)

(2,975,223.87)

INCOME FROM PARTICIPATING INTERESTS

66,997,405.58

241,911,167.84

derived from affiliated undertakings

66,997,405.58

241,911,167.84

10.

INCOME FROM OTHER INVESTMENTS AND LOANS FORMING PART OF THE

FIXED ASSETS

--- ---

other income not included under a)

---

11.

OTHER INTEREST RECEIVABLE AND SIMILAR INCOME

38,033,039.65

35,749,452.56

derived from affiliated undertakings

37,839,143.47

35,345,602.39

other interest and similar income

193,896.18

403,850.17

VALUE ADJUSTMENTS IN RESPECT OF FINANCIAL ASSETS AND OF

INVESTMENTS HELD AS CURRENT ASSETS

3 42,450,691.47 (99,265,514.02)

14.

INTEREST PAYABLE AND SIMILAR EXPENSES

(88,768,193.69)

(42,328,932.89)

concerning affiliated undertakings

(2,556,919.06)

(1,238,460.30)

other interest and similar expenses

7,11

(86,211,274.63)

(41,090,472.59)

15.

TAX ON PROFIT OR LOSS

---

16.

PROFIT OR LOSS AFTER TAXATION

53,055,920.09

121,195,069.13

17.

OTHER TAXES NOT SHOWN UNDER ITEMS 1 TO 16

(5,206.94)

3,887.62

18.

PROFIT OR (LOSS) FOR THE FINANCIAL YEAR

53,050,713.15

121,198,956.75

KERNEL HOLDING S.A.

9, rue de Bitbourg

L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Notes to the annual accounts for the year ended 30 June 2024

Annual

accounts for the year ended

30 June 2024

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, management, enhancement and disposal of participation in whichever form in

domestic and foreign companies. The Company may also finance the Group entities by 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.

Based on 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 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 12 May 2023, the Company had received notification from its major shareholder Namsen Limited Liability Company

(“Namsen Ltd”), a notification of major holding about crossing the 66 2/3% threshold of voting rights, under the provisions

of Articles 8 and 9 of the Law of 11 January 2008 on Transparency Requirements for Issuers of Grand Duchy of

Luxembourg. This event stemmed from share purchase transactions executed by Namsen Ltd on 9 May 2023

(subsequently settled on 12 May 2023), when Namsen Ltd acquired 30,248,449 shares of the Company, representing

approximately 36.00% shares in the share capital of the Company, and gained control over the Group. As of 30 June 2024

and 2023, 100% of the beneficial interest in Namsen Ltd was held by Mr. Andrii Verevskyi.

As of 30 June 2024, the Company’s shares were allocated as follows: 94.37% (30 June 2023: 74.05%) held by Namsen

Ltd, 5.63% (30 June 2023: 18.10%) in free-float, and as of 30 June 2023, 7.85% of the shares were treasury shares held

by the Company’s subsidiary.

The Company also prepares Group consolidated financial statements which are published based on the law dated

10 August 1915, as amended. The consolidated annual report of the Company for the year ended 30 June 2024 is available

at the Company website, http://www.kernel.ua.

These annual accounts were authorized for release by the Board of Directors of Kernel Holding S.A. on 28 October 2024.

KERNEL HOLDING S.A.

9, rue de Bitbourg

L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Notes to the annual accounts for the year ended 30 June 2024

Annual

accounts for the year ended

30 June 2024

Note 2 – Significant accounting policies

2.1 General principles

These annual accounts have been prepared following Luxembourg's 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. The Board of

Directors 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.

These annual accounts have been prepared under the assumption that the Company will continue as a going concern

further discussed in Note 18.

2.2 Significant Accounting Policies

The following are the significant accounting policies and valuation rules adopted by the Company in the preparation of these

annual accounts.

2.2.1 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 the value of financial assets 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.

2.2.2 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.

2.2.3 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 on the most probable market value estimated with due care and in good faith

by the Board of Directors.

2.2.4 Cash at bank and in hand

Cash is valued at its nominal value.

KERNEL HOLDING S.A.

9, rue de Bitbourg

L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Notes to the annual accounts for the year ended 30 June 2024

Annual

accounts for the year ended

30 June 2024

Note 2 – Significant accounting policies (continued)

2.2.5 Foreign currency translation

The Company maintains its books and records in United States dollars (“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 based on the exchange rates effective at the balance sheet date. The

unrealised exchange losses are recorded in the profit and loss account. The realised exchange gains are recorded in the

profit and loss account at the moment of their realisation.

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 unrealised loss is recorded in the profit and loss account and the net unrealised gains are not recognised.

2.2.6 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 are capitalised and amortised to the profit and loss account over the period of

the related loan.

2.2.7 Provisions

Provisions are intended to cover losses or debts that originate in the financial year under review or 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.

Provisions may also be created to cover charges that 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.

2.2.8 Creditors

Creditors are valued at their reimbursement value.

2.2.9 Deferred income

Deferred income includes income items received during the financial year but relating to a subsequent financial period.

KERNEL HOLDING S.A.

