KERNEL HOLDING S.A.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Kernel Holding S.A.

ANNUAL REPORT

For the year ended 30 June 2025

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Kernel is a diversified, vertically

integrated agricultural business,

the largest exporter of agricultural

products from Ukraine.

We are the world’s leading producer and exporter of sunflower oil,

the largest grain exporter from Ukraine, the operator of an exten-

sive agricultural logistics network, and the leading producer of

grain and oilseeds in Ukraine. In FY2025, we supplied 8 million

tons of agricultural products from Ukraine worldwide.

90-99

Corporate Governance

100-158

Financial Statements

100

Independent Auditor’s Report

107

Statement of Management Responsibilities

108

Selected Financial Data

109

Consolidated Statement of Financial Position

110

Consolidated Statement of Profit or Loss

111

Consolidated Statement of Profit or Loss and

Other Comprehensive Income

112

Consolidated Statement of Changes in Equity

113

Consolidated Statement of Cash Flows

114

Notes to the Consolidated Financial Statements

158

Corporate Information

1-38

Management Report

Key Highlights

Chairman’s Statement

Our Business Model

Kernel at Glance

Financial Performance in FY2025

Segment Performance

Oilseed Processing

Infrastructure and Trading

Farming

Risk Management

Alternative Performance Measures

39-89

Sustainability Statement

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Key Highlights

USD million except ratios and EPS

FY2024

FY2025

y-o-y

Income statement highlights

Revenue

3,581

4,115

15%

EBITDA

381

466

22%

Net profit attributable to equity holders of Kernel Holding S.A.

168

238

42%

EBITDA margin

10.6%

11.3%

0.7pp

Net margin

4.7%

5.8%

1.1pp

EPS, USD

0.65

0.81

24%

Cash flow highlights

Operating profit before working capital changes

604

434

(28%)

Change in working capital

(21)

(103)

4.8x

Finance costs paid

(78)

(46)

(41%)

Income tax paid

(32)

(44)

36%

Net cash provided by operating activities

472

242

(49%)

Net cash used in investing activities

(113)

(40)

(64%)

Liquidity and credit metrics

Net interest-bearing debt

281

143

(49%)

Commodity inventories

247

299

21%

Adjusted net debt

(155)

n/a

Shareholders' equity

1,865

2,078

11%

Net debt / EBITDA

0.7x

0.3x

(0.4x)

Adjusted net debt

/ EBITDA

0.1x

(0.3x)

(0.4x)

EBITDA / Interest

5.5x

14.4x

8.9x

Non-financial highlights

Number of employees (full-time equivalent) as of 30 June

10,904

10,760

(1%)

Rate of recordable work-related injuries, accidents per million worked hours

0.76

0.85

12%

Social spending, USD million

25.1

30.4

21%

Total GHG emission, thousand tons of CO

equivalent

3,022

2,044

(32%)

Total energy consumption, thousand gigajoules

9,456

9,417

(0%)

Note

: The financial year ends on 30 June.

Hereinafter, EBITDA is calculated as profit from operating activities, adding back depreciation and amortization.

Commodity inventories are inventories such as corn, wheat, sunflower oil, and other products that were easily convertible into cash before the Russian invasion of

Ukraine given their commodity characteristics, widely available markets, and the international pricing mechanism. The Group used to call such inventories “Readily

marketable inventories”, but after the beginning of the war in Ukraine the Group faced difficulties selling such inventories,

and therefore such inventories cannot any

longer be considered readily marketable.

Adjusted debt is the sum of short-term interest-bearing debt, current maturities of long-term interest-bearing debt, long-term interest-bearing debt and lease liabili-

ties, less cash and cash equivalents, and commodity inventories at cost.

Excluding employees related to assets held for sale as of the reporting date.

Hereinafter differences between totals and sums of the parts are possible due to rounding.

Hereinafter “Kernel” or “Group” refers to the Kernel Holding S.A. group of companies, while “the Company” refers to Kernel Ho

lding S.A. as the Group’s parent entity.

This

Management Report together with the “Sustainability Statement” and “Corporate Governance” sections shall be read and perceived as Directors’ Report for the

purposes of the Luxembourg legislation.

……………………………………………………………………

Net debt / EBITDA

……………………………………………………………………

EBITDA

USD million

1.0x

6.8x

1.1x

0.7x

0.3x

FY2021 FY2022 FY2023 FY2024 FY2025

……………………………………………………………………

Net cash generated by operating activities

USD million

806

220

544

381

466

FY2021 FY2022 FY2023 FY2024 FY2025

460

(305)

716

472

242

FY2021 FY2022 FY2023 FY2024 FY2025

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Chairman’s Statement

Andrii Verevskyi

Chairman of the Board of Directors,

Founder

if adjusting the FY2024 result for one-off impairments and other material nonrecurring items.

Dear Stakeholders,

On behalf of the Board of Directors of Kernel

Holding S.A., I am pleased to present the re-

sults and key developments of the Group for

the financial year ended 30 June 2025. The

Group delivered EBITDA of USD 466 million,

down 16% y-o-y if adjusting the FY2024 result

for one-off impairments and other material

nonrecurring items. Net profit attributable to

shareholders amounted to USD 238 million,

and the Group ended the year with a net debt-

to-EBITDA ratio of 0.3x, reflecting our cautious

indebtedness approach.

FY2025 highlights

The FY2025 marked our fourth year of oper-

ations under the extreme conditions of a full-

scale war in Ukraine. The stability of the

Black Sea export corridor was pivotal to our

performance. We were fortunate that our as-

sets were spared from damage, an outcome

for which we credit the heroic efforts of the de-

fenders of Ukraine. They protect our people,

our operations, and the country's economic

lifelines, and we extend to them our deepest

gratitude. Thanks to these circumstances,

Kernel successfully exported 8.0 million

tons of agricultural goods from Ukraine in

FY2025, matching the previous year's result,

contributing to global food security while also

standing as the country's largest overall ex-

porter.

The market environment in FY2025 proved

exceptionally challenging. Our operations

were constrained by a tight supply of grain and

oilseeds in Ukraine, the result of a poor har-

vest and depleted carry-over stocks. This

scarcity was severely exacerbated by a shift in

farmers' selling strategy. Unburdened by li-

quidity pressure and with sufficient storage ca-

pacity, producers aggressively withheld crops,

speculating on future price increases. These

highly atypical selling patterns fueled intense

competition for grain and oilseeds and directly

eroded our margins throughout the year. The

support from elevated global prices was mod-

est and insufficient to meaningfully offset the

profound negative impact of these domestic

market dynamics.

The performance of our Oilseed Processing

segment starkly reflected the hostile market

environment, with EBITDA collapsing by 34%

y-o-y

to USD 148 million. This was a direct

consequence of deteriorating crush margins,

driven by a 20% drop in Ukraine’s sunflower

seed harvest to 11.8 million tons. This created

a severe structural deficit, with domestic

crushing capacity exceeding the available raw

material supply by an estimated 8.5 million

tons.

This market imbalance forced us to abandon

our long-standing single-crop model and begin

processing soybeans and rapeseed for the

first time. The transition has been challenging,

introducing significant operational complexi-

ties we had not previously faced. We view this,

however, as an irreversible and necessary ad-

aptation to the new supply-demand reality in

Ukraine. While we have made progress, our

ability to efficiently manage three crops is still

developing. The first full-year contribution from

our new western Ukraine plant helped lift total

processed volumes by 8% to 3.5 million tons,

including 314 thousand tons of soybeans, po-

sitioning Kernel among the largest soybean

processors in Ukraine. We kept our plants run-

ning at a high 87% utilization rate, but this fig-

ure masks the underlying weakness, as we

were forced to process lower-margin crops to

maintain a minimum positive contribution.

Nevertheless, we maintained our leadership

as Ukraine’s largest producer and exporter of

sunflower oil.

In FY2025, the Group sold 1.4 million tons of

vegetable oil (down 5% y-o-y), accounting for

27% of national sunflower oil exports and 10%

of global exports. We also sold 1.4 million tons

of vegetable meals, representing a 14% y-o-y

growth driven by soybean meal.

The financial trajectory for the segment re-

flects a margin erosion. Excluding contribu-

tions from electricity sales, EBITDA margins

steadily deteriorated throughout the year, fall-

ing from USD 121 per ton in the first quarter to

just USD 66 in the fourth, translated into an

average margin of USD 94 per ton of oil sold.

The intense competition for a scarce supply of

seeds continues to suppress profitability, a dy-

namic we see no signs of abating.

The Infrastructure and Trading segment re-

ported EBITDA of USD 218 million in FY2025,

a 7% increase y-o-y. This overall result was

driven by two sharply contrasting perfor-

mances within the division.

Our Avere proprietary trading business deliv-

ered a strong USD 99 million in EBITDA, a sig-

nificant increase from the prior year's USD 53

million. While a positive result, we recognize

the inherent volatility of trading income and do

not consider this level of performance to be re-

curring.

In contrast, our Ukrainian grain and vegeta-

ble oil export value chain faced considerable

pressure from tight domestic fundamentals.

EBITDA from these operations declined 21%

to USD 119 million. This was caused by a

smaller grain harvest of 55 million tons, slow

farmer selling, and intensified competition,

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Chairman’s Statement continued

which left parts of the logistics system un-

derutilized. Within these operations, export

terminals were a relatively bright spot, with

EBITDA rising to USD 67 million on record

transshipment of 9.1 million tons (36% y-o-y).

However, handling rates were diluted by sec-

tor-wide capacity underutilization. Other sub-

lines faced headwinds: grain origination and

trading EBITDA declined to USD 39 million on

squeezed margins; the railcar business fell to

USD 8 million amid an approximately 68%

drop in market lease rates; silo services con-

tributed USD 4 million as dry-harvest condi-

tions reduced demand for drying; and the

owned vessel fleet added USD 1 million due

to weaker freight and dry-dock off-hire.

Our Farming segment reported an EBITDA of

USD 184 million, an 8% increase y-o-y, sup-

ported by a combination of factors. Strong

global grain and oilseed prices provided a sig-

nificant tailwind. Additionally, a dry summer re-

sulted in low crop moisture, which reduced the

need for drying services and contributed to a

roughly 13% y-o-y decline in average operat-

ing costs per hectare. However, these positive

effects were partly offset by adverse weather

that reduced corn yields, limiting our total har-

vest size and our ability to fully capitalize on

the favorable pricing environment. During the

year, we sold our entire production along with

carry-in stocks from the 2023 harvest, totaling

approximately 1.8 million tons. This strategic

decision means the Group enters the 2026 fi-

nancial year with minimal carry-over inventory

for the first time since the onset of the full-

scale war.

In FY2025, we continued our strategy of de-

leveraging the business in response to ongo-

ing geopolitical and operational risks. In Octo-

ber 2024, we repaid USD 300 million Euro-

bond, remaining committed to maintaining our

strong credit history. Bond repayment was not

an easy task, considering the existing capital

controls in Ukraine and the war environment,

but our team did its best to reconfirm the posi-

tioning of Kernel as the most reliable Ukrainian

borrower. During the year, the Group also se-

cured the first new international financing

since the start of the full-scale war – a one-

year USD 150 million sunflower oil pre-export

facility from a syndicate of European banks.

After passing the peak of working capital

needs, the Group fully repaid its outstanding

obligations to the EBRD and the sunflower oil

PXF in March 2025 and made advance repay-

ments on a portion of the amounts due to the

EIB. Consequently, the Group’s indebted-

ness as of 30 June 2025 reduced by 30% y-

o-y, to USD 761 million, and net debt reduced

to USD 143 million, down 49% y-o-y. The net-

debt-to-EBITDA ratio bottomed at a record

over the past decade, 0.3x.

Reflecting the ongoing uncertainties of the war

in Ukraine and the Group's strategic priority to

preserve liquidity, the Board of Directors has

recommended that no dividend be paid for

the financial year ended 30 June 2025. This

approach ensures that capital is retained to

support our operational and strategic priorities

in a volatile environment.

FY2026 outlook

Looking into FY2026, Kernel will continue to

operate under conditions of high uncertainty,

where war-related risks can reshape our oper-

ating environment without warning. In such cir-

cumstances, flexibility and preparedness re-

main central to our approach. We are focused

on protecting our people and assets, ensuring

business continuity, and restoring operations

swiftly whenever disruptions occur. A key pri-

ority in this regard for the upcoming year is to

make our grain transshipment terminal, which

was substantially damaged in 2023, fully func-

tional again. This ability to adapt and recover

has become one of Kernel’s defining strengths

and will guide us through the year ahead.

Our most material risks remain unchanged.

Agricultural and logistics assets across

Ukraine remain vulnerable to attack, and with

no insurance coverage for these war-related

risks, our exposure is significant. Export per-

formance will therefore continue to depend on

stable access to the Black Sea, as the capac-

ity of alternative routes is not comparable.

Alongside these logistical challenges, human

capital risk also intensifies with each year of

the war through conscription, displacement,

and sustained psychological pressure on our

workforce. Retaining key talent and supporting

our employees remain daily priorities.

Beyond these direct operational risks,

Ukraine’s agricultural sector continues to op-

erate under significant structural pressure.

The large carry-over stocks that once cush-

ioned the domestic market have been de-

pleted, exposing the full impact of reduced

acreage. This is compounded by a shift in

farmer selling patterns, where many now de-

lay sales, tightening near-term supply. At the

same time, a recent wave of investment in

crushing, rail, and port infrastructure has cre-

ated structural overcapacity, compressing

margins and intensifying competition for vol-

umes.

In such an environment, sustainable perfor-

mance will demand superior efficiency, disci-

plined capital allocation, and an integrated

value chain. For Kernel, this means deepening

farmer relationships to secure volumes, main-

taining asset flexibility, and preserving robust

liquidity to withstand operational shocks. We

expect the operating environment to remain

demanding, defined less by price strength and

more by origination access, cost leadership,

and execution quality.

Building on our existing portfolio of biomass-

fueled cogeneration plants, we are exploring

opportunities to expand our renewable en-

ergy footprint. Our focus is on potential in-

vestments in wind, solar, and energy storage,

and we have taken initial steps with several pi-

lot projects. Our approach remains cautious

and exploratory. We are actively monitoring

market developments and assessing how var-

ious options may align with our long-term

strategy. While we see potential for gradual

expansion in the coming years, no major in-

vestment decisions have been made at this

stage.

Update on corporate matters

The Company is still in the process of delist-

ing, initiated in spring 2023, which will be final-

ized once approval is obtained from the Polish

Financial Supervision Authority. This approval

remains pending due to legal challenges filed

in Luxembourg by a group of eight minority

shareholders, collectively holding 0.4% of Ker-

nel’s shares. The same group has also con-

tested other corporate decisions, including the

share capital increase conducted in August-

September 2023 and the resolutions adopted

at the Annual General Meeting of Sharehold-

ers on 11 December 2023.

During FY2025, the Company achieved favor-

able outcomes in two proceedings, with Lux-

embourg courts declaring the claims inadmis-

sible and dismissing them. These rulings reaf-

firm Kernel’s firm commitment to sound corpo-

rate governance, transparency, and strict

compliance with applicable legal frameworks,

as well as its focus on long-term value creation

for all shareholders. They also underscore the

unsubstantiated nature of the claims pursued

by this fraction of the minority group.

Nonetheless, the claimants have continued to

appeal and deliberately delay proceedings, re-

peatedly extending deadlines in what the

Company regards as obstructive and oppor-

tunistic behavior. The Board of Directors con-

siders these actions a form of corporate har-

assment, aimed not at safeguarding share-

holder value but at impeding the Company’s

strategic objectives and development for the

selfish personal benefit of these shareholders.

Confident in the legitimacy and strong ra-

tionale behind its decisions, the Company re-

mains committed to vigorously defending its

position in court.

Changes in the Executive Manage-

ment Team

I would like to announce changes to our Exec-

utive Management Team. Mr. Yurii Puhach

stepped down as Director of Production

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Chairman’s Statement continued

Assets Management, effective 19 August

2025, and Mr. Oleg Tkachenko as Director of

Security, effective 26 August 2025. On behalf

of the Board, I extend our sincere gratitude to

both for their significant contributions during a

period of profound operational transformation.

I am pleased to confirm they will continue their

careers within Kernel in new capacities, ensur-

ing we retain their valuable experience.

To lead these functions, the Board appointed

Mr. Hryhorii Kapustian as the new Director of

Production Assets Management and Mr. Ai-

biek Toktomushev as Director of Security.

Both bring extensive industry knowledge and

proven leadership skills that are closely

aligned with our strategic priorities. These ap-

pointments underscore our commitment to

maintaining a capable, forward-looking man-

agement team to guide Kernel through a com-

plex operating environment.

Sustainability progress

In FY2025, Kernel strengthened its sustaina-

bility framework by aligning its Sustainability

disclosure with the EU Corporate Sustainabil-

ity Reporting Directive (CSRD) and the Euro-

pean Sustainability Reporting Standards

(ESRS). During FY2025, we worked exten-

sively on shaping Kernel’s ESG Strategy,

laying the foundations for a structured and am-

bitious approach to sustainability. With this re-

port, we are proud to take the next decisive

step – committing to forward-looking ESG tar-

gets through 2030. By doing so, we position

Kernel at the forefront of Ukraine’s agribusi-

ness sector as a pioneer of sustainable trans-

formation. Our strategy underscores our de-

termination to lead by example in addressing

global and national challenges, including cli-

mate change, biodiversity preservation, and

social inequality.

Despite the continued challenges posed by

the war, Kernel remained committed to sus-

tainability and resilience. This year’s efforts in-

cluded measurable reductions in greenhouse

gas emissions, an increase in the use of re-

newable energy, a geospatial analysis of bio-

diversity risks, and the screening of plant pro-

tection products against the criteria of relevant

EU regulations. We also reinforced our social

responsibility as an employer and community

partner, prioritizing workforce resilience, vet-

eran reintegration, and support of local com-

munities. Through these efforts, Kernel contin-

ues to lead the sustainable and low-carbon

development of Ukraine’s agricultural sector.

As the war continues, many of our colleagues

remain conscripted and are now serving in the

Armed Forces of Ukraine. As of the date of this

report, 835 Kernel employees are defending

our country against Russian aggression. We

stand with them and their families, offering

ongoing support and contributing to initiatives

that strengthen Ukraine’s resilience.

Tragically, war has also taken lives. We mourn

62 colleagues who have been killed, and we

continue to keep in our thoughts the 44 em-

ployees listed as missing. In addition, 151 of

our people have sustained injuries while serv-

ing or as civilians. Each of these numbers rep-

resents a story of sacrifice and suffering, and

the Board and management remain commit-

ted to ensuring that their dedication is never

forgotten. Their memories are honored on a

webpage.

For those who return from military service,

Kernel has developed a support program to

help them reintegrate into the workplace and

wider community. This includes tailored work-

ing conditions, psychological and social sup-

port, and training for teams to better under-

stand and support colleagues who are veter-

ans. As part of these efforts, Kernel adopted

the Working with Veterans policy, which

guides the integration of demobilized employ-

ees into professional and social environments,

ensuring they are welcomed back with empa-

thy and respect. We also provide care for

those who can no longer serve, as well as for

the families who continue to carry the burdens

of war.

As part of our broader effort, Kernel’s social

spending amounted to USD 30 million in

FY2025, directed to military aid, humanitarian

relief for affected communities, and support for

our employees and veterans. These initiatives

reflect not only our responsibility as an em-

ployer but also our role as a corporate citizen,

standing firmly with Ukraine in its fight for free-

dom and independence.

In conclusion, I would like to extend my deep-

est gratitude to our employees, whose cour-

age and professionalism make our achieve-

ments possible, to our partners for their trust,

and to our stakeholders for their continued

support. Together, we remain committed to

delivering long-term value and building a resil-

ient future for Kernel. We are equally grateful

to the international community for its vital as-

sistance to Ukraine in these unprecedented

times, and we pay special tribute to the

Ukrainian defenders whose bravery safe-

guards our country and its people. As we look

ahead, Kernel will continue to adapt, invest,

and contribute to Ukraine’s recovery and to

global food security.

Andrii Verevskyi

Chairman of the Board of

Directors, Founder

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Our Business Model

SBM-1, 42

Oilseed Processing

segment

•

Leading sunflower oil producer (~7

% of

global production) and exporter (~10

% of

global exports);

•

Leading bottled sunflower oil producer and

marketer in Ukraine;

•

4.0 million tons annual sunflower seed pro-

cessing capacity;

•

Producer of renewable energy from bio-

mass

Infrastructure and Trading

segment

•

Leading grain exporter from Ukraine with

% of country’s total grain export in

FY2025;

•

Leading grain export terminal operator

with total annual capacity to transship 11

million tons of soft commodities;

•

#1 private inland grain silo network in

Ukraine with 2.2 million tons of one-

time

grain storage capacity;

•

#1 private grain railcar fleet in Ukraine (3.4

thousand of accessible own railcars);

•

Avere proprietary trading activities

Farming

segment

•

Leading producer in Ukraine operating 358

thousand hectares of leasehold farmland;

•

Modern large-

scale machinery, sustaina-

ble agronomic practices, cluster manage-

ment system and export-

oriented crop mix;

•

Nearly 100% of sales volumes flows

through our Infrastructure and Trading and

Oilseed Processing segments, earning in-

cremental profits

Own farming

Origination and procurement

Grain storage

Transportation and logistics assets

Export terminals

Fleet of vessels

Oilseed processing

Renewable energy

Refining and bottling

Avere trading operations

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Kernel at Glance

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………

Segment results summary

Revenue, USD m

EBITDA, USD m

Volume, thousand tons

EBITDA margin, USD/t

FY2024

FY2025

y-o-y

FY2024

FY2025

y-o-y

FY2024

FY2025

y-o-y

FY2024

FY2025

y-o-y

Oilseeds processing

1,864

2,107

13%

148

77%

1,477

1,407

(5%)

105

86%

Infrastructure & trading

2,011

2,169

204

218

5,452

5,427

(0%)

Farming

481

468

(3%)

171

184

1,813

1,658

(9%)

476

515

Unallocated corporate expenses

(77)

(84)

Reconciliation

(775)

(629)

(19%)

Total

3,581

4,115

15%

381

466

22%

Note 1

: Physical grain volumes exported from Ukraine (ex. Avere) for Infrastructure and Trading; harvest of grain and oilseeds in the Farming segment.

Note 2

: USD per ton of vegetable oil sold for Oilseed Processing; USD per ton of grain exported (ex. Avere volumes) for Infrastructure and Trading; USD per hectare for Farming.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Financial Performance in FY2024

FY2025 marked the first full year of relative opera-

tional stability since the onset of the full-scale war in

Ukraine in February 2022. While uncertainty re-

mained elevated, uninterrupted export operations via

the Black Sea ports enabled the Group to fully lever-

age its integrated value chain, with 8 million tons of

agricultural goods sold (flat y-o-y).

The Group’s EBITDA amounted to USD 466 million,

representing a 16% y-o-y decline when compared to

the FY2024 result adjusted for one-off impairments

and other nonrecurring items, given the highly chal-

lenging operating environment:

• Oilseed Processing delivered USD 148 million in

EBITDA, down 34% y-o-y. Limited sunflower seed

supply shifted bargaining power from crushers to

farmers, constraining margins throughout the year

and resulting in USD 105 EBITDA per ton of oil

sold. Nevertheless, diversification into soybeans

and rapeseed allowed the Group to sustain high

utilization rates.

• Infrastructure and Trading generated USD 218

million EBITDA (up 7% y-o-y), supported by record

9.1 million tons of transshipment volumes and an

exceptional USD 99 million of Avere’s contribution,

partially offset by narrowed trading margins and

weaker contributions from railcar and silo services.

• Farming achieved USD 184 million in EBITDA (up

8% y-o-y), supported by higher crop prices and re-

duced per-hectare costs, partially offsetting

drought-affected yields.

• Unallocated corporate expenses increased by

9% y-o-y to USD 84 million.

Net profit attributable to the shareholders of Ker-

nel Holding S.A. soared by 42% y-o-y to USD 238

million.

Kernel also materially improved its debt profile. A key

milestone was the full repayment of USD 300 mil-

lion Eurobonds maturing in October 2024. To-

gether with broader deleveraging and disciplined

cash flow management, this reduced total debt by

30% to USD 761 million and net debt by 49% to USD

143 million. With USD 618 million in cash at year-

end, the Group entered FY2026 with a strengthened

balance sheet, robust liquidity, and enhanced finan-

cial flexibility.

Our outlook for FY2026 remains cautious, reflecting

both opportunities and risks. Stable Black Sea export

operations are expected to continue supporting sales

volumes and infrastructure utilization, while a pro-

jected recovery in Ukraine’s harvest size is likely to

be modest and uneven, offering only partial relief to

supply constraints across the core business lines.

However, geopolitical risks remain elevated, with on-

going hostilities and the persistent threat of disrup-

tions to export logistics. Against this backdrop, Ker-

nel will maintain a disciplined approach to financial

and operational management, prioritizing resilience,

cost efficiency, and prudent capital allocation, while

safeguarding liquidity and reinforcing the Group’s

ability to adapt to rapidly changing market conditions.

Revenue

USD 4,115 million

+15% y-o-y

EBITDA

USD 466 million

+22% y-o-y

FINANCIAL

PERFORMANCE

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Financial Performance in FY2025 continued

Income statement highlights

The Group’s revenue grew by 15% y-o-y, ex-

ceeding USD 4.1 billion in FY2025. The in-

crease was primarily driven by higher global

grain and edible oil prices, while physical sales

volumes remained broadly unchanged. Reve-

nue from freight and other services declined

by 35% y-o-y to USD 265 million, reflecting the

higher share of sales executed under FOB In-

coterms. Export sales continued to dominate,

accounting for 95% of total revenue.

In FY2025, we recognized a USD 7 million

gain from the net change in fair value of bi-

ological assets and agricultural produce,

compared to a USD 10 million loss recorded a

year ago. This reflects gains from revaluing

crops in the fields to fair value less costs to sell

as of 30 June 2025, and expensing of similar

gains recorded in the previous year, as well as

losses from changes in the fair value of live-

stock, as required by IAS 41.

Cost of sales rose by 23% y-o-y to USD

3,553 million, largely due to a 45% y-o-y rise

in costs of goods available for sale and raw

materials, reflecting heightened competition

for feedstock and constraints in grain supply.

In contrast, shipping and handling expenses

plummeted by 44% y-o-y, supported by lower

freight rates. Payroll and payroll-related ex-

penses increased by 13% y-o-y, reaching

USD 91 million.

Driven by the surge in the cost of sales, which

outpaced revenue growth, the gross profit for

the reporting period diminished by 17% y-o-y,

totaling USD 568 million.

Other operating income totaled USD 68 mil-

lion, down 11% y-o-y. Unlike the prior year,

which included a one-off insurance

reimbursement of USD 34 million for property

damage and business interruption, this year’s

result was mainly composed of USD 26 million

gains on securities related to liquidity manage-

ment, USD 15 million gains from contract

wash-outs, USD 10 million income from stock-

takes, and other minor items.

Other operating expenses rose 1.6x y-o-y to

USD 46 million, mainly reflecting losses from

derivative operations and currency swaps,

partly offset at the other operating income

level by higher gains on securities and im-

proved yields on interest-bearing instruments.

General, administrative and selling ex-

penses in FY2025 expanded by 10% y-o-y, to

USD 235 million, mainly on the back of higher

payroll and payroll-related costs.

In FY2025, the Group recognized a USD 9 mil-

lion reversal of impairment losses following

asset revaluation, compared with a USD 229

million impairment loss recorded a year ago,

which had been driven by the anticipated de-

terioration in the business outlook, growing

competition in Ukraine, and increasing future

risks for the business.

Consequently, operating profit in FY2025

surged by 31% y-o-y, to USD 361 million.

Finance costs in FY2025 declined by 35% y-

o-y, coming to USD 78 million, reflecting the

redemption of USD 300 million of Eurobonds

maturing in October 2024 and the Group’s

broader deleveraging efforts. Meanwhile, fi-

nance income in the reporting period con-

tracted by 9% y-o-y, settling at USD 45 million,

primarily comprising interest earned on finan-

cial assets held for cash management, as ex-

tra liquidity balances were allocated into

interest-bearing instruments. Consequently,

net finance costs more than halved y-o-y,

settling at USD 32 million.

The Group recognized a net foreign ex-

change loss of USD 5 million for the year

ended 30 June 2025, primarily driven by the

revaluation of balances denominated in

Ukrainian hryvnia (UAH).

Other expenses, net, increased 25% y-o-y to

USD 36 million, reflecting higher charity and

social spending as well as support of Ukrain-

ian defenders of USD 30 million (up 21% y-o-

y) and a USD 5 million loss on the disposal of

a subsidiary.

With a profit before income tax of USD 287

million, the Group recognized corporate in-

come tax expenses of USD 50 million in

FY2025, resulting in a net profit of USD 238

million attributable to the shareholders of

Kernel Holding S.A. After accounting for ex-

change differences in translating foreign oper-

ations (a loss of USD 26 million) and other

items, the total comprehensive income at-

tributable to equity holders of the Company

amounted to USD 220 million in FY2025, up

3.5x y-o-y.

Considering the significant uncertainties and

risks related to the Group’s future perfor-

mance, the Board of Directors recommended

that the general meeting of shareholders de-

clare a dividend of nil for the year ended on 30

June 2025.

Cash flow highlights

The Group generated USD 434 million in op-

erating profit before working capital

changes, down 28% y-o-y, in line with the

EBITDA pattern, considering the prior-year

one-off non-cash impairment that distorted

………………………………………………………………………

Kernel’s EBITDA split by segments

USD million

(65)

(166)

(101)

(77)

(84)

461

219

221

171

184

359

237

154

204

218

(70)

270

148

806

220

544

381

466

FY2021 FY2022 FY2023 FY2024 FY2025

Oilseed Processing

Infrastructure and Trading

Farming

Unallocated corporate expenses

Total EBITDA

………………………………………………………………………………………………………………………………………...................

Income statement highlights

USD million

FY2024

FY2025

y-o-y

Revenue

3,581

4,115

15%

Net IAS 41 gain

(10)

n/a

Cost of sales

(2,889)

(3,553)

23%

Gross profit

682

568

(17%)

Other operating income

(11%)

Other operating expenses

(28)

(46)

1.6x

Net impairment losses on financial assets

(11)

(2)

(78%)

Loss on impairment of assets

(229)

n/a

General, administrative and selling expenses

(213)

(235)

10%

Operating profit

276

361

31%

Finance costs, net

(69)

(32)

(53%)

Foreign exchange gain, net

(5)

n/a

Other (expenses), net

(29)

(36)

25%

Profit before income tax

211

287

36%

Income tax (expenses) / benefit

(43)

(50)

14%

Profit for the period

168

238

42%

Attributable to equity holders of Kernel Holding S.A.

168

238

42%

Non-controlling interest

(0.3)

(0.6)

74%

EBITDA

381

466

22%

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Financial Performance in FY2025 continued

EBITDA in FY2024.

The Group's working capital changes re-

sulted in a cash outflow of 103 million in

FY2025, as compared to a USD 21 million

cash outflow in FY2024. The outflow primarily

reflected the accumulation of oilseed pro-

cessing products, such as edible oils and veg-

etable meals, at year-end, coupled with the

higher valuation of such inventories.

Interest paid in FY2025 totaled USD 78 mil-

lion, down 29% y-o-y, while interest received

remained broadly flat y-o-y at USD 32 million.

After accounting for USD 44 million in income

tax paid, the Group generated USD 242 mil-

lion in cash from operating activities, down

49% y-o-y.

Net cash used in investing activities totaled

USD 40 million in FY2025, primarily compris-

ing USD 73 million expenditures on the prop-

erty, plant, and equipment related to the re-

placement of out-of-date agricultural machin-

ery, reconstruction of the damaged terminal in

Chornomorsk, and other maintenance activi-

ties, and USD 12 million outflow from the pur-

chase of intangible and other non-current as-

sets. These expenditures were partially offset

by USD 43 million of inflows from the disposal

of financial assets previously allocated for li-

quidity management.

Within the financing activities, the Group re-

paid USD 300 million of Eurobonds maturing

in 2024 and USD 223 million of bank borrow-

ings, while securing USD 150 million from new

borrowings and USD 14 million in net pro-

ceeds from credit lines, primarily with Ukrain-

ian banks. In addition, USD 34 million was

used to repay farmland lease liabilities.

As a result, the total cash outflow during the

reporting period reached USD 192 million,

compared with a USD 145 million cash outflow

a year earlier. Therefore, the Group’s cash po-

sition as of 30 June 2025 settled at USD 618

million, down 24% y-o-y.

Debt overview

Despite operating under wartime conditions, a

disciplined approach to debt management al-

lowed the Group to reduce total debt liabilities

by 30% y-o-y:

• The Group successfully repaid USD 300

million of the Eurobond maturing on 17

October 2024, along with the respective

coupon. Initially, the Group faced difficulties

accumulating the required amount in ac-

counts outside Ukraine due to capital and

currency controls imposed by the National

Bank of Ukraine (“NBU”). However, some of

the easing of currency restrictions imple-

mented by the NBU allowed the Group to

accumulate the necessary liquidity and

complete the Eurobond repayment, demon-

strating its commitment to meeting financial

obligations.

• Additionally, on 23 October 2024, a USD

150 million sunflower oil pre-export fi-

nancing facility became effective to sup-

port the Group's export operations and

meet working capital needs for the upcom-

ing financial year. This financing was se-

cured from a syndicate of European banks

and international financial institutions. The

facility was scheduled to mature in August

2025, with an option for extension. It was

the first new financing provided by interna-

tional lenders to Kernel since the onset of

the full-scale war in Ukraine.

• After passing the seasonal peak of working

capital financing, the Group fully repaid its

obligations to the EBRD and the sunflower

oil PXF in March 2025 and made advance

repayments on a portion of the amounts due

to the EIB.

Therefore, at year-end, the Group's total debt

outstanding amounted to USD 761 million,

comprising:

• USD 298 million book value of Eurobonds

maturing in October 2027 (USD 300 million

principal);

• USD 205 million in lease liabilities arising

from farmland lease agreements entered

into by the Group;

• USD 175 million in short-term debt (includ-

ing USD 147 million owed to Ukrainian and

international banks, USD 22 million on the

current portion of long-term debt owed to

the EIB and Ukrainian bank, and USD 6 mil-

lion in accrued interest on bonds and bank

loans);

• USD 82 million in long-term debt (including

USD 70 million owed to the EIB and USD

12 million owed to the Ukrainian bank). Dur-

ing the year, the Group successfully se-

cured an extended waiver from one of its

long-term lenders, effective until 30 June

2026. This has enabled the Group to reclas-

sify its bank borrowings with an initial long-

term contractual maturity as non-current li-

abilities, reflecting improved financial stabil-

ity and visibility.

The Group’s cash position totaled USD 618

million

at the year-end, down 24% y-o-y. Ac-

cordingly, the Group’s net debt reduced by

………………………………………………………………………………………………………………………………………..................

Liquidity positions and credit metrics

USD million, except for ratios

30 June 2024

30 June 2025

y-o-y

Short-term interest-bearing debt

323

175

(46%)

Long-term interest-bearing debt

n/a

Lease liabilities

170

205

21%

Eurobonds

598

298

(50%)

Debt liabilities

1,090

761

(30%)

Cash and cash equivalents

810

618

(24%)

Net debt

281

143

(49%)

Commodity inventories

247

299

21%

of which edible oil and meal

208

2.2x

Sunflower seeds

(46%)

Grains and other commodity inventories

(35%)

Adjusted net debt

(155)

n/a

Shareholders’ equity

1,865

2,078

11%

Net debt / EBITDA

0.7x

0.3x

(0.4x)

Adjusted net debt / EBITDA

0.1x

(0.3x)

(0.4x)

EBITDA / Interest

5.5x

14.4x

8.9x

……………………………………………………………………..

Kernel 2027 Eurobonds mid

-YTM

Source:

Bloomberg

10%

20%

30%

40%

50%

Jul 22

Jan 23

Jul 23

Jan 24

Jul 24

Jan 25

Jul 25

……………………………………………………………………..

Working capital and debt position

USD billion

“Working Capital”, “Net Debt” and “Commodity in-

ventories” definitions as described in section

Alterna-

tive Performance Measures

0.0

0.5

1.0

1.5

2.0

FY2021 FY2022 FY2023 FY2024 FY2025

Working Capital

Net Debt

Commodity inventories

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Financial Performance in FY2025 continued

49% y-o-y during FY2025, standing at USD

143 million as of 30 June 2025.

The commodity inventories balance as of 30

June 2025 totaled USD 299 million, up 21% y-

o-y, exceeding the net debt by USD 155 mil-

lion. Inventories related to oilseed processing

(sunflower seeds, edible oils, and meals) rose

1.4x y-o-y to USD 254 million, while grain in-

ventories contracted by 35% to USD 44 mil-

lion:

• Volume-wise, as of 30 June 2025, Kernel

had in stock 175 thousand tons of edible oil,

58 thousand tons of sunflower meal, 85

thousand tons of sunflower seeds, and 209

thousand tons of grains (primarily corn and

wheat);

• Noticeably, inventory value increased sig-

nificantly, with sunflower seed costs per ton

up 28% y-o-y and grain inventory costs up

27% y-o-y, reflecting tighter feedstock avail-

ability amid a smaller national harvest of

both grains and oilseeds.

Consequently, commodity inventories sur-

passed net debt by USD 155 million, resulting

in a negative adjusted net debt of USD 155

million as of 30 June 2025.

Over FY2025, the key leverage metrics im-

proved to 0.3x Net debt / EBITDA and 14.4x

EBITDA / Interest as of 30 June 2025.

In December 2024, S&P upgraded Kernel’s

rating to “CCC”. Additionally, in May 2025,

Fitch affirmed Kernel’s credit rating at CCC-.

Undrawn facilities as of 30 June 2025

amounted to USD 313 million, primarily com-

prising short-term credit lines in Ukraine and

Avere’s financing.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Oilseed Processing

The operating environment for the Oilseed Pro-

cessing segment in FY2025 was defined by a pro-

nounced imbalance between supply and capacity.

Global sunflower oil prices remained firm throughout

the year, supported by constrained global supply and

weather-driven disruptions in key producing regions.

Domestically, however, the Ukrainian processing

industry faced growing pressure as crushing ca-

pacity expanded to 20.3 million tons while the sun-

flower seed harvest declined to 11.8 million tons.

This widened the supply-capacity gap to a new high

of 8.5 million tons, intensifying competition for feed-

stock and compressing margins.

During the year, the Group achieved a significant

milestone by processing three crops – sunflower,

soybeans, and rapeseeds – for the first time. Total

processing volumes reached 3.5 million tons, up 8%

y-o-y, supported by the full year operation at the new

oilseed processing plant in western Ukraine. Ex-

panding beyond sunflower enabled the Group to

maintain a high utilization rate of 87% across its

crushing plants, despite temporary shutdowns at

several facilities caused by limited sunflower seed

availability.

