Kernel S A : Unconsolidated Financial Statements for the year ended 30 June 2022

KERNEL HOLDING S.A.

Société Anonyme 9, rue de Bitbourg L-1273 Luxembourg

R.C.S. Luxembourg B 109173

ANNUAL ACCOUNTS AS AT AND FOR THE YEAR ENDED

30 JUNE 2022

AND REPORT OF THE RÉVISEUR D'ENTREPRISES AGRÉÉ

Table of contents

Report of the board of directors to the shareholders	3-11
Report of the réviseur d'entreprises agréé	12-16
Statement of the Board of Directors' responsibilities for the preparation and approval of
annual accounts	17
Balance sheet as at 30 June 2022	18-19
Profit and loss account for the year ended 30 June 2022	20
Notes to the annual accounts	21-44

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

Dear Shareholders,

Kernel Holding S.A., (the "Company") was incorporated in Luxembourg on 15 June 2005 as a Société Anonyme ("S.A.") subject to the Luxembourg law for an unlimited period of time.

The Company is registered with the "Registre de Commerce et des Sociétés" in Luxembourg under the number B 109173.

The subsidiaries of Kernel Holding S.A. (forming together with the Company, the "Group") holds assets primarily in Ukraine and operate across the agricultural value chain.

The Group operates in farming, grain origination, storage, transport, and in the production, refining, bottling and marketing of sunflower oil.

The Group's goal is the continuous development of profitable and sustainable business that enhances its position a leader in the field of low-cost production, sourcing, processing and handling of agricultural commodities, bridging the resource-rich Black Sea region with large international consumer markets.

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

Overview

Kernel Holdings S.A. being a holding company with no operational activity, the overview below is mainly done from the Group perspective, taking into account the performance of Kernel Holding S.A. as well as its subsidiaries.

During the year ended 30 June 2022, the Group generated USD 220 million EBITDA (down by 73% y-o-y) and net loss attributable to shareholders of Kernel Holding S.A. USD 41 million (30 June 2021: profit USD 513 million ).

Acquisitions/ disposals

During the year ended 30 June 2022, Etrecom Investments Limited issued and allotted additional ordinary shares for a total amount of EUR 86,309,300.00 (equivalent to USD 102,000,000.00). In fact, the increase in authorized capital of Etrecom Investments Limited was conducted in two stages: 16th August 2021 by 42,258,600 fully paid ordinary shares totalling EUR 42,258,600.00 (equivalent to USD 51,000,000.00) and 11th October 2021 by 44,050,700 fully paid ordinary shares totalling EUR 44,050,700.00 (equivalent to USD 51,000,000.00). The payments of shares in full were settled in cash in several tranches.

During the year ended 30 June 2022, the Company acquired and disposed participation interest in Avere Commodities S.A. On 1 October 2021, the Company entered into two separate share purchase agreements, whereby it acquired a total of 250 ordinary shares for an aggregate amount of USD 88,023,404.00. On 30 November 2021, the Company subscribed to an additional 50 fully paid ordinary shares totalling CHF 5,000.00 (equivalent to USD 5,369.00) and 375 fully paid participation certificates totalling CHF 3,750.00 (equivalent to USD 4,027.00). On 14 December 2021, the Company entered into a Contribution Agreement, whereby, it contributed 375 participation certificates held in Avere Commodities S.A., to Baobab Capital S.A. for a total value of CHF 81,861,765.00 (equivalent to USD 88,023,404.00).

Annual accounts for the year ended

30 June 2022

3

KERNEL HOLDING S.A.

9, rue de Bitbourg L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Report of the Board of directors to the shareholders

Acquisitions/ disposals (continued)

On 1 December 2021, the Company incorporated a new affiliated undertaking, Baobab Capital S.A. with a subscribed capital of CHF 100,000.00 (equivalent to USD 107,344.00). On 14 December 2021, the Company entered into a Contribution Agreement, whereby, it contributed 375 participation certificates held in Avere Commodities S.A., to Baobab Capital S.A. for a total value of CHF 81,861,765.00 (equivalent to USD 88,023,404.00). On 15 December 2021, the Company entered into a Share Purchase and recharge agreement, whereby it sold all of its holding in Baobab Capital S.A., amounting to CHF 81,961,765.00 (equivalent to USD 88,130,748.00).

On 9 March 2022, the minority shareholders of Avere Commodities S.A. exercised put options, whereby, it obliged the Company to acquire their participation interest in Avere Commodities S.A. The consideration amount was USD 64,626,348.00, out of which USD 32,000,000.00 was paid as of 30 June 2022, which resulted in increased to 100% ownership in Avere Commodities S.A. As of 30 June 2022, the outstanding amount equalled USD 32,626,348.00.