9, rue de Bitbourg

L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Notes to the annual accounts for the year ended 30 June 2024

Annual

accounts for the year ended

30 June 2024

Note 3 – Financial assets

For assets following the historical cost model, the movements of the year are as follows:

Share in affiliated

undertakings

Participating

interests

Investments held

as fixed assets

Total

USD

Gross book value – opening

balance

1,372,799,946.47 6,435,522.21

49.00 1,379,235,517.68

Additions for the year

424,307,892.60

---

424,307,892.60

Disposals for the year

(141,800,000.00)

---

(141,800,000.00)

Transfers for the year

6,435,571.21

(6,435,522.21)

(49.00)

---

Gross book value – closing

balance

1,661,743,410.28 ---

--- 1,661,743,410.28

Accumulated value adjustment –

opening balance

(368,803,647.71) ---

(31.72) (368,803,679.43)

Allocation for the year

(36,196,178.10)

---

(36,196,178.10)

Reversals for the year

78,646,869.57

---

78,646,869.57

Transfers for the year

(31.72)

---

31.72

---

Accumulated value adjustment –

closing balance

(326,352,987.96) ---

---

(326,352,987.96)

Net book value – opening balance

1,003,996,298.76

6,435,522.21

17.28

1,010,431,838.25

Net book value – closing balance

1,335,390,422.32

---

1,335,390,422.32

In September 2023, the Company received in cash USD 141,800,000.00 as a result of the decrease of participation in

Etrecom Investments LTD. A proportional reversal of the accumulated impairment of investments in the amount of USD

78,646,869.57 was made.

In October 2023, the Company’s additional contribution to Kernel Trade LLC for an amount of USD 189,973,920.00 was

registered reflecting an increase in participation.

In December 2023, the Company increased its participation in Estron Corporation LTD through the allotment of 1 Ordinary

share of the nominal amount of EUR 8,543.01 together with a share premium of EUR 214,384,545.98 for a total of EUR

214,393,089.99 which is equivalent to USD 234,333,972.60.

In September 2023, the Company’s subsidiary, Transshipservice LLC, was merged with Oilexportterminal LLC. As a result

of this merger, the Company transferred participation from Transshipservice LLC to Oilexportterminal LLC for USD

6,435,522.21.

During the year ended 30 June 2024, other transfers took place related to the redistribution of ownership interests in

subsidiaries without changes in value.

All undertakings are classified as “Share in affiliated undertakings” as the Company exercises control over its undertakings

through direct and indirect ownership.

Value adjustments

As of 30 June 2024, based on a comprehensive evaluation of the financial conditions of the Company’s subsidiaries,

management has decided to record impairments for certain subsidiaries and reflect these adjustments in the Company's

annual accounts:

- USD 29,411,098.40 in relation to its participation held in Starokonstiantynivskyi OEZ LLC reducing the net book

value of investment from USD 60,204,180.73 to USD 30,793,082.33.

KERNEL HOLDING S.A.

9, rue de Bitbourg

L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Notes to the annual accounts for the year ended 30 June 2024

Annual

accounts for the year ended

30 June 2024

Note 3 – Financial assets (continued)

- USD 6,435,520.80 in relation to its participation held in Oilexportterminal LLC reducing the net book value of investment from USD 6,435,522.21

to USD 1,41.00.

- Remaining value adjustments amounted to USD 349,558.90 related to various subsidiaries and individually are immaterial.

Undertakings in which the Company holds a percentage in its share capital or in which it is a general partner as of 30 June 2024 and 30 June 2023 are as

follows:

Name of undertakings Country

Direct

Ownership %

30.06.2024

Direct

Ownership %

30.06.2023

Closing

date

of last

financial

year

Net equity at

the balance

sheet date

(unaudited),

USD

(Loss)/Profit for

the last financial

year (unaudited),

USD

Net Book Value,

USD

30.06.2024

Net Book Value,

USD

30.06.2023

Inerco Trade S.A. Switzerland 100.00% 100.00% 30/06/2024 290,739,000.00 58,895,000.00 3,532,673.50 3,532,673.50

Ukragrobusiness LLC Ukraine 100.00% 100.00% 30/06/2024 22,942,000.00 4,358,000.00 896,417.35 896,417.35

Estron Corporation LTD Cyprus 100.00% 100.00% 30/06/2024 232,234,762.85 1,856,000.00 234,333,972.60 ---

Etrecom Investments LTD Cyprus 100.00% 100.00% 30/06/2024 272,941,000.00 (25,723,000.00) 101,731,419.47 164,884,549.90

Avere Commodities SA Switzerland 100.00% 100.00% 30/06/2024 192,245,000.00 69,466,000.00 64,696,199.64 64,696,199.64

Filstar Limited Cyprus 100.00% 100.00% 30/06/2024 17,000.00 (17,000.00) --- ---

Sentix SP. Z.O.O. Poland 100.00% 100.00% 30/06/2024 1,000.00 (34,000.00) --- ---

AF Hliborob LLC Ukraine 99.99% 99.99% 30/06/2024 105,428,793.23 7,344,000.00 21,460,728.58 21,460,728.58

Hovtva ALLC Ukraine 99.99% 99.99% 30/06/2024 68,923,346.55 17,346,000.00 4,478,278.36 4,478,278.36

Druzhba-Nova ALLC Ukraine 100.00% 100.00% 30/06/2024 255,875,335.63 23,041,000.00 76,452,610.43 76,452,610.43

Ahro Lohistyka Ukraina LLC Ukraine 100.00% 100.00% 30/06/2024 26,007,000.00 4,620,000.00 4,374,000.00 4,374,000.00

Prydniprovskyi Krai ALLC Ukraine 99.99% 99.99% 30/06/2024 149,445,796.69 34,998,000.00 7,512,088.26 7,512,088.26

Agroservis LLC Ukraine 99.99% 99.99% 30/06/2024 --- --- 1,170,213.96 1,170,213.96

Mriia LLC Ukraine 99.97% 99.97% 30/06/2024 31,993,280.92 5,366,000.00 9,361,531.52 9,361,531.52

Kernel-Capital LLC Ukraine 99.97% 99.97% 30/06/2024 361,422,307.84 5,422,000.00 352,939,677.46 352,939,677.46

Bilovod Grain Elevator PJSC Ukraine 91.12% 91.12% 30/06/2024 2,461,151.20 4,000.00 2,461,151.20 2,754,557.60

Sub-total

885,400,962.33

714,513,526.56

KERNEL HOLDING S.A.