Edible oil sales totaled 1,407 thousand tons, down

5% y-o-y. This volume also includes 82 thousand

tons of bottled oil, which remained flat y-o-y, and 67

thousand tons of edible oils procured on a CPT basis

and resold.

Segment EBITDA rose to USD 148 million in

FY2025, up 77% y-o-y from USD 83 million recorded

in the previous year, although the prior-year result

was adversely affected by one-off USD 167 million

impairment loss.

FY2026 outlook

The structural imbalance between sunflower seed

supply and crushing capacity is expected to persist.

The sunflower seed harvest is projected at only 11.4

million tons, broadly flat y-o-y, while total crushing

capacities are anticipated to expand further to 21 mil-

lion tons.

The recently introduced 10% export duties on soy-

beans and rapeseed are intended to channel raw

materials into domestic processing, reduce shadow

exports, and boost higher value-added exports.

While this measure should improve overall industry

utilization, its direct effect on Kernel is expected to

remain limited, given the Group’s already high utili-

zation rate.

Looking ahead, Kernel will focus on enhancing oper-

ational efficiency in soybean and rapeseed pro-

cessing, which remain relatively new crops for its

portfolio and offer considerable potential for further

processes and costs optimization.

3.5 million tons of

oilseeds processed

EBITDA

(before unallocated head office expenses)

USD 148 million

+77% y-o-y

Revenue

USD 2,107 million

+13% y-o-y

OILSEED

PROCESSING

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Oilseed Processing continued

Market overview

While remaining mindful of the ongoing war

and associated risks that may impact opera-

tions, we identify two key factors materially af-

fecting Kernel’s oilseed processing business:

1) the oilseeds supply-demand balance in

Ukraine, with sunflower remaining the princi-

pal crop and the main driver of processing vol-

umes, determining the profit distribution be-

tween farmers and crushers; and 2) the

global vegetable oil prices, which influence

the combined earnings of domestic oilseed

farming and processing.

Oilseed supply

Ukraine's sunflower seed processing industry

is predominantly localized, with the majority of

seeds harvested by domestic farmers and pro-

cessed within the country. Typically, import

and export volumes of sunflower seeds are

minimal, resulting in negligible carry-over

stocks across seasons. In FY2025, a reduc-

tion in both harvested area and yield led to a

2.8 million tons decrease in the sunflower

seed harvest as compared to the previous

year, which totaled 11.8 million tons for the

year. With rapeseeds and soybeans added,

the total oilseeds harvest in Ukraine in FY2025

resulted in 22.4 million tons, down 9% y-o-y.

With sufficient storage capacity and comforta-

ble liquidity levels, farmers refrained from sell-

ing oilseeds immediately after harvest, opting

instead to delay sales in anticipation of higher

prices. This disrupted the usual processing

patterns, as a significant portion of oilseeds

only reached the market in March-April.

Demand for oilseeds

At the same time, sunflower seed pro-

cessing capacity in Ukraine increased by 9%

y-o-y, to 20.3

million tons driven by the com-

missioning of our state-of-the-art plant in west-

ern Ukraine and two other small local plants.

This widened the gap between crushing ca-

pacity and sunflower seed supply to a new

high of 8.5 million tons, creating a tight supply-

demand environment that pressured crushing

margins and limited plant utilization through-

out the season. Taking into account all availa-

ble oilseed processing facilities (incl. those for

soybeans and rapeseeds), Ukraine’s total ca-

pacity in FY2025 exceeded 22 million tons of

oilseeds.

Global sunflower oil export and prices

Sunflower oil is the fourth-largest consumed

vegetable oil in the world, with an 8.5% mar-

ket share in the 2024/25 season. The largest

Source: Kernel’s estimate, not including the plants on the occupied territories or those with suspended operations for the whole or part of the season due to the

proximity of the frontline.

Source: USDA.

Source: Kernel’s estimate.

consumers and importers are India, the EU,

Turkey, Iran, China, Iraq, and Egypt, collec-

tively accounting for 77% of the global imports.

Meanwhile, Ukraine stands as the largest

global exporter, contributing 37% to the total

exports

Throughout the 2024/25 season, Ukraine’s

sunflower oil export decreased by 25%, reach-

ing 4.7 million tons. Kernel accounted for

~27% of Ukraine’s sunflower oil export

Prices of major vegetable oils are highly cor-

related due to their substitutability and shared

demand drivers, particularly the food industry

and biofuel production. Palm and soybean

oils, as the most liquid markets, serve as the

primary benchmarks for global price trends.

Nonetheless, regulatory shifts or changes in

demand patterns may cause temporary devia-

tions. For Kernel, which focuses primarily on

sunflower oil, it is noteworthy that sunflower oil

proved the most resilient among the oils over

the past twelve months, despite considerable

volatility:

• Sunflower oil prices opened the 2024/25

marketing year above USD 1,000 per ton

and rose by more than USD 200 per ton by

November, driven by tight global supply

conditions resulting from adverse weather

in key producing regions. Although the mar-

ket experienced a modest correction during

winter, prices maintained a robust level

throughout spring and summer;

• Palm oil dominated the broader market nar-

rative. Supply shortages in Indonesia and

Malaysia, combined with stronger domestic

demand from biodiesel mandates, restricted

export availability and fueled a sharp early-

season rally. A correction followed as buy-

ers shifted to cheaper alternatives, particu-

larly soybean oil. Still, palm oil occasionally

maintained a premium, supported by sea-

sonal dips in output and a weaker Malay-

sian ringgit. Prices later moved into discount

territory in spring and early summer but be-

gan recovering toward the close of the sea-

son, once again supporting the broader

vegetable oil complex;

• Soybean oil also emerged as a key market

trend throughout the year. While it remained

the most competitively priced option amid

ample global supply for much of the period,

sustained demand from the biodiesel and

renewable diesel sectors in the United

States and Brazil helped sustain price lev-

els. Later in the season, soybean oil experi-

enced a sharp rally driven by expectations

of increased U.S. blending mandates, re-

strictions on imported feedstocks, and new

tax incentives designed to promote

domestic biofuel production – all of which

contributed to a more optimistic outlook for

U.S. consumption.

As we move into the new season, sunflower

oil remains well-supported, while broader mar-

ket dynamics continue to reflect the balance

between biodiesel policy, crop outcomes, and

shifting trade flows.

……………………………………………………………………

Major vegoils

prices

USD per ton of oil sold in bulk

Source: Kernel

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Soybean oil CNF India

Sunflower oil CIF India

Crude palm oil Bursa Malaysia Derivatives

Rapeseed oil FOB Rotterdam

FY2025

FY2023

FY2024

……………………………………………………………………………………

Sunflower p

rocessing capacities in FY2025

million tons

Source: Kernel’s estimates

23%

19%

13%

38%

20.3

Local

small

Local

big

Kernel

MHP

Multinationals

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Oilseed Processing continued

SBM-1

Our business model

Market leader in oilseed processing

Kernel is the leading global producer and ex-

porter of sunflower oil. In FY2025, we ac-

counted for ~7% of global sunflower oil pro-

duction and ~10% of global sunflower oil

export

Asset base

Kernel owns seven oilseed processing plants

across various regions in Ukraine

, with the

combined sunflower seed processing ca-

pacity of 4 million tons in FY2025 (19% of

Ukraine’s total

). Four of the Group's crush-

ing facilities are multi-seed, enabling the

processing of soybeans or rapeseed as

needed. These assets operate year-round,

with maintenance typically scheduled for one

month during the summer.

At our plants, we have constructed six cogen-

eration heat and power facilities (CHPs)

that utilize sunflower husk (biomass) to gener-

ate electricity for sale to the national grid or for

our own production needs, with a combined

capacity of 84.4 MW. These CHPs also enable

us to power our crushing operations and

achieve energy self-sufficiency during power

outages in Ukraine.

The oilseed processing plant in Poltava is

equipped with refinery, bottling, and pack-

aging lines, featuring a maximum annual re-

fining capacity of 131.4 thousand tons of oil.

Source: USDA, Kernel analysis.

Two of Kernel’s oilseed processing plants, occupied by Russia at the onset of the war in February 2022, sustained severe damage due to the Russian offensive in

the Kharkiv region toward the end of FY2024. The restoration of processing capacities is not considered feasible in the foreseeable future. Both assets were fully

impaired back in FY2022.

Source: Kernel’s estimates.

The majority of refined oil is bottled and sold

through retail channels, while the remainder is

distributed in bulk on the domestic market and

exported by rail.

The Group’s crushing facilities are state-of-

the-art and regularly upgraded, ensuring a

competitive processing cost advantage over

many industry participants. Energy self-suffi-

ciency further enhances operational resili-

ence, particularly within the current Ukrainian

market landscape. The scale of Kernel’s oper-

ations allows for optimal utilization of the na-

tionwide origination network and facilitates

more efficient allocation of overhead costs

across higher volumes.

All assets are strategically located within

Ukraine’s sunflower seed production belt, in

close proximity to farmers. This supports

crush capacities utilization rates and profitabil-

ity, as the low density of sunflower seed neg-

atively impacts the economics of long-dis-

tance seed transportation.

Origination and production

The Group heavily relies on procuring sun-

flower seeds from external farmers, as the

Group’s Farming segment secured only 11%

of oilseeds processed during FY2025.

The processing of sunflower seeds primarily

results in two key products: sunflower oil and

meal. A detailed visualization of the crushing

process is provided below. These products

are predominantly exported to international

……………………………………………………………………………………

Edible oil sold in bulk destinations FY202

thousand tons

……………………………………………………………………………………

Kernel oilseed processing volumes

thousand tons

46%

31%

11%

Europe India Iraq Turkey Other

1,326

663

482

490

610

684

1,001

985

687

811

973

902

563

745

816

845

617

157

655

954

952

3,183

2,187

2,577

3,192

3,453

FY2021 FY2022 FY2023 FY2024 FY2025

Q1 (ends 30 Sep) Q2 (ends 31 Dec)

Q3 (ends 31 Mar) Q4 (ends 30 Jun)

………………………………………………………………………..…..…..…..…..…..…..…..…..…..…..…..…..…..…..…..…..…..…..…..…..…..…..…..…..………………………………………………………………………..…..…..…..…..…..…..…..…..…..……

Sunflower seed crushing process

roduct yields based on the five-year average

Refining &

bottling

Dehulling &

filtering

Burning…

Sunflower seeds

(1,000 kg)

Dehulled

kernel

Pressing &

extracting

An edible oil rich with Omega

-3 and Omega-

6 acids. A

traditional vegetable oil of choice for many regions of

the world, sunflower oil is used only for culinary

pur-

pose, primarily for salad dressing and frying.

A protein

rich livestock feed, used for compound feed

production for hog, cattle

and poultry industries across

the world.

It is the t

hird most important meal globally

after soybean and rapeseed.

Electricity is sold to the national grid as renewable en-

ergy

A biomass is used to produce steam and energy on our

plants but can also be pelletized and sold to third par-

ties.

Crude sunflower oil

(45%)

Bottled

sunflower oil

Husk

7%)

… or

selling

Electricity for sale

(up to 180 kWh)

Sunflower Meal

(38%)

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Oilseed Processing continued

markets via maritime shipping through the

Group’s transshipment terminals.

Additionally, the sunflower seed husk, a bio-

mass by-product of the crushing process, is

mainly utilized on-site as fuel to generate

steam for production needs and electricity for

both internal consumption and sale to the na-

tional grid.

For other oilseeds, product yields vary: soy-

bean processing results in approximately 20%

oil and 73% meal, while rapeseed processing

yields about 44% oil and 54% meal.

Sales

Vegetable oil in bulk

Oilseed processing is primarily export-ori-

ented, with over 90% of the produced sun-

flower oil exported in bulk to key markets such

as India, Europe, the UAE, Turkey, and Iraq.

In FY2025, 72% of bulk oils sales were on

CIF/CFR terms, while FOB sales accounted

for 11% of the Group’s export volume.

Almost 75% of the bulk vegetable oil sales

were exported through our vegetable oil deep-

water transshipment terminal in Chornomorsk,

acquired in July 2023. The remaining volumes

were primarily transported by inland rail.

While the Group primarily relies on chartered

vessels, during the reporting period our own

tanker “Mavka” transported 84 thousand tons

of vegetable oil to destinations including the

Netherlands, Portugal, and Italy.

Kernel’s primary customers include soft com-

modity processors involved in refining and bot-

tling sunflower oil, international trading com-

panies, as well as buyers who use our oil as

feedstock for biofuel production. The largest

customer in FY2025 was Viterra B.V., contrib-

uting 11% of total bulk oil sales.

The Group continued procuring edible oils in

Ukraine on a CPT basis, subsequently export-

ing them on CIF/CFR terms to capitalize on

additional trading margins. This year, we dou-

bled the volume of sunflower oil purchased to

57 thousand tons, while rapeseed oil pur-

chases totaled 10 thousand tons.

Vegetable meals

Vegetable meals are also a fully export-ori-

ented product, with the majority of volumes

shipped through the Group’s terminal in Chor-

nomorsk, supplemented by exports via inland

logistics routes.

Bottled sunflower oil

In FY2025, 120 thousand tons of crude sun-

flower oil were further refined, with 70% (84

thousand tons) of this refined volume bottled

at our Poltava plant, generating additional

margin from this higher value-added product.

The remaining refined oil was sold in bulk.

In FY2025, 66% of bottled sunflower oil pro-

duction was exported to Europe, the Middle

East, Asia, and Africa under Kernel brands

and private labels. Kernel held a 20% share of

Ukraine's total refined bottled sunflower oil ex-

ports, supplying international retailers like

Walmart and Maxima.

The remaining 34% of bottled oil was sold do-

mestically through 19 nationwide retailers, 25

regional distributors, and 34 other customers,

including charitable foundations, government

institutions, and local customers. Domestic

sales were split 75% to retailers and 25% to

distributors under brands like “Schedryi Dar”,

“Stozhar”, and “Chumak”.

Renewable energy

All renewable energy produced by Kernel’s

CHPs was previously sold under long-term

power purchase agreements to the state-

owned enterprise “Guaranteed Buyer”. These

agreements fixed the feed-in tariff at 0.12

EUR/kWh until 2030. However, starting Sep-

tember 2024, we shifted to selling electricity

on the open market. This strategic change

was driven by the energy deficit in Ukraine,

prompted by Russian attacks on the country’s

energy infrastructure, which has caused day-

ahead market prices to rise, making the terms

with “Guaranteed Buyer” less economically

advantageous.

Contractual commitments

As of 30 June 2025, the Group had contrac-

tual commitments to sell 270 thousand tons

of edible oil for USD 291 million (USD 1,076

per ton) and 98 thousand tons of sunflower

meal for USD 29 million (USD 290 per ton).

Key developments

Non-core oilseeds processing

Constraints in sunflower seed availability, cou-

pled with continuously expanding processing

capacities, created new challenges for market

participants in FY2025. The widening gap be-

tween seed supply and crushing demand,

which reached 8.5 million tons during the year,

prompted the Group to diversify its processing

portfolio beyond sunflower seeds into other

oilseeds, including soybeans and rapeseed.

While rapeseed had already been part of Ker-

nel’s processing mix, FY2025 marked the

Group’s first large-scale experience with soy-

beans.

Over the reporting period, Kernel’s plants pro-

cessed 314 thousand tons of soybeans and

138 thousand tons of rapeseed. This posi-

tioned the Group as one of Ukraine’s largest

soybean processors, with the majority of vol-

umes handled at the state-of-the-art facility

commissioned in February 2024. Diversifying

into multiple oilseeds was not without chal-

lenges, yet the Group successfully adapted

and sustained high efficiency levels across its

crushing plants. This resilience enabled Ker-

nel to mitigate the impact of constrained sun-

flower seed supply while laying a strong foun-

dation for future growth in alternative oilseed

processing.

Renewable energy

In October 2024, the Group commissioned its

final 20 MW CHP unit, increasing total in-

stalled capacity to 84.4 MW. As a result, in

FY2025, Kernel sold to the grid or substi-

tuted purchased electricity totaling 380

GWh, compared with 369 GWh in FY2024.

Generation volumes fell short of expectations,

……………………………………………………………………………………

Bottled sunflower oil destinations FY2025

million liters

42%

34%

11%

Europe Ukraine Middle East

Africa Asia Other

……………………………………………………………………………………

Kernel bottled oil core brands

……………………………………………………………………………………

Kernel bottled oil selected customer

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Oilseed Processing continued

primarily due to limited sunflower seed availa-

bility, which reduced the supply of husk used

for power production. In addition, the actual

husk yield was lower than forecast, further

constraining output. Currently, we are explor-

ing options to use biomass other than husk in

our co-generation heat and power plants to di-

versify the fuel base, enhance operational re-

silience, and reduce dependence on sun-

flower seed harvest dynamics.

The Group secured USD 328 thousand in co-

financing from the Jumbo Impact Fund for the

substation reconstruction project at the Pol-

tava oilseed extraction plant. The investment

supported a low-carbon production initiative

that enabled the refinery at the Poltava oilseed

extraction plant to operate entirely on renewa-

ble energy generated from sunflower husks.

Consequently, the plant was officially certified

as a renewable energy consumer by Bureau

Veritas Group.

Bottled oil

Over the course of the year, we placed strong

emphasis on expanding and improving sales

within the Food Service segment. Our efforts

focused on strengthening relationships with

key partners in the hospitality, catering, and in-

stitutional sectors, as well as enhancing our

product offering and service quality to better

meet the needs of professional kitchens.

This year, we also introduced our new bag-in-

box (BIB) packaging format for the first time –

a durable, multi-layer pouch encased in a rigid

cardboard box. This packaging was certified

under the BRCGS Global Food Safety Stand-

ard, ensuring high product quality and safety.

War impact

The ongoing war in Ukraine continues to im-

pact our operational performance across mul-

tiple areas:

Includes 272 thousand tons of oilseeds processed by Kernel plants in FY2025 via tolling agreements.

• Asset damage: in early August 2024, our

largest oilseed processing facility in western

Ukraine was damaged by a Russian drone

attack, leading to a temporary shutdown of

the operations. The repair costs amounted

to USD 206 thousand, with operations suc-

cessfully resumed in September 2024 fol-

lowing a month of pre-season maintenance

and repairs.

• Conscription of employees: employee

conscription into the Ukrainian military re-

sulted in notable labor shortages at our

crushing facilities, complicating recruitment

and retention of qualified personnel, partic-

ularly in high-risk regions. The frequency of

personnel turnover has disrupted opera-

tional continuity and exerted additional

strain on remaining staff, thereby affecting

overall productivity and efficiency.

Headcount

In FY2025, the headcount in the Oilseed

Processing segment decreased by 12% y-o-

y, to 2,193 employees, as we eventually had

to lay off staff from our destroyed plants in the

Kharkiv region who could not be transferred to

other facilities.

Performance overview

Over FY2025, Kernel processed 3.5 million

tons of oilseeds

, representing an 8% y-o-y

increase, despite the supply-demand con-

straints that affected seasonal processing pat-

terns. There are two key drivers behind the in-

crease in processing volumes:

• the commissioning of the state-of-the-art

oilseed extraction plant in western Ukraine

in February 2024, which was operational for

the whole FY2025, adding the annual sun-

flower seed processing capacity of 1 million

tons.

• the Group’s ability to adapt its processing

mix to include alternative oilseeds, mitigat-

ing the impact of limited domestic sunflower

seed availability during the year. Of the total

oilseeds processed, soybeans accounted

for 314 thousand tons, while rapeseeds

comprised 138 thousand tons. This flexibil-

ity helped achieve a combined utilization

rate of 87% across the Group’s oilseed ex-

traction plants, compared with 75% if based

solely on sunflower seed processing.

With a total of 3 million tons of sunflower seeds

processed, Kernel’s market share in

Ukraine’s sunflower seed processing is es-

timated at 26% for FY2025, the highest level

in the Group’s history and an increase of 5pp

compared to FY2024. This record perfor-

mance reflects not only the strong operational

efficiency of our crushing assets but also the

solid relationships built with farmers and the

effective work of our procurement team in se-

curing raw material supply.

While processing volumes increased com-

pared to the previous year, edible oil sales

declined by 5% y-o-y to 1,407 thousand tons

in FY2025, primarily due to variations in oil

content across the oilseeds processed (as de-

scribed in the Origination and production sec-

tion above). The total sales volume included

82 thousand tons of bottled sunflower oil

(down 2% y-o-y) and 67 thousand tons of edi-

ble oils purchased on a CPT basis in Ukraine

for trading purposes and subsequently ex-

ported.

During the reporting period, the Group also

sold 1,421 thousand tons of vegetable meals

– another key product generated from the

oilseeds processing operations. Sunflower

meal accounted for 80% of the total, with soy-

bean meal and rapeseed meal making up the

remainder. Although vegetable meals have

lower value compared to the oil itself, their

sales are strategically vital for optimizing over-

all crushing margins and mitigating inventory

buildup that could potentially disrupt plant op-

erations. Ensuring efficient sales channels is

imperative given the limited shelf life of vege-

table meals, thereby supporting operational

continuity and profitability.

The Oilseed Processing segment generated

USD 148 million EBITDA in FY2025, up 77%

y-o-y from USD 83 million in FY2024. The

prior-year result, however, included a one-off

impairment loss of USD 167 million and a USD

27 million gain from insurance payments for

property damage and business interruption

due to the Russian invasion of Ukraine. Ad-

justing for these one-offs, EBITDA in FY2025

reduced by 34% y-o-y.

Despite a decline in edible oil sales volumes,

overall processing output remained broadly

……………………………………………………………………………………………………………………………………………………

Oilseed Processing segment performance

FY2024

FY2025

y-o-y

Oilseeds processed

thousand tons

3,192

3,453

Edible oil sales

thousand tons

1,477

1,407

(5%)

Revenue

USD million

1,864

2,107

13%

EBITDA

USD million

148

77%

EBITDA per ton of oil sold

USD / ton

105

86%

EBITDA margin

% of revenue

4.5%

7.0%

57%

……………………………………………………………………………………

Meal sales by type of oilseeds

thousand tons

1,408

889

984

1,207

1,141

197

1,408

962

984

1,250

1,421

FY2021 FY2022 FY2023 FY2024 FY2025

Sunflower Soybean Rapeseed

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Oilseed Processing continued

stable, as lower sunflower oil production was

offset by higher soybean crushing, which in

turn supported increased sales of soybean

meal. Profitability, however, came under pres-

sure as crushing margins narrowed signifi-

cantly during the year, despite stronger vege-

table oil prices. The key factor was a reduced

sunflower seed harvest in Ukraine, which

shifted bargaining power from crushers to

farmers. With sufficient liquidity and storage

capacity, farmers delayed sales until late in

the season, creating a tight and highly com-

petitive raw material market. This dynamic

constrained margins throughout the year, with

pressure most pronounced in the final quarter.

EBITDA contribution from renewable energy

generation amounted to USD 10 million,

down 61% y-o-y, mainly reflecting a 60% in-

crease in the cost of sunflower husk, the key

consumable used for electricity production.

Bottled oil sales added USD 12 million in

EBITDA, down 13% y-o-y.

As a result, EBITDA per ton of oil sold

reached USD 105 in FY2025, up 86% y-o-y.

However, after adjusting for the one-off USD

167 million impairment loss and USD 27 mil-

lion insurance reimbursement recognized in

FY2024, EBITDA per ton of oil sold declined

by 30% y-o-y. This decrease underscores the

adverse impact of constrained seed supply

and heightened competition among proces-

sors, occurring despite a 21% y-o-y increase

in global sunflower oil prices.

FY2026 outlook

Supply-demand balance

For the upcoming sunflower seed harvest, to-

tal production is projected at 11.4 million tons,

broadly flat y-o-y, as unchanged acreage was

offset by a sharp deterioration in yields. Pro-

longed drought in the south and east severely

reduced crop potential, and while conditions in

the north and west were more favorable, they

were insufficient to counterbalance the overall

decline. At the same time, Ukraine’s sunflower

seed crushing capacity is expected to rise to

21 million tons with the commissioning of new

processing plants. This will widen the gap be-

tween available feedstock and processing de-

mand to a record 9.7 million tons, intensifying

competition for raw materials and further pres-

suring margins across the industry.

Soy and rapeseed export duties

In July 2025, the Ukrainian parliament intro-

duced a 10% export duty on soybeans and

rapeseed, which became effective in Septem-

ber 2025 following the President’s approval.

The duty applies only to traders exporting

these oilseeds, while agricultural producers

exporting their own harvest are exempt from

the duty. Such a measure is intended to stim-

ulate domestic processing of these oilseeds,

reduce the scale of shadow exports, and in-

crease exports of higher value-added prod-

ucts such as oils and meals.

The initiative is expected to support higher

processing volumes of soybeans and rape-

seed by domestic processors. At the same

time, a number of new processing facilities are

under construction, with several close to com-

missioning. The direct impact on the Group is

anticipated to be limited, as its existing oilseed

processing facilities already operate at a utili-

zation rate of 87%.

Ukraine has prior experience with the intro-

duction of restrictive export duties, most nota-

bly on sunflower seeds, which laid the founda-

tion for the development of a strong domestic

sunflower processing industry and enabled

the country to become a global leader in sun-

flower oil production.

……………………………………………………………………………………

Oilseed Processing segment EBITDA

(70)

270

148

(73)

237

105

FY2021 FY2022 FY2023 FY2024 FY2025

USD million USD / ton of oil sold

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Infrastructure and Trading

The uninterrupted functioning of the Black Sea com-

mercial navigation corridor, established by the

Ukrainian Navy in October 2023, was the most im-

portant factor impacting the operational performance

of the Infrastructure and Trading segment throughout

FY2025. This stability enabled the Group to export

5.4 million tons of grain, slightly below the previous

year’s volume. More than 95% of exports were trans-

shipped through the Group’s grain terminal in Chor-

nomorsk, while the remainder was routed via Danube

ports. Despite the observable shortage of the grains

available for export this season, Kernel maintained

its position as Ukraine’s largest grain exporter,

with market share rising by 2pp to 12%.

The Group also leveraged its extensive infrastructure

platform, handling a record 9.1 million tons of grain,

edible oils, and vegetable meals through its export

terminals – the highest transshipment volume in

Kernel’s history. This achievement highlights the

strategic importance of Kernel’s integrated infrastruc-

ture, which remains a key competitive advantage in

sustaining export leadership under highly challeng-

ing market and wartime conditions.

From a financial perspective, the Infrastructure and

Trading segment recorded EBITDA of USD 218 mil-

lion, representing a 7% y-o-y increase. Avere’s trad-

ing business contributed USD 99 million in EBITDA,

reflecting exceptional trading gains supported by

market expertise and disciplined risk controls, though

such performance remains highly volatile. Mean-

while, grain origination and export operations in

Ukraine delivered USD 119 million in EBITDA, down

21% y-o-y, as limited grain supply weighed on export

volumes and margins.

FY2026 Outlook

For the upcoming financial year, the Group’s export

operations will remain highly dependent on the ac-

cessibility of Black Sea ports, with exportable grain

volumes continuing to be a key determinant of finan-

cial and operational results. In the first months of the

new financial year, trading activity remained sub-

dued, primarily due to weak farmer selling, as pro-

ducers were reluctant to release stocks while antici-

pating higher price levels. This temporary slowdown

is expected to sustain pressure on margins in the

near term.

The Group targets to reach grain exports of 6.6 mil-

lion tons in FY2026, while continuing to leverage its

unique export value chain to navigate ongoing geo-

political and market challenges. In October 2025, the

reconstruction of the Group’s grain transshipment

terminal in Chornomorsk, damaged by a Russian

missile strike in 2023, is expected to be completed.

Upon commissioning, the terminal’s transshipment

capacity will be fully restored to its pre-strike level of

10 million tons per annum.

Exported 5.4 million

tons of grains

EBITDA

(before unallocated head office expenses)

USD 218 million

+7% y-o-y

Revenue

USD 2,169 million

+8% y-o-y

INFRASTRUCTURE

AND TRADING

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Infrastructure and Trading continued

Market overview

The key market factors impacting the perfor-

mance of the Infrastructure and Trading seg-

ment include the size of the grain harvest in

Ukraine, the availability of Ukrainian Black

Sea ports for export operations, and global

grain price dynamics. Additional factors in-

clude competition among grain traders and

grain infrastructure assets, to name a few.

Grain supply and export in Ukraine

In FY2025, Ukrainian farmers harvested 55

million tons

of grain, a 7% y-o-y decline.

While acreage under major crops remained

unchanged at around 10 million hectares, a

severe summer drought significantly reduced

yields of the most productive crop, corn. Com-

bined with low carry-in stocks, this resulted in

a domestic grain shortage and drove an 18%

y-o-y decrease in exports of grains and

oilseeds to 46 million tons in FY2025.

Throughout the year, grain exports were pri-

marily supported by deep-water Black Sea

ports, while Danube routes were used selec-

tively by players for whom such logistics were

more cost-efficient given the location of their

core assets. In FY2025, 89% of grain volumes

were shipped from Ukraine via maritime

routes. However, overall terminal utilization re-

mained below capacity, as the share of grain

available for export has declined since the on-

set of the full-scale war and has yet to recover.

This was further reinforced by the lack of ex-

pansion in cultivated land, constrained by the

ongoing war in Ukraine.

In the 2024/25 season, Ukraine ranked as the

world’s fifth-largest grain exporter after the

United States, Argentina, Russia, and Brazil,

accounting for 8% of global grain trade

Global grain prices

Global wheat and corn prices remained

broadly stable during the 2024/25 marketing

year, shaped primarily by production dynam-

ics. Wheat output expanded worldwide, exert-

ing downward pressure on prices, while lower

corn production provided relative price sup-

port. Regional harvest pressures, shifting

trade flows, and biofuel demand added further

influence. Early in the season, corn prices

dropped to four-year lows on weak export de-

mand, but later recovered as adverse weather

in South America and reduced crop expecta-

tions in the EU and Black Sea tightened sup-

ply. In contrast, wheat prices came under sus-

tained pressure from large harvests in Aus-

tralia and Argentina and intensified Russian

exports, which narrowed the traditional wheat-

corn price spread.

Three key grains: corn, wheat, and barley. Source: Kernel’s estimates as of September 2025.

Source: USDA, as of September 2025.

In the second half of the season, both markets

experienced heightened volatility. Wheat

briefly rallied in February on U.S. and Black

Sea crop concerns, before easing again as

record South American harvests materialized

and geopolitical factors softened risk premi-

ums. Corn gained support in April from slow

U.S. planting progress and stronger ethanol

demand, but came under renewed pressure in

May-June as Brazil’s record Safrinha crop and

expanded U.S. acreage lifted global supply

forecasts. Wheat stabilized into the summer,

with a June rally driven by heavy rains in the

U.S., active import demand, and drought risks

in the Black Sea and China, amplified by tech-

nical fund buying.

In Ukraine, FOB corn prices demonstrated up-

ward momentum in the first half of the season,

supported by restrained farmer selling, before

entering a correction phase in early 2025 amid

abundant global supply from Brazil and the

U.S. The market remained under pressure

from structural surpluses, which limited upside

potential and kept margins subdued. Wheat

prices followed a similar trajectory: seasonal

weakness during harvest was offset by tempo-

rary support from quality premiums and slower

farmer sales, but ultimately, global oversupply

weighed heavily, resulting in a noticeable de-

cline in prices toward the end of the reporting

period.

Competition among grain traders

Historically, we have competed with estab-

lished multinational trade houses such as

COFCO, Cargill, ADM, Bunge, Louis Dreyfus,

and Glencore, as well as numerous regional

competitors. However, many of the multina-

tional traders scaled down or exited the

Ukrainian market at the onset of the full-scale

war in 2022. Since then, the market has seen

the rise of smaller, agile entrants that have

rapidly expanded their trading activities by

capitalizing on alternative export routes during

periods of heightened volatility. In this environ-

ment, Kernel leverages its integrated infra-

structure and logistical capabilities to sustain

and strengthen its competitive position.

During the reporting period, farmer behavior

added a further layer of complexity. Sales of

harvested crops were spread more evenly

across the year, rather than being concen-

trated in the traditional post-harvest period.

This slower pace of selling intensified compe-

tition, as multinational traders responded with

more aggressive origination strategies. Lever-

aging their ability to operate at break-even lev-

els, these players sought to capture volumes

and reinforce farmer loyalty. As a result, com-

petitive pressure on margins increased, and ri-

valry for domestic market share intensified.

……………………………………………………………………..

Top 5 grain exporters from Ukraine in

FY202

% of total grain export

Source: Ministry of Agrarian Policy and Food of Ukraine, Kernel

12%

Kernel

Louis Dreyfus

ADM

Cargill

Nibulon

……………………………………………………………………..

Grain exports from Ukraine by transport in

FY2025

thousand tons

Source: Ministry of Agrarian Policy and Food of Ukraine, Kernel

89%

Black Sea ports Danube ports

Railway Trucks

39.5

……………………………………………………………………..

Corn and feed wheat prices, FOB Ukraine

USD per ton

Source:

Fastmarkets, Kernel

100

150

200

250

300

350

Corn Feed wheat

FY2025

FY2023 FY2024

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Infrastructure and Trading continued

SBM-1

Our business model

The Infrastructure and Trading segment con-

sists of two separate business arms:

• Grain and sunflower oil export value

chain in Ukraine. This arm comprises inter-

connected business units that form a supply

chain linking Ukrainian farmers to global

markets: silo services, transportation and

logistics assets, export terminals, vessels,

grain origination, and export operations in

Ukraine.

• Avere's global physical and proprietary

trading operations.

Grain export business in Ukraine

Kernel is the leading grain exporter from the

Black Sea region and the largest from

Ukraine. The Group sources grain from local

growers, including its own Farming segment,

and exports it from Ukraine, effectively navi-

gating this low-margin business by leveraging

the following:

• Experienced procurement team with na-

tionwide presence and deep understanding

of local trends and regional peculiarities;

• First-hand access to the unique in Ukraine

own infrastructure – the largest private

silo network, the largest private fleet of grain

railcars, as well as the largest deep-water

grain transshipment capacity in ports and

own vessels;

• Prudent risk management: locking up the

margins by selling grain through forward

contracts in a similar time frame as purchas-

ing it from farmers on the spot market

;

• Client-focused approach: Kernel differen-

tiates itself through strong farmer relation-

ships managed via the IBuyMore CRM sys-

tem and supported by numerous value-

added initiatives:

− In FY2025, Kernel resumed its pre-crop

prepayment initiative, allocating USD

50 million to farmers. These advances

provided critical liquidity support for the

farmers ahead of the season while se-

curing access to raw materials and re-

inforcing the Company’s origination

base;

− Through the Open Agribusiness initi-

ative, Kernel shares expertise and pro-

vides various services to third-party

farmers operating on a total of 159 thou-

sand hectares of land.

− Through the Open Agri Club platform,

Kernel brings together farmers, agri-

businesses, industry processing enter-

prises, and scientific institutions to work

together to improve technologies and

find innovative and effective solutions

for the sustainable development of the

agricultural sector.

− Kernel also provides advanced IT

Deviations from such approach may appear during the business disruptions caused by the war in Ukraine.

ISCC certification confirms that corn was produced in an environmentally and socially sustainable way, making it suitable for use in bioethanol production.

solutions, such as an electronic docu-

ment flow system to streamline paper-

work and Transithub, a virtual truck nav-

igation solution for logistics providers.

− Since 2015, Kernel has been develop-

ing Digital AgriBusiness (“DAB”) – a

proprietary digital platform for farm

management that integrates innovation

with traditional agronomic practices.

DAB leverages precision farming tech-

nologies and AI-driven analytics, com-

bined with advanced planning, model-

ing, and performance tracking, to pro-

vide an unparalleled level of detail and

decision-making support throughout the

production cycle. In FY2025, the Group

began offering this platform to its part-

ners, extending the benefits of DAB be-

yond Kernel’s own operations.

Kernel's export portfolio predominantly fea-

tures corn, which constitutes approximately

60% of total grain exports. Wheat emerges as

the second-largest export commodity, ac-

counting for between 20% and 35% of annual

exports. The remaining exports are composed

of barley, soybeans, and rapeseed. Most of

the exported grain is used for feed, but we

also export food-quality grain (0.8 million

tons of wheat in FY2025) and for bioethanol

production (1 million tons of ISCC-compliant

corn exported in FY2025, granting a price pre-

mium over conventional corn).

In FY2025, more than 75% of Kernel’s grain

exports from Ukraine were sold on a CIF/CFR

basis, with Kernel handling sea transportation

to the destination port. FOB sales accounted

for almost 23% of the Group’s export volumes

during the period.

Silo services

Kernel operates the largest private inland

silo network in Ukraine, consisting of 29 si-

los with a total one-time grain storage capacity

of 2.3 million tons. Our network comprises

both highly productive silos capable of loading

shuttle trains (54 railcars) in a day, and

smaller, less efficient, floor-type storage facili-

ties.

Strategically located in Ukraine’s key grain-

producing regions, these silos provide a full

range of services, including grain intake, dry-

ing, cleaning, storage, and off-loading, serving

both our Farming segment and third-party

farmers. Grain intake begins with wheat in July

and concludes with corn in November-Decem-

ber, enabling seasonal turnover of more than

1.0x storage capacity.

Beyond standard services, Kernel’s silo

network is a critical grain origination tool.

It allows procurement teams to acquire grain

and sunflower seeds from within a 100-kilome-

ter radius, making Kernel a preferred partner

for farmers. This network also strengthens re-

lationships with farmers and provides valuable

insights into Ukraine’s grain supply.

Transportation and logistics assets

Kernel operates a fleet of transportation and

logistics assets to deliver grain, sunflower oil,

and meal to Ukrainian ports or for inland ex-

ports. The company ranks among the seven

largest rail freight shippers in Ukraine and is

the leading shipper of agricultural products:

• Grain railcars: Kernel is the largest private

operator of grain railcars in Ukraine, holding

a 10% market share with 3,400 railcars.

These railcars transport grain from Kernel-

owned and third-party silos to transship-

ment terminals. Ownership allows Kernel to

save on lease costs, though railway traction

and infrastructure fees still apply. Since the

war began, 8% of the Group's railcars have

been stuck in Russian-occupied territories,

………………………………………………………………………………………………………………

Kernel grain export from Ukraine destina-

tions

million tons

51%

27%

19%

Europe Asia Middle East Other

5.4

………………………………………………………………………

Kernel grain export from Ukraine

million tons

69%

61%

77%

63%

57%

23%

21%

17%

30%

36%

8.0 8.0

3.7

5.5

5.4

FY2021 FY2022 FY2023 FY2024 FY2025

Corn Wheat Other

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Infrastructure and Trading continued

but the remaining fleet strongly supports ex-

port operations;

• Specialized containers: Kernel owns 100

specialized railway containers for transport-

ing grain and sunflower meal, along with

400 tank containers for sunflower oil;

• Rail flatcars: the Group operates 99

flatcars to transport containers by rail;

• Railway tanks: Kernel has 77 railway tanks

for sunflower oil transportation (5 of those

have been stuck in Russian-occupied terri-

tories);

• Vehicles: the Group also owns 26 tanker

trucks for sunflower oil, 66 trucks with trail-

ers for grain transport, and 14 jumbo trucks

for Packaged Goods transportation.