Both the investments held by the Company, Chorna Kamianka LLC and Urozhai Agricultural LLC, at amounts of USD 6,215,549.01 and UAH 28,320,960.00 (equivalent to USD 2,740,328.51) respectively, have been merged into Ahrofirma Khliborob LLC.

During the year ended 30 June 2022, the Company increased value of its participation interest through additional financial contributions to the following companies:

• Estron Corporation LTD for an amount of EUR 200,000.00 (equivalent to USD 236,280.00).
• Starokonstiantynivskyi OEZ LLC for an amount of USD 54,188,730.00 in accordance with the agreement dated 1 December 2021.
• Sentix Polska for an amount of PLN 8,000.00 (equivalent to USD 1,873.21) in accordance with the share purchase agreement dated 6 June 2022.

As of 30 June 2022, considering the financial situation of some subsidiaries, the management decided to record the following impairments and reversals of value adjustment:

• USD 164,129,530.73 in relation to its participation held in Etrecom Investments Limited reducing the net book value of investment from USD 329,014,080.63 to USD 164,884,549.90.
• USD 41,650.43 in relation to its participation held in Cherkaskyi, Public Joint Stock Company reducing the net book value of investment from USD 486,789.42 to USD 445,138.99.
• USD 410,040.00 in relation to its participation held in Bilovodskyi Kombinat Khliboprodyktiv reducing the net book value of investment from USD 3,909,048.00 to USD 3,499,008.00
• USD 1,873.21 in relation to its participation held in Sentix Polska reducing the net book value of investment from USD 1,873.21 to USD 0.00.
• USD 50,227,497.43 in relation to its participation held in Kernel Trade LLC reducing the net book value of investment from USD 231,867,105.22 to USD 181,639,607.79.
• USD 1,343,625.03 in relation to its participation held in Kernel Capital LLC reducing the net book value of investment from USD 354,283,302.49 to USD 352,939,677.46.

Annual accounts for the year ended

30 June 2022

4

KERNEL HOLDING S.A.

9, rue de Bitbourg L-1273 Luxembourg

R.C.S. Luxembourg B 109173

Report of the Board of directors to the shareholders

1. Income statement highlights

The Group generated USD 5,332 million revenue in FY2022, down 5% y-o-y on the back of lower sunflower oil and meal sales volumes due to difficulties with exporting produce from Ukraine in March-June 2022.

The Group recognized a USD 13 million gain from net change in fair value of biological assets and agricultural produce in FY2022, compared to a USD 133 million gain a year ago.

Costs of sales in FY2022 decreased by 3% y-o-y, to USD 4,692 million, and includes US$ 98 million loss from reduction of net realizable value of inventories below cost. Adjusting for such loss, cost of sales declined by 5% y- o-y, in line with the revenue reduction during FY2022.

Other operating income, net of other operating expenses in FY2022 was USD 19 million, comprising primarily gains on contracts wash-out and stock-take, related mostly to the Group's subsidiary Avere Commodities S.A. trading operations in comparison and losses incurred as a result of Group's operations with securities and derivatives.

General and administrative expenses in FY2022 reduced by 28% y-o-y, to USD 230 million, as the result of recognized additional payroll related expenses in FY2021 related to accounting of profit-shares arrangements in Avere Commodities S.A.

Additionally, the net impairment losses on financial assets reached US$ 33 million, primarily related to expected credit losses on Group's accounts receivable.

Reflecting the direct impact of war, Kernel recognized the loss on impairment of assets of US$ 317 million in FY2022, comprising the impairment of PP&E, goodwill, intangible assets, assets held for sale, write-off of inventories destroyed, allowance created for inventories located at the temporary occupied territories.

Finance costs in FY2022 curtailed by 12% y-o-y, to USD 131 million, primarily driven by the reduced interest on bonds due to the redemption of Group's 2022 bonds. Such savings on interest were partially offset by increased interest payments on bank debt as a result of the postponement of the seasonal bank loans principal repayment due to stretched situation with sales and liquidity after 24 February 2022. Together with that, the Group generated USD 11 million finance income in FY2022 up by 1.9x y-o-y.

The Group also recognized a USD 10 million foreign exchange gain following the Ukrainian hryvnia depreciation against USD over the reporting period.

Other expenses, net, amounted to USD 25 million, mostly driven by all-time high social spending of USD 26 million, but also reflects USD 3 million gain on the disposal of PP&E.

With the loss before income tax generated, Group recognized income tax benefit of USD 3 million in FY2022 and ended the year with USD 41 million net loss attributable to share-holders of Kernel Holding S.A. Considering the financial results achieved, uncertainties around the outcome of the war in Ukraine, stretched liquidity position, ongoing negotiations with Group's creditors on the postponement of the debt principal repayment, and the presence of restrictive covenants in the additional agreements already signed with the lenders, the Board of Directors recommended the general meeting of shareholders to declare a dividend at nil for the year ended on 30 June 2022

Annual accounts for the year ended

30 June 2022

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