9, rue de Bitbourg

L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Notes to the annual accounts for the year ended 30 June 2024

Annual

accounts for the year ended

30 June 2024

Note 3 – Financial assets (continued)

Name of undertakings Country

Direct

Ownership %

30.06.2024

Direct

Ownership

30.06.2023

Closing date

of last

financial

year

Net equity at

the balance

sheet date

(unaudited),

USD

(Loss)/Profit the

last financial

year

(unaudited),

USD

Net Book Value,

USD

30.06.2024

Net Book Value,

USD

30.06.2023

Prydniprovskyi OEZ LLC Ukraine 65.37% 34.92% 30/06/2024 43,003,798,70 10,965,000.00 37,000,000.00 37,000,000.00

Cherkasky PJSC Ukraine 65.08% 65.08% 30/06/2024 273,981.75 (21,000.00) 262,918.35 319,070.85

Kernel-Trade LLC Ukraine 49.37% 15.87% 30/06/2024 428,682,859.38 108,646,000.00 371,613,527.79 181,639,607.79

Transgrainterminal LLC Ukraine 49.12% 22.82% 30/06/2024 18,277,016.10 21,515,000.00 10,319,912.83 10,319,912.83

Starokonstiantynivskyi OEZ LLC Ukraine 31.87% 78.54% 30/06/2024 17,701,007.50 (2,085,000.00) 30,793,082.33 60,204,180.73

Transbulkterminal LLC Ukraine <0.01% <0.01% 30/06/2024 17.14 (924,000.00) 17.28 17.28

Oilexportterminal LLC Ukraine <0.01% --- 30/06/2024 7.80 (238,000.00) 1.41 ---

Transshipservice LLC Ukraine --- 24.00% 30/06/2024 --- --- --- 6,435,522.21

Sub-total 449,989,459.99 295,918,311.69

Total, USD

1,335,390,422.32

1,010,431,838.25

KERNEL HOLDING S.A.

9, rue de Bitbourg

L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Notes to the annual accounts for the year ended 30 June 2024

Annual

accounts for the year ended

30 June 2024

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

30.06.2024

Total

30.06.2023

USD

Amounts owed by affiliated

undertakings

225,386,790.96

355,990,937.37

581,377,728.33

602,726,546.63

Loans provided to affiliated

undertakings

200,757,008.80

355,990,937.37

556,747,946.18

501,954,909.64

Advance for increase of share capital of

affiliated undertakings

---

100,000,000.00

Other receivables from affiliated

undertakings

24,629,782.16

---

24,629,782.15

771,636.99

Other debtors

3,345,677.23

3,258.32

3,348,935.55

93,198,644.23

Receivable from the related party

343,274.91

---

343,274.91

90,181,767.38

Loans provided to the related party

1,864,520.44

---

1,864,520.44

1,798,986.28

VAT receivable

939,993.30

---

939,993.30

1,137,792.43

Other

197,888.58

3,258.32

201,146.90

80,098.14

Total

228,732,468.19

355,994,195.69

584,726,663.88

695,925,190.86

Loans provided to affiliated undertakings

As of 30 June 2024, the outstanding amount of the loans denominated in USD was 552,965,132.83 and denominated in

UAH was 3,782,813.35 (2023: USD 498,385,798.49 and UAH 3,569,111.15 respectively) and the rates for USD

denominated loans were in a range from 5.0% to 9.8% and for UAH denominated loan – 6.5% (2023: 5.0% to 9.8% for USD

denominated loans and 6.5% for UAH denominated loan). As of 30 June 2024 loan receivable of USD 365,005,266.11 was

guaranteed for the full amount by another affiliated undertaking of the Company.

Advance for increase of share capital of affiliated undertakings

During the year ended 30 June 2023, the Company issued an advance for the increase of share capital in one of its affiliated

undertakings in the amount of USD 100,000,000.00. The increase of share capital of the subsidiary was registered in the

government bodies in Ukraine in October 2023 resulting in the increase of shares in its affiliated undertakings (Note 3).

Other receivables from affiliated undertakings

As of 30 June 2024, the Company had an outstanding balance of USD 24,629,782.15, which consisted of USD

23,531,582.00 of receivables from affiliated undertaking for dividends declared and USD 1,098,200.15 of other receivables

from affiliated undertakings (2023: nil and USD 771,636.99 respectively).

Other debtors

As of 30 June 2023, the Company had an outstanding balance of USD 89,973,920.00 in consideration for the sale of

participation in its affiliated undertakings to the related party. During July 2023, the outstanding amount was fully repaid.

KERNEL HOLDING S.A.

9, rue de Bitbourg

L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Notes to the annual accounts for the year ended 30 June 2024

Annual

accounts for the year ended

30 June 2024

Note 5 – Investments

Other investments are composed of the following:

30.06.2024

30.06.2023

USD

Investment certificates

64,394,698.70

63,280,324.35

Total

64,394,698.70

63,280,324.35

As of 30 June 2024, the Company holds investment certificates (debt instrument) of one of its affiliated undertakings, which were issued under the ISIN code

UA4000179790.