Export terminals

Kernel is one of the largest port operators

in Ukraine, with infrastructure that includes:

• TransBulkTerminal in the deep-water port

of Chornomorsk, the largest grain trans-

shipment facility in Ukraine, with a capac-

ity to handle 8.0 million tons of grain per an-

num

. It is capable of servicing over-Pana-

max vessels with deadweights of up to

100,000 tons and maximum berth loading of

up to 80,000 tons. As a core asset for Ker-

nel, it is critical for handling the Group’s ex-

ports, with no viable alternative for this ca-

pacity.

• TGT-Oil terminal in Chornomorsk port, ac-

quired in July 2023, with a sunflower oil

transshipment capacity of 1.4 million tons

per year and storage capacity of 97 thou-

sand tons. It is a Group’s core asset for sun-

flower oil loading to vessels.

• OilExportTerminal in the deep-water port

of Pivdennyi, with an annual capacity to

transship 0.5 million tons of sunflower oil.

• Reni-Oil terminal in the port of Reni on the

Danube River, acquired in FY2024, with a

capacity of 0.7 million tons of sunflower oil

annually.

• Danube Prom Agro terminal in the river

Transshipment capacity was revised following the missile attack on 19 July 2023, which damaged the terminal’s infrastructure. Upon completion of reconstruction

works, the original capacity of 10 million tons per annum is expected to be restored.

port of Reni, allowing export of 0.4 million

tons of grain/sunflower meal per annum.

Kernel’s terminals primarily handle grain (70%

of total throughput in FY2025), along with veg-

etable meals and edible oils. The Group also

has transshipment agreements with port facil-

ities in the Netherlands to support export op-

erations.

Vessels

Kernel owns and operates the bulk carrier Rot-

terdam Pearl V, with a grain cargo capacity of

50 thousand tons, and the tanker Mavka, with

a sunflower oil cargo capacity of 12.5 thou-

sand tons.

By controlling the entire value chain – from si-

los to railcars, port terminals, and vessels –

Kernel enhances efficiency and reduces ex-

port logistics costs.

Avere operations

Founded in FY2018, Avere is a 100%-owned

subsidiary of Kernel. It is headquartered in

Switzerland with representative offices in the

USA, Singapore, the Cayman Islands, Aus-

tralia, Brazil, the UK, and China. Avere’s team

of 41 professionals specializes in research,

trading, and execution. It focuses on merchan-

dising and proprietary trading of grains,

oilseeds, and related commodities in key

global markets, operating independently of

Kernel’s Ukrainian operations.

Due to its trading nature, Avere’s financial re-

sults can be volatile. Market risk is managed

through various tools, including:

• Drawdown: Monitoring the difference be-

tween the most recent peak and trough in

market value.

• Value-at-Risk: Managing the maximum po-

tential loss over one day with 95% confi-

dence.

Key developments

War impact

In FY2025, the Infrastructure and Trading seg-

ment continued to operate under wartime con-

ditions, with grain exports via Black Sea ports

remaining stable since October 2023. The

commercial navigation corridor established

and maintained by the Ukrainian Navy func-

tioned without interruption, ensuring steady

maritime traffic and supporting the consistent

flow of exports. Despite ongoing missile and

drone strikes targeting port and railway infra-

structure, as well as civilian vessels, the

Group’s logistics assets were not materially af-

fected. Nevertheless, the Group faced several

challenges disrupting our operations:

• Prolonged air alarms: For security rea-

sons, all terminal activities must be sus-

pended during missile and drone attacks.

These interruptions extended vessel load-

ing times and disrupted the regular flow of

operations. In FY2025 alone, our main ter-

minal was fully non-operational for a cumu-

lative 30 days, excluding standard idle peri-

ods under normal circumstances. Such

downtime creates additional inefficiencies in

logistics planning and negatively affects

overall throughput.

• Shortage of qualified personnel: The

tightening labor market for skilled profes-

sionals in Ukraine posed further challenges,

particularly in maintenance and repair activ-

ities. Limited availability of qualified special-

ists often extends the time required to com-

plete scheduled works, leading to delays in

operational timetables and reduced effi-

ciency.

Asset reconstruction

On 19 August 2023, a missile strike on the port

of Chornomorsk severely damaged our Trans-

BulkTerminal, destroying storage facilities, in-

take infrastructure, loading equipment, and in-

ventories. The attack reduced Kernel’s

………………………………………………………………………………………………………………

Kernel export

terminals throughput

million tons

…………………………………………………………………………………………………………………………………………………………………………………………………………

…………..……………………

Repair works at the

TransBulkTerminal following the Russian missile attack in 2023

70%

16%

14%

Grains Edible oils Vegetable meals

9.1

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Infrastructure and Trading continued

capacity by 136 thousand tons of storage and

2 million tons of annual transshipment. Given

the uninterrupted export operations since Oc-

tober 2023, which restored business confi-

dence and underscored the strategic im-

portance of the facility, the Group decided to

proceed with its restoration. During FY2025,

USD 11 million was invested in reconstruction

works, with commissioning scheduled to begin

in October 2025. Total investments in the pro-

ject are expected to reach USD 19 million.

Upon completion, the terminal’s transship-

ment capacity will be restored to its original 10

million tons of soft commodities per annum.

Over the year, the Group also successfully re-

stored two silos damaged by missile attacks in

2023-2024, reinstating their original storage

capacity.

Headcount

As of 30 June 2025, the headcount of the In-

frastructure and Trading segment in-

creased by 6% y-o-y to 3,056 employees,

driven primarily by the hiring of additional staff

at the Group’s grain silos.

Performance overview

Operational performance

Grain export from Ukraine

The functioning of the Black Sea export routes

remained the key performance driver for the

segment in FY2025. With near-uninterrupted

port operations, more than 95% of grain export

volumes were transshipped through the

Group’s grain terminal in Chornomorsk, with

the balance handled via Danube ports. In total,

the Group exported 5.4 million tons of grain,

remaining flat y-o-y. Corn accounted for 57%

of total exports, wheat for 36%, with the bal-

ance comprising barley and other minor crops.

The prior-year comparative base, however,

was distorted by the July-September 2023

blockade of the Black Sea, when the Group

managed to export only 203 thousand tons of

grain.

Nevertheless, the Group‘s share of Ukraine’s

grain exports increased by 2pp y-o-y to 12%,

underscoring Kernel’s operational efficiency,

strong relationships with farmers, and the

competitive advantage of its export infrastruc-

ture, which together reinforced our position as

the country’s largest grain exporter. Kernel ac-

counted for 15% of the country’s corn exports

(+3pp y-o-y), 13% of wheat (+4pp y-o-y), and

12% of barley (+5pp y-o-y). However, our mar-

ket share remains below the pre-war peak of

18% achieved in FY2021.

Of the total exported grain, 26% was produced

by the Farming segment, while the majority

This volume is included in the export terminal’s throughput total figure.

was sourced from third-party farmers. Pro-

curement from other farmers totaled 3.9 mil-

lion tons, a 39% y-o-y increase, though still be-

low pre-war levels. As of 30 June 2025, the

Group’s grain inventories stood at 209 thou-

sand tons, broadly consistent with pre-war

norms, providing a stable supply base for on-

going export operations.

Export terminals throughput

In FY2025, Kernel transshipped 9.1 million

tons of agricultural goods through its export

terminals, marking the highest volume in the

Group’s history and a 36% y-o-y increase.

Grain accounted for 70% of total transship-

ment volumes, edible oil for 16%, and meal for

the remainder.

While the Group’s grain export volume re-

mained stable compared to the previous year,

the overall growth in transshipment volumes

was driven by higher edible oil exports han-

dled through the Group’s vegetable oil trans-

shipment terminal, which became operational

in January 2024, as well as by increased vol-

umes transshipped for third parties. During the

reporting period, the Group handled 1.5 million

tons of third-party-owned goods by providing

transshipment services

Grain and oilseeds received in inland silos

The total volume of grain received in inland

silos in FY2025 declined by 3% y-o-y to 2.7

million tons. Of this total, 1.5 million tons were

produced by the Group's own Farming seg-

ment – 0.4 million tons lower than the previous

year due to a smaller harvest size. An addi-

tional 233 thousand tons were procured by the

Group, with the remaining volume supplied by

third-party farmers.

The primary grains received were corn (1,393

thousand tons) and wheat (870 thousand

tons), with a minor share made up of sunflower

seeds, soybeans, and rapeseed.

Railcars business

The Ukrainian railcar market in FY2025 faced

a pronounced structural imbalance, driven by

several interrelated factors:

• Reduced cargo base as the total grain and

oilseed volumes available for transport de-

clined noticeably during the year. Unlike the

first two years of the full-scale war, when

limited access to seaports created signifi-

cant carry-over stocks, FY2025 was charac-

terized by stable export flows via the Black

Sea corridor and comparatively low stocks

at the beginning of the season. The situa-

tion was further exacerbated by a 4 million

ton decline in the Ukrainian grain harvest,

directly reducing transportation demand;

• Oversupply of grain railcars, as many

market participants expanded their fleets by

purchasing additional units for in-house op-

erations. With overall volumes now lower,

this capacity expansion has resulted in a

significant surplus of grain railcars in the

market, intensifying competition and driving

utilization rates down;

• Improved railcars turnover as Ukrainian

Railways enhanced operating efficiency

during the year by reallocating locomotives

across routes and benefiting from the more

stable and predictable export operations

through the Black Sea. While positive for

the system overall, improved turnover fur-

ther reduced the effective demand for addi-

tional railcar capacity.

Such an imbalance has exerted downward

pressure on pricing, driving rental rates to their

lowest levels in recent years and resulting in

the business line’s financial results that were

substantially below historical levels. Given the

ongoing structural surplus in the market, this

challenging environment is likely to persist in

the foreseeable future.

Financial results

In FY2025, the Infrastructure and Trading seg-

ment reported EBITDA of USD 218 million, re-

flecting up 7% y-o-y. Within the segment, per-

formance was shaped by two distinct business

arms with contrasting dynamics.

Avere’s trading business delivered an excep-

tional result, generating USD 99 million in

EBITDA (an 87% increase y-o-y) and account-

ing for nearly half of the segment’s total, com-

pared with just 26% in the prior year. This per-

formance was driven by Avere’s strong exper-

tise in global commodity markets, accurate as-

sessment of price trends, and a disciplined

risk management framework. While the out-

come was exceptional, it should be noted that

Avere’s earnings are inherently sensitive to

…………………………………………………………………………………………………………………………………………………………

Infrastructure and Trading segment performance

FY2024

FY2025

y-o-y

Grain export volumes

thousand tons

5,452

5,427

(0%)

Export terminal's throughput (Ukraine)

thousand tons

6,700

9,136

36%

Grain received in inland silos

thousand tons

2,802

2,719

(3%)

Revenue

USD million

2,011

2,169

EBITDA

USD million

204

218

EBITDA margin per ton of grain exported

USD

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Infrastructure and Trading continued

market volatility, and therefore, results of this

scale are not expected to be sustained on a

recurring basis.

By contrast, the grain and edible oil export

value chain in Ukraine generated USD 119

million in EBITDA, down 21% y-o-y. This result

reflected more challenging fundamentals, as

limited grain supply constrained export vol-

umes, pressured origination margins, and re-

duced utilization rates across export infra-

structure. The performance of individual busi-

ness lines varied, with each contributing differ-

ently to the overall result:

• Export terminals contributed more than

half of the achieved EBITDA, generating

USD 67 million, up 55% y-o-y, supported by

record-high transshipment volumes, albeit

negatively impacted by reducing transship-

ment rates due to general market capacity

underutilization, considering lower y-o-y

harvest;

• Grain origination and trading operations

delivered EBITDA of USD 39 million, down

28% y-o-y, reflecting lower grain harvest in

Ukraine and diminished carry-in stocks,

which shifted bargaining power toward

farmers and constrained trading margins;

• EBITDA from the railcar business declined

to USD 8 million in FY2025 from USD 22

million in the prior year. Such a decrease

was primarily due to a 68% y-o-y reduction

in market lease rates for grain railcars, high-

lighting the іstructural imbalance in the

Ukrainian railcar market as disclosed in de-

tail above;

• Silo services business line generated

only USD 4 million in EBITDA, down 81% y-

o-y, on the back of the lower demand for the

drying services, the main profit driver for this

segment. At the same time, the reduced

need for drying and cleaning services trans-

lated into lower post-harvest costs for the

Group’s Farming segment;

• The Group’s own fleet of vessels

contributed USD 1 million in EBITDA

compared with USD 12 million a year ago.

This decline was mainly attributable to

weaker freight rates and scheduled dry-

dock surveys, during which each vessel

was temporarily off-hire.

FY2026 outlook

Looking ahead, the performance of the Infra-

structure and Trading segment will remain

heavily dependent on the availability of

Ukrainian Black Sea ports for export opera-

tions, harvest size in Ukraine, and on further

developments in the war. The presence of sea

mines poses a potential risk to the stable func-

tioning of export operations through the Black

Sea. In response to safety concerns for civilian

vessels, the Ukrainian Sea Ports Authority

may be required to impose restrictions on the

entry and departure of vessels. Such

measures could result in a reduction of the

Group’s export volumes and, consequently,

adversely affect the utilization rates of its ex-

port terminals.

Despite these uncertainties, the Group targets

an increase in export volumes of grain to 6.6

million tons in FY2026 on the back of higher

expected crop size. While still below pre-war

levels, this is an ambitious objective given the

current market environment:

• Since the onset of the full-scale war, the

acreage under the three main crops (corn,

wheat, and barley) has decreased by 5 mil-

lion hectares, reducing the grain volumes

available for export regardless of yield dy-

namics. Domestic consumption of these

crops has fallen by about 13% compared to

pre-war levels, in line with demographic

trends. However, the contraction in export-

able supply has been far more pronounced.

For FY2026, harvest of corn, wheat, and

barley is projected at 60 million tons, with 44

million tons (up 5 million tons y-o-y) pro-

jected to be available for export;

• Multinational traders are reinforcing their

presence in Ukraine, competing aggres-

sively on origination to capture market

share. Their scale and ability to operate at

tighter margins create sustained pressure

on both trading profitability and throughput

fees, despite ongoing risks of attacks on lo-

gistics infrastructure;

• At the same time, farmers, supported by

sufficient working capital and access to stor-

age capacity, are also in a stronger position

to delay sales, holding back volumes in an-

ticipation of higher prices. This behavior, al-

ready evident throughout FY2025, is antici-

pated to persist into FY2026, becoming the

new normal on the market, reshaping dy-

namics, and maintaining pressure on trad-

ing margins;

• Competition among export terminals is set

to intensify with the re-launch of the former

grain transshipment facility in Odesa and

the ongoing construction of a new large ter-

minal in the port of Pivdennyi. These

developments are expected to strengthen a

structural oversupply of handling capacities,

putting further pressure on margins. This

situation mirrors the trend already experi-

enced in the sunflower oil sector, where sig-

nificant capacity expansion reshaped indus-

try economics and constrained profitability;

• Global grain and oilseed prices are ex-

pected to remain under pressure next year.

Wheat and corn face strong downward

pressure from record harvests in the U.S.,

Brazil, and the Black Sea region, with slow

import demand further weighing on prices.

………………………………………………………………………

Infrastructure and Trading segment EBITDA

USD million

111

115

116

151

119

248

122

359

237

154

204

218

FY2021 FY2022 FY2023 FY2024 FY2025

Avere Ukraine

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Farming

The Farming segment’s performance in FY2025 was

shaped by a combination of positive and negative

factors. A severe summer drought followed by a dry

autumn reduced yields across most major crops:

corn declined by 17% y-o-y to 8.4 tons per ha, wheat

by 8% to 6.1 tons per ha, and soybeans by 25% to

2.2 tons per ha. As a result, total harvested volume

in FY2025 decreased by 9% y-o-y to 1.7 million

tons. Nevertheless, a 20% y-o-y reduction in crop

production costs, driven mainly by lower post-harvest

grain handling services (cleaning, drying, storage),

together with stronger global grain and oilseed

prices, helped mitigate the impact of the smaller har-

vest.

A critical factor supporting the performance was the

uninterrupted availability of Black Sea export routes,

which enabled the realization of 1.8 million tons of

grains and oilseeds produced by the Farming seg-

ment (including carry-in stock from the 2023 har-

vest). This allowed the Group to enter the next finan-

cial year with minimal carry-over stocks, reducing ex-

posure to price volatility.

As a result, the segment delivered EBITDA of USD

184 million in FY2025, up 8% y-o-y. On a per-hec-

tare basis, EBITDA amounted to USD 515, with 358

thousand hectares under operation during the report-

ing period.

FY2026 outlook

Over the coming year, the Farming segment is ex-

pected to benefit from a larger harvest, primarily

driven by expanded corn acreage and improved

yield. However, profitability is expected to come un-

der pressure as production costs per hectare are pro-

jected to rise by more than 30% y-o-y, reflecting

higher seed and lease expenses, elevated growing

costs, and increased reliance on post-harvest ser-

vices due to wetter crop conditions.

Global grain and oilseed prices are anticipated to re-

main supportive, though persistent volatility and

global surpluses may limit revenue upside. The sta-

bility of Black Sea export routes will remain critical,

as any disruptions could directly affect export vol-

umes and logistics costs. Reflecting stronger confi-

dence among market participants, forward contract-

ing has resumed, with more than 600 thousand tons

of the new harvest already contracted as of 30 June

2025.

Against a backdrop of continued uncertainty, Kernel

remains committed to strengthening operational re-

silience, driving cost efficiency, and preserving the

agility needed to respond quickly to evolving market

and geopolitical dynamics.

Revenue

USD 468 million

-3% y-o-y

EBITDA

(before unallocated head office expenses)

USD 184 million

+8% y-o-y

Produced 1.7 million

tons of grains and

oilseeds

FARMING

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Farming continued

SBM-1

Our business model

Large-scale farming

Kernel is one of the largest crop producers in

Ukraine. As of 30 June 2025, the total area of

leasehold farmlands under Kernel’s opera-

tions amounted to 358 thousand hectares

including 338 thousand hectares under 2025

crops to be sold, 4 thousand hectares of land

under seeds and crops grown for in-house

use, and 16 thousand hectares of fallow land

In FY2025, we harvested 1.7 million tons of

corn, wheat, sunflower seeds, rapeseeds, and

soybeans.

We operate in the central and northern regions

of Ukraine, characterized by highly fertile

“chornozem” black soils and sufficient precipi-

tation. Our land bank is divided into five pro-

duction clusters, each with a decentralized op-

erational decision-making structure that ena-

bles rapid responses to external factors. The

central office is responsible for shaping our

overall business strategy, procuring key in-

puts, and overseeing operations. A spirit of

healthy competition among these clusters pro-

motes ongoing efficiency enhancements.

Except for 2,984 hectares of irrigated land

used for in-house seed production, all our

farmland is rain-fed, with all the associated

weather risks.

We adhere to a simple crop mix dominated

As of 30 June 2025, the Group’s total leased land area amounted to 362 thousand hectares.

Of the fallow land, approximately 14 thousand hectares were not cultivated due to their proximity to active hostilities and the Russian border.

by corn, sunflower, and wheat, covering a

total of 80% of our farmland bank, and the re-

maining percentage stands for rapeseed, soy-

beans, and other minor crops.

The Farming business is characterized by a

long working capital cycle (~18 months), as

illustrated in the “FY2025 crop production cy-

cle” graph below.

Leasehold land operations

Approximately one-quarter of Ukraine's agri-

cultural land is held by the state, municipali-

ties, and state-owned companies. The remain-

ing 75% consists of small land parcels, rang-

ing from 1 to 10 hectares, depending on the

region, owned by private individuals who ac-

quired these rights during the land distribution

process in the 1990s following the collapse of

the Soviet Union.

For the past two decades, all farmland in

Ukraine has been subject to a moratorium,

preventing its sale. Initially implemented in

2001, this moratorium has been repeatedly

extended by the parliament, impeding the

growth of the farming sector in Ukraine. Con-

sequently, agricultural producers lease land

from current owners, with new lease agree-

ments since 2015 having a minimum term of

seven years to ensure the stability of farmers'

business operations. The farmland market fi-

nally opened on 1 July 2021, albeit with sev-

eral restrictions. The most significant of these

……………………………………………………………...………

Kernel’s farmland lease rights maturity

as % of total landbank

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………

FY202

5 crop production cycle

FY2024

FY2025

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

July

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar-Jun

Corn

Land preparation

Fertilization

Planting

Plant protection

Harvesting

Selling

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

July

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar-Jun

Sunflower

Land preparation

Fertilization

Planting

Plant protection

Harvesting

Selling

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

July

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar-Jun

Winter wheat

Land preparation

Fertilization

Planting

Plant protection

Harvesting

Selling

18%

34%

28%

11%

10%

< 5 years 5-10 10-15 15-20 > 20

years

………………………………………………………………………………………

Kernel’s acreage harvested by crops

thousand hectares

51%

41%

24%

30%

31%

36%

33%

19%

15%

13%

10%

17%

26%

13%

26%

31%

501 499

363

359

358

FY2021 FY2022 FY2023 FY2024 FY2025

Corn Sunflower Wheat Other

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Farming continued

restrictions include:

• Ukrainian citizens initially were permitted to

acquire agricultural land, but individual own-

ership was limited to a maximum of 100

hectares.

• Starting from 1 January 2024, Ukrainian-in-

corporated legal entities are also allowed to

purchase agricultural land, and the owner-

ship cap increased from 100 hectares to

10,000 hectares for both private individuals

and legal entities.

• Foreign individuals and corporations, as

well as legal entities with foreign sharehold-

ers under the Law of Ukraine, are prohibited

from purchasing land unless a nationwide

referendum decides otherwise.

Kernel leases all the land under operation,

with lease contracts having an average ma-

turity of 14 years. All lease contracts include

the right of first refusal to prolong leases or to

buy the land in case of being allowed to do so.

We've secured the use of 10.6 thousand hec-

tares of land through long-term land lease

agreements, extending up until the year 2118.

These agreements, known as “emphyteusis”

leases, involve making a single lump-sum

payment of all rent to the lessor at the agree-

ment's signing. This approach enables us to

ensure the continuity of our operations for an

extended duration, well beyond the scope of

typical farmland lease contracts.

Private individuals own 89% of the landbank

that we lease, and the state owns 11%.

Starting from FY2020, land lease expenses

are not accounted for among operating ex-

penses, thus impacting segments' EBITDA,

but are reflected as amortization of right-of-

use assets and finance expenses attached to

lease liabilities.

Despite all the Group’s efforts to maintain the

integrity of its landbank, some landowners

The Group reports its crop yields on a net basis, after post-harvest grain handling processes such as cleaning and drying.

prefer not to extend the lease agreements,

and as a result, the Group naturally loses part

of its farmland bank, in the range of 1-2% each

year.

At the beginning of FY2025, the Group ex-

panded its land bank by acquiring an agricul-

tural enterprise with lease rights over 3.6 thou-

sand hectares. This acquisition aligns with the

Group’s strategy to maintain the integrity of its

land bank, offsetting the natural loss of land

due to the non-renewal of lease agreements

by landowners.

Performance overview

For the 2024 crop (planted in FY2024 and sold

in FY2025), the Group adjusted its crop struc-

ture to reestablish sustainable farming prac-

tices and restore crop rotation, which had

been disrupted by Russia’s invasion of

Ukraine:

• Sunflower acreage was reduced by 44% y-

o-y to 67 thousand hectares, or 19% of total

acreage, down from the elevated levels of

33–36% maintained in 2020-2023. Alt-

hough sunflower remains a highly profitable

crop, excessive concentration poses agro-

nomic risks, including soil water imbalance,

higher pest and disease pressure, and ad-

verse effects on subsequent crops. The el-

evated share in 2022-2023 was a temporary

response to uncertainty surrounding grain

export logistics.

• Corn acreage remained stable at 87 thou-

sand hectares, as the crop continues to

serve as a key component of crop rotation

and a vital contributor to overall revenue,

despite weather-related yield volatility.

• Winter wheat acreage expanded by 51% y-

o-y to 93 thousand hectares, representing

26% of total acreage – the highest share in

Kernel’s crop structure since 2012.

• The Group increased plantings of soy-

beans and rapeseeds to 72 thousand hec-

tares and 14 thousand hectares, respec-

tively, driven by the strong profitability of

oilseeds in FY2024. Notably, this decision

resulted in 66% of all soybeans processed

in FY2025 being sourced from the Group’s

own harvest.

The summer drought had a severe impact on

crop development and overall production, trig-

gering an earlier-than-usual start to the har-

vesting campaign. Consequently, corn yields

declined by 17% y-o-y to 8.4 tons per hectare,

wheat by 8% to 6.0 tons per hectare, and soy-

beans by 25% to 2.2 tons per hectare

. Sun-

flower yields proved more resilient, remaining

stable across the Group’s operating regions

despite sharper declines in other crop-produc-

ing areas of Ukraine.

………………………………………………………………………...........................................................................................................................

FY202

5 harvest results

Acreage

thousand ha

Net crop yields

tons / ha

Harvest size

thousand tons

FY2024

FY2025

y-o-y

FY2024

FY2025

y-o-y

FY2024

FY2025

y-o-y

Corn

10.1

8.4

(17%)

853

725

(15%)

Sunflower

120

(44%)

2.8

(1%)

337

186

(45%)

Wheat

51%

6.6

6.0

(8%)

403

560

39%

Soybean

10%

2.9

2.2

(25%)

187

155

(17%)

Other

41%

359

358

(0%)

1,780

1,626

(9%)

Note 1

One ton per hectare equals 15.9 bushels per acre for corn and 14.9 bushels per acre for wheat and soybean.

Note 2

For the four main crops: corn, sunflower, wheat, and soybean.

Note 3 Includes pea, rapeseed, barley, forage crops and other minor crops, as well as land left fallow for crop rotation purposes

………………………………………………………………………………………

Kernel’s production of key crops

thousand tons

…………………………………………………………………………………………………………………………………………………………………………………………

Kernel’s crop

net yields

tons per hectare

2,032

2,360

1,324

853

725

449

469

332

337

186

357

395

161

403

560

187

155

2,841

3,234

1,836

1,780

1,626

FY2021 FY2022 FY2023 FY2024 FY2025

Corn Sunflower Wheat Soybean

8.0

9.3

8.8

10.1

8.4

4.9

6.1

4.6

6.6

6.0

3.0

2.5

2.8

1.2

2.0

2.9

2.2

FY2021

FY2022

FY2023

FY2024

FY2025

Ukraine

Corn

Wheat Sunflower Soybean

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Farming continued

During the reporting period, the Farming seg-

ment realized 1.8 million tons of grains and

oilseeds, including 0.4 million tons of sun-

flower seeds and rapeseeds processed in Ker-

nel's oilseed plants and 1.4 million tons sold

for export. These sales included 147 thousand

tons of carry-over stocks from the 2023 crop.

Consequently, the Group entered the new fi-

nancial year with immaterially low carry-over

stocks of approximately 4.2 thousand tons of

corn and 1.4 thousand tons of soybeans,

which are expected to be realized in FY2026.

The Farming segment delivered an EBITDA of

USD 184 million in FY2025, up 8% y-o-y, in-

fluenced by several factors:

• Unlike the previous year, when prices for

key crops were under pressure, FY2025

was marked by a recovery in sales prices

that positively influenced the segment’s per-

formance. The average selling prices of our

grains and oilseeds increased between

20% and 50% y-o-y, broadly aligned with

global market dynamics throughout the

year.

• Dry weather conditions during the harvest-

ing campaign contributed to lower post-har-

vest service requirements. Due to excep-

tionally low crop moisture levels in corn,

wheat, and sunflower seeds, the need for

drying and other silo services declined sig-

nificantly. This translated into a notable re-

duction in operating expenses, with aver-

age costs per hectare decreasing by 13% y-

o-y;

• At the same time, a severe summer drought

followed by a dry autumn constrained the

growth potential of all major crops, particu-

larly corn, wheat, and soybeans, resulting in

a smaller crop size compared to the previ-

ous year and limiting the segment’s ability

to fully capitalize on favorable price dynam-

ics;

• The result also includes a recognized USD

7 million non-cash net gain from the change

in the fair value of biological assets and ag-

ricultural produce.

The segment’s earnings translated into USD

515 EBITDA per hectare, with 358 thousand

hectares under operations in FY2025.

Headcount

The headcount of the Farming segment re-

mained relatively unchanged y-o-y, with 4,451

employees as of 30 June 2025.

FY2026 outlook

We anticipate that the Farming segment’s per-

formance in the next financial year will be

shaped by three key factors: harvest size, pro-

duction costs, and market environment. Each

of these drivers is outlined in more detail be-

low.

Harvest 2025 size

For the FY2026 harvest, the Group further ad-

justed its crop structure, restoring rotation

practices that had been disrupted during the

first two years of the full-scale war, when lo-

gistics constraints and limited storage capacity

required short-term shifts in crop mix. With

conditions partially stabilized, the structure

was realigned as follows:

• Corn accounted for the largest share,

covering 172 thousand hectares or 48% of

total acreage, marking a return to the

Group’s pre-war agronomic strategy fo-

cused on sustainable and efficient crop ro-

tation;

• Winter wheat occupied 94 thousand hec-

tares, equal to 26% of acreage, securing its

position as the second-largest crop in the

structure;

• Acreage under sunflower seeds was re-

duced by 31% y-o-y to 46 thousand hec-

tares, or 13% of acreage. Despite this tem-

porary decrease, a gradual return to a sus-

tainable share of around 25% is targeted in

the midterm perspective;

• Soybeans were planted on 24 thousand

hectares, compared with 72 thousand hec-

tares in the prior season. The crop had been

reintroduced into the rotation two years ear-

lier as part of the Group’s strategy to reduce

reliance on corn.

Adverse weather patterns created atypical

conditions for the 2025 crop season, shifting

the development phases of grain and oilseed

crops. Two waves of late spring frosts dam-

aged critical growth stages of winter crops and

early development of spring crops. A pro-

longed cool spring and summer with sharp

day-night temperature fluctuations further

slowed vegetation in northern regions such as

Chernihiv and Sumy. Meanwhile, central re-

gions, including Poltava, Cherkasy, and Kiro-

vohrad, faced insufficient soil moisture and

limited rainfall, which delayed crop growth and

resulted in premature wilting and early ripen-

ing.

As of the date of this report, the harvesting

campaign is in its active phase. Unlike the pre-

vious year, when harvesting began ahead of

schedule due to exceptionally dry summer

weather, this season the campaign com-

menced a few days later than planned. The

Group has already completed harvesting the

spring crops, while the majority of acreage

………………………………………………………………………………………

Profitability dynamics

USD million

657

635

695

481

468

461

219

221

171

184

70%

35%

32%

35%

39%

FY2021 FY2022 FY2023 FY2024 FY2025

Revenue EBITDA

EBITDA margin, %

………………………………………………………………………………………

Realized crops produced by Farming

thousand tons

69%

67%

61%

62%

44%

11%

16%

10%

15%

34%

18%

15%

26%

14%

12%

2,963

2,321

2,490

2,295

1,786

FY2021 FY2022 FY2023 FY2024 FY2025

Corn Wheat Sunflower

Soybean Rapeseeds Other

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Farming continued

under corn and sunflower seeds remains to be

harvested. Wheat yields decreased by 3% y-

o-y to 5.9 tons per hectare, while rapeseed

yields were broadly unchanged at 2.4 tons per

hectare. For late crops, corn yields increased

by 12% y-o-y to 9.4 tons per hectare, whereas

sunflower yields declined by 4% y-o-y to 2.7

tons per hectare, based on 14% and 93% of

acreage harvested, respectively.

Volume-wise, the total crop size for 2025 is

projected to exceed the previous year, primar-

ily driven by the expansion of acreage and im-

provement of yields of corn.

Production costs

On the cost side, the segment is expected to

face significant headwinds, with average pro-

duction costs per hectare projected to rise by

33% y-o-y. Wetter crop conditions are likely to

increase demand for drying and other post-

harvest services, while higher seed prices and

elevated growing expenses will further add to

the cost base. In addition, land lease costs are

projected to increase by 31% y-o-y. Taken to-

gether, these factors may partially offset the

benefits of higher production volumes and a

relatively stable pricing environment.

Market environment

Global grain and oilseed prices continue to de-

termine agricultural commodity pricing in

Ukraine. Forecasting selling prices remains

challenging amid persistent volatility in world-

wide supply and shifting trade flows. Current

market observations suggest that even strong

yields may not translate into higher revenues

for the Farming segment, as global surpluses

continue to outweigh local production gains.

Historically, the Group contracted part of its

grain harvest in advance. However, such prac-

tice was suspended following the onset of the

full-scale war, as heightened uncertainty

raised concerns among buyers regarding the

reliability of deliveries. With export routes

through the Black Sea ports stabilized since

October 2023, forward contracting of the new

harvest was resumed closer to the end of

FY2025. As of 30 June 2025, more than 600

thousand tons of grain have already been con-

tracted.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Risk management

GOV-5

Risk management system

The Group’s management defines risk as an

event, action, or lack of action, which can lead

to failure to achieve the Company’s objectives.

Kernel has an evolving system of risk man-

agement aimed at preserving the stability

and solvency of the Company under ex-

treme conditions to secure long-term sus-

tainable value for shareholders.

Based on the Risk Management Policy

(adopted by the Board of Directors in Novem-

ber 2018) and underlying policies and proce-

dures, Kernel monitors and assesses its risk

exposures regularly and takes steps to mini-

mize their impact.

Key roles

The Company’s risk management is realized

by the Board of Directors, Executive Manage-

ment Team, and other management and staff,

starting from strategy development and im-

pacting all activities and processes of the

Company. These activities set out to identify

and manage risks, to provide reasonable as-

surance of the Company’s goals accomplish-

ment. Please see the details in the “Key roles

and duties in the risk management process”

chart.

Risk management cycle

The risk management cycle includes five

stages:

• risk identification;

• risk assessment and prioritization;

• development and execution of mitigation

plan;

• monitoring of mitigation plan execution;

• risk management process enhancement.

Risk categories

The management classifies all risks into five

categories:

• Strategic (Business)

• Operational

• Financial

• Regulatory

• Sustainability

………………………………………………………………………………………………………………………………………................

Kernel’s risk identification and mitigation system

………………………………………………………………………………………………………………………………………..................

Key roles and duties in the risk management process

CEO



owner of the risk management

process for the Company as a

whole;



responsible for implementing the

risk management strategy and

functioning of the effective risk

management system.

Board of Directors

Risk Committee of the Executive Management Team

Audit Committee

Assists the Board of Directors in the discharge of its risk man-

agement responsibilities:

 formulating the description of the risks specific to the Com-

pany;



overseeing adequacy and effectiveness of Kernel’s risk

management system;



reviewing the Company’s policies on risk assessment and

risk management.

 supervise the risk manage-

ment process;

 determine and approve the

level of risk acceptability and

Company’s risk appetite;

 decide on critical and signifi-

cant risks;

 review the risk related reports.

 ensure the introduction and implementation of the risk

management policy and procedures;



develop and continuously improve an effective risk

management and monitoring system, spreading the

culture of decision-making in terms of risks, their valu-

ation and likelihood of occurrence;



coordinate roles and participants;



identify, assess, manage and control key risks;



coordinate updating and improvement of the internal

control system.

Internal Audit



assess the adequacy and effectiveness of risk man-

agement processes and internal controls in opera-

tions;



assist Directors on operational risk identification, as-

sessment, and prioritization in operations;



implementation, status monitoring, internal controls,

and mitigation activities of action plan of operational

risks;



assist, advise and consult management in improving

the effectiveness of risk management and internal

control systems in operations.

Directors and executives

risk owners within their functional duties



Identification of risks;



Assessment of risks;



Making and implementing deci-

sions on risks mitigating actions.

Risk identification

Risk assessment

and prioritization

Development

and execution

mitigation plan

Monitoring of

mitigation

plan

execution

Risk manage-

ment process

enhancement

Risk management

cycle

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Risk management continued

Top 10 risks

This section includes a summary of the main

risks that Kernel may face during the normal

course of its business. However:

• this section does not purport to contain an

exhaustive list of the risks faced by Kernel,

and Kernel may be significantly affected by

risks that it has not identified or considered

not to be material;

• some risks faced by Kernel, whether they

are mentioned in this section or not, may

arise from external factors beyond Kernel’s

control;

• whereas mitigations are mentioned in this

section, there is no guarantee that such

measures will be effective (in whole or in

part) to remove or reduce the effect of the

risk;

• investors may face other risks when dealing

with Kernel securities (shares and bonds).

As a result of the latest review cycle, the Board

approved the Top 10 risks for the Group for

FY2026 as depicted on the risk matrix. A list

of risks, together with disclosure of changes in

assumptions on impact and probability, is pre-

sented in the table below.

………………………………………………………………….………………………………………………………………………............

Risks matrix

Risk impact

Risk Probability

Very low Low High Very high

Severe

MajorModerate

Minor

Medium

Strategic

(Business) risks

Operational

risks

Change

y-o-y

# Risk Name

Change in estimates

FY2026 vs FY2025

Rationale on changes in estimates

Impact

Probability

1 Weak harvest in Ukraine

No change Decrease

• Decreased probability as the 2025 harvest is projected to improve compared to

the previous season; however, the impact remains significant due to underutilized

country’s handling capacities.

2 Logistics disruptions No change

Decrease

• Decreased probability, reflecting stable export operations through Black Sea

ports throughout FY2025.

Loss of critical infra-

structure

No change

• Impact and probability remain unchanged as the threat of targeted attacks on

infrastructure persists.

Low global soft com-

modity prices

Decrease

Increase

•

Increased probability driven by the anticipated high corn and wheat harvests

worldwide, exerting downward pressure on prices.

5 Loss of Inventories Increase No change

• Increased impact driven by the higher forecasted export volumes, which will re-

quire the accumulation of inventories at terminals to support the increased

throughput.

Trade position risk due

to unforeseen market

volatility

No change

• Impact and probability of trade position risk remain unchanged

, as exposure

to unforeseen market volatility continues to be managed at a consistent level.