Note 6 – Capital and Reserves

Subscribed

Capital

USD

Share premium

account

USD

Legal

reserve

USD

Other

reserves

USD

Profit or loss

brought forward

USD

Result for the

financial year

USD

Total

USD

As at 30 June 2023 2,218,928.64 507,069,043.22 221,893.00 --- 436,056,034.52 121,198,956.75 1,066,764,856.13

Movements for the year:

• Increase of subscribed capital

5,703,696.00

---

5,703,696.00

• Increase of share premium

---

54,279,504.02

---

54,279,504.02

• Transfer

(174,332.41)

---

174,332.41

---

• Allocation of prior year's result

---

121,198,956.75

(121,198,956.75)

---

• Profit for the year

---

53,050,713.15

As at 30 June 2024 7,748,292.23 561,348,547.24 221,893.00 174,332.41 557,254,991.27 53,050,713.15 1,179,798,769.30

The allocation of the prior year’s results was approved by the General Shareholders’ Meeting of 11 December 2023.

KERNEL HOLDING S.A.

9, rue de Bitbourg

L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Notes to the annual accounts for the year ended 30 June 2024

Annual

accounts for the year ended

30 June 2024

Note 6 – Capital and Reserves (continued)

Subscribed capital / Share premiums and similar premiums

As of 1 September 2023, the Company increased its share capital by USD 5,703,696.00, through the issuance of

216,000,000 new Ordinary Shares, each without indication of a nominal value. The total offering of USD 59,983,200.02 was

raised from qualified investors, with USD 54,279,504.02 allocated to share premium.

On 21 March 2024, the Company decreased its share capital by USD 174,332.41 through the cancellation of 6,602,000

shares held in treasury by its wholly-owned subsidiary. The cancellation was allocated to other reserves.

As of 30 June 2024, the Company’s share capital amounts to USD 7,748,292.23 divided into 293,429,230 shares without

indication of a nominal value.

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 2024 and 30 June 2023, the legal reserve of the Company amounts to USD 221,893.00 and is fully allocated.

Other reserves

On 21 March 2024, the Company created a non-distributable reserve through cancellation of shares in share capital for an

amount of USD 174,332.41.

As of 30 June 2024, the reserve not distributable amounts to USD 174,332.41.

Note 7 – 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

30.06.2024

Total

30.06.2023

USD

Non-convertible loans

607,611,973.07

---

607,611,973.07

Eurobonds - Guaranteed notes (Principal amount)

600,000,000.00

---

600,000,000.00

Eurobonds - Guaranteed notes (Accrued interest)

7,611,973.07

---

7,611,973.07 7,611,973.07

Amounts owed to affiliated undertakings

137,599,879.43 ---

137,599,879.43 57,087,991.91

Trade creditors

963,797.43

---

963,797.43

964,448.78

Tax authorities

1,099,850.84

---

1,099,850.84

938,632.36

Other creditors

16,541,996.85

---

16,541,996.85

40,610,492.54

Amounts owed to credit institutions

130.52

---

Total

763,817,628.14

---

763,817,628.14

707,213,538.66

KERNEL HOLDING S.A.

9, rue de Bitbourg

L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Notes to the annual accounts for the year ended 30 June 2024

Annual

accounts for the year ended

30 June 2024

Note 7 – Creditors (continued)

Non-convertible loans

The table below presents aggregate information on guaranteed notes issued on the Irish stock exchange and principal

outstanding amounts as of the reporting dates:

Date of

issue

Initial

contractual

maturity

ISIN code

30.06.2024

(USD)

30.06.2023

(USD)

Guaranteed

Notes – 6.75% Eurobonds

Principal

27 October

2020

27 October

2027

XS2244927823 300,000,000.00

300,000,000.00

Guaranteed

Notes – 6.50% Eurobonds

Principal

17 October

2019

17 October

2024

XS2010040983 300,000,000.00

300,000,000.00

Accrued interest on Eurobonds

7,611,973.07

Total

607,611,973.07

As of 30 June 2024 and 30 June 2023, the Group did not have an unconditional right to defer settlement of its bonds for 12

months or longer from the reporting date as a result of cross-default provisions and accelerated maturity of certain bank

loans held by the Company’s subsidiaries. Therefore, the Eurobonds balance is classified in the line “due and payable within

one year” as of both 30 June 2024 and 30 June 2023. Notwithstanding such classification, the Group remained in full

compliance with the terms of the bonds.

Interest charge on the Eurobonds is classified under the Interest payable and similar expenses (other interest and similar

expenses) line.

Amounts owed to affiliated undertakings and other creditors

In May 2024, an affiliated undertaking of the Company paid on behalf of the Company in the amount of USD 23,000,000.00

increasing the Amounts owed to affiliated undertakings balance and expenses for Fines, sanctions and penalties (Note 12).

In June 2024, an affiliated undertaking of the Company paid USD 29,500,000.00 to a third party on the Company’s behalf

under the settlement agreement. This increased the Amounts owed to the affiliated undertakings balance and reduced the

Other creditors' balance.

The interest rate of the loans outstanding as of 30 June 2024 is in the range of 2-5% and denominated in USD with the

maturity of 30 June 2025 and 15 February 2025.

Note 8 – Other operating income/ Income from participating interests

Other operating income

During the financial year ended 30 June 2024, the Company received USD 32,582,741.42 (2023: USD 9,999,000.00) from

an insurance claim for political violence, triggered by the war in Ukraine.

Income from participating interests

During the financial year ended 30 June 2024, the Company recognised income from participating interests

USD 66,997,405.58 (2023: USD 241,911,167.84), which mainly relates to

- Dividends received from affiliated undertakings USD 66,997,405.58 (2023: USD 33,025,909.00);

- Gain on sale of participating interest in the affiliated undertakings is nil (2023: USD 208,885,258.84).

Guaranteed by several Company’s affiliated undertakings

KERNEL HOLDING S.A.

9, rue de Bitbourg

L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Notes to the annual accounts for the year ended 30 June 2024

Annual

accounts for the year ended

30 June 2024

Note 9 – Other external expenses

The other external expenses are composed as follows:

2024

2023

USD

Business trips expenses

(2,473,416.53)

(2,243,558.97)

Legal fees

(2,585,806.01)

(1,713,142.64)

Other professional fees

(1,874,143.56)

(1,067,776.72)

Accounting and audit fees

(910,857.94)

(858,015.32)

Donations

---

(2,909,602.32)

Others

(304,083.15)

(274,433.08)

Total

(8,148,307.19)

(9,066,529.05)

Note 10 – Staff

The average number of staff employed by the Company during the year is as follows:

2024

2023

Management

---

Employees

Total

Note 11 – 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:

2024

2023

USD

Directors' fees: amounts accrued during the year

643,435.09

364,621.24

During the year ended 30 June 2022, a new management incentive plan was introduced, according to which the

Company granted management the option to sell to the Company 2,792,435 of its ordinary shares. 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 thousand, where all amounts, except for the maintenance capital expenditures, are specified in 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 2026. As of 30 June 2024 the Company has a commitment of USD 66,459,953.00 to buy back the shares

issued to management as part of the management incentive plan. As of 30 June 2024 the Company has recognised a

provision of USD 45,958,203.50 in relation to this buyback (treasury shares). The amount of provision was determined

as a difference between/excess of the amount to be paid for the shares of and their value in use.

KERNEL HOLDING S.A.

9, rue de Bitbourg

L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Notes to the annual accounts for the year ended 30 June 2024

Annual

accounts for the year ended

30 June 2024

Note 12 – Other operating expenses

2024

2023

USD

Other operating expenses

Fines, sanctions and penalties

(28,444,139.41)

(2,169,611.10)

Non-refundable VAT

(824,505.79)

(434,066.45)

Director's fees (Note 11)

(643,435.09)

(364,621.24)

Book value write-off of current receivables

---

(6,925.08)

Indemnities, damages and interest

(19.81)

---

Total

(29,912,100.10)

(2,975,223.87)

Note 13 – Audit and non-audit fees

Audit and non-audit fees are made up as follows:

2024

2023

USD

Audit Fees

(571,713.87)

(565,876.79)

Other Services

(25,514.22)

---

Total

(597,228.09)

(565,876.79)

The fees of the PricewaterhouseCoopers Société cooperative for the audit of these annual accounts were USD 34,256.00

(2023: USD 30,000.00).

Note 14 – Off-balance sheet commitments

The financial commitments of the Company are as follows:

The Company guarantees the obligations under long-term Capex financing from the European Investment Bank and the

European Bank for Reconstruction and Development Bank for the total amount of USD 306,000,000.00. As of 30 June 2024,

the outstanding principal amount under this financing stated USD 137,099,259.50 and USD 26,880,000.03, respectively

(30 June 2023: USD 170,716,320.53 and USD 40,543,000.00).

As of 30 June 2024, the Company has commitment as a Guarantor under agreements signed between Avere Commodities

SA and its subsidiaries and European banks for trading facility for the total amount of USD 240,000,000.00 (30 June 2023:

USD 264,000,000.00).

Additionally, as of 30 June 2024, the Company guarantees all the obligations under agreements signed by subsidiaries of

Kernel Holding S.A. with Ukrainian subsidiaries of European banks and Ukrainian banks in the total amount of USD

186,812,730.27 and USD 38,816,108.69 respectively (covering credit lines, counter guarantees, letter of credit issuance

and operations with non-deliverable forwards) (30 June 2023: USD 340,605,333.35 and USD 35,576,970.40).

Note 15 – Tax Status

The Company is fully taxable under Luxembourg tax regulations.

KERNEL HOLDING S.A.

9, rue de Bitbourg

L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Notes to the annual accounts for the year ended 30 June 2024

Annual

accounts for the year ended

30 June 2024

Note 16 – Contingencies

The international tax environment is becoming more complex in terms of tax administration, which could increase tax

pressure on taxpayers. In particular, a key part of the OECD/G20 BEPS Project is addressing the tax challenges arising

from the digitalisation of the economy. The Global Anti-Base Erosion Rules (“GloBE”) are a key component of this plan and

ensure large multinational enterprises pay a minimum level of tax on the income arising in each of the jurisdictions where

they operate. More specifically, the GloBE Rules provide for a coordinated system of taxation that imposes a top-up tax on

profits arising in a jurisdiction whenever the effective tax rate, determined on a jurisdictional basis, is below the minimum

rate. Kernel Holding S.A. belongs to the Kernel Group which is withing scope of the OECD Pillar Two Model Rules. Pillar

Two legislation was enacted in Luxembourg, the jurisdiction in which Kernel Holding S.A. is incorporated, which has come

into effect for fiscal years starting on or after 31 December 2023. However, it was determined in terms of Pillar 2 rules that

Namsen Limited residing in Cyprus should be considered the Ultimate Parent Entity of Kernel Holding and should therefore

have the obligation to apply the Income Inclusion Rule and be charged with the top-up tax (TUT) due on any low-taxed

profits of itself and its low-taxed subsidiaries. Cyprus has not yet transposed the rules into the domestic legislation but is

expected to do so in the course of 2024 with retroactive effect as of 31 December 2023, in line with the requirements of the

EU Directive, and will therefore be effective for the Kernel Holding from 1 July 2024. Since the Pillar Two legislation will not

be effective at the closing date of the financial year, Kernel Holding will not have related current tax exposure.