Credit and counterparty

risks

Increase Decrease

• Increased impact as expected higher volumes of purchases from third-party sup-

pliers will raise the Group’s exposure to potential counterparty non-

performance

and related financial and operational losses.

Information security and

IT risks

No change

• No changes as result of the mitigating actions implemented.

Disruption or limitation

of electricity supply

Decrease Decrease

•

Decreased impact and probability supported by the ongoing development of

the alternative energy market in Ukraine.

10 Human capital risks Increase Increase

• Increased impact and probability due to the sustained labor market shortage

resulting from continued emigration, internal displacement to safer regions, and

the ongoing uncertainties associated with mobilization despite partial exemptions

for critical personnel.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Risk management continued

Kernel FY2026 Top 10 risks and mitigating factors

Risk

Possible impact

Mitigating factors

1. Weak har-

vest in Ukraine

• Subdued Farming segment EBITDA be-

cause of reduced total harvest size due to

unfavorable weather conditions, while the

cost base remained unchanged.

• Low crushing margins

due to

higher competition among crushers

for the limited supply of oilseeds.

•

Low capacity utilization of the

Company’s oilseed processing

plants

due to the deficit of the

oilseeds on the market;

• Low profitability of the grain ex-

port value chain (underutilized in-

frastructure capacities or de-

pressed margins), given that a ma-

jor portion of our grain export vol-

umes originates from third-party

farmers.

 A diversified land bank reduces to some extent the overall Farming

segment's exposure to weather risks.

 Diversified oilseeds origination base:

• Our oilseed origination areas cover the whole sunflower seed

growing belt in Ukraine, thus reducing our exposure to weather

volatility in any particular region.

• Comprehensive data-driven procurement strategy based on re-

gional supply-demand balances composed of the official statis-

tics, market consensuses, and inputs from our farming and pro-

curement teams.

 Multi-seed processing: the ability to adjust oilseed processing mix

to mitigate the deficit of the sunflower seed on the market.

 “Open Agribusiness” and “Open Agri Club” platforms help third-

party farmers increase productivity through access to expert agro-

nomic knowledge, modern technologies, and financing opportunities.

By offering crop consulting, digital tools, and tailored services, these

platforms strengthen farmer loyalty and reinforce Kernel’s role as a

reliable originator of grains and oilseeds;

 Pre-crop financing of third-party farmers conditional upon obligatory

sale of future harvest (sunflower seeds and grain) to Kernel, thus cov-

ering part of our needs. Use of various credit enhancement instru-

ments when providing financing (e.g., future crop pledge agreements,

agri-notes, etc.).

2. Logistics

disruption:

closed Ukrainian

seaports due to

the war;

• Reduction in export volumes of grain, sun-

flower oil, and meal in case of continued dif-

ficulties with the export of agriproducts via

the Ukrainian Black Sea ports (a usual and

most convenient export route for Ukrainian

agricultural products);

• Growing logistics costs (railway in Ukraine

and EU, truck and barges services) caused

by substituting cheap sea freight with more

expensive in-land

and river logistics with

multi-modal transshipment.

• Increase in the shipment time resulting in

more working capital required; quality deteri-

oration of goods due to long-time multi-

modal transportation.

 In case of Ukrainian Black Sea ports being blocked, the Group will

focus on transshipments via Ukrainian Danube River ports and

railway deliveries to Constanta port in Romania, as other export

channels proved to be not so efficient (higher costs and lower

throughput capacities);

 Capacity expansion. For the facilities under control, the Group un-

dertakes regular capacity expansion initiatives;

 Diversified load points in ports to mitigate risks related to any par-

ticular port. The Group has secured transshipment capacities in the

following ports: Pivdennyi, Chornomorsk, and Reni. Additionally, the

Group arranged for the provision of transshipment services with op-

erators in the Rotterdam port in the Netherlands;

 Own fleet in operations to support deep-water and river logistics.

3. Loss of

critical

infrastructure

• Undermined earnings generation capac-

ity and additional CapEx required due to

potential loss or damages of critical infra-

structure (export terminals, oilseed extrac-

tion plants, key silos) as a result of Russian

missile or drone attacks.

 Diversified asset base located relatively far from the regions of ac-

tive military actions;

 Grain and oil transshipment agreements with third-party export

terminals;

 Diversified load points in ports.

4. Low global

soft commod-

ity prices: grain

and oilseeds,

sunflower oil

• Undermined profitability of the Group’s

Farming segment (which is always in a

naturally long position as a typical up-

stream business) in the case of low global

grain and oilseeds prices.

• Undermined profitability of the Group’s

Infrastructure and Trading segment, as

low prices do not allow to absorb high logis-

tics costs, and farmers prefer to wait with

sales of grain.

• Compressed margins in the Oilseed Pro-

cessing segment: low prices for sunflower

oil reduce combined earnings shared by

farmers and crushers in Ukraine in the short

term and discourage farmers from



Hedging grain prices: we use various hedging tools, including CME

corn and soybean futures and options, forward contracts for the Black

Sea origin premium, and direct forward contacts (if available). Physi-

cal delivery forward contracts (if available) are typically used for

shorter duration hedging, normally within six months;

 A longer period of crop sales: under normal conditions, we start

selling next year’s crop as soon as we have the initial understanding

of the next year’s production costs, considering also the entire value

chain margin;

 Partial flexibility in determining the timing of sale of own crop,

allowing to avoid sales during extremely low-price periods;

 Deep analysis of global soft commodity fundamentals: Avere re-

search and trading unit provides insights into the global soft commod-

ity market, guiding the selection of proper timing and pricing of our

hedging operations.



Active procurements of sunflower seeds at the beginning of the

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Risk management continued

Kernel FY2026 Top 10 risks and mitigating factors

Risk

Possible impact

Mitigating factors

expanding acreage under sunflower in the

long term.

season (when a huge post-harvest supply of sunflower seeds allows

for negotiating more attractive prices) to partially mitigate long-term

sunflower oil price weakness;

 Careful sales management during the season to mitigate seasonal

price declines.

5. Loss of in-

ventories

• Physical loss of the Group’s inventories

due to Russian missile or drone attacks.



Expanding the Group’s export capacities via alternative routes;

 Investments into additional storage capacities (including plastic

silo bags);

 Diversified load points in ports;

 Minimizing onsite storage in ports in favor of direct loading.

6. Trade posi-

tion risk due to

unforeseen

market volatil-

ity

• Losses arising from the Group’s trade po-

sition mismanagement. For example, an

open position in sunflower oil may hurt the

Company’s earnings in case of significant

movements in sunflower oil prices;

• Losses arising from Avere trading busi-

ness.

 Trade position control system:

− daily monitoring of maximum long/short limits, with separate limits

for different goods (e.g., sunflower oil from own seeds, purchased

seeds, or third-party purchases).Specific limits are set for sun-

flower seed procurement not covered by sunflower oil sold. Special

approvals are required to exceed the limits.

− certain positions are controlled by restricting Value at Risk and

drawdown limits with daily monitoring.

− constant monitoring of market price movements on existing trade

positions, with continuous improvements to the monitoring system.

 “Balanced book

” policy: mitigates commodity price fluctuations

through price and volume hedging. Such a policy presupposes the

arrangement of forward contracts for sunflower oil sales, alongside

the procurement of sunflower seeds from farmers. In such a manner,

the Company reduces risk exposure by ensuring the sales volumes,

as well as locking the selling price. Deviations from this approach may

occur within certain trade limits approved by the management or be-

yond such limits in specific cases (separate management decision is

required);



Centralized contract execution and scheduling of shipments.

7. Credit and

counterparty

risks

• Defaults of third-party farmers under fi-

nancing received from the Group (includ-

ing the Open Agribusiness program);

• Losses arising due to the Group’s counter-

parties not performing their trade obliga-

tions.

• Imposition of fines and criminal liability

for violation of sanctions.

 Clearly defined parameters and strict selection criteria for farm-

ers applying for financing programs from the Group, along with high-

quality contract preparation to safeguard Kernel’s interests as a cred-

itor;

 Constant monitoring of solvency and business performance of the

farmers who received financing from the Group;

 Negotiating with farmers on extending the obligations repayment pe-

riod or agreeing on alternative ways of repayment;

 Active restructuring and claim work against counterparties in de-

fault;

 Comprehensive due diligence of counterparties across all business

areas. Cooperation with unverified counterparties is strictly prohib-

ited, as is contract signing or payments prior to completion of verifi-

cation.

8. Information

security and IT

risks

• The loss or disclosure of key information

may threaten business operations and de-

velopment of the business;

• Interruption of business processes and

decisions which are dependent on the con-

tinuity of IT applications and infrastructure.

• Leakage of the information stored at assets

currently occupied by Russia;

• Cyber-attacks on the Group’s IT infrastruc-

ture;

• Damage to the Group’s cloud IT infrastruc-

ture occurred due to the military actions in

Ukraine; and lack of access to cloud services

provided outside of Ukraine.



The backup data center was relocated to Lviv (Western Ukraine);

 Access to the IT systems is denied at night for developers and

contractors;

 Implemented IT business continuity and data recovery policy;

 Multifactor authentication is being implemented to reduce the risk

of documents, correspondence, and other confidential data leakage;

 Password policy, access control for external users to company IT

systems; Privileged access management solutions.

 Regular testing of the IT recovery plan; regular vulnerability testing

from inside and outside;

 Patch management policy – regular installations of critical and se-

curity patches on servers and workstations;

 Special solution to combat the advanced persistent threat (APT) and

0-day virus attacks;

 Implementation of incident and change management processes in

the IT infrastructure;

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Risk management continued

Kernel FY2026 Top 10 risks and mitigating factors

Risk

Possible impact

Mitigating factors



Improving the maturity of the access management process by auto-

mating the process of reviewing access rights.

 Regular training and testing of employees for knowledge and com-

pliance with information security rules.

9. Disruption or

limitation of

electricity sup-

ply

• Disruption of oilseed processing

• Reduction in export volumes of grain, sun-

flower oil, and meal in case of continuing

blackout.

 Alternative electricity source. Major production and export sites are

equipped with diesel-powered electricity generation, allowing them to

continue operations during blackouts, although not always at full ca-

pacity.

 The Group’s own co-generation heat and power plants serve to

mitigate power disruption risks.

10. Human cap-

ital risk

• Disruptions in business and support pro-

cesses due to:

− a shortage of staff in general and the

challenge of replacing key employees

due to the low qualifications of new can-

didates, exacerbated by significant emi-

gration from Ukraine;

− employee conscription for military ser-

vice, a consequence of the protracted

war in Ukraine;

− increased mental stress among remain-

ing employees as a result of the ongoing

and prolonged war in Ukraine.

 Competitive compensation: pay levels meet or exceed industry

benchmarks and are regularly reviewed to stay competitive in Ukraine

and neighboring markets. The compensation system is regularly re-

viewed to align with the Company's strategy and HR strategy. We

regularly measure employee satisfaction levels and react to the re-

sults;

 Extensive social package: housing repayable loans for young em-

ployees in the regions, voluntary medical insurance (full coverage for

employees, 50% for children), and targeted financial support in diffi-

cult life situations;

 Talent development: education programs with extensive coverage

and a system of individual development and career planning, as well

as mental health education (as disclosed in the Sustainability section

of the annual report);

 Safe and convenient working conditions: continuous improvement

of workplace safety and infrastructure, with flexible work options and

support for employee networks;

 Effective recruitment and onboarding: we attract talent through di-

verse recruitment channels, partnerships with universities and the

business community, and via the dedicated Kernel Chance program,

complemented by comprehensive adaptation programs to integrate

new employees effectively;

 Employee involvement through an effective KPI system, responsi-

bility delegation, rewards for operational efficiency improvement, and

teambuilding events;

 Employer brand: active HR brand development to strengthen Ker-

nel’s reputation as a responsible and sustainable employer.

Other risks identified by the Company’s management include (but are not limited to):



Liquidity associated risks;



Failure to maintain the integrity of the leasehold farmland bank;



Fraudulent activities;



A shortfall of proceeds from sales of renewable energy;



Investment projects management associated risks;



Increase in competition;



Sustainability-related risks: non-

compliance with environmental standards; undermined profitability due to more severe environmental require-

ments applicable to farming and oilseed processing related to the implementation of the European Green Deal; low sus

tainability rating of

Kernel may increase the cost of capital;



Weak economic growth, either globally or in the Group’s key markets;



Economic policy, political, social, and legal risks and uncertainties in countries other than Ukraine in which Kernel Holding S.A. operates;



Any loss or diminution in the services of Mr. Andrii Verevskyi, Kernel Holding S.A.’s chairman of the Board of Directors;



The risk that changes in the assumptions underlying the carrying value of certain assets, including those occurring as a resu

lt of adverse market

conditions, could result in the impairment of tangible and intangible assets, including goodwill;



The risk of fluctuations in the exchange rate of the Ukrainian hryvnia to the US dollar;



The risk of disruption or limitation of natural gas;



The risk of product liability claims;



The risk of potential liabilities from investigations, litigation, and fines regarding antitrust matters;



The risk that Kernel Holding S.A.’s governance and compliance processes may fail to prevent regulatory penalties or reputatio

nal harm, both

at operating subsidiaries and in joint ventures; and

 The risk that Kernel Holding S.A.’s insurance policies may provide inadequate coverage.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Alternative Performance Measures

To comply with the ESMA Directive on Alter-

native Performance Measures (“APMs”), Ker-

nel Holding S.A. (hereinafter, the “Group”)

presents this additional disclosure, which en-

hances the comparability, reliability, and com-

prehension of its financial information.

The Group presents its results in accordance

with generally accepted accounting principles

(IFRS), but management considers that cer-

tain supplemental non-IFRS measures, such

• EBITDA;

• EBITDA margin;

• Segment EBITDA;

• Segment EBITDA margin;

• Investing Cash Flows net of Fixed As-

sets Investments;

• Net Fixed Assets Investments;

• Operating Cash Flows before Working

Capital Changes;

• Free Cash Flows to the Firm;

• Debt Liabilities;

• Net Debt;

• Commodity Inventories;

• Adjusted Net Debt; and

• Adjusted Working Capital;

(together, the “Alternative Performance

Measures”) provide investors with a supple-

mental tool to assist in evaluating current busi-

ness performance.

The Group believes the Alternative Perfor-

mance Measures are frequently used by se-

curities analysts, investors, and other parties

interested in evaluating companies in the

Group’s industry. The Alternative Perfor-

mance Measures have limitations as analyti-

cal tools, and investors should not consider

any of them in isolation or any combination of

them together as a substitute for analysis of

the Company’s operating results as reported

under IFRS. Other companies in the industry

may calculate these Alternative Perfor-

mance Measures differently or may use them

for different purposes than Kernel Holding

S.A., limiting their usefulness as comparative

measures. Each of the Alternative Perfor-

mance Measures is defined below.

EBITDA and EBITDA margin

The Group uses EBITDA

as a key measure

of operating performance, and it is defined as

profit from operating activities, adding back

depreciation and amortization.

The Group defines EBITDA margin as

EBITDA divided by revenue during the re-

ported period.

Kernel Holding S.A. views EBITDA and

In other documents (e.g. listing particulars) the Group could use the term Adjusted EBITDA, which is calculated as profit before income tax adding back net finance

costs, net foreign exchange gain, net other expenses, share of income/(loss) of joint ventures, and amortization and depreciation, and coming to the same result as

EBITDA

EBITDA margin as the key measures of the

Group’s performance. The Group uses

EBITDA and EBITDA margin in its public re-

porting, which is also related to the listing of

the Company’s equity on the Warsaw Stock

Exchange. The Group believes that these

measures better reflect the Group and its sub-

sidiaries’ core operating activities and provide

both management and investors with infor-

mation regarding operating performance,

which is more useful for evaluating the finan-

cial position of the Group and its subsidiaries

than traditional measures, to the exclusion of

external factors unrelated to their perfor-

mance.

EBITDA and EBITDA margin have limitations

as analytical tools, and investors should not

consider these measures in isolation or in any

combination with Non-IFRS Measures as a

substitute for analysis of the Group’s operating

results as reported under IFRS. Some of these

limitations are as follows:

• EBITDA and EBITDA margin do not reflect

the impact of finance costs, the significance

of which reflects macroeconomic conditions

and has little effect on the Group’s operating

performance;

• EBITDA and EBITDA margin do not reflect

the impact of taxes on the Group’s operat-

ing performance;

• EBITDA and EBITDA margin do not reflect

the impact of depreciation and amortization

on the Group’s performance. The assets of

the Group, which are being depreciated

and/or amortized, will need to be replaced

in the future, and such depreciation and

amortization expenses may approximate

the cost of replacing these assets in the fu-

ture. By excluding this expense from

EBITDA and EBITDA margin, such

measures do not reflect the Group’s future

cash requirements for these replacements;

• EBITDA and EBITDA margin do not reflect

the impact of share of income/loss of joint

ventures, which are accounted under the

equity method;

• EBITDA and EBITDA margin do not reflect

the impact of foreign exchange gain/(loss),

which the Group does not consider to be

part of its core operating performance be-

cause the main difference arises on trans-

actions between entities of the Group with

different functional currencies;

• EBITDA and EBITDA margin do not reflect

the impact of other expenses, as such ex-

penses are not a part of the Group’s core

operations.

…………………………………………………………………………………………………………………………………………………...

Reconciliation of profit from operating activities to

EBITDA and EBITDA margin:

in thousand USD except the margin

FY2024

FY2025

Profit from operating activities

276,428

361,046

add back:

Amortization and depreciation

104,723

105,283

EBITDA

381,151

466,329

Revenue

3,581,462

4,115,042

EBITDA margin

11%

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Alternative Performance Measures continued

Segment EBITDA and Segment

EBITDA margin

The Group uses Segment EBITDA and Seg-

ment EBITDA margin as the key measures of

segment operating performance. The Group

defines Segment EBITDA as profit/(loss) from

operating activities adding back amortization

and depreciation.

The Group defines Segment EBITDA margin

as Segment EBITDA divided by the segment

revenue during the reporting period.

Investing Cash Flows net of Fixed As-

sets Investments

The Group uses Investing Cash Flows less

Net Fixed Assets Investments as a measure

of its expenditures on investments other than

property, plant and equipment and it is defined

as net cash used in investing activities, adding

back:

• purchase of property, plant and equipment;

• proceeds from disposal of property, plant,

and equipment.

Net Fixed Assets Investments

The Group uses Net Fixed Assets Invest-

ments as a measure of its expenditures on

fixed assets maintenance, and it is defined as

net cash used in investing activities less In-

vesting Cash Flows net of Fixed Assets In-

vestments or, alternatively, may be calcu-

lated as cash used for purchase of property,

plant and equipment less proceeds from dis-

posal of property, plant, and equipment.

Operating Cash Flows before Working

Capital Changes

The Group uses Operating Cash Flows as a

measure of the cash generation of its core

business operations and it is defined as net

cash generated by operating activities less

changes in working capital, including:

• change in trade receivables and other finan-

cial assets;

• change in prepayments and other current

assets;

• change in restricted cash balance;

• change in taxes recoverable and prepaid;

• change in biological assets;

• change in inventories;

• change in trade accounts payable; and

• change in advances from customers and

other current liabilities.

…………………………………………………………………………………………………………………………………………………...

Calculation of Segment EBITDA and Segment EBITDA margin:

in thousand USD except the margin

FY2024

FY2025

Oilseed Processing

Profit from operating activities

49,642

112,926

plus Amortization and depreciation

33,734

34,821

Segment EBITDA

83,376

147,747

Segment revenue

1,863,798

2,106,649

Segment EBITDA margin

Infrastructure and Trading

Profit from operating activities

175,536

189,098

plus Amortization and depreciation

28,255

29,034

Segment EBITDA

203,791

218,132

Segment revenue

2,011,138

2,168,808

Segment EBITDA margin

10%

Farming

Profit from operating activities

131,966

146,811

plus Amortization and depreciation

38,836

37,581

Segment EBITDA

170,802

184,392

Segment revenue

481,359

468,205

Segment EBITDA margin

35%

39%

Other

Loss from operating activities

(80,716)

(87,789)

plus Amortization and depreciation

3,898

3,847

Segment EBITDA

(76,818)

(83,942)

…………………………………………………………………………………………………………………………………………………...

Reconciliation of net cash used in investing activities to

Net Fixed Assets Investments:

in thousand USD

FY2024

FY2025

Purchase of property, plant and equipment

(142,578)

(72,956)

Proceeds from disposal of property, plant and equipment

10,175

4,841

Net Fixed Assets Investments

(132,403)

(68,115)

…………………………………………………………………………………………………………………………………………………...

Reconciliation of net cash used in investing activities to Investing Cash Flows net of Fixed

Assets Investments

in thousand USD

FY2024

FY2025

Net cash used in investing activities

(112,548)

(40,343)

Adding back:

Purchase of property, plant and equipment

(142,578)

(72,956)

Proceeds from disposal of property, plant and equipment

10,175

4,841

Investing Cash Flows net of Fixed Assets Investments

19,855

27,772

…………………………………………………………………………………………………………………………………………………...

Reconciliation of net cash generated by operating activities to Operating Cash Flows before

Working Capital Changes

in thousand USD

FY2024

FY2025

Net cash generated by operating activities

472,136

241,664

Less:

Changes in working capital, including:

(21,322)

(102,581)

Change in trade receivable and other financial assets

(8,803)

3,579

Change in prepayments and other current assets

30,859

36,872

Change in taxes recoverable and prepaid

36,391

(10,455)

Change in biological assets

(17,181)

17,010

Change in inventories

(16,899)

(143,493)

Change in trade accounts payable

(45,292)

(7,203)

Change in advances from customers and other current lia-

bilities

(397)

1,109

Operating Cash Flows before Working Capital Changes

493,458

344,245

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Alternative Performance Measures continued

Free Cash Flows to the Firm

The Group uses Free Cash Flows to the Firm

as a measure of the cash generation of its core

business operations and it is defined as the

sum of net cash generated by the operating ac-

tivities and the net cash used in investing activ-

ities.

Commodity Inventories

The Group uses Commodity Inventories

(hereinafter “CI”) as an additional measure of its

liquidity, which the Group uses to provide a sup-

plemental tool to assist in evaluating current

business performance and in calculating credit

ratios under certain of the Group’s financing ar-

rangements. The Group defines CI as agricul-

tural inventories, such as corn, wheat, sun-

flower oil, and other products that were easily

convertible into cash before the Russian inva-

sion of Ukraine, given their commodity charac-

teristics, widely available markets, and the inter-

national pricing mechanism. The Group used to

call such inventories “Readily marketable in-

ventories”, but after the beginning of the war in

Ukraine, the Group faced difficulties with selling

such inventories, and therefore, such invento-

ries cannot be considered as readily marketa-

ble any longer.

Debt Liabilities

The Group uses three metrics as the measure

of its leverage and indebtedness, which con-

sists of Debt Liabilities, Net Debt, and Ad-

justed Net Debt. The Group defines Debt Li-

abilities as the sum of:

• bonds issued;

• current bond issued

• interest on bonds issued;

• long-term borrowings;

• current portion of long-term borrowings;

• short-term borrowings;

• lease liabilities and

• current portion of lease liabilities.

The Group defines Net Debt as Debt Liabili-

ties less cash and cash equivalents and cash

deposits pledged under credit facilities. Fi-

nally, the Group defines Adjusted Net Debt,

as Net Debt less commodity inventories.

Adjusted Working Capital

The Group uses Adjusted Working Capital

as a measure of its efficiency and short-term

liquidity which is defined as current assets (ex-

cluding cash and cash equivalents, and assets

classified as held for sale) less current liabili-

ties (excluding the short-term borrowings, the

current portion of long-term borrowings, cur-

rent portion of lease liabilities, the current

bond issued, the interest on bonds issued, and

liabilities associated with assets classified as

held for sale).

…………………………………………………………………………………………………………………………………………………...

The following table shows the Group’s key inventories considered eligible for

by type and the

amounts of such inventory that the Group treats as

CI as in the periods indicated:

in thousand USD

As of 30 June

2024

As of 30 June

2025

Sunflower oil & meal

93,850

208,226

Sunflower seed

84,789

46,171

Grains

67,839

43,937

Other

31,182

65,133

Total

277,660

363,467

of which: Commodity Inventories

246,749

298,549

…………………………………………………………………………………………………………………………………………………...

Calculation of

Debt Liabilities, Net and Adjusted Net Debts as on the dates indicated:

in thousand USD

As of 30 June

2024

As of 30 June

2025

Bonds issued

298,487

Current bonds issued

597,580

Interest on bonds issued

7,612

3,616

Long-term borrowings

82,307

Current portion of long-term borrowings

22,239

Short-term borrowings

315,166

148,887

Lease liabilities

142,534

171,234

Current portion of lease liability

27,206

34,021

Debt Liabilities

1,090,098

760,791

less: cash and cash equivalents

809,584

617,511

Net Debt

280,514

143,280

less: commodity inventories

246,749

298,549

Adjusted Net Debt

33,765

(155,269)

…………………………………………………………………………………………………………………………………………………...

Reconciliation of total current assets to

Adjusted Working Capital as at the dates indicated:

in thousand USD

As of 30 June

2024

As of 30 June

2025

Total current assets

2,155,355

2,004,295

less:

Cash and cash equivalents

809,584

617,511

Total current liabilities

1,367,062

666,854

add back:

Short-term borrowings

315,166

148,887

Current portion of long-term borrowings

22,239

Current portion of lease liabilities

27,206

34,021

Current bonds issued

597,580

Interest on bonds issued

7,612

3,616

Adjusted Working Capital

926,273

928,693

…………………………………………………………………………………………………………………………………………………...

Calculation of

Free Cash Flows to the Firm:

in thousand USD

FY2024

FY2025

Net cash generated by operating activities

472,136

241,664

Net cash used in investing activities

(112,548)

(40,343)

Free Cash Flows to the Firm

359,588

201,321

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Alternative Performance Measures continued

The Management believes that these APMs assist in providing additional useful information on the underlying trends, performance and position of

the Group. APMs are used by the Management for performance analysis, planning, reporting and incentive setting purposes. The measures are

also used in discussions with the investors, investment analyst community and credit rating agencies.

APM

Calculation

Why APM is the most important for management

EBITDA

Profit from operating activities adding back amortization

and depreciation.

EBITDA is the main metric used by the management of the Group

to measure operating performance. It is also widely used by inves-

tors when evaluating businesses, and by rating agencies and cred-

itors to evaluate the leverage.

EBITDA margin

EBITDA divided by revenue during the reported period.

EBITDA margin is a metric widely used to measure profitability of

Group's operations.

Segment EBITDA

Segment profit from operating activities adding back

amortization and depreciation.

EBITDA is the main metric used by management of the Group to

measure segment operating performance.

Segment EBITDA

margin

Segment EBITDA divided by segment revenue during

the reporting period.

Segment EBITDA margin is the metric widely used to measure

profitability of Group's segment operations.

Investing Cash

Flows net of Fixed

Assets Invest-

ments

Net cash used in investing activities adding back pur-

chase of property, plant and equipment, and proceeds

from disposal of property, plant and equipment.

As the Group has grown and developed through acquisitions, this

APM helps to monitor the M&A and other investing activities of the

Group.

Net Fixed Assets

Investments

Net cash used in investing activities less Investing Cash

Flows net of Fixed Assets Investments.

The Group is executing a solid investment program, and fixed as-

sets investment is an important measure to monitor capital expendi-

ture as a part of the execution of investment program.

Operating Cash

Flows before

Working Capital

Changes

Net cash generated by operating activities less changes

in working capital activities, including:

• change in trade receivables and other financial assets;

• change in prepayments and other current assets;

• change in restricted cash balance;

• change in taxes recoverable and prepaid;

• change in biological assets;

• change in inventories;

• change in trade accounts payable; and

•

change in advances from customers and other current

liabilities.

The Group uses this APM as a pre-working capital measure that

reflects Group’s ability to generate cash for investment, debt ser-

vicing and distributions to shareholders.

Free Cash Flows

to the Firm

Sum of net cash generated by operating activities and

net cash used in investing activities.

The Group uses this APM as it reflects the cash generating capa-

bility of the Group to repay debt and distribute dividends to share-

holders.

Commodity

Inventories

Agricultural inventories, such as corn, wheat, barley, soy-

bean, sunflower seed, meal and oil.

The Group uses this APM as an additional measure of its liquidity,

which the Group uses to provide a supplemental tool to assist man-

agement and investors in evaluating current business performance

and in calculating credit ratios under certain of the Group’s financ-

ing arrangements.

Debt Liabilities

Sum of bonds issued, current bonds issued, interest on

bonds issued, long-

term borrowings, current portion of

long-term borrowings, short-term borrowings; lease lia-

bilities and current portion of lease liabilities.

The Group uses this APM, as it is a useful measure of the leverage

of the Group, which is widely used by credit investors and rating

agencies.

Net Debt

Debt Liabilities less cash and cash equivalents and

cash deposits pledged under credit facilities.

The Group uses this APM, as it is a useful measure of the leverage

of the Group, which is widely used by credit and equity investors

and rating agencies.

Adjusted Net Debt

Net Debt less commodity inventories.

The Group uses this APM as a supplemental measure of the

Group’s liquidity

, which shows the amount of Debt Liabilities not

covered by cash and commodity inventories.

Adjusted

Working

Capital

Current assets (excluding cash and cash equivalents,

and assets classified as held for sale) less current liabili-

ties (excluding short-

term borrowings, current portion of

long-

term borrowings, current portion of lease liabilities,

current bonds issued, interest on bonds issued, and lia-

bilities associated with assets classified as held for sale).

The indicator of working capital is important for the Group, as the

Group is involved in trading and processing activities and hold large

volumes of inventories on the balance. The Group also invests in

business expansion, which needs working capital inves

tments to

increase efficiency. It is useful for users and investors because it

measures both a Group’s efficiency and its short-

term financial

health. It also helps management to keep a business operating

smoothly and meet all its financial obligation within the coming year.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Sustainability Statement

Regulation (EC) No 1907/2006 of the European Parliament and of the Council of 18 December 2006 concerning the Registration, Evaluation, Authorisation and

Restriction of Chemicals (REACH)

In FY2025, Kernel advanced its sustainability agenda

by aligning its Sustainability Statement with the Cor-

porate Sustainability Reporting Directive (CSRD)

and European Sustainability Reporting Stand-

ards (ESRS). This integration reflects a strategic

shift toward embedding environmental, social, and

governance (ESG) considerations into the Group’s

core business model, value chain, and decision-mak-

ing processes.

Important updates in the FY2025 Sustainability

Statement include the consolidated ESG Strategy,

which sets forward-looking targets across climate,

circular economy, diversity, and community impact

by 2030. In FY2025, Kernel also conducted a geo-

spatial analysis of our landbank to estimate its prox-

imity to protected areas and areas with high biodiver-

sity value – an important exercise in preparation for

compliance with the EU Deforestation Regulation

(EUDR). Furthermore, we screened our whole port-

folio of plant protection products and categorized

them in line with the REACH

criteria of substances

of concern and substances of very high concern.

The reporting year was marked by significant pro-

gress in climate action, human capital development,

and stakeholder engagement, despite the ongoing

challenges posed by the war in Ukraine. Kernel

achieved measurable reductions in greenhouse gas

emissions across all scopes, expanded the use of re-

newable energy, and deepened its commitment to re-

generative agriculture and biodiversity protection.

The Group maintained its Carbon Disclosure Pro-

ject (CDP) climate rating at level B and became the

first in Ukraine’s food industry to commit to the Sci-

ence-Based Targets initiative (SBTi).

Socially, Kernel reinforced its role as a responsible

employer and community partner. It invested in

workforce resilience, mental health, and veteran re-

integration, while also expanding access to training

and career development. Community initiatives

reached thousands of beneficiaries, with a focus on

healthcare, education, and support for the Ukrainian

Armed Forces. Governance practices were strength-

ened through enhanced ESG oversight, risk man-

agement, and anti-corruption measures, supported

by a robust compliance framework and stakeholder

engagement mechanisms.

Kernel’s first double materiality assessment identi-

fied 20 material sustainability topics, guiding the

Group’s disclosures and strategic priorities. The

Group also reported on EU Taxonomy-aligned activ-

ities, with a focus on bioenergy.

This progress underscores Kernel’s commitment to

long-term value creation through sustainability, resil-

ience, and responsible leadership in Ukraine’s agri-

cultural sector.

SUSTAINABILITY

STATEMENT

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Key highlights in FY2025

Climate action

•

220 thousand tCO2e – total Scope 1 GHG emissions, excluding 699 thousand tCO2e

of biogenic emissions

• 90 thousand tCO2e – total Scope 2 GHG emissions (location-based)

• 103 thousand tCO2e – total Scope 2 GHG emissions (market-based)

• 1,631 thousand tCO2e – total Scope 3 GHG emissions

• Maintained CDP rating (Carbon Disclosure Project) at the level B, making Kernel the

only Group in Ukraine with such a rating

Energy management

• 9,419 TJ – total electricity consumption

• 2,146 MJ/t – energy intensity of sunflower seed processing

• 66 MJ/t-% – energy intensity of drying grain

• 640 MJ/t – energy intensity of harvested grain

Waste management

• 228 tons – total volume of hazardous waste generated

• 26,964 tons – total volume of non-hazardous waste generated

Biodiversity management

• 208,940 ha – total area of application of biological products accounted

• Less than

1% of the landbank is in close proximity to nature-protected areas

Employment

• 10,760 – total number of employees

• 2,293 – total number of new hires

• 14.8% – percentage of employee turnover

The Excellence Learning Awards, HR and Talent category (Gold)

The International CSR Excellence Award

UN Global Compact Partnership for Sustainability Award (Gold)

HR Brilliance Award

Training and career

advancement

• 216,517 – total number of training hours

• 1,894 – total number of employees, receiving regular performance and career reviews

Occupational health and safety

•

– total number of recordable work-related injuries

•

0.85 – lost time injury frequency rate

Economic performance

• USD 4,190 million – Direct economic value generated

•

USD 3,908 million – Total economic value distributed

• Disclosure in line with the EU Taxonomy

Support of local communities and

society as a whole

• USD 30 million – total amount of social spendings, which includes support of the

Ukrainian Army, humanitarian aid, and other charity expenses

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Sustainability at Kernel

Sustainability at Kernel is driven by an overarching goal - to feed the growing population while enhancing natural and social capital, particularly in

Ukraine. Our management approach towards sustainability is organized around three pillars, namely (1) environmental stewardship, with a material

focus on climate actions both in direct operations and throughout the value chain; (2) social responsibility, which gained new levels of prioritization

amid the Russian invasion of Ukraine; and (3) governance integrity, commonly referred to as ESG. These principles and approaches are integrated

across all of Kernel’s business segments.

Our values and purpose that help us manage ESG risks and opportunities in the agriculture sector in Ukraine are as follows:

I. Environmental stewardship

Low-carbon development: scaling up decarbonization practices across the value chain, from carbon farming and

precision agriculture on the field to low-carbon oilseed processing.

Biodiversity: promoting soil health and biodiversity through integrated pest management, expansion of cover crop

practices, and control over seed quality with own laboratories.

II. Social responsibility

National security and wellbeing: contributing towards Ukraine’s victory against the Russian invasion through on-

going support of the Armed Forces of Ukraine and humanitarian aid.

Human capital: proactive expansion of agriculture expertise by attracting and educating students through Open

Agro University and other educational and training programs.

Diversity, equality and inclusion: integration of veterans back into civilian life, providing them with opportunities

for self-realization.

III. Governance integrity

Sustainable finance: groundwork for systematic attraction of sustainable finance through an evidence-based ap-

proach of enhancing natural capital.

Ethics and compliance: ensuring transparent business practices through systematic integration of relevant sustain-

ability standards.

Market leadership: sharing own experience with other key agriculture companies as well as small- and medium-size

farmers to improve market maturity and institutional capacity in sustainable and low-carbon development.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Our ESG Strategy

Environmental stewardship

Climate change

GHG emission

reduction



Validate a science-based target (SBTi)

for

Scope 2 emissions at the Poltava Oil Extraction

Plant

Regenerative

agriculture



Reduce the share of land under plowing from

25% in 2020 to 10% by 2030



Introduce cover crops and siderats in crop rota-

tion on 30%

of the land previously under winter

wheat by 2030

Sustainable agriculture

through innovation



Implement a technology management system

based on the approaches and results of precision

farming polygons on 100%

of the land bank by

2030

Energy

Renewable

energy



Achieve a level of electricity production from own

generation using renewable energy sources of at

least 50%

of the Group’s total electricity con-

sumption by its oilseed processing plants

by 2030

Biodiversity

Pollinators protection



Achieve 100% use of pollinator-

safe insecticides

during the flowering of crops by 2030

Soil health



Apply biological destructors on at least 50%

of the

cultivated landbank by 2030

Waste and

resource use

Packaging



Reach 20%

of bottled oil packaged in bottles

made with recycled plastic and tethered caps by

2030

Social responsibility

Own workforce

Diversity and

inclusion



Increase women’s representation in traditionally

male-dominated positions to 15% by 2030



Continuous development of career

opportunities

and an inclusive working environment for women,

youth, veterans, and people with disabilities

Talent development



Fill at least

10%

of open Group vacancies with

graduates of Internship and First job programs by

2030

Communities

Resilience and

development of local

communities



Increase beneficiary participation in the Group’s

social programs by 10%

across all operational re-

gions by 2030

Consumers & end

users

Engagement with

consumers



Launch a new product category —

sunflower oil

with a reduced carbon footprint

across the en-

tire value chain



Ensure compliance with the

EU Deforestation

Regulation (EUDR)

Note 1: Unless stated otherwise in the ESG Strategy, the baseline for targets is FY2025

20% of bottles with recycled plastic and 20% of bottles with tethered caps

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

General information

Guide to the Sustainability

Statement

In 2025, Kernel integrated its Sustainability

Statement into the Management Report, align-

ing the reporting approach with the require-

ments of the Corporate Sustainability Report-

ing Directive (CSRD) and the European Sus-

tainability Reporting Standards (ESRS).

The Sustainability Statement forms part of the

Management Report and is structured across

four key areas:

• General information (ESRS 2)

• Environmental information (ESRS E1, E2,

E4 and E5)

• Social information (ESRS S1, S3 and S4)

• Governance information (ESRS G1)

The sustainability matters covered within

these sections are identified from Kernel’s

Double Materiality Assessment (DMA), de-

scribed in detail on page 47.

In preparing the Sustainability Statement, Ker-

nel followed the ESRS reporting structure,

presenting relevant policies, actions, targets,

and metrics in relation to the identified material

impacts, risks, and opportunities (IROs).