Due to the complexities in applying the legislation and calculating GloBE income, the quantitative impact of the enacted

legislation cannot yet be reasonably estimated. Kernel Holding is currently engaged with advisors to confirm the modalities

of the application of the legislation.

The Company is currently a party to five legal cases in the District Court in Luxembourg, all initiated by eight shareholders

who together held 1,210,430 shares as of February 2024, amounting to 0.4% of the Company's total issued shares:

- merits proceedings initiated on 13 October 2023 with the objective: 1) To establish that the Company's directors

acted against the Company's interests, were conflicted, and lacked the necessary authority at the Board of

Directors' meeting on 13 April 2023; 2) To invalidate all decisions made during the aforementioned Board

meeting, including the resolution to delist the Company from the Warsaw Stock Exchange; 3) Alternatively, to

appoint an expert to assess (i) the fairness of the public tender offer price announced by Namsen Limited on

March 30, 2023, compared to the real value of the Company, and (ii) the economic impact of the Board of

Directors' decisions, including the delisting, on the Company's corporate interests.

- summary proceedings initiated on 20 February 2024 related to the temporary suspension of decisions made by

the Company's Board of Directors on 21 August 2023 (regarding the initiation of a share offering), and on 1

September 2023 (pertaining to the issuance of 216,000,000 new shares in the context of the increase in share

capital following subscriptions received by certain shareholders in response to the share offering). Additionally,

the claimants seek to suspend all actions taken by Namsen Limited, the Company's largest shareholder,

following the capital increase, including the suspension of its voting rights related to the shares acquired

thereafter.

- merits proceedings initiated on 20 February 2024 related mainly to the annulment of the Board of Directors'

decisions made on 21 August and 1 September 2023, as mentioned above. Alternatively, the claimants seek

compensation for damages from Namsen Limited.

- summary proceedings initiated on 3 April 2024 related mainly to the suspension of the decisions taken at the

AGM held on 11 December 2023.

- merits proceedings initiated on 26 April 2024 related mainly to the annulment of the decisions taken at the AGM

held on 11 December 2023.

It is an early stage of the proceedings, and the outcome of the litigation cannot be assessed at the moment. However, the

management of the Group believes there was no non-compliance with laws and regulations with regard to the facts appealed

by the claimants.

KERNEL HOLDING S.A.

9, rue de Bitbourg

L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Notes to the annual accounts for the year ended 30 June 2024

Annual

accounts for the year ended

30 June 2024

Note 17 – Operating environment

As the main investments of the Company are 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, Russia launched a full-scale military invasion of Ukraine. As a response, Ukraine declared martial

law which is still in place as of the date of signing of these annual accounts as the military actions are still ongoing in the

Eastern and Southern parts of Ukraine along the frontline, some towns and cities in these regions remain temporarily

occupied while Russia conducts sporadic bombardments throughout the whole Ukrainian territory.

The Ukrainian economy has features inherent in emerging markets, and its development is heavily influenced by the fiscal

and monetary policies adopted by the Ukrainian government, together with developments in the legal, regulatory, and

political environment which changes rapidly.

According to the National Bank of Ukraine`s (‘NBU’) forecast, during the second half of the 2024 calendar year, the inflation

will pick up to 8.5%, but ease to 6.6% next year and go back to 5% target in the 2026 calendar year. Although the economic

recovery will continue, its pace will slow to 3.7% this year, primarily due to significant damage to the energy system. In the

next two years, real GDP growth will accelerate to 4%–5%.

During August 2024, approximately USD 8.4 billion in external financing was received into the general fund of Ukraine's

State Budget. Of this amount, USD 5.5 billion were grants, and USD 2.9 billion were concessional loans. Thus, over 65%

of the funds raised were received on a non-repayable basis. Overall, in 2024, external financing reached USD 24.5 billion

(including USD 6.6 billion in grants). The total assistance since the beginning of the full-scale war amounts to USD 98 billion.

The ‘grain agreement’ between Ukraine, Turkey, and the United Nations was effective until 17 July 2023, when Russia has

officially withdrawn from the deal. In August 2023, a temporary sea corridor began to operate via Ukraine. In 2023, a total

of 56.3 million tons of goods were exported through Ukrainian ports (2022: 47.8 million tons). Starting from 17 July 2023, up

until today, 2,300 ships have entered Ukraine's Black Sea ports during the corresponding period of operation of the Black

Sea maritime corridor, with a total cargo turnover of more than 64 million tons. Of this, nearly 44 million tons of grain were

exported from Ukraine via this corridor. This enabled Ukrainian exporters to increase the physical volume of their sales by

35% in the first half of 2024 and to reach pre-war export levels.