Where required, we have applied the incorpo-

ration by reference option: disclosures are

presented either within the Sustainability

Statement itself or in related sections of the

Management Report, as summarized in the ta-

ble “List of DRs compiled and list of DRs in-

corporated by reference”. Each such case is

clearly indicated with a footnote and in-text

tag, pointing to the corresponding ESRS Dis-

closure Requirement (DR). This approach

ensures improved clarity and readability while

minimizing unnecessary repetition of infor-

mation relating to Kernel’s business model,

strategy, value chain, and governance frame-

work.

Water and marine resources (ESRS E3) and

Employees in the value chain (ESRS S2) were

assessed as immaterial and are therefore not

disclosed in the Sustainability Statement

2025.

IRO-2

List of DRs compiled and list of DRs incorporated by reference

Disclosure requirement (DR) description

Page

General disclosures

BP-1

General basis for preparation of the sustainability statement

BP-2

Disclosures in relation to specific circumstances

●

GOV-1

The role of the administrative, management and supervisory bodies

50-51; 91

●

GOV-2

Information provided to and sustainability matters addressed by the undertaking’s administrative, man-

agement and supervisory bodies

50--51; 98

GOV-3

Integration of sustainability-related performance in incentive schemes

GOV-4

Statement on due diligence

45; 84

●

GOV-5

Risk management and internal controls over sustainability reporting

45-46

●

SBM-1

Strategy, business model and value chain

7; 15-18; 21-24;

26-28

SBM-2

Interests and views of stakeholders

46-47

SBM-3

Material impacts, risks and opportunities and their interaction with strategy and business model

IRO-1

Description of the process to identify and assess material impacts, risks and opportunities

48-49

IRO-2

Disclosure Requirements in ESRS covered by the undertaking’s sustainability statement

E1 Climate change

GOV-3

Integration of sustainability-related performance in incentive schemes

E1-1

Transition plan for climate change mitigation

SBM-3

Material impacts, risks and opportunities and their interaction with strategy and business model

52-54

IRO-1

Description of the processes to identify and assess material climate-related IRO

E1-2

Policies related to climate change mitigation and adaptation

50; 87-89

E1-3

Actions and resources related to climate change mitigation and adaptation

53-54

E1-4

Targets related to climate change mitigation and adaptation

E1-5

Energy consumption and mix

54-55

E1-6

Gross Scopes 1, 2, 3 and Total GHG emissions

E1-8

Internal carbon pricing

E2 Pollution

IRO-1

Description of the processes to identify and assess material pollution-related IRO

E2-1

Policies related to pollution

58; 87-89

E2-2

Actions and resources related to pollution

58-60

E2-3

Targets related to pollution

E2-4

Pollution of air, water and soil

E2-5

Substances of concern and substances of very high concern

Note 1: IR – incorporated by reference. The disclosure requirement marked with a dot [●] is incorporated in the Sustainability Statement, either entirely or partially, by

reference to a different section of the Management Report.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

General information continued

E4 Biodiversity and ecosystems

SBM-3

Material impacts, risks and opportunities and their interaction with strategy and business model

IRO-1

Description of processes to identify and assess material biodiversity and ecosystem-related IRO

63-64

E4-2

Policies related to biodiversity and ecosystems

64; 87-89

E4-3

Actions and resources related to biodiversity and ecosystems

64-65

E4-4

Targets related to biodiversity and ecosystems

E5 Resource use and circular economy

IRO-1

Description of the processes to identify and assess material circular economy-related IRO

E5-1

Policies related to resource use and circular economy

66; 87-89

E5-2

Actions and resources related to resource use and circular economy

66-67

E5-3

Targets related to resource use and circular economy

67-68

E5-5

Waste

S1 Own Workforce

SBM-3

Material impacts, risks and opportunities and their interaction with strategy and business model

S1-1

Policies related to its own workforce

69-70; 87-89

S1-2

Processes for engaging with own workforce and workers’ representatives about impacts

S1-3

Grievance mechanism

S1-4

Taking action on material impacts on own workforce, and approaches to managing material risks and

pursuing material opportunities related to own workforce, and effectiveness of those actions

70-72

S1-5

Targets related to its own workforce

S1-6

Characteristics of the undertaking’s employees

S1-9

Diversity metrics

S1-10

Adequate wages

S1-12

People with disabilities

S1-13

Training and skills development metrics

S1-14

Health and safety metrics

S1-15

Work-life balance metrics

S1-17

Incidents, complaints and severe human rights impacts

S3 Affected communities

SBM-3

Material impacts, risks and opportunities and their interaction with strategy and business model

S3-1

Policies related to affected communities

76; 87-89

S3-2

Processes for engaging with affected communities about impacts

76-77

S3-3

Processes to remediate negative impacts and channels for affected communities to raise concerns

77; 81

S3-4

Taking action on material impacts on affected communities, and approaches to managing material risks

and pursuing material opportunities related to affected communities, and effectiveness of those actions

77-78

S3-5

Targets related to affected communities

S4 Consumers and end-users

SBM-3

Material impacts, risks and opportunities and their interaction with strategy and business model

S4-1

Policies related to consumers and end-users

79; 87-89

S4-2

Processes for engaging with consumers and end-users about impacts

S4-3

Processes to remediate negative impacts and channels for consumers and end-users to raise concerns

S4-4

Taking action on material impacts on consumers and end-users, and approaches to managing material

risks and pursuing material opportunities related to consumers, and effectiveness of those actions

79-80

S4-5

Targets related to consumers and end-users

G1 Governance

●

GOV-1

The role of the administrative, supervisory and management bodies

●

G1-1

Business conduct policies and corporate culture

82; 87-89

G1-2

Management of relationships with suppliers

82-83

G1-3

Prevention and detection of corruption and bribery

G1-4

Incidents of corruption or bribery

G1-6

Payment practices

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

General information continued

BP-1

General basis for preparation

This Sustainability Statement has been pre-

pared on a consolidated basis in accordance

with the European Sustainability Reporting

Standards (ESRS, EU 2023/2772). It covers

Kernel Holding S.A. and all its subsidiaries

(collectively referred to as the "Group” or “Ker-

nel”) for the period 1 July 2024 to 30 June

2025. The scope of consolidation is consistent

with that applied in the Group’s Consolidated

Financial Statements.

The Sustainability Statement encompasses

value chain information across the Group’s di-

rect operations, as well as its indirect activities

in the upstream and downstream stages. For

specific information on the Group’s value

chain, please refer to the Business Model sec-

tion. The entire value chain was considered

during the Double Materiality Assessment

(DMA); the detailed procedure and material

impacts, risks, and opportunities (IROs) are

presented in the Material Impacts, Risks, and

Opportunities sub-section (pages 47-49).

The Group has omitted information corre-

sponding to intellectual property, know-how,

or the results of innovation.

BP-2

Disclosure in relation to specific

circumstances

Time horizons

In preparing this sustainability statement, the

Group has applied the following forward-look-

ing time horizons as defined in ESRS 1:

• Short-term: 1 year, within the reporting pe-

riod

• Medium-term: from 1 to 5 years

• Long-term: more than 5 years

Changes in preparation on the

presentation of the Sustainability

statement

In FY2025, there were no changes made in

the preparation and presentation of sustaina-

bility information compared to the previous re-

porting period. Reporting errors in prior report-

ing periods, namely FY2023 and FY2022,

were identified and corrected in the GHG

emissions (Scope 1, 2, and 3, as well as GHG

emission intensity) metrics. Errors were asso-

ciated with the ongoing improvements in the

accounting system, clarifications of raw data,

alignment of relevant conversion factors, and

other corrections related to calculations.

Disclosures from other legislation or

sustainability reporting standards

This Sustainability Statement contains infor-

mation as per the EU Taxonomy. In the pro-

cess of DMA, we took into consideration the

overarching principles of the Global Reporting

Initiative (GRI). In preparing the E1 Climate

Change information, we were guided by the

Task Force on Climate-Related Financial Dis-

closures (TCFD) framework.

Incorporation by reference

Kernel has applied the ESRS “Incorporated by

reference” approach, placing specific Disclo-

sure Requirements (DRs) within the Manage-

ment Report. The list of DRs incorporated by

reference, along with their placement in this

Annual Report, is presented in the table on

pages 43-44.

Use of phase-in and voluntary provi-

sions

The Group has elected to apply phase-in pro-

visions for SBM-3 (48e), E1-9, E2-6, E4-6, and

E5-6 in line with ESRS 1 Appendix C. Data

points that are voluntary for reporting have

also been omitted.

Sources of uncertainty

Disclosed metrics that are subject to a high

level of measurement uncertainty include

Scope 3 emissions. The uncertainty arises be-

cause the calculation approach entirely relies

on the use of secondary data such as emis-

sions factors from DEFRA and CEDA data-

bases, as well as spend-based methodolo-

gies. These approaches are based on indus-

try-average estimates rather than region- or

source-specific carbon footprint values, which

limits precision and introduces measurement

uncertainty.

GOV-4

Statement on due diligence

We recognize that robust due diligence across

all business segments and throughout the

value chain is the foundation of responsible

business conduct and sustainable develop-

ment. As a leading agricultural producer in

Ukraine, we are guided by international sus-

tainability standards, including the United Na-

tions (UN) Guiding Principles on Business and

Human Rights. Our due diligence framework

is based on systematic risk identification, as-

sessment, prevention, and mitigation prac-

tices to address actual and potential environ-

mental and social impacts within our direct op-

erations. We also evaluate our suppliers, in-

vestment decisions, and business relation-

ships to ensure compliance with environmen-

tal regulations, labor rights, and ethical busi-

ness practices. In addition, Kernel has suc-

cessfully undergone several external Environ-

mental and Social due diligence reviews con-

ducted by international financial institutions

and commercial banks, which inform financing

decisions. See additional information on due

diligence in Annex 1.

GOV-5

Risk management and internal

controls over sustainability re-

porting

Scope, main features, and compo-

nents of Risk Management and Inter-

nal Control processes

As part of the Group’s risk management pro-

cess, risk management and internal controls

encompass all aspects of annual sustainability

reporting. These processes include the identi-

fication, assessment, and mitigation of inher-

ent material misstatement risks arising,

among others, from potential human error or

data incompleteness that could impact the ac-

curacy of sustainability reporting (see Risks

and Uncertainties section of this report).

Risk Assessment approach and prior-

itization methodology

The Group’s risk assessment approach in-

volves a systematic evaluation of potential

risks based on their likelihood and impact.

Sustainability reporting-related risks are incor-

porated into the enterprise risk management

framework, which prioritizes risks using a risk

matrix that categorizes them as high, medium,

or low priority and is currently undergoing for-

malization. This methodology allows for focus-

ing resources on the most significant risks to

the sustainability reporting process.

Main risks identified and mitigation

strategies

The sustainability reporting process presents

several risks, including incompleteness, er-

rors, data inaccuracies, regulatory non-com-

pliance, and operational disruptions. To miti-

gate these identified risks, internal controls are

applied in the reporting streams. Segregation

of responsibilities is applied in the reporting

process, where separate individuals conduct

data collection, validation, and review. A key

component of this framework is data verifica-

tion, which includes reconciling reported data

with source systems and analyzing material

differences compared to prior years. To sup-

port regulatory compliance, legislative

changes and updates are continuously moni-

tored to achieve alignment with reporting re-

quirements. Given the reliance on key person-

nel within the reporting organization, these

measures help address risks related to work-

force availability and expertise, supporting

consistency in disclosures.

Integration of findings of Risk Assess-

ment and Internal Controls into inter-

nal functions and processes

As outlined above, the sustainability reporting

risks are incorporated into the internal risk

management system, and the findings from

risk assessments and internal controls are

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

General information continued

integrated into internal functions through reg-

ular updates to the policies and procedures.

The Group aims to ensure that all departments

are aligned with the sustainability reporting

objectives and that any identified risks are ad-

dressed promptly. The Group also conducts

training sessions to keep employees who are

involved in the reporting function informed

about the latest developments in sustainability

reporting.

SBM-2

Interests and views of stake-

holders

Kernel recognizes that its business operations

impact various stakeholders, who, in turn,

influence and shape how we conduct our busi-

ness. Kernel identifies eight stakeholder

groups that are subject to inter-influence and

ongoing interaction with the Group. These in-

fluences and stakeholder categories are out-

lined in Kernel’s management vision, as well

as through an analysis of stakeholder feed-

back dynamics, and are revised during due dil-

igence and DMA processes. Our stakeholder

interactions are guided by the Stakeholder En-

gagement Policy, which aligns with the rele-

vant IFC Performance Standards.

Stakeholder engagement is a vital part of Ker-

nel’s DMA process. The outcomes of this en-

gagement shaped the final prioritization of

material topics for disclosure, boosting the

credibility and transparency of the assess-

ment process. Stakeholder views gathered

during this process were incorporated into

Kernel’s sustainability priorities and consid-

ered in the Group’s broader strategy and busi-

ness model. More details on stakeholder en-

gagement within the DMA framework are pro-

vided on pages 48-49.

Key interests and methods of engagement with stakeholder groups

Employees

Interest and key concerns

Engagement method

• Healthy and safe working conditions

• Fair workplace conditions and practices

• Competitive salary and career advancement

• Professional development opportunities and recognition of results

• Equality and diversity

• Learning & development programs

• Internal communications

• Group website & social media

• Hotline for submitting compliance-related inquiries

• HR Conference & Strategic sessions for each business division

IFIs & Banks

Interest and key concerns

Engagement method

• Transparent, accurate, and timely information on financial perfor-

mance

• Risk control and prevention, compliance with ESG standards, and re-

sponsible business conduct

• Non-financial performance and sustainable development

• Annual and quarterly reports

• Group website & social media

• One-to-one meetings (online/offline)

• Email communication and ESG questionnaires

Local communities

Interest and key concerns

Engagement method

• Employment opportunities

• Responsible land and resource use

• Compliance with national legislation

• Support for local farmers (knowledge-sharing, partnership)

• Socio-economic development of territories

• Timely communication and effective grievance handling

• Environmental and social impact assessments

• One-to-one meetings (online/offline)

• Group website & social media

• Hotline for submitting compliance-related inquiries

• Printed material distributed among communities

National and local government

Interest and key concerns

Engagement method

• Regulatory compliance (national and local)

• Socio-economic development of territories

• Responsible land and resource use

• One-to-one meetings (online/offline)

• Group website & social media

• Website of the charitable foundation “Together with Kernel”

• Local and national media

• Hotline for submitting compliance-related inquiries

Civil society organizations/NGOs

Interest and key concerns

Engagement method

Environmental NGOs:

• Climate change adaptation and mitigation

• Risks of water and soil pollution, impact on biodiversity

• Timely communication and effective grievance handling

Social NGOs:

• Compliance with national legislation

• Livelihood of local communities

• Human rights of employees and local communities

• Equal opportunities and diversity

• Timely communication and effective grievance handling

• One-to-one meetings (online/offline)

• Group website & social media

• Annual reports

• Hotline for submitting compliance-related inquiries

Academics and analysts

Interest and key concerns

Engagement method

• Efficient handling of questions, feedback, or research-related inquiries

• Group website & social media

• One-to-one meetings (online/offline)

• Email communication

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

General information continued

Material Impacts, Risks and

Opportunities (IROs)

SBM-3

Results of double materiality assess-

ment (DMA)

As the foundation for this sustainability state-

ment, Kernel conducted its first double mate-

riality assessment (DMA) in alignment with the

Corporate Sustainability Reporting Directive

(CSRD) and guidance from the European Fi-

nancial Reporting Advisory Group (EFRAG).

The double materiality principle requires re-

porting on topics deemed material from at

least one of the following perspectives:

• Impact materiality: The actual or potential

impacts of Kernel’s operations on people

and the environment.

• Financial materiality: Sustainability-related

risks and opportunities that may influence

Kernel’s financial performance

In FY2025, we identified the following sustain-

ability topics as material to our business

model, operations, and business relationships

across the value chain:

Within these areas, 20 sustainability sub-top-

ics were identified and assessed for their im-

pact, financial, or dual materiality. These are

visually presented in the materiality matrix on

this page.

Each material subtopic is defined by specific

material impact, risks, and opportunities

(IROs), which serve as the basis for Kernel’s

topical disclosures. Comprehensive infor-

mation on the DMA methodology and topic-

specific IROs is provided in the IRO-1, IRO-2,

and SBM-3 sections for each relevant topical

standard.

No entity-specific topics have been identified

for FY2025.

The IROs identified through the DMA are out-

lined in detail within each topical chapter. They

highlight where along the value chain these

IROs materialize and over which time horizons

they are relevant, directly connecting them to

Kernel’s strategy and business model.

Customers

Interest and key concerns

Engagement method

• Food safety and quality of products

• Transparency and traceability of product information

• Compliance with certification standards

• Timely communication and effective grievance handling

• Group website & social media

• Group’s brand names

• Brand exhibitions and specialized events

• Annual reports

• Hotline for submitting compliance-related inquiries

• Customer research and brand health tracking

Suppliers

Interest and key concerns

Engagement method

• Fair market competition

• Transparent procurement

• Ethical business conduct

• Compliance with agreements and delivery of commitments

• Supply Chain Sustainability Program

• One-to-one meetings (online/offline)

• Group website & social media

Climate Change

Pollution

Biodiversity and Ecosystems

Resource Use and Circular Economy

Own Workforce

Affected Communities

Consumers and end-users

Governance

……………………………………………………………………………………………………………………………………………………………………….

Kernel’s materiality matrix

Environment

E1 Climate Change

1 Climate change adaptation

2 Climate change mitigation

3 Energy

E2 Pollution

4 Pollution of air

5 Pollution of water

6 Pollution of soil

7 Substances of concern

8 Substances of very high concern

9 Pollution of living organisms

10 Microplastics

E3 Water and Marine Resources

11 Water

12 Marine resources

E4 Biodiversity and Ecosystems

13 Direct impact drivers of biodiversity loss

14 Impacts on the state of species

15 Impacts on the extent & condition of ecosys-

tems

16 Impact & dependencies on ecosystem ser-

vices

E5 Resource Use and Circular Economy

17 Resource inflows

18 Resource outflows

19 Waste

Social

S1 Own Workforce

20 Working conditions

21 Equal treatment and opportunities for all

22 Other work-related rights

S2 Workers in the Value Chain

23 Working conditions

24 Equal treatment and opportunities for all

25 Other work-related rights

S3 Affected Communities

26 Communities‘ economic, social, and cultural

rights

27 Communities‘ civil and political rights

28 Rights of indigenous peoples

S4 Consumers and end-users

29 Information-related impacts for consumers

30 Personal safety of consumers

31 Social inclusion of consumers

Governance

G1 Governance

32 Business conduct

33 Corruption and bribery

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

General information continued

IRO-1; IRO-2

Description of the process to identify

and assess material impacts, risks,

and opportunities

Kernel conducted a double materiality assess-

ment in line with the principles of the European

Sustainability Reporting Standards (ESRS),

evaluating sustainability matters from both im-

pact and financial materiality perspectives.

The determination of material sustainability

matters was based on a quantitative assess-

ment of a previously identified list of IROs.

This approach involved prioritizing IROs

based on the factors of severity and likelihood,

followed by calculating their materiality score,

and consists of the following six steps:

Step 1. Identification of impacts, risks and

opportunities

The process of identifying IROs began with

the long list of relevant sustainability topics

outlined in ESRS 1, Application Requirement

(AR) 16. Building on previous reporting efforts,

we refined our understanding of the business

model, activities, and value chain to capture

the broader implications of our operations

across sustainability topics. This included

mapping the Kernel’s supply chain and identi-

fying relevant internal and external stakehold-

ers throughout the upstream and downstream

value chain. Screening of our operations and

supply chain provided the basis for defining

IROs across different stages of production and

business relationships.

The assessment first addressed the Group’s

impacts, both positive and negative, across

environmental, social, and governance dimen-

sions. It then focused on identifying risks and

opportunities, particularly those linked to the

identified impacts, supported by a review of

the Group’s Risk Management System. Rele-

vant IROs were analyzed and validated

through close collaboration between the sus-

tainability team and internal subject-matter ex-

perts.

We considered various internal and external

sources of information to form the list of rele-

vant IROs and to inform our analysis, including

industry-specific ESG benchmarks, such as

GRI, internal analyses, stakeholder expecta-

tions, regulatory requirements, and Kernel’s

strategy.

Step 2. Impact materiality assessment

The impact materiality assessment evaluated

actual or potential, positive or negative im-

pacts on people and the environment. This as-

sessment considered the location of the im-

pact across the value chain (upstream, own

operations, and downstream) and the ex-

pected timeframe of occurrence: short-term

(up to 1 year), medium-term (1–5 years), and

long-term (beyond 5 years).

We developed a calculation methodology

aligned with ESRS-proposed criteria (Section

3.4). Actual impacts were assessed based on

severity factors such as scale, scope, and ir-

remediability, while potential impacts were

evaluated using severity and likelihood. Each

factor was assigned a score on a scale from 1

to 4, representing limited to strategic impacts

of the Group on environmental, social, or gov-

ernance matters. Please refer to the Impact

Assessment table for more details on the

methodology.

The raw materiality score for potential impacts

ranged from 1 to 16 and was normalized to a

standardized scale of 1 to 4 to ensure con-

sistent interpretation and comparability. Fol-

lowing consultations with internal stakehold-

ers, a threshold of 1.3 for the normalized ma-

teriality score was adopted to classify IRO as

material. In line with ESRS 1 for potential neg-

ative impacts on human rights, the severity of

the impact was given more weight than likeli-

hood, reflecting the critical importance of hu-

man rights considerations.

Step. 3 Financial materiality assessment

The financial materiality assessment involved

the evaluation of identified risks and opportu-

nities that affect, or are expected to affect, the

Group’s financial position, financial perfor-

mance, cash flows, access to finance, or cost

of capital. These effects may manifest as neg-

ative or positive deviations over the short-,

medium-, or long-term across different parts of

the value chain. We assessed each identified

risk and opportunity based on the potential

magnitude (severity) of financial effect and the

likelihood of occurrence (ESRS 1, Section

3.5).

Risks and opportunities were evaluated ac-

cording to their nature, specifically whether

they directly affected the Group’s financial

health or influenced its reputation:

• Financial risks and opportunities were

measured using absolute EBITDA thresh-

olds aligned with the Group’s defined risk

appetite.

• Reputational risks and opportunities were

assessed based on the level of media expo-

sure and stakeholders’ perception.

For consistency, each risk and opportunity

DMA Assumptions

Value chain

Kernel’s DMA considers the value chain per-

spective through the assessment of IROs

arising from our own operations, upstream

suppliers of oilseeds and grains, as well as

trade partners and customers in the down-

stream value chain. The details on Kernel’s

value chain are outlined in the Business

Model section.

Stakeholder engagement

The perspective of affected stakeholders

and the users of the Sustainability State-

ment was incorporated into the assessment

through direct engagement with stakehold-

ers (see page 46 on Stakeholder engage-

ment), as well as by proxy through the

knowledge of our internal subject matter ex-

perts. These experts, representing different

divisions of the Group, engage with affected

stakeholders as part of their core responsi-

bilities and stay informed on the latest devel-

opments across relevant ESG areas.

Sustainability due diligence

In addition to stakeholder engagement, our

DMA was informed by our Social and Envi-

ronmental Due Diligence and the Enterprise

Risk Management process (see pages 45-

46).

Impact assessment criteria

Actual

Potential

Score

Negative impact

Positive impact

Negative impact

Positive impact

Scale

Evaluates the intensity of the impact on people or the environment

1-4

Scope

Measures how widespread the impact is on people or the environment

1-4

Irremediability

Assesses the extent to

which a negative impact

can be remediated

Irrelevant

Assesses the extent to

which a negative impact

can be remediated

Irrelevant

1-4

Likelihood

Irrelevant

Probability of occurrence

1-4

Materiality

calculation

Severity

Severity¹ x likelihood Severity² x likelihood

Normalized

1-4

Note 1: Severity of negative impact is defined as scale, scope and irremediability.

Note 2: Severity of positive impacts is defined as scale and scope

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

General information continued

was assigned a score on a scale from 1 to 4,

representing severity and likelihood ranging

from ‘limited’ to ‘strategic’ in significance to the

Group’s financial position. In line with the over-

all evaluation methodology, raw materiality

scores for potential risks and opportunities

were normalized to ensure comparability. A

materiality threshold of 1.3 was established,

with any IRO scoring at or above this threshold

considered material.

Step 4. Consolidation of results

The results of the impact and financial materi-

ality assessment were consolidated to obtain

an overview of Kernel’s impacts, risks, and op-

portunities mapped within the longlist of sus-

tainability matters. A sustainable matter was

defined as a material if included at least one

material IRO at every level of aggregation, i.e.,

subtopic and topic.

After identifying material sustainability mat-

ters, the corresponding data points from the

EFRAG data point list were determined for dis-

closure using the ESRS decision tree. For fur-

ther detail, refer to “List of DRs compiled and

list of DRs incorporated by reference” on

pages 43-44 and Annex 2 “List of data points

that derive from other EU legislation”.

The Water and Marine Resources topic

(ESRS E3) was considered immaterial to Ker-

nel’s operations within environmental topics,

as water is not a key resource across any of

our business segments. Currently, less than

1% of our land bank is irrigated for seed pro-

duction. In the oilseed processing segment,

water is used primarily for technical purposes,

such as steam generation and domestic

needs, both of which require insignificant vol-

umes. Although the IROs related to ESRS E3

did not meet our materiality thresholds, Kernel

acknowledges its responsibility to monitor and

manage water-related subjects. These topics

continue to be addressed through our existing

governance structures, policies, and opera-

tional practices.

Step 5. Stakeholder validation and man-

agement validation

Stakeholder engagement was leveraged to

validate the outcomes of the materiality as-

sessment, ensuring accuracy, completeness,

and relevance. A broad group of internal and

external stakeholders, including IFIs and

banks, suppliers, trade partners and custom-

ers, civil societies and business associations,

government representatives and policymak-

ers, as well as the Group’s departments of

sustainable development, CSR, trading and

product quality, investor and public relations,

compliance, HR and internal audit - actively

participated in a dialogue regarding the

Group’s identified material topics.

Stakeholders' views on material topics were

taken into account through email. Each stake-

holder received a list of potentially material

topics and was asked to indicate which topics

they considered material, along with justifica-

tions. Insights gained from stakeholders were

analyzed and considered in the finalization of

material matters, addressing potential gaps

and reinforcing the prioritization of IROs.

Where necessary, the status of topics under

review was reconsidered either by:

• Integrating previously overlooked IROs;

• Recalibrating severity and likelihood scores

of already identified IROs.

The validated results were presented to the

leadership team for final endorsement. The

Group's Board of Directors, together with the

Sustainability Department, oversees and ap-

proves the material sustainability topics and

DMA methodology, ensuring alignment with

corporate objectives and stakeholder expecta-

tions.

Step 6. Monitoring and periodic review

Kernel implements a structured approach for

monitoring and periodic review of its sustaina-

bility topics. The monitoring process includes

tracking changes within the regulatory land-

scape, industry trends, and emerging new

IROs that may affect the Group or its stake-

holders, as well as maintaining consistent

dialogue with stakeholders to ensure their

perspectives are integrated into the DMA pro-

cess.

A re-assessment of double materiality is per-

formed on an annual basis. Previously identi-

fied outcomes may remain valid if there is suf-

ficient evidence to confirm their relevance at

the time of reporting. In the event of major

events, such as significant regulatory changes

or the establishment of new business relation-

ships, an immediate review of sustainability

topics will be triggered. The Group’s Sustain-

ability Department oversees the monitoring

process and conducts the annual review in

collaboration with the Financial Reporting, Ac-

counting, and Control Departments.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Environmental information

E1 Climate change

In this section:

• Climate change adaptation

• Climate change mitigation

• Energy

E1.IRO-1

Climate change-related impacts, risks

and opportunities

Impacts, risks, and opportunities related to cli-

mate change mitigation, adaptation, and en-

ergy were identified through Kernel’s DMA, in-

formed by our annual climate risk analysis

conducted in alignment with the TCFD frame-

work. This analysis, which covers both physi-

cal and transition-related risks and opportuni-

ties, is presented in detail in the sub-

section “Climate Risks and Opportunities” on

page 51.

For further details on the methodological ap-

proach applied under the DMA, see pages 48-

49. The table below summarizes the material

IROs identified for E1 Climate change, includ-

ing their location in the value chain and the

timeframe over which associated risks, oppor-

tunities, and potential impacts, both positive

and negative, may materialize.

MDR-P; E1-2

Policies

Kernel recognizes climate actions and the

broader climate corporate governance as one

of the most material aspects of the Group’s

ESG agenda. Principles of traceable and effi-

cient climate mitigation and climate adaptation

practices across the whole value chain are an-

chored by the Environmental Protection policy

and reflected in the Sustainable Development

and CSR policy. We expect our suppliers to

uphold the same level of climate-related re-

sponsibility as outlined in our Supplier Code of

Conduct.

See Annex 3 – Key Policies and Procedures

for a detailed description of all Kernel policies.

GOV-1; GOV-2; E1.GOV-3

Climate corporate governance

Board oversight of climate corporate gov-

ernance

Kernel’s Sustainability Committee of the

Board of Directors is the body responsible for

(1) identifying, prioritizing, and advising the

Board on the Group’s strategic activities in the

areas of decarbonization, climate-related

business opportunities, development of envi-

ronmental, social and human capital, and sus-

tainability governance (hereinafter – “ESG”)

and sustainable finance; (2) critically review-

ing and considering the ESG Strategy, which

will incorporate SBTi aligned climate targets

and decarbonization pathway; (3) ensuring the

implementation of the ESG Strategy across

business operations; (4) connecting ESG and

climate corporate agendas with Kernel’s busi-

ness strategy, business objectives and capital

allocation decision.

The Sustainability Committee consists of at

least three members, appointed by the Board

of Directors upon the proposal of the Nomina-

tion and Remuneration Committee. The Chair

of the Committee appoints a secretary, who is

usually a sustainability manager within the

Group. For this reason, the Sustainability

Committee serves as an effective link between

the Board of Directors and the Executive Man-

agement Team.

The Sustainability Committee meets at least

twice a year. The purpose of such meetings is

the following:

Environmental Material Impacts, Risks and Opportunities

Value chain

Time horizon

Sustainability matter

IRO

IRO nature

Description

Upstream

Own operations

Downstream

E1 Climate change

Climate change

adaptation

Positive

impact

Actual

Enhancing climate resilience by implementing regenerative agricul-

tural practices that reduce soil erosion and improve water retention

capacity.

● -

Risk

Financial

Acute physical climate risks: Crop yield losses resulting from extreme

weather events.

● ● S

Risk

Financial

Chronic physical climate risk: Losses of productive land due to the

shifts in climatic zones

● ● L

Risk

Financial

Higher expenditure on crop protection due to increased vulnerability

to pests and diseases amid chronic climate change.

● ● M

Climate change

mitigation

Negative

impact

Actual

Generation of greenhouse gas (GHG) emissions (Scope 1,2,3).

● ● -

Positive

impact

Actual

Reducing GHG emissions and promoting carbon sequestration

through improved agricultural and land management practices.

● ● -

Risk

Financial

Climate transitional risks: Increasing spending on material assets

(OPEX) as a result of new regulatory frameworks

● L

Opportunity

Financial

Creation of new revenue streams from low-carbon practices and com-

modities, including carbon certificates, price premiums, and access to

green financial instruments.

● ● S

Energy

Positive

impact

Actual

Generation and supply of renewable energy to the grid supports local

communities and contributes to greenhouse gas (GHG) emissions re-

duction

● ● -

Risk

Financial

Increased spending on electricity as a result of new domestic regula-

tory frameworks, i.e., UA ETS

● L

Opportunity

Financial

Provision of feedstock and production of biomethane and liquid biofu-

els in response to the growing demand under the REPowerEU frame-

work.

● M

Opportunity

Financial

Reduced operating expenses and enhanced energy self-sufficiency

through the adoption of bioenergy solutions

● S

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Environmental information continued

• update on priority business opportunities re-

lated to sustainability function and climate

change

• when required, review of changes in rele-

vant policies and procedures

• when required, review and approval of stra-

tegic targets associated with decarboniza-

tion and sustainable development.

Regarding remuneration, services provided by

the Directors in their capacity as members and

the chairwoman of the Sustainability Commit-

tee include oversight of the identification and

implementation of climate-related business

opportunities, which is considered in their

fixed fees.

The Audit Committee critically reviews and

prioritizes physical and transition climate risks

as part of its responsibilities to assist the

Board of Directors in delivering its risk man-

agement responsibilities by providing a de-

scription of risks specific to Kernel, overseeing

the adequacy and effectiveness of Kernel’s

risk management system, and reviewing the

Group’s policies on risk assessment and risk

management.

Management’s role in climate corporate

governance

Kernel aims to integrate ESG and climate-re-

lated corporate agendas into its overall busi-

ness strategy and operations. The Executive

Management Team is actively engaged in the

implementation of ESG and climate action

practices and initiatives within their respective

functions, which are considered a priority at a

specific time. Kernel plans and prioritizes such

initiatives based on its vision of the Group's

role and the agricultural sector's overall contri-

bution to achieving the goals of the Paris

Agreement, as well as its position within the

international climate arena. We develop our vi-

sion based on our understanding of global dy-

namics in the areas of decarbonization and

carbon markets, complemented by continuous

dialogue with our key trade partners and major

global agriculture commodity traders.

The Chief Executive Officer plays a crucial

role in overseeing the integration of ESG and

climate-related corporate agendas into busi-

ness operations. The CEO provides a critical

review and feedback on the development of

Kernel's ESG and climate corporate strategy,

including GHG emission reduction targets, ap-

proaches to the development of the sustaina-

bility and climate corporate strategy across

operations, as well as engagement in relevant

business opportunities related to decarboniza-

tion.

The HR Director provides overall support to

initiatives related to low-carbon development.

This includes the development of climate-

related KPIs for the Executive Management

Team, which are then cascaded across each

corporate function. The head of the HR De-

partment is also responsible for communi-

cating the importance and benefits of sustain-

ability practices and climate actions within the

Group, as well as supporting their implemen-

tation from a behavioral perspective. Kernel’s

Head of Sustainability is in direct subordina-

tion to the Head of the HR department. The

Head of Sustainability is responsible for lead-

ing the development and improvement of Ker-

nel's sustainability and climate corporate func-

tion.

The Risk Committee of the Executive Man-

agement Team is responsible for identifying,

assessing, managing, and controlling key

risks, including climate-related risks.

In FY2025, Kernel has formalized an internal

strategic target for the executive management

by 2028 related to climate change, namely

“Ensuring the implementation of the Group's

low-carbon development and climate resili-

ence projects”. This target is further cascaded

across relevant departments through annual

KPIs. The results of the annual evaluation of

progress towards KPIs and the overall perfor-

mance of employees directly impact remuner-

ation decisions, specifically the review of

wages and the size of bonuses.

E1-1

Transition plan for climate change

mitigation

In 2023, Kernel finalized the "Climate corpo-

rate governance and low-carbon pathway"

project in partnership with EBRD and EY. The

project covered an assessment of climate-re-

lated risks and opportunities (aligned with

TCFD recommendations), a gap analysis of

climate governance, and a feasibility review of

mitigation and adaptation measures. Based

on these results, Kernel developed a compre-

hensive Program of Activities that sets out or-

ganizational and investment measures to

strengthen climate governance and enhance

performance. The Program spans key areas

including agribusiness, production, energy,

carbon offsets, supply chain, GHG account-

ing, risk management, strategy, governance,

and sustainable finance. The Program was re-

viewed by the Sustainability committee, priori-

tizing actions and reflecting them in respective

KPIs for executive and operational managers.

It now serves as the cornerstone of Kernel’s

long-term emission-reduction strategy,

aligned with SBTi FLAG guidance and sup-

porting the Group’s planned climate transition

pathway.

However, due to the ongoing Russian invasion

of Ukraine and related uncertainties, the

Group has not yet adopted its transition plan

for climate mitigation, particularly in relation to

setting GHG emissions reduction targets. The

timing of adoption remains contingent on ex-

ternal wartime developments. Nevertheless,

the Group has established its ESG strategy

and continues to advance initiatives on

broader sustainability topics beyond carbon,

ensuring progress in areas such as sustaina-

ble production, resource efficiency, social re-

sponsibility, and governance.

E1.SBM-3

Climate risks and opportunities

Approach to climate risk identification and

management

Kernel conducted a comprehensive resilience

analysis to assess how climate risks could be

reflected in the enterprise value over the short-

, medium-, and long-term time horizons.

• Short-term (up to 1 year): Evaluation of ex-

posure to climate impact in the short-term

perspective aligns with the annual opera-

tional business planning, reflecting the dy-

namics of the commodities market. In Farm-

ing, Kernel continuously monitors and ana-

lyzes climate parameters throughout the

crop cycle (land preparation, fertilization,

plantation, plant protection, and harvest-

ing). Key indicators include precipitation,

temperature, atmospheric pressure, sum of

active temperatures, and soil moisture re-

serve (SMR), with data sourced from the

Group’s own meteorological stations. Ker-

nel also uses the normalized difference veg-

etation index, also known as NDVI, from

satellite databases to assess and predict

yields by estimating the density of green

coverage on land.

• Medium-term (1 to 5 years): Scientific mod-

eling indicates a gradual shift in Ukraine’s

natural zones (woodlands, forest-steppe,

steppe) northwestward over the next dec-

ade. For this horizon, Kernel aligns climate

risk assessment with 5-year financial mod-

eling. Scenarios account for acute climate

events, which might have a significant neg-

ative impact on harvest. Kernel's assess-

ment of medium-term climate risks shows

that acute climate events have the most im-

pact on oilseed crops, namely sunflower.

The Group already has experience in adapt-

ing to these risks through changes in the ge-

ographic location of the land bank to more

suitable areas.

• Long-term (5 to 10 years): Kernel relies on

the Coupled Model Intercomparison Pro-

ject models (CMIP6) to evaluate long-term

climate dynamics (reference point: 2051–

2055). While the Group does not undertake

business planning over such extended hori-

zons, these projections inform future deci-

sion-making, particularly in relation to M&A

opportunities.

The overall approach to evaluating climate

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Environmental information continued

risks and their financial impacts is built on the

climate change information provided by the

Regional Climate Models, specifically CMIP6

Projections using the SSP 2.6-4.5 scenario,

(referred to as “Net Zero 2050” or “hard”); and

the SSP 8.5 scenario (referred to as “Nation-

ally Determined Contributions” or “soft”). This

allows us to understand the dynamics of cli-

mate change impact across Kernel's landbank

in the long-term perspective.

Relevant parameters of these scenarios are

used to stress-test Kernel's financial model,

allowing the Group to evaluate exposure to

long-term climate change and quantify the

monetary impact, particularly on EBITDA.

Transitional climate risks are also included in

the model, reflecting potential additional ex-

penditures under both Ukrainian and Euro-

pean carbon regulations.