As of 1 October 2024, Ukraine had USD 38,899 million in international reserves, early data show. In September 2024, they

declined by 8.1%. Such dynamics were driven by the NBU’s FX interventions to compensate for the structural deficit of

foreign currency and smooth out exchange rate fluctuations, as well as by Ukraine’s FX debt repayments. These

transactions were partially offset by proceeds from the placement of FX domestic government debt securities and inflows of

international assistance in September, which were one of the smallest since the beginning of the year, following the large

inflows in August.

In accordance with the July 2024 NBU Inflation Report, external financing will enable Ukraine to maintain a sufficient level

of international reserves. By the end of 2024, they will have come close to USD 41 billion. Going forward, as international

support expectedly declines, reserves will gradually diminish to USD 37 billion in 2025 and USD 32 billion in 2026. However,

they will be sufficient to preserve the sustainability of the FX market and ensure moderate two-way fluctuations in the

exchange rate as market conditions change.

Starting from 14 June 2024, the Board of the National Bank of Ukraine has decided to cut the key policy rate from 13.5% to

13.0%. Considering the still moderate rate of inflation, ongoing improvement in inflation expectations, and the balance of

risks for further inflation dynamics, the NBU continues the cycle of interest rate policy easing to support economic recovery.

Beginning on 19 September 2024, NBU has decided to keep its key policy rate at 13% per annum.

In 2023 - 2024, Ukraine witnessed massive power outages for the population and businesses due to significant damage to

power grids caused by missile attacks and shelling from the Russian Federation, which also caused problems with water

and heat supply.

KERNEL HOLDING S.A.

9, rue de Bitbourg

L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Notes to the annual accounts for the year ended 30 June 2024

Annual

accounts for the year ended

30 June 2024

Note 17 – Operating environment (continued)

The Government introduced a range of emergency measures to resolve those challenges and stabilise the economy.

Effective from February 2023, the situation in the energy system of Ukraine improved and stabilised. However, in May-

September 2024 missile attacks on the Ukrainian energy system resumed which has led to new outages.

As of October 2024, the war between Ukraine and the Russian Federation is ongoing, resulting in the significant destruction

of property and assets in Ukraine and other serious consequences. The consequences of the war are changing daily, and

the long-term implications are unclear. Further impact on the Ukrainian economy depends upon the way the Russian military

invasion in Ukraine is resolved and upon the success of the Ukrainian Government in the realisation of new reforms,

recovery strategy after the invasion is stopped, and the transformation of the state to acquire the European Union

membership, as well as cooperation with the international funds.

Note 18 – Going concern

The Group`s operations continued to be significantly affected by the russian full-scale military invasion of Ukraine on 24

February 2022, causing widespread disruption within Ukraine and triggering economic, humanitarian, and environmental

crises. Kernel Group's business activities have been adjusted, focusing on continuity and safeguarding operations. The

Group has assessed the impact of the war's business, as follows:

• In 2024, Ukraine's grain exports underwent significant changes. Following the termination of the UN-brokered

Black Sea Grain Initiative on 17 July 2023, Russia revoked its security guarantees for vessels navigating to

Ukraine's deep-sea ports and commenced regular attacks targeting port and agricultural infrastructure, further

destabilizing the region's ability to sustain export operations. In August 2023, the Ukrainian Navy established a

temporary corridor for commercial navigation; however, normal ship traffic did not fully resume until mid-

October. Russian attacks on civilian grain vessels continue to jeopardize Ukraine’s export capabilities, placing

immense pressure on companies relying on Black Sea routes. However, the temporary corridor has enabled a

continuation of grain shipments throughout the 2024 financial year.

• Several of the Group's facilities, including 7 silos and 3 export terminals, have sustained significant damage

from missile and drone attacks. These assaults caused substantial harm to storage facilities, intake capacities,

and loading equipment, with a net book value of lost property, plant and equipment amounting to USD 11.2

million. Port railway infrastructure was attacked several times, causing logistics disruptions. The Vovchansk oil

extraction plant in the Kharkiv region previously operated by the Group is fully destroyed because of heavy

battles in the town. The Prykolotne oil extraction plant in the Kharkiv region also suffered severe damages as a

result of the bombing and is currently inaccessible.

• The Group faces mobilization of employees to Ukraine`s military forces. Since the invasion, 1,764 employees

have joined Ukraine’s military forces or territorial defense, of which approximately 826 have been demobilized.

Most personnel have returned to their pre-war positions.

• As of 2024, the war in Ukraine has displaced millions of its citizens both internally and across Europe.

Approximately 6.8 million Ukrainians have sought refuge in various European countries, with significant

numbers being hosted in Poland, Germany, and the Czech Republic. Meanwhile, within Ukraine, around 8

million people have been displaced from their homes, fleeing conflict zones for safer regions, particularly in the

west of the country. This mass displacement has created serious workforce shortages both inside and outside

of Ukraine. As millions have left the country, businesses, particularly in key sectors such as agriculture, logistics,

and manufacturing, have faced challenges in finding personnel to maintain normal operations. Skilled labor

shortages are particularly acute, as many professionals and tradespeople were among those displaced or are

now serving in the military. The active conscription poses additional human capital risks for the Group.

• As of 30 June 2024, the Group classified its bank borrowings with long-term initial contractual maturity in the

amount of USD 130,594 thousand as short-term as the Group had waivers for technical and financial covenants

for the period less than the final 12 months since the reporting date.

• The Group is seeking alternative sources of financing, such as loans from European and Ukrainian banks that

have committed to providing financial support to businesses in Ukraine.

KERNEL HOLDING S.A.

9, rue de Bitbourg

L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Notes to the annual accounts for the year ended 30 June 2024

Annual

accounts for the year ended

30 June 2024

Note 18 – Going concern (continued)

The management has undertaken a restructuring of the business processes in response to the impacts of the war:

• The Group achieved a total crushing volume of 3.2 million tons of oilseeds for the 2024 financial year,

including 130 thousand tons of rapeseed. This includes 188 thousand tons processed for third parties under

tolling agreements. This represents a 24% year-over-year increase, primarily driven by the additional

crushing capacity introduced in February 2024 with the commissioning of a greenfield oil extraction plant in

western Ukraine. The performance in FY2025 will be supported by stable export operations through Black

Sea ports. However, the Group anticipates the largest-ever deficit of seeds in the country, which will

intensify competition for feedstock and put downward pressure on margins.

• The Group successfully increased product exports by 36% through the Black Sea ports and alternative

routes, including Danube ports, rail, and trucks, thanks to additional investments in logistics assets and the

dedicated efforts of the team. The Group acquired a 50,000-ton capacity bulk vessel, marking the third in

Kernel's fleet. This addition enhanced the Group's logistics and export capacity.

• Grain procurement increased to 2.8 million tons on the back of stable export operations via Black Sea export

routes for most of the year.

• As of 30 June 2024, the Group managed a land bank of 358 thousand hectares, with 95% of the land

successfully planted. The Group has completed the harvesting of all crops, except for corn, which is now in

the final phase of harvesting.

• To ensure uninterrupted operations the Group continues to invest in power generators and during the year

ended 30 June 2024 USD 2.4 million were invested to support the electricity system (for the year ended 30

June 2023: USD 3.1 million).

• Since 2017, Kernel has been developing a biomass-based "green" energy project, achieving a combined

turbine actual capacity of approximately 84.4 MW. In the context of the ongoing war, investing in this

initiative has provided the company with a reliable alternative energy source, reducing its dependency on

external supplies and enhancing resilience against disruptions caused by the conflict.

• As of 30 June 2024, the Group has outstanding loans totaling USD 315,166 thousand. During the 2024

financial year, short-term borrowings of USD 790,455 thousand were repaid. Additionally, starting from

December 2023, the Group resumed its regular repayment schedule with European banks, having fully

repaid the previously outstanding principal to restore normal terms.

• After the reporting date the Group repaid USD 300,000,000 bonds (Note 24, 39) which were due 17 October

2024.

• The Group signed the new PXF agreement for financing of sunflower seeds purchase for USD 150,000

thousand which was arranged by European banks.

• Despite the disruptions caused by the war in Ukraine, as of 30 June 2024 the Group’s current assets

exceeded current liabilities by USD 788,293 thousand, and the Group generated profit for the period of USD

167,628 thousand and operating cash flow of USD 472,136 thousand.

Considering the above, management has assessed the going concern assumption based on which the consolidated

financial statements and these annual accounts have been prepared.

Management prepared cash flow forecasts for the next 12 months since the Group’s consolidated financial statements

issue date. The following key assumptions were made by management:

• No significant further advancement of Russian troops into the territory of Ukraine and no further escalation

of military actions that could severely impact the Group’s assets;

• Deep water ports in Ukraine will remain open and operational during the next financial year, enabling the

Group to continue exports.

• Deferral of non-essential capital expenditures that are not contractually committed or critical to operations;

• The settlement of the 2024 bonds occurred in October 2024;

• The Group will be able to settle the bank borrowings and bonds until their initial maturity date;

• The Group expects to utilize available credit lines or secure new financing within the 2025 financial year.

KERNEL HOLDING S.A.

9, rue de Bitbourg

L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Notes to the annual accounts for the year ended 30 June 2024

Annual

accounts for the year ended

30 June 2024

Note 18 – Going concern (continued)

Management acknowledges that the future development of military actions, and their duration represent a material

uncertainty that 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. Despite the

material uncertainty relating to the war in Ukraine, management is continuing to take actions to minimize the impact on

the Group and thus believes that the application of the going concern assumption for the preparation of the Group’s

consolidated financial statements and these annual accounts is appropriate.

Note 19 – Subsequent events

n July 2024, the Company increased its participation in Estron Corporation LTD through the issue and allotment of 13,011

ordinary shares for a total amount of EUR 111,153,103.11, equivalent to USD 119,267,279.64, partly paid in cash and

primarily through the transfer of ownership of shares in Ukrainian subsidiaries in the amount of the USD 119,265,237.15.

In August 2024, a russian drones attacked and damaged the largest oilseed processing plant in western Ukraine, launched

in February 2024. The attack caused an estimated USD 341 thousand damage to storage facilities and plant systems. An

expert assessment will determine the exact losses. The production capacity was unaffected, and the plant continues to

operate at normal capacity.

In October 2024, the Group`s assets at the port of Chornomorsk were damaged due to a russian drone attack on Ukraine's

port infrastructure. Fortunately, there were no casualties, and transshipment operations were not suspended.

In October 2024, the Group entered into pre-export credit facility with a syndicate of European banks. The Facility provides

a total available limit of up to USD 150 million and matures on 1 August 2025, with the possibility of further extension.

In October Kernel Holding S.A. has completed the scheduled redemption of its USD 300 million 6.5% coupon bonds due in

2024 (the “2024 Eurobonds”). The Company has fully settled the principal amount along with accrued coupon payment in

accordance with the terms specified in the 2024 Eurobonds prospectus. This action effectively discharges all of the

Company's obligations toward the holders of 2024 Eurobonds.