The interconnection between climate, physi-

cal, and transitional risks is linked to the as-

sumption that SSP 2.6-4.5 scenarios would

imply that carbon regulations will be tightened

significantly. It will significantly impact the

Group’s performance, but the Group will be

less vulnerable to physical risks. In contrast,

the SSP 8.5 scenario suggests that carbon

regulations will be tightened moderately, with

a soft impact on the Group’s performance.

Still, in turn, the Group will be more exposed

to physical risks.

Monitoring of physical chronic climate risks

is based on the Group's practical observations

and analysis of available agrometeorological

research on changes in Ukraine's climate

zones and yield dynamics. To that end, Ker-

nel's business analysts conduct a regular

analysis of harvest results from both Kernel

and other agricultural companies in Ukraine,

comparing these indicators across geographic

regions. This enables the identification of cli-

mate patterns and tendencies across the land

bank, which are used to inform long-term stra-

tegic decisions on asset allocation. Such deci-

sions are made at the Executive Management

Team level or the level of the Board of Direc-

tors if the monetary implication of risk exceeds

the established substantial strategic impact

threshold.

The risk of acute climatic events resulting in

decreased yields is a basic risk for the agricul-

ture business. Within Kernel's risk manage-

ment framework, this risk is reflected as

“Weak harvest in Ukraine”, which is typically

included in the Group’s top ten risks. Likewise,

the Group's financial modeling provides for

conservative basic assumptions of reduced

yields due to the impacts of acute climate

Food and Agriculture Organization of the United Nations, GAEZ Data Portal

impacts. In addition, acute climate physical

risks also affect Kernel's infrastructure since

extreme weather conditions would impact

farming business across the whole country

(impact on Kernel's supply chain and trading

operations), leading to decreased capacity op-

erations of the Group's silos and oilseed pro-

cessing plants.

Kernel's sustainability function undertakes the

identification of climate transition risks

through the ongoing monitoring of develop-

ments in domestic and EU carbon regulations.

Material transitional risks are evaluated in

terms of their monetary impact, together with

financial and business analytics. The evalua-

tion of climate transitional risks is based on an

analysis of the Network for Greening the Fi-

nancial System (NGFS) scenarios of carbon

prices within the EU ETS and in Ukraine. The

analysis of these scenarios and the financial

implications of climate transition risks, as well

as information on key drivers of these risks

(i.e., developments in EU and domestic cli-

mate regulations), are updated annually.

Assessment of material climate-related

risks and anticipated financial effects

Chronic physical risks

For Kernel's operations, chronic physical cli-

mate risks are relevant in both long-term stra-

tegic decisions on asset location and the im-

pact on yields of key crops. Analysis of the

overall dynamics in the climate system across

Ukraine's territory demonstrates a gradual

shift in the boundaries of natural zones (wood-

lands, forest-steppe, steppe) towards the

northwest, reducing the extent of suitable ar-

eas and affecting yields. Lower yields trans-

late into potential EBITDA losses not only for

the Farming segment but also indirectly for

Oilseed Processing, Infrastructure and Trad-

ing.

To estimate potential long-term decrease in

yields, we apply projections of Global Agro-

Ecological Zoning for Ukraine, prepared by the

Food and Agriculture Organization

(FAO)

.These projections result from climate

scenario Ensemble (average of 5 climatic

models) for RCP 2.6 and RCP 8.5 for the pe-

riod 2040-2070.

Acute physical risks

We evaluate acute physical risks using the

Regional Climate Model (RCM) of climate dy-

namics in Ukraine. The RCM collects data on

single levels from numerous experiments,

models, domains, resolutions, ensemble

members, time frequencies, and periods com-

puted over several regional domains all over

the World, particularly in the CMIP6 of the

Coordinated Regional Climate Downscaling

Experiment (CORDEX) framework. This anal-

ysis indicates that the frequency of acute

events such as droughts is expected to rise in

the northern parts of Kernel’s land bank under

the SSP 8.5 scenario in the long term.

To estimate the potential financial impact of

acute climate risks, we use the 2024 impacts

of heatwaves and drought during the pollina-

tion period on harvest as a reference point and

translate them into potential losses in EBITDA

for Farming, Oilseed processing, Infrastruc-

ture and Trading. Kernel also plans a more in-

depth analysis of historical harvest perfor-

mance and its correlation with extreme

weather events, enabling the assessment to

be further tailored to on-the-ground data.

Transition risk: emerging carbon regula-

tion in Ukraine (carbon tax and Emission

Trading Scheme)

Ukraine’s carbon tax applies to Kernel’s com-

bined heat and power plants that generate

electricity from sunflower husk, a by-product of

the oilseed crushing process recognized un-

der Annex IX.A of the EU RED II Directive as

an advanced biofuel feedstock. The nature of

these risks lies in the fact that the EU’s posi-

tion on the combustion of biomass and pro-

duction of advanced biofuels contradicts

Ukraine's regulation on Monitoring, Verifica-

tion, and Reporting (MRV), considering GHG

emissions of biomass combustion to be zero.

Ukraine's carbon tax increased from 10 UAH

to 30 UAH per ton of CO

in 2021. Although

the rate remained unchanged in FY2025, we

anticipate that it would grow in the medium-

term perspective to become more aligned with

the average price of a ton of CO

in the EU

(these expectations are based on Ukraine's

commitments under the EU Association

Agreement and its candidacy to the EU, as

well as Ukraine's possible response to EU

CBAM requirements). Kernel evaluates the

risk of the expected growth in carbon tax over

the following years, based on the average car-

bon tax value in EU member countries (EUR

20-120 per tCO

), which would result in signif-

icant annual expenditures.

Regarding Ukraine's national emission trading

scheme (UA ETS), the key risk for Kernel is

the significant increase in electricity price,

which would include the cost of carbon, when

UA ETS is finalized and launched. We use the

NGFS (Network for Greening the Financial

System) climate modeling of the carbon price

dynamics in Ukraine to estimate potential fi-

nancial impacts.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Environmental information continued

The financial impact of this transitional climate

risk is estimated as a range of combined addi-

tional expenditure stemming from increased

carbon tax and electricity price by 2030, where

the minimum figure is the projections under

the SSP 8.5 and the maximum figure – under

the SSP 2.6-4.5 scenario. As of FY2025, the

carbon price in Ukraine is projected to be EUR

1.1 per tCO

under the SSP 8.5 scenario and

increase up to EUR 231.2 per tCO

under the

SSP 2.6-4.5 scenario.

Transition risk: emerging carbon regula-

tion in EU (increasing cost of fertilizers)

EU's ‘Fit for 55’ package (under which the EU

seeks to cut its emissions by at least 55% be-

fore 2030) includes provisions on the ETS,

namely the target to reduce emissions by 61%

before 2030 and to reduce the number of free

allowances by 4.2% each year. GHG emis-

sions from the production of nitric acid, ammo-

nia, and hydrogen are covered by the EU ETS.

Considering that nitric acid, ammonia, and hy-

drogen are intermediates in the production of

NPK fertilizers, it is expected that the price of

EU-sourced fertilizers will increase following

the implementation of the Fit for 55 provisions.

The financial impact of this transitional climate

risk is estimated to be a range of additional ex-

penditures stemming from the increased cost

of N-fertilizers, with the minimum figure pro-

jected under the SSP 8.5 scenario and the

maximum figure under the SSP 2.6-4.5 sce-

nario. As of FY2025, if produced in the EU, the

price of fertilizers would reflect the price of EU

allowances on GHG emissions, which are pro-

jected to increase up to EUR 203.7/tCO

un-

der the SSP 8.5 scenario, and up to EUR

283.7/tCO

under the SSP 2.6-4.5 scenario by

2030 (according to NGFS climate data projec-

tions). In the case of domestically produced

fertilizers, their price would account for a pro-

jected carbon price in Ukraine as indicated

above.

Assessment of material climate-related op-

portunities

Bioenergy. Kernel explores opportunities in

the production of biofuels, namely biomethane

produced from plant-based feedstocks such

as silage, corn, or crop residue. Demand for

such energy sources is increasing in both

Ukraine and the EU, supported by the REPow-

erEU initiative. Recent developments in

Ukrainian legislation further support this op-

portunity by allowing biomethane injection into

the national gas transportation system and by

establishing a renewable gas guarantees of

origin (RGGO) registry for biomethane pro-

ducers.

Diversification of financial assets with sus-

tainability- and climate-linked finance. We

aim to effectively access markets of sustaina-

bility- and climate-linked finance, both in terms

of receiving specialized interest rates on loans

(linked to specific covenants) and project fi-

nance.

International carbon markets. Since 2024,

Kernel has been in the process of developing

grounds for accessing voluntary carbon mar-

kets, namely through the methodology

VM0042 that quantifies the greenhouse gas

(GHG) emission reductions and soil organic

carbon (SOC) removals resulting from the

adoption of improved agricultural land man-

agement, as well as intergovernmental carbon

market mechanisms provided by Article 6.2

and Article 6.4 of the Paris Agreement. Explor-

ing carbon offset markets is closely tied to in-

depth analysis of global market incentives for

decarbonizing the supply chains of agricultural

commodities, fostering relevant dialogue with

reputable international organizations, and ex-

changing knowledge with key trading partners.

Efficiency improvement through carbon

farming practices. The opportunity lies

around the system of farming practices that

promote the accumulation of soil organic car-

bon, reduction of GHG emissions from tillage

and nitrification, and improving soil health and

biodiversity. These practices are commonly

referred to as regenerative, or carbon farming,

which is one of the key pillars of the Group’s

corporate climate strategy. We believe that

this represents a long-term direction of devel-

opment, which is expected to have a visible

impact on capitalization. Over the last several

years, this subject has evolved from purely

theoretical discussion to practical considera-

tion during operational planning and testing.

MDR-A; E1-3

Actions and resources

Kernel’s decarbonization strategy focuses on

both its Farming and Oilseed Processing seg-

ments.

Adoption of regenerative agriculture prac-

tices

Material decarbonization actions are concen-

trated in the Farming segment, as crop pro-

duction accounts for the majority of Kernel’s

GHG emissions. The emission reductions are

achieved through carbon farming practices,

also known as regenerative agriculture, in-

cluding reduced tillage, the use of nitrification

inhibitors, and the introduction of cover crops

into crop rotations. According to prior estima-

tions, such practices can potentially have the

following emission reduction capacity: (1) nitri-

fication inhibitors up to 10% reduction, (2)

cover crops up to 31% reduction, and (3) re-

duced tillage up to 85% reduction. More than

90% of Kernel’s land bank is already cultivated

using reduced tillage technology.

Implementation of precision farming tech-

nologies

Emission reduction efforts go hand in hand

with enhancing operational efficiency. Kernel

has been advancing the principles of precision

farming, and since 2023, has introduced zonal

management within its fields. By identifying

homogeneous productivity zones and tailoring

agricultural practices to each, the Group is

able to optimize tillage and input application

rates. These decisions are informed by de-

tailed soil characteristics, climate, and terrain

data, agrochemical analysis, and other varia-

bles, ensuring both greater efficiency and re-

duced environmental impact.

Scaling renewable energy use

In the Oilseed Processing segment, the Group

seeks to leverage its capacity for green elec-

tricity production from biomass (sunflower

seed husk) that previously was sold to the na-

tional energy grid in full volume. At the Poltava

OEP, this electricity is now used to power bot-

tled oil production, significantly reducing the

production’s carbon footprint – marking an-

other step toward embedding sustainable

practices into its production cycle. In the re-

porting period, Poltava OEP also completed

external verification confirming the direct con-

sumption of green electricity from its CHP.

Collaboration plays a key role in the Group’s

decarbonization efforts. In FY2025, Kernel

was selected as a beneficiary of the Jumbo

Impact Fund, an initiative launched by our cli-

ent, Jumbo Supermarkten, to reduce GHG

emissions in supply chains through co-funded

projects. Under this program, Kernel received

a co-financing of USD 328 thousand to imple-

ment a low-carbon sunflower seed processing

project for bottled oil production at Poltava

OEP. Building on this success, Kernel intends

to scale the Poltava OEP model across its

other oilseed processing plants, with the po-

tential to reduce up to 50% of Scope 2 emis-

sions through direct consumption of green

electricity from CHPs. The remaining energy

consumption, related to Scope 2 electricity us-

age, can potentially be offset by allocating

self-generated renewable electricity for inter-

nal operations or sourcing external low-carbon

electricity through market instruments such as

Corporate Power Purchase Agreements

(PPAs).

MDR-T; E1-4

Targets

Kernel has set climate-related targets that in-

tegrate decarbonization, sustainable agricul-

ture, and the expansion of renewable energy.

At the Poltava OEP, we are advancing the

validation of a science-based target (SBTi)

for Scope 2 emissions, ensuring our reduc-

tion pathway is consistent with global climate

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Environmental information continued

goals.

In agriculture, we are committed to regenera-

tive practices that improve soil fertility, pre-

serve biodiversity, and reduce greenhouse

gas emissions: we aim to reduce the share

of land under plowing from 25% in 2020 to

10% by 2030, while introducing cover crops

and siderats on 30% of land previously

dedicated to winter wheat. To strengthen

resource efficiency and support innovation, we

aim to implement a technology manage-

ment system based on precision farming

polygons across 100% of our land bank by

2030, enabling data-driven decisions that op-

timize yields and minimize environmental im-

pacts.

Complementing these actions, we aim to

have at least 50% of the electricity used by

our assets come from our own renewable

generation by 2030, advancing our transition

to low-carbon energy, reducing reliance on

fossil fuels, and lowering operational risks

linked to energy volatility. With these

measures, we are dedicated to delivering

measurable climate benefits while securing

long-term competitiveness and sustainability

of the Group.

Metrics

E1-5

Energy consumption and mix

Energy consumption

terajoules

FY2023

FY2024

FY2025

Non-renewable fuel consumed

2,381.2

1,895.0

1,593.6

Natural gas

1,194.6

717.0

489.6

Oilseed Processing

112.0

212.2

251.5

Infrastructure and Trading

1,031.8

486.3

234.4

Farming

50.8

18.5

3.7

Other

0.0

Diesel

1,113.1

1,099.6

1,042.2

Oilseed Processing

3.6

9.1

13.7

Infrastructure and Trading

50.3

28.8

20.6

Farming

1,051.2

1,056.6

1,002.7

Other

7.9

5.2

Petroleum

37.9

43.4

41.0

Oilseed Processing

0.6

1.0

1.1

Infrastructure and Trading

4.2

5.8

5.2

Farming

32.4

29.2

25.8

Other

0.7

7.4

8.8

LNG

35.6

35.0

20.8

Oilseed Processing

0.2

Infrastructure and Trading

1.7

2.0

1.4

Farming

33.7

32.2

18.9

Other

0.5

0.3

Renewable fuel consumed (sunflower seed husk)

5,189.2

7,028.0

7,113.2

Purchased electricity

581.1

628.4

471.8

Oilseed Processing

413.5

457.4

325.3

Infrastructure and Trading

127.3

128.2

110.8

Farming

38.0

40.4

34.0

Other

2.4

1.7

Heating

414.5

766.6

534.4

Oilseed Processing

0.0

Infrastructure and Trading

0.0

1.5

1.1

Farming

0.0

Other

414.5

765.1

533.2

Electricity from own generation

203,9

232,3

530,3

Electricity sold to the grid

631.7

1,094.3

826.2

Total energy consumption

8,138.2

9,456.0

9,418.6

Oilseed processing

5,291.3

6,846.0

7,409.1

Infrastructure and Trading

1,215.3

652.6

375.2

Farming

1,206.1

1,176.9

1,085.1

Other

425.6

780.5

549.2

Note 1: Any discrepancies between data in this and previous reports (FY2024 and FY2023) are associated with further improvements in the accounting system,

clarifications of raw data, alignment of relevant conversion factors and other corrections.

Energy intensity indicators

megajoules

FY2023

FY2024

FY2025

Energy consumed per ton of sunflower seed crushed

2,058.7

2,279.6

2,145.6

Energy consumed per ton-% of grain dried

64.3

64.5

66.3

Energy consumed per ton of harvested grain

632.2

629.5

640.0

Energy intensity based on net revenue, per USD million

2.4

2.6

2.3

Note 1: Any discrepancies between data in this and previous reports (FY2024 and FY2023) are associated with further improvements in the accounting system,

clarifications of raw data, alignment of relevant conversion factors and other corrections.

The revenue figure used is USD 4,115 million (in FY2024 –

USD 3,581 million), consistent with the revenue reported in Kernel's Consolidated

Statement of Profit or Loss in its consolidated financial statements.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Environmental information continued

E1-6

Scope 1, Scope 2 and Scope 3 greenhouse gas (GHG) emissions

Key GHG emission indicators

thousand tCO2e

FY2023

FY2024

FY2025

Scope 1

271.7

237.2

220.0

by GHG

128.2

88.5

50.2

23.8

23.9

18.5

119.7

124.8

151.3

by business segment

Oilseed Processing

6.6

12.7

15.2

Infrastructure and Trading

62.2

30.0

15.1

Farming

202.3

193.6

188.5

Fuel use

91.7

90.0

84.7

Fertilizers application

109.5

114.6

141.4

Changes in stock of soil carbon

- 25.5

- 37.9

- 58.4

Cattle methane from enteric fermentation

26.7

26.9

20.8

Other

0.7

1.0

1.1

Biogenic (combustion of sunflower husk)

509.8

690.5

698.9

Scope 2 (Location based)

92.5

123.5

89.7

Scope 2 (Market based)

132.1

152.8

102.9

Scope 3

2,141.5

2,508.3

1,631.6

Cat.1. Purchased goods and services

605.1

922.3

864.6

Cat.2. Capital goods

4.3

8.6

7.3

Cat.3. Fuel- and energy-related activities (not incl.in S.1-2)

59.7

57.2

50.1

Cat.4. Upstream transportation and distribution

375.2

265.1

150.5

Cat.5. Waste generated in operations

4.5

6.6

4.0

Cat.9. Downstream transportation and distribution

1,088.5

1,219.6

523.0

Cat.10. Processing of sold products

3.5

28.1

31.9

Cat.12. End-of-life treatment of sold products

0.8

0.7

0.2

Note 1: Any discrepancies between data in this and previous reports (FY2024 and FY2023) are associated with further improvements in the accounting system, clari-

fications of raw data, alignment of relevant conversion factors and other corrections.

Scope 3 GHG emissions of Avere Commodities SA

thousand tCO2e

FY2023

FY2024

FY2025

Scope 3

741.8

777.1

2,161.4

Cat.1. Purchased goods and services

657.7

735.9

2,078.7

Cat.9. Downstream transportation and distribution

58.3

29.8

67.6

Cat.10. Processing of sold products

25.8

11.5

15.1

Note 1: In line with the consolidation principles of the ESRS framework, the Group estimated GHG emissions of Avere Commodities SA fo

r the first time in the reporting

period. Material GHG emissions are considered to be associated with the trading activities, namely the following Scope 3 categories: Category 1 “

Purchased goods and

services”, Category 9 “Downstream transportation and distribution”, and Category 10 ‘Processing of sold products”

. Estimations were made using proxy emission factors

from sources recognized by the GHG Protocol, such as Ecoinvent and CEDA by Watershed databases, as well as Kernel’s data. The

Group seeks to develop this

accounting in future reporting periods

Key GHG emissions intensity indicators (Scope 1&2)

FY2023

FY2024

FY2025

GHG emissions per volume of harvested crop, kg CO2e/ t of yields

Corn

37.4

60.3

63.2

Sunflower

158.3

144.4

140.9

Wheat

39.7

47.9

53.5

Rapeseed

374.9

535.1

276.7

Soybean

94.7

66.8

101.9

GHG emissions per area of sowed crop, kg CO2e/ ha

Corn

419.8

484.2

604.1

Sunflower

472.7

419.0

411.7

Wheat

288.3

309.1

331.4

Rapeseed

1,010.0

1,258.5

768.1

Soybean

271.1

145.6

263.1

GHG emissions per sunflower seeds processed, kg CO2e/ t of seeds

28.2

27.0

30.8

GHG emissions per net revenue (location-based), kg CO2e/USD million

111.7

107.6

89.0

GHG emissions per net revenue (market-based), kg CO2e/USD million

127.2

118.8

95.8

Note 1: Any discrepancies between data in this and previous reports (FY2024 and FY2023) are associated with further improvements in the accounting system, clari-

fications of raw data, alignment of relevant conversion factors and other corrections.

The revenue figure used is USD 4,115 million (in FY2024 -

USD 3,581 million), consistent with the revenue reported in Kernel's Consolidated

Statement of Profit or Loss in its consolidated financial statements.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Environmental information continued

E1-8

Internal carbon pricing

For internal carbon pricing, Kernel uses two

sources of indications, namely (1) the Ukrain-

ian carbon tax and (2) actual and projected

prices of allowances within the EU Emission

Trading Scheme (EU ETS). Projected prices

of EU ETS allowances are estimated in line

with the scenarios of climate impact dynamics

provided by the Network of Central Banks and

Supervisors for Greening the Financial Sys-

tem (NGFS). As of the end of FY2025, the ap-

plied price of carbon was estimated at USD

203.7, which is the projected price of one EU

ETS carbon allowance by 2030 under the

NGFS ‘Nationally Determined Contributions’

(soft) scenario of climate impact dynamics.

Under the NGFS ‘Net Zero 2050’ (hard) sce-

nario of climate impact dynamics, the price of

an allowance is projected to increase up to

USD 283.7 by 2030. The Group applies these

carbon price indications in the annual assess-

ment of climate transitional risks, specifically

to conduct driver analysis of climate change

factors on the Group's EBITDA stress testing,

as well as to estimate the financial impact of

climate-related business opportunities. Re-

sults of such assessments are used in the de-

cision-making regarding risk management

and appropriate response to arising opportu-

nities. The Group’s internal carbon pricing ap-

proach covers 100% of gross Scope 1 and

Scope 2 emissions.

MDR-M

Climate change accounting methodology

Energy consumption and mix

For the calculation of energy consumption, the

Group consolidated data from its business

segments and subsidiaries, primarily including

information from supplier invoices and meter

readings. Total energy consumption for own

operations consists of fuel usage at the as-

sets, fuel consumption in both owned and

leased agriculture machinery and vehicles,

and the use of purchased, self-generated en-

ergy and electricity sold to the grid (including

heating). Self-generated electricity is reported

as “Renewable fuel consumption”, as this is

electricity generated from biomass (sunflower

seed husk). Each business segment and sub-

sidiary in the Group reports energy consump-

tion data by energy type. Categories of con-

sumed fuel include natural gas, diesel, petro-

leum, and LNG.

Scope 1, Scope 2, and Scope 3 greenhouse

gas (GHG) emissions

Kernel accounts for GHG emissions from its

operational activities in Ukraine, adhering to

the IPCC Guidelines for National Greenhouse

Gas Inventories and Greenhouse Gas Proto-

col Guidance.

Scope 1 emissions include direct GHG

emissions associated with the Group's opera-

tions of fossil fuel stationary and mobile com-

bustion, cattle farming, farmland cultivation

(soil carbon stock change), and fertilizer appli-

cations. The Group’s total biogenic GHG

emissions, generated from the combustion of

sunflower seed husk and changes in organic

carbon stocks, are reported separately. Emis-

sions associated with farming operations are

reported in the financial year, when the agri-

cultural products were harvested, using data

on mineral and organic fertilizers applied dur-

ing the growth period in crops.

We continue improving prototype operational

accounting of GHG emissions from farming

operations across key crops (winter wheat,

corn, sunflower, winter rapeseed, and soy-

bean) and individual fields (Kernel’s whole

landbank, comprising approximately 5 thou-

sand fields). The main purpose of such an ap-

proach is to reflect that the landbank is not ho-

mogeneous in terms of soil characteristics, ag-

roclimatic conditions, and, therefore, agricul-

tural technology and application rates, which

in turn are tailored to crop rotation. For that

reason, it’s correct to calculate the carbon

footprint of farming operations (kgCO

/t of

yield and kgCO

/ha) for each field rather than

on average for the whole landbank. This ap-

proach also enables the demonstration of an-

nual carbon removals (shown as negative val-

ues) resulting from changes in tillage prac-

tices, such as shifting from conventional to re-

duced tillage, sowing cover crops, and man-

aging crop residue. We are working to auto-

mate such accounting by integrating the meth-

odology into existing ERP systems and ensur-

ing traceability of the carbon footprint of each

batch of grain (originating from a particular

field) across the value chain. For these pur-

poses, we seek to ensure minimization of data

uncertainty: calculations of changes in soil

carbon due to tillage are performed using

“measure and model” and “measure and re-

measure” approaches (aligned with the Veri-

fied Carbon Standard methodology, VM0042)

that account for the availability of laboratory

agrochemical data on soil organic carbon.

This approach will enable us to monitor the

field-related carbon footprint of our commodi-

ties (in kgCO

e/t of yield) and operations (in

kgCO

e/ha) from sowing to harvest. By doing

so, the Group can better evaluate the overall

potential for decarbonizing farming opera-

tions, prioritize geographic locations and in-

tensity of low-carbon practices, and achieve

GHG emissions reductions with greater mon-

etary efficacy.

Scope 2 (location-based) emissions refer to

GHG emissions generated from energy (elec-

tricity and heating) that the Group purchases

from the national grid. The average specific

emission factor for electricity production in

Ukraine is calculated as the ratio of total emis-

sions from electricity production in Ukraine

(source: National Inventory Report to

UNFCCC) to energy production itself (source:

Ministry of Energy and Coal Mining).

Scope 2 (market-based) emissions refer to

GHG emissions from energy (electricity and

heating) consumed, calculated based on

emission factors from specific electricity con-

tracts. Carbon intensity of heating, both loca-

tion and market-based approach, is the same

due to a vertically integrated market and heat-

ing monopoly supply.

Scope 3. To calculate Scope 3 emissions,

Kernel applies the methodology provided by

the GHG Protocol Corporate Value Chain

(Scope 3) Accounting and Reporting Stand-

ard. We use secondary data to calculate 100%

of our Scope 3 emissions across all 15 cate-

gories:

• Purchased goods and services: This cate-

gory includes three material types of pur-

chased products: (1) grains and oilseeds,

(2) agricultural machinery, and (3) fertiliz-

ers. For the purchased grains, the account-

ing approach lies in the application of car-

bon intensity factors of Kernel's own crops

to the volumes of the purchased grains. For

the purchased agricultural machinery, a

spend-based method was used, where

emission factors were calculated based on

the carbon intensity of the net revenue of

machinery producers (material producers

included CNH Industrial, John Deere, MAN,

and Palfinger). For nitrogen fertilizers pur-

chased by Kernel, emissions were calcu-

lated based on nitrogen content and sector-

average emission factors (kg CO2e/kg N).

To calculate this category of emissions for

Avere Commodities SA, the global market

activity emissions factors sourced from

Ecoinvent database were applied for the fol-

lowing commodities: palm oil, palm meal,

rapeseed oil, rapeseed meal, soy oil and

soy meal. For corn, sunflower, wheat, rape-

seed, soybean, sunflower oil, and sunflower

meal Kernel’s operational emission inten-

sity data for respective years were applied.

• Capital goods: Kernel accounted for the

emissions associated with the production of

metal and concrete, used for the construc-

tion of assets. The Group applied material

use emission factors for metal and concrete

from the UK Department of Environment,

Food and Rural Affairs (DEFRA).

• Fuel-and-energy-related activities (not in-

cluded in Scope 1 or 2): To calculate this

category of emissions, Kernel used primary

data on energy consumption and applied

Well-to-tank indicators (Activity A) from

DEFRA; transmission and distribution

losses data for Ukraine (Activity C); as well

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Environmental information continued

as average heat rate of local thermal power

plants (Activity B) to calculate emissions

across three types of activities: Activity A

(23,686.2 tons CO2e), Activity B (14,938.8

tons CO2e), Activity C (11,507.5 tons

CO2e).

• Upstream transportation and distribution:

This category includes emissions from the

transportation of purchased goods and in-

ternal logistics (i.e., transportation of grains

from fields to silos and from silos to termi-

nals). We applied the Rail transportation

and Truck transportation emission factors

from CEDA 2024 by Watershed.

• Waste generation in services: For this cate-

gory, Kernel used primary data on waste

generation and approaches to waste utiliza-

tion, including treatment of wastewater dis-

charged to WWTPs. The Group applied the

Waste disposal emission factors from

DEFRA.

• Business travel: This category of emissions

is not material in comparison to the total vol-

ume of Scope 3 GHG emissions. We evalu-

ated this category of emissions and con-

cluded that it remains immaterial for Kernel

operations (less than 1 tCO

e).

• Employee commuting: This category of

emissions is not material in comparison to

the total volume of Scope 3 GHG emis-

sions. We evaluated this category of emis-

sions and concluded that it remains imma-

terial for Kernel operations (less than 1

tCO

e).

• Upstream leased assets: Kernel does not

have leased assets within its operations.

• Downstream transportation and distribution:

This category includes the emissions asso-

ciated with the marine freight of sold prod-

ucts (grain and oil) – from the combustion of

fuel by ships, mostly Panamax class. Emis-

sion factors for water transportation,

sourced from CEDA by Watershed data-

base, were applied. The same approach

was used for calculating this category of

emissions for Avere Commodities S.A.

Processing of sold products: This category

includes emissions associated with the re-

fining of sunflower oil. Unrefined sunflower

oil purchased from Kernel typically under-

goes a refining process at the buyer's facili-

ties. To calculate such emissions, the

Group used the average electricity effi-

ciency factor for its own refining process

and applied grid emission factors for each

country where sunflower oil was exported

(The IFI Dataset of Default Grid Factors).

The same approach was applied for calcu-

lating this category of emissions for Avere

Commodities SA Avere, specifically for sun-

flower oil, palm oil, rapeseed oil, and soy oil.

• Use of sold products: Kernel sells final prod-

ucts, including grains, sunflower oil, and an-

imal meal. In case the sold products are

used in the energy sector, the sunflower oil-

related biodiesel component of fuel is con-

sidered zero-carbon.

• End-of-life treatment of sold products: this

category includes the emissions associated

with the treatment of the waste sold. Kernel

used primary data on the waste sold and its

utilization approaches. The relevant Waste

disposal emission factors from DEFRA

were applied. However, this category of

emissions is not material in comparison to

the total volume of Scope 3 emissions.

• Downstream leased assets: This category

of emissions is not relevant to Kernel's busi-

ness, as the Group does not provide leased

assets.

• Franchises: This category of emissions is

not relevant to Kernel's business as the

Group neither acts as an investor nor does

it have shares in emission-related portfolios.

• Investments: This category of emissions is

not relevant to Kernel's business as the

Group neither acts as an investor nor does

it have shares in emission-related portfolios.

No significant events or changes in circum-

stances related to GHG emissions occurred in

the reporting period.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Environmental information continued

E2 Pollution

In this section:

• Pollution of air, water and soil

• Substances of concern and very high con-

cern

E2.IRO-1

Pollution-related impacts, risks and

opportunities

Agricultural and processing activities have a

negative environmental footprint due to their

interaction with natural systems and the use of

resources. Kernel pays close attention to

these impacts, recognizing pollution-related

effects arising across its core operations. Pol-

lution-related impacts have been identified

through an impact screening process. As part

of this process, we mapped our business seg-

ments - farming, oilseed processing, infra-

structure, and trading, analyzing where inter-

actions with nature occur and where emis-

sions to air, water, and soil are generated. The

assessment also covered the identification of

transitional and physical risks and opportuni-

ties associated with these impacts. To ensure

a comprehensive understanding of our pollu-

tion-related IROs, we consulted internal sub-

ject matter experts, including environmental

and operational teams. Although affected

communities were not directly involved in the

pollution materiality assessment, their per-

spectives were indirectly considered through a

review of environmental complaints received

via the grievance mechanism. These engage-

ments helped validate and refine the identifi-

cation of relevant IROs.

For further details on the methodological ap-

proach applied under the DMA, see pages 48-

49. The table below summarizes the material

IROs identified for E2 Pollution, including their

location in the value chain and the timeframe

over which associated risks, opportunities,

and potential impacts, both positive and nega-

tive, may materialize.

MDR-P; E2-1

Policies

Kernel recognizes the importance of address-

ing environmental pollution and is committed

to protecting air, clean water, and healthy soils

through the application of best practices and

technical solutions. These ambitions are re-

flected in our Environmental Protection policy.

The policy places a strong emphasis on pre-

venting and mitigating environmental impacts.

We systematically monitor key environmental

indicators related to pollution to ensure the re-

sponsible use of natural resources and contin-

uous improvement in environmental perfor-

mance. To prevent incidents and emergen-

cies, we conduct regular technical inspections

of our equipment and implement preventive

measures. In the event of an industrial or nat-

ural emergency, Kernel acts immediately to

stop any processes causing significant envi-

ronmental impact, contain pollution, and ad-

dress the consequences. Our response

measures are designed to minimize harm to

both people and the environment through

rapid reaction and remediation efforts. We ex-

pect our suppliers to uphold the same level of

environmental responsibility as outlined in our

Supplier Code of Conduct.

See Annex 3 – Key Policies and Procedures

for a detailed description of all Kernel policies.

MDR-A; E2-2

Actions and resources

Our commitment remains focused on prevent-

ing and reducing emissions using best prac-

tices and technical solutions.

Monitoring of environmental impacts and

ecological compliance

Our management approach towards regula-

tion of the impacts of our operations on the en-

vironment is built on two pillars, namely (1)

continuous monitoring of key environmental

performance indicators to be aligned with per-

mit requirements and to pass environmental

inspections successfully, and (2) the use of

environmental impact assessment (EIA)

and strategic environmental assessment

(SEA) procedures in line with national legisla-

tion, for planned activities that pose a high risk

of significant environmental impacts.

Mechanisms of environmental monitoring are

practically implemented through a group-wide

environmental management system (EMS),

which is certified with the ISO 140001

Environmental Material Impacts, Risks and Opportunities

Value chain

Time horizon

Sustainability matter

IRO

IRO nature

Description

Upstream

Own operations

Downstream

E2 Pollution

Pollution of air

Negative

impact

Actual

Direct emissions of air pollutants result from combustion-powered ma-

chinery, oilseed processing and grain handling, fertilizer and pesticide ap-

plication, and other agricultural operations.

● -

Pollution of water

Negative

impact

Actual

Agricultural operations can degrade water quality through discharges and

chemical runoff from fertilizer and pesticide applications, as well as from

oilseed processing. This can result in nutrient loading, leading to eutroph-

ication and oxygen depletion in water bodies.

● -

Positive

impact

Actual

Adoption of regenerative agricultural practices improves soil structure and

water infiltration and retention, thus preventing chemical runoff and nitro-

gen leaching.

● -

Pollution of soil

Negative

impact

Actual

Direct soil pollution caused by improper use of chemicals like fertilizers

and pesticides can negatively impact on the soil environment.

● -

Substances of concern

(SoC) and Substances

of very high concern

(SVHC)

Negative

impact

Actual

The use of plant protection products containing SoCs and SVHCs might

negatively impact human health and the environment.

● -

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Environmental information continued

“Environmental management” standard

. Re-

sponsibility for performing environmental

monitoring and ensuring compliance with rel-

evant legislation lies with the assets-based

team of environmental specialists (11 full-time

employees).

Due to the nature of our business operations,

we are required to obtain permits for air emis-

sions, water withdrawal, and wastewater dis-

charge, each of which specifies emission and

discharge limits in accordance with applicable

local regulations. The process of obtaining

permits is performed both by Kernel’s team of

environmental specialists and external con-

tractors. In FY2025, Kernel’s assets obtained

a total of 14 new permits, including three air

emission permits and 11 water withdrawal per-

mits. Moreover, over the reporting period, Ker-

nel has been working on completing the envi-

ronmental impact assessment (EIA) process

for six projects.

In line with permit obligations, we have devel-

oped monitoring programs to control the envi-

ronmental quality of our operations. These in-

clude analyzing air, soil, and water quality and

assessing levels of noise and vibration pollu-

tion. The state ecological inspectorate did not

perform environmental compliance inspec-

tions on our assets in FY2025, since inspec-

tions are forbidden during martial law. Im-

portantly, we considered and successfully re-

solved all 7 complaints regarding Kernel’s op-

erations from local citizens. In FY2025, we

spent a total of USD 341 thousand on

measures associated with the mitigation of en-

vironmental impacts and environmental pro-

tection.

Control of air pollution

In the Kernel’s operations, air pollution asso-

ciated with oilseed processing and grain han-

dling is addressed through a series of techno-

logical initiatives.

Particulate matter and NO

₂ emissions, re-

sulting from sunflower husk combustion, are

managed using technological emission control

systems. Our oilseed processing plants oper-

ate 11 electrostatic precipitators (ESPs) to re-

move particulate matter (PM) from boiler flue

gases. These highly efficient filtration devices

(95-98%) use electric energy to generate an

electrostatic charge that captures fine parti-

cles.

Additionally, the boilers at two oilseed extrac-

tion plants (OEPs) are equipped with DeNO₂

systems designed to reduce nitrogen dioxide

(NO₂) emissions. These systems work

through a chemical reaction between nitrogen

Certification ISO 14001 covers key trading Group Kernel-Trade, six oil crushing plants, two farming clusters, fifteen silos and one trading terminal

oxides and a reagent, producing molecular ni-

trogen (N₂) and water. Depending on parame-

ters, this process allows for the reduction of

nitrogen oxide emissions by 30-75%.

Dust emissions associated with grain and

oilseed handling are primarily managed

through engineering solutions designed to

minimize the release of particulate matter into

the atmosphere. This includes the use of en-

closed unloading stations, covered conveyor

lines, and ship-loading equipment equipped

with integrated dust control features. Where

complete prevention is not feasible, emissions

are treated using specialized equipment. No-

tably, dust from grain handling operations is

effectively controlled through the use of cy-

clone filters, which are installed at all silos and

transshipment terminals.

Hexane emissions, which are linked to its

use as a solvent in edible oil extraction, are

carefully regulated and minimized throughout

its transportation, storage, and application to

ensure both resource efficiency and opera-

tional safety. The solvent operates in a closed-

loop system, enabling it to be reused across

multiple extraction cycles, thereby optimizing

efficiency and minimizing environmental im-

pact.

In FY2025, Kernel’s hexane management at

oilseed processing plants was focused on

three key areas:

• Improving use efficiency: Enhancing cool-

ing systems to enable more effective con-

densation of hexane vapors, thereby in-

creasing solvent recovery and reducing

losses.

• Early detection and monitoring: Installing

hexane analyzers to enable timely leak de-

tection and continuous monitoring of emis-

sions.

• Maintenance: Conducting regular technical

maintenance to prevent uncontrolled hex-

ane losses and ensure system integrity.

All equipment in contact with hexane at Ker-

nel’s plants complies with the EU ATEX Di-

rective (2014/34/EU ‘Equipment for potentially

explosive atmosphere’).

Emissions of ozone-depleting substances,

primarily refrigerants, are linked to the opera-

tion of industrial cooling equipment at two oil

extraction plants and within the animal hus-

bandry division. Maintenance and monitoring

of these systems are performed by an external

organization. In FY2025, no refrigerant leaks

were detected.

In FY2025, Kernel paid a total of USD 505

thousand in environmental tax, of which USD

368 thousand for CO2 emissions and USD 51

thousand for air-polluting emissions from sta-

tionary sources.

Control of water pollution

At Kernel, we are committed to responsible

water pollution management and minimizing

the environmental impact of our operations. All

wastewater generated during our processing

activities is treated before being discharged

into water bodies, in full compliance with na-

tional regulations.

Water management at oilseed processing

plants includes the implementation of full-cy-

cle water treatment systems in four OEPs.

These systems provide biological, physical,

and chemical purification of wastewater, en-

suring effective treatment before discharge.

In FY2025, a total of 229.9 megaliters of

wastewater were purified at our facilities, with

139.3 megaliters undergoing physical-chemi-

cal and biological treatment, and 90.6 megali-

ters treated using dissolved air flotation (DAF)

technology.

In case an oilseed processing plant is con-

nected to a municipal wastewater treatment

plant (WWTP), wastewater is pre-treated on-

site to meet the requirements set by WWTP

and is directed to proper external treatment.

Regulatory compliance and quality man-

agement of treated wastewater are moni-

tored by our laboratories, which analyze water

samples in line with the Ukrainian national reg-

ulation on maximum permissible discharges of

pollutants. This regulation defines acceptable

limits for various contaminants and is outlined

in our “Special Water Use” permits.

Such permits limit the volumes of withdrawn

water and/or the volumes and quality of efflu-

ents based on surveys that define hydrological

conditions, baseline water quality, and the as-

similation capacity of a water body. The per-

mitting authority uses information on water

use within a watershed or aquifer to set permit

conditions in a way that balances the interests

of all users and keeps cumulative pollution lev-

els within the national water quality standards.

The regulatory requirements were the only cri-

teria for setting permit conditions that define

the quality of our effluents.

Parameters of wastewater, controlled during

laboratory testing, include eight substances as

well as biological oxygen demand (BOD₅) and

chemical oxygen demand (COD). In FY2025,

there were no incidents of non-compliance

with the quality requirements of wastewater

quality.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Environmental information continued

Preventing agricultural runoff is a focus

area in Kernel’s efforts to protect the water en-

vironment. We implement strict measures to

minimize the risk of water pollution associated

with farming activities, the most significant

area of potential impact. Specifically, we en-

sure the precise application of fertilizers and

pesticides, which allows us to control the risk

of their runoff into water bodies. In addition, we

do not implement agricultural and manure

management activities within buffer zones that

safeguard surface water resources.

Monitoring of soil pollution

In the Farming segment, Kernel prioritizes soil

health and pollution prevention through preci-

sion agriculture and responsible nutrient man-

agement. Since 2024, we have been develop-

ing soil health management plans for each

farm cluster under ISCC certification. These

plans include integrating bioinsecticides and

biofungicides, improving spraying technolo-

gies to minimize ecosystem exposure, and ap-

plying degraders and soil remediation tech-

niques. For non-agricultural soils, monitoring

of non-fertile bulk soils is conducted strictly in

line with legislative requirements.

Control of substances of concern (SoC)

and substances of very high concern

(SVHC)

In FY2025, Kernel conducted a screening of

plant protection products (PPPs) used in the

Criteria laid down in Article 57 and is identified in accordance with Article 59(1) of Regulation (EC) No 1907/2006 of the European Parliament and of the Council (35);

is classified in Part 3 of Annex VI to Regulation (EC) No 1272/2008 of the European Parliament and of the Council ( 36 ) in one of the following hazard classes or hazard

categories: carcinogenicity categories 1 and 2; germ cell mutagenicity categories 1 and 2; reproductive toxicity categories 1 and 2; endocrine disruption for human

health; endocrine disruption for the environment; Persistent, Mobile and Toxic or Very Persistent, Very Mobile properties; Persistent, Bioaccumulative and Toxic or Very

Persistent, Very Bioaccumulative properties;

Criteria laid down in Article 57 of Regulation (EC) No 1907/2006 (REACH) and were identified in accordance with Article 59(1) of that Regulation.

Group’s farming operations against the criteria

of substances of concern

(SoC) and sub-

stances of very high concern

(SVHC) as part

of the broader analysis of our compliance with

EU requirements on PPPs. As a result of the

screening, the Group identified in its PPPs

portfolio 52 products that contain active ingre-

dients classified as substances of concern,

and 14 products that contain substances of

very high concern.

MDR-T

Targets

At present, Kernel has not established quanti-

tative sustainability targets related to pollution

management. We recognize the importance of

setting outcome-oriented goals and are as-

sessing the feasibility of defining such targets

in the coming years.

In the meantime, we track the effectiveness of

our policies and actions through the operation

of our EMS, which ensures compliance with

environmental permits and the ISO 14001 reg-

ulatory requirements. Effectiveness is evalu-

ated based on the occurrence of incidents with

ecological consequences, alongside regular

monitoring of pollution emissions. Our defined

ambition is to maintain full regulatory compli-

ance and to continuously improve our environ-

mental performance by minimizing pollution

risks.

………………………………………………………………………………………………………………………………………….………..…………………………………………………………………………..…

Scheme of Kernel’s water management cycle at oil

seed extraction plants

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Environmental information continued

Metrics

-4

ollution of air, water and soil

Pollution of air

thousand tons

FY2023

FY2024

FY2025

Carbon monoxide

0.67

0.92

Oilseed Processing

0.53

0.83

0.84

Infrastructure and Trading

0.12

0.06

0.063

Farming

0.017

0.024

0.015

Nitrogen oxides

0.42

0.84

0.49

Oilseed Processing

0.35

0.49

0.45

Infrastructure and Trading

0.06

0.332

0.03

Farming

0.007

0.016

0.006

Sulphur oxides

0.05

0.08

Oilseed Processing

0.04

0.07

Infrastructure and Trading

0.01

0.002

Farming

0.0003

0.0001

0.0027

Solid substances

1.26

1.22

0.30

Oilseed Processing

0.6

0.7

0.1

Infrastructure and Trading

0.63

0.40

0.13

Farming

0.08

0.09

0.06

Pollution of water

tons

FY2023

FY2024

FY2025

Weighing agents

1.1

0.9

11.4

Chlorides

15.4

21.5

32.7

Sulphates

37.3

38.2

53.4

Fats

Dry residue (mineralization)

129.7

122.7

174.3

Other substances

3.5

3.9

5.1

Note 1

: The reported values refer to pollutants present in the treated wastewater discharged into groundwater bodies exclusively for the Bandurka Oilseed extraction

Plant

-5

Substances of concern and Substances of very high concern

Substances of concern and Substances of very high concern (SoC/SVHC)

Main hazard class, tons

SoC/SVHC

FY2025

Carc. 1B

SVHC

Carc. 2

SoC

21.0

Repr. 1A

SVHC

Repr. 1B

SVHC

13.9

Repr. 2

SoC

360.0

Muta. 1B

SVHC

3.9

Muta. 2

SoC

PMT

SoC

2.8

Note 1

: Carc. - carcinogenicity categories

Repr. -reproductive toxicity categories

Muta. - germ cell mutagenicity categories

PMT - Persistent. Bioaccumulative and Toxic

Kernel’s specific metrics

Key environmental monitoring indicators in FY2025

Scope of monitoring

# of checks

# of sites monitored

# of samples taken

Air quality

212

1,861

Conditions of the emissions permit

1113

Conditions of EIA

422

Areas at the borders with SPA

102

326

Water quality

241

Ground water

191

Surface water

Soil quality

103

106

Areas of waste storage

Areas at the borders with SPA

Noise pollution

245

Vibration pollution

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Environmental information continued

MDR-M

Pollution accounting methodology

Pollution of air, water and soil

When assessing air pollution from processing

plants, emissions from husk and natural gas

combustion in boiler units, as well as gas com-

bustion in grain dryers, are considered. Addi-

tionally, particulate matter emissions from

technological processes unrelated to fuel

combustion are also taken into account. Emis-

sions from the infrastructure and farming seg-

ment include pollutants generated during fuel

combustion in small installations (such as boil-

ers, grain dryers, and generators), as well as

particulate matter and other pollutants typical

of auxiliary and related processes. An external

contractor develops substantiating documents

for the company that include descriptions of

technological processes, identification of

sources, and calculations of pollutant emis-

sions. Based on specific emission factors, the

company’s environmental specialists perform

quarterly calculations of actual pollutant emis-

sions into the atmosphere and corresponding

environmental tax.

Wastewater discharges into surface water

bodies are performed in accordance with a

special water use permit, which specifies the

discharge volumes and maximum permissible

concentrations of pollutants.

Each quarter, the company’s environmental

specialist submits wastewater samples to an

accredited independent laboratory for analy-

sis. The volume of discharged wastewater is

recorded using a flow meter.

Based on the laboratory results and measured

wastewater volumes, the environmental spe-

cialist calculates the amount of pollutants in

the discharged wastewater and the corre-

sponding environmental tax.

Substances of concern and substances of

very high concern

Volumes of applied plant protection products

are obtained from Kernel’s database, which

consolidates the factual situation on the

ground based on accounting write-offs. The

write-off of activity data is conducted based on

the actual records of all agricultural operations

made by agronomists for each field through-

out the cultivation season in the operational

online system (Online Job Order Book).

Agronomists also reflect actual data on field

activities on the online application ‘Mobile

Agronomist’ (MAG), which interlinks with the

Online Job Order Book. When conducting

screening analysis of the PPPs portfolio

against the criteria of substances of concern

and substances of very high concern, we as-

signed respective classification in the data-

base, allowing us to extract data automati-

cally.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Environmental information continued

E4 Biodiversity and ecosystems

In this section:

• Direct impact drivers of biodiversity loss

• Impacts on the state of species

• Impacts on the extent and condition of eco-

systems

• Impacts and dependencies on ecosystem

services

E4.SBM-3

Impacts, risks and opportunities and

their interaction with strategy and

business model

Among Kernel’s business segments, Farming

operations are considered as those that both

depend on the ecosystem services and may

impact biodiversity-sensitive areas. To esti-

mate the potential impacts on biodiversity-

sensitive areas, in FY2025, Kernel conducted

a comprehensive analysis of its entire land-

bank (358 thousand ha of cultivated land) to

identify spatial overlaps with protected areas.

Every field was visually compared against the

protected area boundaries obtained from free

access at the World Database on Protected

Areas (WDPA)

using geometric intersection

analysis in QGIS

platform. To better contex-

tualize the area's ecology, biomes and biore-

gions were also examined using the Terres-

trial Ecoregions of the World (TEOW)

. In ad-

dition, we similarly screened our landbank

against polygons of wetlands of international

importance obtained from the Global Wet-

lands Database level 3 (GLWD)

and the

Ramsar list.

As a result of this analysis, it was identified

that 905 fields out of approximately 5 thou-

sand fields demonstrate an average-weighted

level of intersection with protected areas,

namely the Emerald Network, of 5.7%, which

accounts for a total of 3,424 ha (less than 1%

of the landbank). Nevertheless, agricultural

operations on these fields are legal and are

regulated by land lease agreements, which

are registered in the State Land Cadastre of

Ukraine. We are also compliant with the rele-

vant national legislation on protected areas,

namely the Nature Reserve Fund and under-

lying laws. Indeed, in 2020, the Ukrainian Par-

liament registered Bill No.4461 “On Territories

of the Emerald Network”, under which Ukraine

undertakes to protect and conserve its natural

habitats according to European standards.

However, the legislation has not yet been

The World Database on Protected Areas (“WDPA”)

QGIS (Quantum Geographic Information System) – a free, open-source software for creation, visualization and analysis of geospatial information)

Terrestrial Ecoregions of the World (“TEOW”)

Global Lakes and Wetlands Database

Cabinet of Ministers of Ukraine, Resolution No. 935 of November 23, 1995 (Kyiv), "On Measures for the Protection of Wetlands of International Importance."

Cabinet of Ministers of Ukraine, Directive No. 147-r of February 23, 2011, "On Approval of Granting Wetlands the Status of Wetlands of International Importance."

Cabinet of Ministers of Ukraine, Directive No. 895-r of September 21, 2011, "On Approval of Granting Wetlands the Status of Wetlands of International Importance."

Cabinet of Ministers of Ukraine, Directive No. 818-r of October 24, 2012, "On Approval of Granting Wetlands the Status of Wetlands of International Importance."

adopted. However, the bill does not entirely

prohibit agricultural activities within the territo-

ries of the Emerald Network, provided they are

of low intensity and do not damage protected

habitats. Any new or intensified agricultural

practices (e.g., conversion to intensive farm-

ing, installation of irrigation systems, pesticide

use) must undergo an appropriate environ-

mental assessment in line with the Law on En-

vironmental Impact Assessment (EIA).

Regarding wetlands of international im-

portance, only 328 hectares have some level

of intersection with GLWD Level 3 or Ramsar

list polygons across 18 fields (the average

weighted level of intersection with protected

areas across these fields is 19%). However,

further analysis revealed that these territories

are not recognized by Ukrainian legislation as

wetlands of international importance, in line

with the provisions of the Ramsar Convention;

therefore, our operations are fully compliant

with relevant laws

We identified that our material dependency on

biodiversity and ecosystem services is associ-

ated with soil productivity and pollination,

which is key for ensuring the long-term stabil-

ity of yields and, therefore, high operational

performance of our Farming segment.

Furthermore, we are committed to preventing

deforestation and any forms of expansion of

arable lands at the cost of natural habitats and

other territories not intended for farming, both

in our own operations and in our supply chain.

Importantly, Ukraine is considered a low-risk

country in relation to deforestation, consider-

ing that forestry and agricultural land banks

are governed by different laws that prohibit the

conversion of forests into agricultural land. Ad-

ditionally, Ukraine is historically known for its

large territories of agricultural land (almost

70% of the country’s territory), which have not

been forested over the last 50 years. Issues of

illegal deforestation in Ukraine are specific to

the lands of the forest fund and are not asso-

ciated with agricultural activities. Neverthe-

less, in FY2025, Kernel started an in-depth

preparation to ensure compliance with the EU

Deforestation Regulation (EUDR).

E4.IRO-1

Biodiversity and ecosystem-related

impacts, risks and opportunities

Biodiversity- and ecosystem-related IROs

were identified through geospatial analysis of

overlaps with protected areas, impact assess-

ment, and consultations with internal subject

matter experts. At this stage, the evaluation fo-

cused on Kernel’s operations, with the inten-

tion of extending the scope in the future.

The assessment included both actual and po-

tential impacts. For agricultural operations, we

consider greenhouse gas emissions to be a

driver of climate change and a possible con-

tributor to biodiversity loss. We also identified

actual pressures on species, particularly polli-

nators such as bees, that are affected by the

use of agrochemicals and pesticides. In paral-

lel, we identified positive effects of regenera-

tive farming practices, including reduced till-

age, the use of cover crops, and improved

………………………………………………………………….…………………………………………………………………………………………………………

Demonstration of the geometric intersection analysis

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Environmental information continued

nutrient management, which help restore soil

health, support ecosystem stability, and en-

sure stable yields. Dependencies were also

analyzed, with a focus on ecosystem services

such as pollination, which are crucial to agri-

cultural productivity and contribute to the

economic benefits of the Group.

For further details on the methodological ap-

proach applied under the DMA, see pages 48-

49. The table below summarizes the material

IROs identified for E4 Biodiversity and

ecosystems, including their location in the

value chain and the timeframe over which as-

sociated risks, opportunities, and potential im-

pacts, both positive and negative, may mate-

rialize.

MDR-P; E4-2

Policies

We are strongly committed to both minimizing

our negative impact on biodiversity and under-

taking specific measures to conserve and

boost biodiversity across our landbank. This

approach is reflected in our Environmental

Protection policy, and we are expecting our

suppliers to uphold the same standards

through the Supplier Code of Conduct. In the

next reporting period, we plan to adopt a ded-

icated Sustainable Agriculture Policy that will

address biodiversity and ecosystem manage-

ment. Environmental Protection policy does

not currently cover deforestation. We have es-

tablished a working group to monitor regula-

tory developments and ensure compliance

with the EUDR, with a deforestation-specific

policy planned for a later stage.

See Annex 3 – Key Policies and Procedures

for a detailed description of all Kernel policies.

MDR-A

Actions and resources

The key principle in delivering our commit-

ments towards biodiversity is ensuring com-

prehensive and detailed monitoring of our

farming activities, which we perform through-

out our innovative “DigitalAgriBusiness” farm

management system. By integrating IT, AI,

Normalized Difference Vegetation Index quantifies vegetation by measuring the difference between near-infrared (which vegetation strongly reflects) and red light

(which vegetation absorbs). NDVI is a standardized way to measure healthy vegetation – the higher the NDVI, the healthier vegetation.

Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade

and Big Data solutions, we collect and analyze

field-level and operational data, which en-

hances precision farming practices, strength-

ens risk management, and ensures careful

oversight of our interactions with natural eco-

systems. All our fields are cultivated using

RTK-guided autopilot machinery, with RTK

signals shared among partners to expand pre-

cision farming coverage. We also monitor our

fields through remote sensing technologies by

collecting data, such as NDVI

, from satel-

lites, helicopters, and on-site data collection

facilities, which are then synchronized in data-

bases and analyzed with GIS (Geographic In-

formation Systems) programs. These insights

are embedded into daily operations: agrono-

mists use tablets equipped with a “Mobile

Agronomist” scouting application, improving

risk assessment and accelerating decision-

making in the field. Furthermore, we under-

take thorough due diligence before the conclu-

sion of the lease, which includes evaluation of

the physical condition, such as quality of soil

and existing vegetation, as well as the legal

status of the land, namely ownership rights,

registered land use limitations, and legal suit-

ability for farming, which also includes proxim-

ity to conservation areas.

Our practical approaches to minimizing the

adverse impacts of our farming operations on

biodiversity include the following:

• Promotion of soil biodiversity. Kernel ac-

tively researches and tests applications of

biological fertilizers, including phosphorus-

and nitrogen-fixing bacteria. We are the first

agricultural producer in Ukraine to establish

and run our own microbiological laboratory,

where we closely evaluate the benefits of bi-

ological fertilizers on soil health. We also

utilize bio-destructors, namely bacteria and

fungi, which contribute to maintaining soil

biodiversity while intensifying the decompo-

sition of organic crop residues mulched and

left in fields, leading to a subsequent return

of nutrients from the residue back to the soil.

Bio-destructors also have a fungicidal ef-

fect, protecting crops from harmful microor-

ganisms. In FY2025, the total area of appli-

cation of biological products accounted for

208,940 hectares.

• Integrated pest management system.

When undertaking pest control actions to

reduce crop exposure to diseases, we com-

ply with applicable national and interna-

tional regulations. We only use authorized

plant protection products, listed in the State

registry of pesticides and agrochemicals al-

lowed to be used in Ukraine. Also, we do not

apply chemicals prohibited by the Stock-

holm Convention on Persistent Organic Pol-

lutants and products, listed in Annex 3 of the

Rotterdam Convention

We constantly

Environmental Material Impacts, Risks and Opportunities

Value chain

Time horizon

Sustainability matter

IRO

IRO nature

Description

Upstream

Own operations

Downstream

E4 Biodiversity and ecosystems

Climate change

Negative

impact

Potential

Greenhouse gas emissions from agricultural activities contribute to cli-

mate change, which can lead to biodiversity loss and disruption of ecosys-

tems.

● ● L

Impacts on the state of

species

Negative

impact

Actual

Harm to pollinators due to the application of pesticides and agrochemicals,

leading to declines in species such as bees and negatively affecting crop

pollination and ecosystem health.

● ● -

Impacts on the extent

and condition of ecosys-

tems

Positive

impact

Actual

Restoration of soil health and ecosystem stability through regenerative ag-

ricultural practices such as reduced tillage, use of cover crops, and effec-

tive nutrient management.

● ● -

Impacts and dependen-

cies on ecosystem ser-

vices

Positive

impact

Actual

Ensure timely communication with beekeepers about agricultural activities

on the fields, specifically the application of plant protection products that

prevent harm to pollinators and support pollination services, thereby en-

hancing crop productivity and promoting biodiversity conservation.

● ● -

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Environmental information continued

improve our pest management approaches

by adjusting them in line with legislative

changes on pesticides in other countries.

For example, since 2021, we have been

gradually reducing the use of neonicotinoid

products. Before using a new substance on

the operational scale, we test it on our R&D

fields (more than 25 thousand hectares).

Pesticides are applied by self-propelled

spraying machinery equipped with a posi-

tioning control system that deactivates

sprayers outside field boundaries, prevent-

ing overlapping and re-application. In addi-

tion, machines have automatic remote con-

trols for weather conditions, which account

for wind, allowing for minimized off-the-field

releases of pesticides.

• Control of seed quality. For sowing cam-

paigns, Kernel only uses breeds and hy-

brids of seeds, listed in the State Registry of

Plant Species Eligible for Cultivation in

Ukraine, which excludes genetically modi-

fied seeds. All seeds, either produced inter-

nally or sourced from the market, undergo a

thorough examination in Kernel’s accred-

ited laboratory before sowing.

• Monitoring soil nutrients. At least once

per crop rotation cycle, we analyze soil

quality at our agrochemical laboratory by

taking over 2,000 soil samples (from 25-30

centimeters depths). Based on the evalua-

tion results, we adjust our crop mix plans,

production technology, and fertilization

practices where required. A test-based ap-

proach to fertilizer application allows for

maintaining a deficit-free balance of nutri-

ents and thus prevents deterioration of soil

quality.

• Protection of pollinators. Kernel imple-

ments a system of notifying beekeepers

who operate near our fields about plans to

apply plant protection products. Notification

is provided no later than 3 days before pes-

ticide application, with details on exact date

and time, location, as well as type of chem-

icals and method of application. We are also

taking into account weather conditions, spe-

cifically wind speed.

MDR-T; E4-4

Targets

Kernel has set specific targets that directly ad-

dress the areas identified in our assessment

and track the effectiveness of biodiversity-re-

lated actions.

One of the crucial factors in agriculture relates

to pollinator health, where the use of agro-

chemicals can negatively affect species such

as bees, while at the same time, our business

depends on the pollination services they pro-

vide. To mitigate this impact and safeguard

critical ecosystem services, we have commit-

ted to achieving 100% use of pollinator-safe

insecticides during the flowering of crops

by 2030 (minimization layer). This target not

only reduces harm to pollinators but also

strengthens the resilience of local ecosystems

and ensures the continuity of crop productivity.

Another priority area is soil health, which is a

key factor influencing both ecosystem stability

and agricultural yields. In this context, we have

set the target of applying biological destruc-

tors on at least 50% of its cultivated land-

bank by 2030 (rehabilitation layer). By doing

so, we aim to improve soil quality, enhance bi-

odiversity below ground, and reinforce the

positive contribution of our farming practices

to ecosystem resilience and agroecological

transition.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Environmental information continued

E5 Circular economy

In this section:

• Waste

E5.IRO-1

Circular economy-related impacts,

risks and opportunities

Our circular economy and resource use-re-

lated IROs were identified and assessed rely-

ing on the standard materiality assessment

approach. This involved mapping our opera-

tions, evaluating the effects of circular econ-

omy practices, and analyzing our waste man-

agement processes within business seg-

ments. Risks and opportunities were consid-

ered through the lens of dependency analysis.

The process was guided and supported by our

internal subject matter experts within the envi-

ronmental team. The analysis covers Kernel’s

own operations, with a view to potentially ex-

tending the scope across the entire value

chain. While the perspectives of affected com-

munities were not directly solicited, they were

indirectly considered through the review of

complaints and feedback received.

For further details on the methodological ap-

proach applied under the DMA, see pages 48-

49. The table below summarizes the material

IROs identified for E5 Circular economy, in-

cluding their location in the value chain and

the timeframe over which associated risks, op-

portunities, and potential impacts, both posi-

tive and negative, may materialize.

MDR-P

Policies

Kernel recognizes the importance of sustaina-

ble waste management and the need to mini-

mize the environmental impact associated

with waste generation. Our Environmental

Protection policy and Supplier Code of Con-

duct establish the foundation for responsible

waste management, emphasizing waste re-

duction, reuse, and continuous improvement

across our operations and value chain. The

Environmental Protection policy is aligned

with the Law of Ukraine on Waste Manage-

ment, updated in 2023, which harmonized na-

tional legislation with European Union stand-

ards and best practices.

Key highlights of the new legislation included:

• Extended Producer Responsibility

(EPR): Producers are now accountable for

the entire lifecycle of their products, partic-

ularly the waste they generate. This in-

cludes packaging, electrical and electronic

equipment, batteries, and other products.

Producers must finance the collection, recy-

cling, and disposal of their products' waste.

• Waste Management Hierarchy: The law

emphasizes a waste management hierar-

chy that prioritizes waste prevention, fol-

lowed by preparation for reuse, recycling,

other recovery operations (e.g., energy re-

covery), and disposal as a last resort.

• Municipal Waste Management: A munici-

pal household waste management system

is established and managed by an Adminis-

trator responsible for the effective

collection, billing, and handling of claims re-

lated to waste services.

• E-Waste System: A unified state electronic

waste system (e-waste) will be introduced

to manage waste data and interactions

electronically, enhancing transparency and

accountability.

• Hazardous Waste Management: Stricter

regulations for hazardous waste, including

the requirement for permits for collection,

transport, and treatment, as well as specific

requirements for waste incineration and

landfill operations.

We also expect our suppliers to uphold the

same standards in their operations as outlined

in the Supplier Code of Conduct. For further

details, please refer to Annex 3 – Key Policies

and Procedures.

MDR-A

Actions and resources

Minimization of waste, as well as its proper

treatment, is one of the key indicators of Ker-

nel’s operational efficiency. We aim to imple-

ment measures towards the reduction of the

overall volume of waste through the moderni-

zation of technological processes, including

the reuse of waste across divisions, contrib-

uting to the long-term sustainability of our

business, as well as through the establish-

ment of controls over waste generation, trans-

portation, and storage.

In FY2025, Kernel continued to enhance its

operational practices across the Farming, In-

frastructure & Trading, and Oilseed Pro-

cessing segments, focusing on strengthening

resource circularity and minimizing envi-

ronmental impact through three distinct ac-

tion streams.

Resource circularity

The actions of this stream focus on turning by-

products and residues into valuable inputs

across our production chain. Particularly, in

the Farming segment:

• Crop residues are normally left distributed

on the field, incorporated into the soil, or

mulched, thereby enhancing soil health by

increasing organic matter and returning car-

bon to the soil. Part of the straw is used for

cattle management as bedding. No crop

residue is burned on the field, as it is strictly

forbidden.

• Manure, the primary waste from animal

husbandry, is removed from cowsheds via

scrapper conveyors and transported to em-

banked storage areas for natural compost-

ing. All storage sites are located outside of

settlements, in leeward areas, and away

from water protection buffer zones to avoid

contamination. Manure is mainly applied in

fields as organic fertilizer, and part of it is

distributed among local communities for

gardening purposes – closing the nutrient

loop. In FY2025, we applied organic fertiliz-

ers, namely manure, over an area of 857

ha.

Environmental Material Impacts, Risks and Opportunities

Value chain

Time horizon

Sustainability matter

IRO

IRO nature

Description

Upstream

Own operations

Downstream

E5 Circular economy

Waste

Negative

impact

Actual

Generation of waste that contributes to the environmental burden.

● -

Positive

impact

Actual

Valorization of waste through its use in generating green electricity.

● -

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Environmental information continued

In the Infrastructure and Trading segment,

generation of waste is associated mainly with

the grain purification process and includes:

• Fraction of substandard grain and crop

residue, separated from main products and

mainly used as cattle fodder in our animal

husbandry business or sold to third parties.

In addition, we use crop residue as a fuel on

one of our drying installations for the gener-

ation of steam.

In the Oilseed Processing segment, waste is

primarily generated during sunflower oil pro-

duction and electricity generation:

• The primary waste stream from processing

is sunflower husk, which is used as a bio-

mass fuel in combined heat and power

(CHP) plants at all our oil extraction facili-

ties. This enables the generation of electric-

ity for both internal consumption and sale to

the national grid, as well as steam required

for the production of sunflower oil.

• A further byproduct, sunflower ash, results

from the combustion process in power gen-

eration and is repurposed as a raw material

for fertilizer production. Ash is valuable for

its chemical composition, namely its high

potassium content and lack of hazardous

admixture. Applying ash in fields allows us

to return a part of the harvested nutrients

back to the soil.

Circular Product & Packaging Design

Under this action stream, Kernel focuses on

reducing environmental impact through sus-

tainable packaging solutions and

responsible material choices, particularly

within its Oilseed Processing operations.

In this segment, the main product is crude oil,

sold in bulk for further processing by custom-

ers, eliminating the need for packaging and

minimizing waste generation. The remaining

volume of produced oil is refined, bottled, and

packed for consumer markets. Thus, packag-

ing waste, primarily plastic and cardboard,

occurs downstream, at the customer level. To

reduce the environmental impact at this stage

of the value chain, we are actively working to

transition to recycled plastic bottles and teth-

ered caps. These efforts directly support cir-

cular economy objectives, aiming to reduce

virgin material use, improve recyclability, and

minimize packaging-related waste.

Responsible Waste Management & Com-

pliance

In this action stream, Kernel ensures environ-

mentally sound management of non-circular

waste streams. In both the Farming segment

and cross-segment activities, we follow strict

procedures to minimize environmental and

health risks associated with waste manage-

ment:

• Pesticide packaging is collected sepa-

rately, depending on the class of hazard,

and transferred to a licensed provider of

waste disposal services.

• Animal mortality waste, such as cows’

carcasses, is disposed of in registered bio-

thermal pits in compliance with the require-

ments of the State Veterinary Committee.

• Additional types of waste arise from

operational household activities, such as

machinery maintenance, construction and

engineering works, and wastewater treat-

ment. These streams are handled following

national environmental standards to mini-

mize risks to the environment and human

health.

Waste that cannot be reused within the pro-

duction chain is transferred to licensed dis-

posal or recycling providers, selected from an

official list maintained by the Ministry of Envi-

ronmental Protection of Ukraine. The Ministry

ensures compliance through regular verifica-

tion, and violations can result in license revo-

cation. We expect our contractors to adhere to

the same waste management standards, re-

quiring them to control waste generation and

prevent mixing different types of waste. Con-

tractors must also provide agreements with li-

censed disposal and recycling services as

proof of compliance.

The Group's efforts reflect a dedicated ap-

proach to managing waste efficiently, adher-

ing to regulations, and implementing innova-

tive solutions for waste reduction and circular-

ity.

MDR-T; E5-3

Targets

Kernel has established a voluntary target for

resource use and the circular economy to en-

hance the sustainability of our packaging. By

2030, we aim for 20% of bottled oil to be

packaged in bottles made from recycled

plastic and 20% of bottles to be equipped

…………………………………………………………………..……………………………………………………………………..……...........................................................................................................

Scheme of Kernel’s waste management cycle

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Environmental information continued

with tethered caps. This target addresses

material impact related to waste generation,

particularly associated with plastic use, while

promoting circular product design. The initia-

tive contributes to increasing the share of re-

cycled materials in packaging and reducing

dependence on virgin plastic. Within the waste

hierarchy, this target is classified under Recy-

cling, as it supports the reuse of secondary

materials and strengthens circularity in pack-

aging solutions.

MDR-M

Waste accounting methodology

Waste is classified into two main categories:

hazardous and non-hazardous. Hazardous

waste primarily includes used oil, rags, filters,

batteries, fluorescent lamps, and chemical re-

agents. Non-hazardous waste covers house-

hold waste, seed-cleaning residues, used

tires, plastics, paper, and cardboard. Biomass

is accounted for separately as a biofuel.

Waste data is collected across the Company’s

Processing, Farming, and Infrastructure seg-

ments, using primary data sources supple-

mented by estimates where necessary. Data

are provided by accounting specialists, de-

partment managers, and technical experts,

such as the chief energy engineer, senior fore-

man, and commercial manager, through cor-

porate programs and information systems.

EU Taxonomy

The Kernel reports its contribution to the Eu-

ropean Union’s environmental objectives of

climate change mitigation and adaptation, in

line with the guidelines laid down in the EU

Taxonomy regulations. In response to these

requirements, we have conducted a compre-

hensive analysis of our economic activities, in-

cluding the revenue they generate, as well as

our capital expenditures (CapEx) and opera-

tional expenditures (OpEx). Besides, we iden-

tified the share of activities that meet the EU

Taxonomy criteria or, in other words, are con-

sidered “environmentally sustainable”.

NACE code D35.11 in accordance with the statistical classification of economic activities, established by Regulation EC No 1893/2006

The identified taxonomy-eligible economic ac-

tivity falls under the category “Electricity gen-

eration from bioenergy”

and refers to the

production of electricity from biomass, namely

sunflower seed husk, at our cogeneration heat

and power (CHP) plants. This “green CapEx”

investment project, launched in 2017 and

completed in 2024, resulted in six CHP units

with a combined electricity generation capac-

ity of 84.4 MW.

Our taxonomy-eligible activity has the poten-

tial to save up to 700 thousand tCO2e of na-

tional emissions every year, contributing sig-

nificantly to Ukraine’s transition to a net-zero

emissions economy. As of FY2025, Kernel

has been operating six CHPs.

Metrics

-5

Waste

Key waste management indicators

in FY2025

tons

Hazardous

Non-hazardous

Total

Total waste generated

227.7

26,964.0

27,191.7

Total waste diverted from disposal

68.4

12,653.4

12,721.8

Recycling

68.4

12,653.4

12,721.8

Total waste directed to disposal

160.3

14,483.7

14,644.1

Landfill

7,321.8

Other disposal operations

160.3

7,161.9

7,322.2

Total non-recycled waste, tons

160.3

14,483.73

14,644.1

Total non-recycled waste, %

70.4

53.7

53.9

Note

1: Transferred for utilization.

Taxonomy-eligible share of Kernel’s economic activities

FY2024

FY2025

USD million

Amount

Revenue, including

3,581.0

100%

4,115.0

100%

taxonomy-eligible

48.7

1.4%

53.4

1.3%

taxonomy non-eligible

3,532.3

98.6%

4,061.6

98.7%

Capital expenditure

, including

158.6

100%

68.8

100%

taxonomy-eligible

5.7

3.6%

2.2

3.2%

taxonomy non-eligible

152.9

96.4%

66.6

96.8%

Operational expenditure, including

3,176.0

100%

3,828.0

100%

taxonomy-eligible

24.0

0.8%

43.9

1.2%

taxonomy non-eligible

3,152.0

99.2%

3,784.1

98.9%

Note 1: Additions in CIP and uninstalled equipment for the respective period (Note 14).

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Social information

S1 Own workforce

In this section:

• Working conditions

− Secure employment

− Working time

− Adequate wages

− Work-life balance

− Health and safety

• Equal treatment and opportunities for all

− Gender equality and equal pay for work

of equal value

− Training and skills development

− Employment and inclusion of people

with disabilities

− Diversity

S1.SBM-3

Impacts, risks and opportunities and

their interaction with strategy and

business model

Kernel’s workforce includes its employees,

both permanent and temporary, working on a

full-time and part-time basis. The main cate-

gories of impacts identified include both nega-

tive and positive dimensions. On the negative

side, impacts relate to compromised working

conditions due to climate-related factors such

as extreme heat or seasonal variability, work-

life balance challenges where support

measures are unevenly applied, and health

and safety concerns arising from accidents,

occupational diseases, or mental overload

linked to long working hours. These are not

systemic or widespread issues but rather po-

tential and context-specific impacts that are

being monitored.

On the positive side, the Group’s high share of

permanent contracts and stable market posi-

tion contribute to secure and predictable em-

ployment, particularly in times of full-scale

war. Further, contributions to training and

equal access to knowledge-sharing initiatives

enhance workforce resilience and capabilities,

while targeted inclusion programs for people

with disabilities and veterans promote a more

diverse and equitable workplace. These

measures create opportunities for Kernel to

access a broader talent pool and improve

adaptability in the face of sectoral and eco-

nomic change. From a risk perspective, how-

ever, the potential loss of employees and in-

stitutional knowledge represents financial and

operational vulnerability.

For further details on the methodological ap-

proach applied under the DMA, see pages 48-

49. The table below summarizes the material

IROs identified for S1 Own workforce, includ-

ing their location in the value chain and the

timeframe over which associated risks, oppor-

tunities, and potential impacts, both positive

and negative, may materialize.

MDR-P; S1-1

Policies

Kernel’s general approach towards managing

human resources is defined by the Code of

Conduct and is built on four principles, namely

(1) involvement as internal entrepreneurship,

(2) partnership and unity of goals, (3) mutual

respect and trust, and (4) development of hu-

man potential. Our practices are strictly

aligned with the Labor Code of Ukraine and

other relevant national legislations, as well as

the International Labor Organization’s (ILO)

Fundamental Conventions. Kernel has zero

tolerance for any form of forced or compulsory

labor or child labor. Kernel has an unwavering

Social Material Impacts, Risks and Opportunities

Value chain

Time horizon

Sustainability matter

IRO

IRO nature

Description

Upstream

Own operations

Downstream

S1 Own workforce

Secure Employment &

Working Time

& Adequate Wages

Negative

impact

Actual

Climate-related changes (e.g., extreme heat, seasonal variability) may

alter working conditions, potentially compromising working time.

● -

Positive

impact

Actual

High share of permanent contracts and stable market position, espe-

cially in volatile conditions, has a positive impact on employees by

providing a secure and predictable work environment.

● -

Work-life balance

Negative

impact

Potential

Lack of support for work-life balance initiatives, or unequal access to

such measures, can negatively affect employee well-being, satisfac-

tion, and productivity, potentially leading to higher turnover and absen-

teeism.

` ● S

Health and safety

Negative

impact

Potential

Workplace health and safety is compromised by both physical impacts,

i.e., accidents and occupational disease, and mental overload, stem-

ming from factors like the intensity and duration of working hours.

These issues can negatively impact employees’ health

, productivity,

and overall well-being.

● S

Training and

skills development

Positive

impact

Actual

Ensuring equal access to knowledge sharing and in-house upskilling

creates broader development opportunities for employees, while

strengthening the company’s resilience and self-

reliance during talent

shortages.

● -

Risk

Financial

Loss of employees and institutional know-how may lead to capability

gaps, increased recruitment costs, and operational disruption.

● S

Employment and

inclusion of persons

with disabilities

Positive

impact

Actual

Fostering a more equitable and ethical work environment by promoting

inclusion and diversity, including the development of tailored integra-

tion programs for veterans and their families.

● -

Opportunity

Strategic

Gaining access to a broader and more diverse talent pool, driving in-

novation, and improving organizational adaptability.

● S

Diversity

Negative

impact

Potential

Diversity imbalance in professional roles can undermine motivation,

engagement, and career progression for underrepresented groups.

● -

Opportunity

Strategic

Access to a broader talent pool through diverse hiring.

●

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Social information continued

commitment to human rights, which is a fun-

damental principle employed at every corpo-

rate level. Kernel ensures a transparent ap-

proach to remuneration and equal payments

in line with the Compensation and Benefits

policy.

The principles of ensuring the safety of em-

ployees are embodied in the Security policy.

Apart from that, the Group’s strategy on the

safety of workers has been put into clearer

perspective amid the Russian full-scale inva-

sion of Ukraine and ongoing military actions.

Indeed, upon the declaration of martial law,

Kernel adopted the Resilience in Times of War

policy, which outlines the principles guiding

the Group’s adaptation to unique external

challenges and disruptions. On the opera-

tional level, the Group is guided by the Occu-

pational Health and Safety policy, which has

also been updated to reflect the emerging

needs of wartime, specifically to ensure tai-

lored care for mental health.

Our position on internationally proclaimed hu-

man rights is defined in our Sustainability De-

velopment and Corporate Social Responsibil-

ity policy and aligned with the principles of the

UN Global Compact, which Kernel signed in

2020. Our approach to safeguarding equal op-

portunities and maintaining a non-discrimina-

tory working environment is guided by the Lux-

embourg Law of 23 July 2016 and our Anti-

Discrimination and Diversity, Equality, and In-

clusion (hereinafter – “DE&I”) policy. As an ad-

aptation to the new societal circumstances

triggered by wartime, Kernel adopted the

Working with Veterans policy, which guides

the integration of demobilized employees in

the professional and social environments.

We expect the same level of responsibility re-

garding relations with employees throughout

our supply chain. Our counterparties are obli-

gated to comply with our Supplier Code of

Conduct, which requires them to ensure fair

and safe working conditions for their employ-

ees and compliance with labor legislation.

These requirements are reflected in the rele-

vant contractual provisions.

See Annex 3 – Key Policies and Procedures

for a detailed description of all Kernel policies

disclosed.

S1-2

Engagement with employees

Kernel conducts annual feedback sessions in

the form of questionnaires at every stage of an

employee's life cycle in the Group, namely (1)

upon completion of a probation period, (2)

every year after performance assessment and

tailored professional training, and (3) exit in-

terviews and feedback when an employee

leaves the Group. A separate line of engage-

ment and feedback is available for veterans.

Additionally, every year, we conduct anony-

mous satisfaction, loyalty, and engagement

surveys, which involve all employees. When

measuring satisfaction, the survey considers

how employees rate compensation, working

conditions, team atmosphere, relationships

with management, development opportuni-

ties, and communication. Engagement is re-

flected in a willingness to share experiences

and take proactive steps. The primary objec-

tive of this exercise is to identify negative im-

pacts and gaps in the Group’s management

approaches and work towards their elimina-

tion; to identify positive impacts and

strengthen positive performance factors; and

to define general ways for the Group to de-

velop as an employer.

In terms of involving employees in the Group’s

strategic discussions and decision-making

processes, Kernel holds annual conferences

for every business segment and department.

During these conferences, representatives

from the Executive Management Team and

functional managers collaborate closely to re-

view the previous year's performance, identify

key lessons learned, and explore new strate-

gic ideas. The director of each business seg-

ment and department is responsible for ensur-

ing that this form of engagement takes place

and its results are efficiently integrated into the

operational activity.

All Kernel’s employees also have the oppor-

tunity to proactively contribute their vision and

implement their ideas on improving opera-

tional efficiency across business segments

through the incentive program “Synergy of

Change”. Employees are rewarded if their

suggestions contribute to an increase in the

Group’s EBITDA.

Furthermore, engagement with employees is

a fundamental aspect of the Group’s occupa-

tional health and safety management (herein-

after - OHSMS) and is actively encouraged

through various channels. The “Near Miss”,

“Stop Card”, and “Walk The Talk” initiatives

provided platforms for employees to report

safety concerns, suggest improvements, and

participate in safety projects. We employ pro-

active methods to engage our employees in

the development, implementation, and evalu-

ation of the effectiveness of the OHSMS, as

well as to communicate information related to

occupational health and safety (OHS), namely

via corporate surveys, the “Gold Safety Rules”

initiative, which recognizes best set of labor

safety requirements, composed by employees

themselves; and the “Walk the Talk” project,

that allows OHS specialists and manager ex-

plore gaps in OHSMS by interviewing

employees and discussing their ideas on im-

provements.

Since 2020, Kernel has been a signatory to

the UN Global Compact, declaring its align-

ment with key internationally recognized prin-

ciples of protection of human rights of employ-

ees, including the Universal Declaration of Hu-

man Rights and the International Labor Or-

ganization’s (ILO) Declaration on Fundamen-

tal Principles and Rights at Work.

MDR-A; S1-4

Actions and resources

Employment safety

Amid the Russian invasion of Ukraine and on-

going military actions, the safety and well-be-

ing of Kernel’s workforce have been of utmost

priority. Kernel ensures that all its offices and

production sites have air alert systems and ap-

propriate shelters. Both the workforce and

counterparties working on site are obligated to

proceed to shelters when air alerts are in ef-

fect. The Group ensures that production pro-

cesses remain uninterrupted through remote

management during such times.

In FY2025, Kernel continued providing exten-

sive support to its employees, especially those

who are defending the country or who are in-

ternally displaced. During FY2025, 141 of our

employees were enlisted in the Armed Forces

of Ukraine, whereas 102 employees were de-

mobilized. The total monetary support pro-

vided to enlisted employees over FY2025

amounted to USD 3,313 thousand. As of 30

June 2025, 829 of our employees are serving

in the Armed Forces of Ukraine. Furthermore,

in FY2025, Kernel provided USD 389 thou-

sand of financial support to employees who

suffered disability as a result of military actions

and the families of employees who were killed

in action.

Remuneration approach and adequate

wages

Kernel’s remuneration approach is built on

three pillars, namely:

1. Base compensation and benefits. The

basic level of Kernel’s remuneration system

includes:

− salaries and wage-based bonuses that

match or exceed the benchmark of

other industries. It also includes addi-

tional payments and compensation, de-

pending on working conditions, as well

as fixed payments in the event of retire-

ment and financial support in the case

of an employee’s difficult personal cir-

cumstances. When personnel optimiza-

tion occurs, resulting in a reduction in

the number of employees, the wage

fund is not reduced correspondingly but

is redistributed among the remaining

team members.

− healthcare services, including voluntary

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Social information continued

medical insurance for full-time employ-

ees, life insurance for employees, who

cover insurance costs, and OHS insur-

ance.

− rewards for improvements in produc-

tion, both monetary (such as one-time

monetary incentives for operational ac-

complishments) and non-financial

recognitions.

− other benefits include sponsorship of

educational opportunities and sports

activities, provision of food at work-

places, free transportation to work, etc.

2. Reward for leadership. Each year, em-

ployees undergo an assessment of their

competencies, both self-assessment and

evaluation by a linear manager. Based on

the results, employees’ base salaries may

be reviewed (more information on annual

performance appraisal and career advance-

ment in the section Training and career ad-

vancement)

3. Incentive system. This system aims to en-

sure that the career goals of our employees,

business targets of business divisions, and

long-term strategic goals of the Group are

synchronized. Kernel annually establishes

financial and operational quantitative and

qualitative goals, which are cascaded down

to specific KPIs of employees in relevant

business segments. Employees can also

establish their own KPIs. Annual perfor-

mance assessment quantifies the achieve-

ment of KPIs and automatically impacts the

size of the annual performance bonus. The

system is fully transparent and prevents any

prejudice. We provide employees with all

the tools to directly affect KPIs and monitor

the KPIs’ execution on a close-to-online ba-

sis.

Occupational health and safety

Kernel’s OHSMS operates in line with national

regulations and ISO 45001 standards, and is

led by an OHS corporate manager who re-

ports annually to a management committee

headed by the Group’s CEO. Within the

OHSMS, the process of identifying and as-

sessing work-related hazards and safety risks

is exercised on a non-routine and annual ba-

sis. A non-routine procedure of risk identifica-

tion takes place for new business operations

and assets, and results in a list of hazards and

risks. The risk identification on an annual basis

is reflected in the responsibilities of managers,

OHS professionals, and other employees to

update the list of hazards, basing their inputs

on results of internal and external labor safety

audits, the outcomes of employees’ engage-

ment process, and feedback, conclusions

drawn from incidents investigations, as well as

results of OHS assessments and incorpora-

tion of world best practices. OHS assess-

ments include self-assessments and statutory

Acronym stands for Eliminate, Reduce, Isolate, Control, Personal Protective Equipment, Discipline.

inspections, information on which is consoli-

dated in a special database.

Once potential risks and hazards are identi-

fied, the OHSMS triggers the procedure of risk

management, which is organized in line with

the ERIC/PD

hierarchy of hazard controls

and consists of the following steps, taken in

descending priority:

• Fully eliminate a risk or a hazard

• Reduce the potential impact of a risk or a

hazard

• Isolate a risk or a hazard from employees

• Control a risk or a hazard by providing em-

ployees with personal protective equip-

ment, training, detailed instructions and in-

formation, means of first response, as well

as lockout/tagout devices.

In the event of work-related incidents, we

launch an investigation of each case, using

the Ishikawa, or “fishbone diagram” approach

that aims: (1) to identify root causes of an inci-

dent, (2) to map risks and hazards that mate-

rialized, (3) to determine corrective actions in

line with the ERIC/PD hierarchy of hazards

control, and (4) to integrate lessons learned

into required improvements of the OHSMS.

This information is diligently recorded in the

accident statistics, which also includes data on

the frequency of occupational accidents, sub-

sequent lost workdays, and the severity of in-

juries.

For every work-related accident, we create a

special investigation commission that might

also include representatives of relevant au-

thorities. As a result of an investigation, the

commission issues a report detailing the cir-

cumstances of the incident and recommenda-

tions to improve the risk management ap-

proaches and to prevent the occurrence of

such incidents in the future. Such an approach

aims to ensure continuous improvement of the

OHS practices to achieve the central target of

zero work-related injuries and fatalities.

To ensure alignment of our OHS approaches

with national legislation and best practices, we

conduct annual state inspections (5 in FY2025

with no fines imposed). Additionally, all em-

ployees covered by the OHSMS undergo an

internal audit every year, and in FY2025,

6,902 employees were audited externally. Fur-

thermore, Kernel allocates significant re-

sources to prevent occupational health and

safety violations and incidents through rigor-

ous annual training.

In FY2025, Kernel invested a total of USD 2.1

million in occupational health and safety.

These funds were allocated to enhance safety

infrastructure, provide training, and improve

health services for employees.

Work-life balance

Since the full-scale Russian invasion, Kernel

has been implementing the corporate program

“Resilience. Strength Within You,” aimed at

breaking the stigma around seeking psycho-

logical support and fostering a culture of self-

care by supporting the mental, physical, and

social well-being of employees through educa-

tional, sports, and motivational activities. It is

structured around the development of four key

life areas: mental health, social relationships,

physical well-being, and creativity. The strate-

gic goal is to enhance employee productivity

and engagement by improving psychological

resilience, physical health, and social connec-

tions, while reducing stress and burnout and

fostering a culture of self-support. In practice,

the program is implemented by organizing

webinars, training sessions, and psychologi-

cal consultations; holding sports events, mar-

athons, and physical challenges; launching

creative activities such as art therapy and

photo contests; and developing a corporate

Telegram channel with useful content.

The program’s target audience includes 11

thousand employees (7.5 thousand of whom

do not have email access) across Ukraine and

their families. The initiative also targets fami-

lies of employees serving in the army and vet-

erans, 70% of whom reside in small towns and

villages. Expected outcomes include a three-

fold increase in psychological support re-

quests, 50% employee engagement in project

activities, a 5% reduction in staff turnover, as

well as improved psychological resilience and

overall well-being. In FY2025, a total of 5,834

people participated, representing a 35% in-

crease compared to the previous year. Partic-

ipants benefited from over 22 thousand hours

of training.

Training and skills development

Kernel’s approach to professional develop-

ment of its own workforce is based on the

Competency Model. This model comprises

eight key competencies established in line

with Kernel’s business strategy, priorities, and

targets to maximize the Group’s long-term

value. These competencies were initially iden-

tified through Group-wide research and up-

dated in FY2025.

Kernel’s key professional competencies are

the following:

1. Strategic thinking

2. Responsibility

3. Systematic thinking

4. Partnership and collaboration

5. Adaptivity and improvement

6. Customer-oriented approach

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Social information continued

7. Team management and leadership

8. Internal entrepreneurship

Employees covered by the Competency

Model undertake an annual assessment, after

which they create an individual development

plan. The individual development plan con-

sists of three parts: (1) hard learning, which

provides for the attraction of internal or exter-

nal experts and the allocation of individual

learning budgets; (2) soft learning, which is re-

alized through Kernel’s Institute of Internal

Couches; and (3) distance learning, which em-

ployees can access through an online educa-

tional platform, Kernel Hub, which provides

more than 1 thousand e-books, 155 e-

courses, and 200 training videos. Together,

these learning activities form the corporate

minimum package, which includes one profes-

sional course and at least three general devel-

opment courses. The competency model ap-

plies to both managers and specialists, ensur-

ing that all employees receive professional ed-

ucation tailored to their development plans

and job descriptions, which outline standard

skill requirements for each position.

Over the last two years, the Group has been

implementing a strategy of safeguarding in-

house expertise and the expansion of profes-

sional skills. The Group has already devel-

oped electronic courses on key business pro-

cesses, including logistics, oilseed and grain

purchasing, and the operation of transship-

ment terminals. Kernel also leverages oppor-

tunities of Artificial Intelligence (AI) in develop-

ing training content, which allows for reducing

time spent on courses development by 6 times

and saving the budget by 4 times.

Gender equality, human rights, inclusion

and diversity

In line with DE&I policy, Kernel aspires to

reach at least 30% representation of each

gender within the Group’s corporate bodies,

namely the Board of Directors and the Execu-

tive Management Team. We have designated

individuals and teams responsible for imple-

menting the DE&I Policy at every corporate

level, ensuring the adoption of diversity, equal-

ity, and inclusion principles in all business ac-

tivities of Kernel. At the Board of Directors’

level, matters related to the integration of di-

versity principles are overseen by the Nomina-

tion and Remuneration Committee, whereas

the Chief Executive Officer is responsible for

the implementation of the DE&I Policy

throughout the Group.

As the wartime context became closely inter-

linked with the Group’s everyday life, last year

Kernel started an adaptation program for vet-

erans with the primary focus on the Group’s

employees who were demobilized and going

back to civilian life. The program seeks to help

veterans in their self-realization and smooth

integration into business processes. It con-

sists of three key components, namely: (1)

physical recovery, including compensation of

costs of medical treatment and prosthetics; (2)

mental recovery involving tailored work with

professional psychologists; (3) integration into

the workplace, which also implies specific

training on communication skills and ethics for

other employees. The latter might also include

alterations of a workplace or machinery to ac-

commodate a person’s prosthetics. Upon re-

turn to work, veterans may also change their

previous professional qualifications with spe-

cial support from the HR department. Kernel’s

veterans’ adaptation program was recognized

in Forbes Ukraine's Top-25 rating. The pro-

gram includes a mandatory protocol for man-

agers who supervise veterans, requiring regu-

lar face-to-face meetings to review profes-

sional performance, KPIs, personal needs,

and, most importantly, to provide care and

mental health support. Managers are respon-

sible for monitoring the well-being of veterans

and offering timely assistance. Additionally,

Kernel facilitates and supports gatherings for

the corporate veteran community, including a

dedicated networking channel for veterans on

Telegram and occasional offline events.

MDR-T; S1-5

Targets

Kernel has set workforce targets to track the

effectiveness of our actions and address ma-

terial sustainability matters. In the area of di-

versity and inclusion, we are committed to in-

creasing women’s representation in tradi-

tionally male-dominated positions to 15%

by 2030. This target reflects our ambition to

broaden access to opportunities and foster a

more inclusive workplace. In parallel, we rec-

ognize the strategic importance of talent de-

velopment for the Group. To this end, by

2030, we aim to ensure that at least 10% of

open vacancies are filled by graduates of

our Internship and First Job programs. This

target enhances our ability to retain institu-

tional knowledge, develop internal experts,

and support the career progression of young

professionals entering the workforce. We also

strive for the continuous development of ca-

reer opportunities and an inclusive work-

ing environment for women, youth, veter-

ans, and people with disabilities.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Social information continued

Metrics

S1-6

Characteristics of employees

Key human resources indicators

(as of 30 June)

FY2023

FY2024

FY2025

Total number of employees

10,733

10,904

10,760

including by geography:

Ukraine

10,691

10,851

10,703

Other countries

including by level:

Managers

885

879

889

Specialists

3,110

3,157

3,229

Workers

6,738

6,868

6,642

including by business segment:

Oilseed Processing

2,530

2,479

2,193

Infrastructure and Trading

2,741

2,894

3,056

Farming

4,508

4,527

4,451

Head office and other

954

1,004

1,060

including by age

less than 30 years old

1,585

1,548

1,507

up to 50 years old

2,992

6,110

5,969

more than 50 years old

6,156

3,246

3,284

including by employment contract, by region:

Permanent

10 077

10 259

10 090

Ukraine

10 035

10 206

10 033

Other countries

Seasonal and temporary (only Ukraine)

656

645

670

including by employment contract, by gender:

Permanent

10 077

10 259

10 090

Male

7 347

7 469

7 382

Female

2 730

2 790

2 708

Seasonal and Temporary

656

645

670

Male

586

580

586

Female

including by employment type, by gender:

Full-time

10 647

10 067

10 172

Male

7 877

7 418

7 509

Female

2 770

2 649

2 663

Part-time

837

588

Male

631

459

Female

206

129

Key employment indicators

FY2023

FY2024

FY2025

Total number of new hires

2,711

2,464

2,293

by geography

Ukraine

2,711

2,456

2,282

Other countries

by gender

Male

1,866

1,745

1,640

Female

603

717

653

by age

less than 30 years old

684

735

726

up to 50 years old

1,312

1,320

1,053

more than 50 years old

473

407

514

Total number of employees who have left

2,163

1,491

2,493

by gender

Male

1,623

1,073

1,773

Female

713

418

720

by age

less than 30 years old

477

320

535

up to 50 years old

646

411

824

more than 50 years old

1,040

760

1,134

Total number of employees who left Kernel due to retirement

103

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Social information continued

Metrics

S1-9

Diversity

Kernel’s top management is the Executive

Management Team, as defined by the Corpo-

rate Governance Charter. The Team consists

of 14 directors of the Group’s business seg-

ments and departments, headed by the CEO.

They are responsible for Kernel’s overall oper-

ational and financial performance. More infor-

mation on the Executive Management Team,

as well as data on the composition and diver-

sity of the Board of Directors, is provided in the

Corporate Governance section.

S1-10

Remuneration and adequate wages

In FY2025, Kernel’s total payroll accounted for

a total of USD 161 million; 189 employees

were receiving minimum wage (166 FTE ba-

sis).

Employees working with a full-time workload

(coefficient = 1.0) are classified as full-time.

Those with a workload below 1.0 are catego-

rized as part-time.

S1-12

People with disabilities

In FY2025, the share of socially vulnerable

employees was 28% out of the total number of

employees, and 7% of all employees were in-

dividuals with disabilities.

S1-13

Training and skills development

During FY2025, a total of 3,278 employees

evaluated their competencies and created in-

dividual development plans. Throughout the

year, 8,167 employees benefited from Ker-

nel’s educational programs, spending 216,517

hours of training (an average of 26.5 hours per

employee), 42% of which were dedicated to

improving hard skills and 58% to improving

soft skills. Furthermore, 9,608 employees en-

gaged in at least one course on Kernel Hub,

our online educational platform.

Key diversity and equality indicators

(as of 30 June)

FY2023

FY2024

FY2025

Executive Management Team distribution, %

by gender

Male

80%

Female

20%

by age

30-50 years old

87%

80%

more than 50 years old

13%

20%

Employees distribution, %

by gender

Male

74%

Female

26%

by age

less than 30 years old

15%

14%

up to 50 years old

28%

56%

55%

more than 50 years old

57%

30%

31%

Key training and education indicators

FY2023

FY2024

FY2025

Average hours of training per employee

30.4

27.2

26.5

by gender:

Average hours of training per male

29.9

28.3

25.5

Average hours of training per female

31.4

27.8

25.2

by employee category:

Average hours of training per manager

39.1

34.8

33.1

Average hours of training per specialist

40.0

34.0

31.9

Average hours of training per worker

18.8

19.3

16.5

Total number of training hours

207,596

200,188

216,517

including by skill sets

Hard skills

161,037

128,298

90,445

Soft skills

46,559

71,890

126,072

including by learning formats

Full-time training

63,293

60,120

35,529

Distance Learning

144,303

140,067

180,988

including by frequency

Annual / regular training

95,758

41,508

18,986

One-time training

108,746

151,732

186,585

Modular development programs

3,092

6,948

10,946

Key employees’ career development indicators

FY2023

FY2024

FY2025

Total number of employees, receiving regular perfor-

mance and career development reviews

1,647

1,676

1,894

including by gender

Male

1,273

1,270

1,466

Female

374

406

428

including by employee category

Managers

621

756

659

Specialists

1,026

920

1,235

S1-14

Health and safety

Key occupational health and safety indicators

(as of 30 June)

FY2023

FY2024

FY2025

Recordable work-related injuries

Oilseed Processing

Infrastructure and Trading

Farming

High-consequence work-related injuries (ex. Fatalities)

Oilseed Processing

Infrastructure and Trading

Farming

Fatalities resulted from work-related injuries

Oilseed Processing

Infrastructure and Trading

Farming

Rate of recordable work-related injuries (LTIFR)

0.61

0.76

0.85

Rate of fatalities as a result of work-related injury

0.05

Rate of high-consequence work-related injuries (excluding fatalities)

0.11

0.27

0.16

Note 1: Indicators for FY2023 and FY2024 were corrected in this report as the result of identified accounting discrepancies.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Social information continued

S1-17

Incidents and complaints

There were no instances of discrimination and

severe human rights incidents connected to

the own workforce have occurred over

FY2025.

All submissions to Kernel’s grievance mecha-

nism are recorded in the Unified Register of

Reports and are processed per the Procedure

for Receiving and Reviewing Information Re-

ceived via Hotline Channels. More information

about the process of compiling data on work-

related grievances, incidents, and complaints

related to social and human rights matters is

provided in the “Grievance mechanism” sub-

section (see page 81). In FY2025, a total of 81

enquiries from employees were received.

MDR-M

Own workforce accounting methodology

To ensure accurate and consistent reporting

of the Group’s workforce data, the following

methodology is applied annually to calculate

the number of active employees as of June 30:

1. Employee data is extracted from the official

HR management system using the report ti-

tled "Employee List of the Organization",

with the reporting date set to June 30.

2. The primary filter applied is “Main Place of

Work” under the Employment Type cate-

gory. This ensures that only individuals em-

ployed at their primary place of work are in-

cluded in the dataset. Employees engaged

under internal part-time or additional em-

ployment contracts are excluded to prevent

double-counting.

3. Only employees who are officially part of the

Group as of June 30 are included in the re-

port. Any individuals who, for technical or

transitional reasons, remain in the system

but are no longer affiliated with the Group

are manually excluded from the dataset.

4. The dataset is classified by the following

categories:

− Business division

− Employment type (full-time/part-time)

− Job level

− Geography and region

− Gender

− Age group

− Employment contract type

5. Additional validation is conducted for em-

ployees working in other countries to ensure

accurate geographic classification and

avoid data inconsistencies.

6. The dataset is reviewed for potential outliers

or anomalies, which may arise due to sys-

tem errors or data entry issues. Such en-

tries are investigated and corrected or re-

moved as necessary.

7. Final calculations and aggregations are per-

formed using pivot tables in Microsoft Excel.

This approach enables the generation of

structured breakdowns across the required

reporting dimensions.

S1-15

Work

-life balance

Parental leave indicators

FY2023

FY2024

FY2025

Male

Female

Male

Female

Male

Female

Employees who were entitled to parental leave

192

223

179

Employees who took parental leave

Employees who returned to work in the reporting period after parental leave ended

Employees due to return to work after taking parental leave

164

135

133

Employees who were still employed 12 months after their return to work

Kernel’s specific metrics

Occupational health and safety training in FY2025

OHS trainings, participants

3 693

OHS trainings, hours

7 790

Participants in electronic OHS training

2 121

Number of emergency response drills

212

Employees involved in emergency response drills

1 315

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Social information continued

S3 Affected communities

In this section:

• Adequate food

• Water and sanitation

• Land-related impacts

S3.SBM-3

Impacts, risks and opportunities and

their interaction with strategy and

business model

This section covers communities with whom

Kernel has a direct relationship through its

own operations. Therefore, communities living

or working around Kernel’s farming opera-

tions, grain storage facilities, oilseed pro-

cessing sites, and export terminals are subject

to potential or actual material impacts. Thus,

communities affected by Kernel’s upstream

segment, namely procurement facilities and

farms not owned or operated by Kernel, are

excluded from this section.

Across the regions where we operate, we

have identified material positive impacts that

reflect our commitment to addressing local

community needs. Notably, through the provi-

sion of food products, Kernel contributes to

better health, livelihoods, and overall food se-

curity for rural and local communities. In addi-

tion, our investments in water infrastructure

and sanitation facilities have improved access

to clean and safe water, leading to reduced

disease risks and enhanced community health

outcomes. Land-related impacts also repre-

sent a significant area of opportunity. Because

land is one of our strategic production re-

sources, Kernel recognizes its responsibility to

respect land rights and ensure our operations

do not cause adverse impacts. Through trans-

parent communication and fair lease prac-

tices, we build long-term trust and partner-

ships with landowners and communities, se-

curing stable access to land while creating

shared value for both communities and the

Group. These IROs are not uniform across all

affected communities. While food and water

initiatives benefit all directly connected com-

munities, land-related opportunities are more

relevant to the landowners and farming-adja-

cent populations where land access and use

are essential livelihood factors.

For further details on the methodological ap-

proach applied under the DMA, see pages 48-

49. The table below summarizes the material

IROs identified for S3 Affected communities,

including their location in the value chain and

the timeframe over which associated risks, op-

portunities, and potential impacts, both posi-

tive and negative, may materialize.

MDR-P; S3-1

Policies

At Kernel, we strive to be a responsible neigh-

bor and reputable partner to local communities

and support the Ukrainian society overall.

These priorities are reflected in our Social Im-

pact and Community Engagement policy and

Sustainable Development and CSR policy.

The Group acknowledges the impact of its op-

erations on the communities we engage with

and is committed to upholding human rights

according to the Human Rights policy in line

with the UN Guiding Principles on Business

and Human Rights and the OECD Guidelines

for Multinational Enterprises. We strive to fos-

ter understanding of the cultures, traditions,

and values of the local communities in which

we operate. To this end, we promote inclusive

and open dialogue, ensuring that underrepre-

sented and vulnerable groups are heard and

actively involved. Where human rights impacts

occur, we are committed to enabling access to

effective remedies, while maintaining pro-

cesses to monitor compliance and address

material issues transparently.

See Annex 3 – Key Policies and Procedures

for a detailed description of all Kernel policies.

S3-2

Engagement with affected communi-

ties

The Group’s approach towards effective inter-

action with different groups of stakeholders is

guided by the Stakeholder Engagement policy

specified on pages 46-47, which includes an

extensive plan of our interactions with key

stakeholders like local communities.

The Group systematically engages with com-

munities to identify, minimize, or prevent po-

tential impacts of its activities on human rights,

well-being, and sustainable local develop-

ment. Kernel’s community engagement pro-

cess follows a structured cycle of stakeholder

mapping, consultation, feedback integration,

and monitoring.

Engagement is conducted both directly and

through legitimate representatives or trusted

intermediaries - such as community leaders,

local NGOs, opinion leaders, and social infra-

structure workers, who have a deep under-

standing of the local context, needs, and chal-

lenges. We ensure that community perspec-

tives are embedded at all key stages of initia-

tive development:

• Before project launch - Conduct consulta-

tions, joint planning sessions, round tables,

public discussions, and focus groups to

gather community opinions, concerns, and

needs.

• During project implementation – Collect

Social Material Impacts, Risks and Opportunities

Value chain

Time horizon

Sustainability matter

IRO

IRO nature

Description

Upstream

Own operations

Downstream

S3 Affected communities

Adequate food

Positive

impact

Actual

Contributing to better health, livelihoods, and overall food security

through the provision of food products.

● -

Water and sanitation

Positive

impact

Actual

Better health and reduced disease risks through investments in wa-

ter infrastructure, improving access to clean and safe water.

● -

Land-related impacts

Opportunity

Financial

Land-use restrictions during project development can temporarily

disrupt local livelihoods.

● M

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Social information continued

and integrate regular feedback to adapt ap-

proaches and actively involve communities

in project monitoring.

• After project completion - Carry out im-

pact assessments and community satisfac-

tion surveys to evaluate results and inform

future initiatives.

The frequency of interaction is proportionate

to the scale of the initiative, namely, large so-

cial projects require monthly engagement,

while smaller ones, as needed, but at least

once a year. The CSR Department is respon-

sible for stakeholder identification and en-

gagement, while the Head of CSR Service

holds operational accountability for these pro-

cesses.

The Group also recognizes the importance of

considering the interests of vulnerable and

marginalized groups in its social engagement

processes. The priority groups include women

and girls, internally displaced people, people

with disabilities, the elderly, low-income

households, youth, and veterans. The Group’s

engagement measures are tailored to the spe-

cific needs of vulnerable and marginalized

groups, ensuring accessible formats, gender-

sensitive approaches, trusted intermediaries,

and confidentiality safeguards. This approach

removes participation barriers and enables

these groups to contribute actively to decision-

making and benefit from social initiatives.

Kernel regularly evaluates the effectiveness of

its engagement with communities through an-

nual surveys on communication quality and

the impact of implemented initiatives, analysis

of complaints and requests, and social impact

assessments.

S3-3

Processes to remediate negative im-

pacts

Kernel is committed to preventing, mitigating,

and remediating any negative impacts arising

from its activities. This includes expert assess-

ments of social, environmental, and infrastruc-

ture factors, followed by corrective measures

ranging from financial compensation to adjust-

ments in operating practices. Where specific

issues arise, e.g., road damage, the Group de-

velops and executes targeted recovery plans.

These measures are designed not only to re-

solve immediate problems but also to prevent

their recurrence and strengthen long-term

community trust. To ensure affected commu-

nities can express concerns, submit pro-

posals, or communicate their needs, the

Group maintains an accessible, transparent,

and effective grievance mechanism. More in-

formation on the procedure is provided in the

“Grievance mechanism” subsection (see page

81).

MDR-A; S3-4

Actions and resources

In alignment with Kernel’s social impact

strategy, the Group implements a broad range

of initiatives that support:

• Community healthcare

• Education

• Culture and sports

• Military support and rehabilitation for veter-

ans

• Infrastructure improvements

• Community economic growth

• Community capacity building

• Barrier-free accessibility

• Energy independence and energy effi-

ciency

These initiatives aim to prevent social isolation

and discrimination while improving the quality

of life, particularly for vulnerable groups. In

shaping its initiatives, the Group strives to bal-

ance business objectives with community

needs by applying inclusive project selection

processes, co-financing mechanisms, and ac-

tively engaging the community. This approach

not only generates positive outcomes for com-

munities but also helps prevent and mitigate

potential negative impacts.

Effectiveness of initiatives is evaluated using

both quantitative and qualitative indicators for

specific projects. We take preventive

measures to avoid and mitigate potential neg-

ative impacts on communities. Operational ac-

tivities are planned with careful attention to

stakeholder needs, supported by ongoing

communication through established channels.

Key community initiatives

Goal

Actions

Location

Participants

My community: Together with Kernel

Foster community development by

equipping participants with practical

crowdfunding skills and by supporting

the creation and implementation of lo-

cal initiatives that promote sustaina-

ble growth.

- Training and mentoring support, during which partici-

pants gained knowledge in project planning, crowd-

funding, communications, and partnership building.

- Co-funding of social projects based on the results of

the training and the presentation of participants’ initia-

tives.

Poltava

Kropyvnytskyi

Starokostiantyniv

Chornomorsk

Myhiivska and Syniu-

khyno-Bridska communi-

ties

70 training partici-

pants

33 projects co

funded

Empowered: A Platform for Community

Provide training for representatives of

local self-

government, civil society or-

ganizations, and community initiative

groups on key aspects of territorial

development.

Creation of an online course combining theory and

practical tools to help participants effectively mobilize

resources, manage local finances, build partnerships,

and implement socially significant projects.

Over 250 communities

(1st wave)

206 communities

(2nd wave)

479 participants

(1st wave)

481 participants

(2nd wave)

Rehabilitation for Service Members and Their Families

Deliver rehabilitation support to ser-

vice members returning from combat

zones, as well as to their families, to

restore the physical, psychological,

and emotional well-

being of Ukraine’s

defenders and their loved ones.

Provision of medical procedures, psychological sup-

port, and spaces for physical activity and mental recov-

ery in a safe, natural environment.

Tysovets village,

Lviv Region

109 people re-

ceived rehabilita-

tion services

Maindi Social Franchise – Implemented within the First Lady of Ukraine Olena Zelenska’s national initiative

Integrate rehabilitation spaces into

the local healthcare system to en-

hance secondary, long-

term rehabili-

tation during the post-

acute recovery

phase.

Installation of mobile rehabilitation units and medical

equipment.

Kropyvnytskyi

Holovanivsk

Poltava

Talne

617 people under-

went medical treat-

ment

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Social information continued

For example, in transporting raw materials and

goods via local roads, routes are selected to

avoid disrupting local traffic. The Group moni-

tors vehicle movement, load levels, and

transport methods to reduce disturbance and

funds annual improvements to local road con-

ditions. All processes comply with Ukrainian

laws and standards, limiting impacts on the

environment, public health, and infrastructure.

Sanitary zones are established around facili-

ties with ongoing monitoring of pollution,

noise, and other factors. These measures help

prevent conflicts from significant negative im-

pacts of operations or decisions. No severe

human rights issues or incidents with affected

communities were reported in FY2025. The

Group reduces community-related risks by in-

vesting in social development and maintaining

ongoing communication and engagement.

Guided by integrity-based stakeholder rela-

tions, Kernel strengthens social legitimacy, ex-

pands its community presence and relation-

ships, and builds partnerships with local self-

government bodies.

MDR-T; S3-5

Targets

Kernel has set a target to strengthen its con-

tribution to local community well-being by en-

hancing access to and participation in social

programs. By 2030, the Group aims to in-

crease beneficiary participation in its com-

munity initiatives by 10% across all re-

gions of operation. This target reflects our

commitment to fostering inclusive and resilient

communities, ensuring that social benefits

reach a broader share of stakeholders, includ-

ing underrepresented and vulnerable groups.

“Worth Acting” Grant Program

Implement targeted projects to sup-

port war veterans, the families of de-

ceased veterans, and the families of

fallen Defenders of Ukraine.

Grant support for the implementation of veterans’ busi-

ness initiatives in partnership with the Ukrainian Veter-

ans Foundation, the Ministry of Veterans Affairs of

Ukraine, and the IT Group SKELAR.

20 regions of Ukraine

Kyiv

130 veterans' busi-

nesses

Children of the Unbreakable

Provide holistic care and support for

children of fallen, missing, or captive

Defenders of Ukraine, ensuring their

well

-being and prospects.

- Organization of a summer camp for children.

- Excursions, cinema visits, and trips to entertainment

centers.

- Holiday events to mark International Children’s Day.

- Weekend family tours.

- Birthday gifts.

- Distribution of 88 tablets to children for educational

purposes and access to online learning.

- Purchase of gift certificates for children’s clothing,

footwear, and school supplies.

- Sanatorium rehabilitation provided to children to-

gether with their mothers.

Territories of the Com-

pany’s operational pres-

ence (190 communities)

135 children

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Social information continued

S4 Consumers and end-users

In this section:

• Health and safety of consumers and/or end-

users

S4.SBM-3

Impacts, risks and opportunities and

their interaction with strategy and

business model

In identifying IROs related to consumers and

end-users, Kernel considered various types of

consumers, including B2B customers and in-

dividual consumers who purchase our prod-

ucts directly. The scope of the assessment in-

cluded all consumers who may be materially

impacted by both our operations and value

chain. A positive impact identified relates to

consumer health and safety. By adhering to in-

ternationally recognized certification stand-

ards, rigorous food safety management sys-

tems, and continuous monitoring, we en-

sure that all products meet high safety and

quality benchmarks. This impact provides di-

rect benefits for both B2B customers, who can

rely on safe, sustainable, and high-quality in-

puts for their operations, and individual con-

sumers, who benefit from safe and nutritious

food products.

For further details on the methodological ap-

proach applied under the DMA, see page 48-

49. The table below summarizes the material

IROs identified for S4 Consumers and end-us-

ers, including their location in the value chain

and the timeframe over which associated

risks, opportunities, and potential impacts,

both positive and negative, may materialize.

MDR-P; S4-1

Policies

For Kernel, as a leading producer of grain in

Ukraine and sunflower oil globally, the quality

of its products and the health of its consumers

are the highest priorities. Our management

approach towards ensuring the highest quality

of our goods is embedded in the Safety and

Quality Management policy. The policy aims

to establish a unified system for managing

product quality and safety issues, creating

conditions for their continuous development in

line with international standards (ISO, GMP+,

ISCC, IFS, BSCI, etc.) and the Sustainable

Development Goals. At the center of our ap-

proach is the preventive food management

system, which seeks to mitigate potential risks

of biological, chemical, and physical hazards

before they become material.

See Annex 3– Key Policies and Procedures

for a detailed description of all Kernel policies.

S4-2

Engagement with consumers

Kernel exercises four main channels of en-

gagement with consumers, namely:

1. Research of consumers' preferences,

awareness about the Group’s activities,

conducted by specialized agencies before

and after launching new products or intro-

ducing any changes.

2. Interaction via Kernel’s official social media,

where consumers ask questions and ex-

press their concerns. All feedback received

is analyzed and addressed.

3. B2B engagement through sales represent-

atives, who gather and process feedback on

operational aspects.

4. Grievance mechanism, accessible to all

stakeholders (see more information on

page 81). The Group responds to every in-

quiry, and in cases related to product qual-

ity, provides full documentation and, when

needed, conducts additional laboratory

tests to confirm compliance with the highest

standards.

MDR-A; S4-4

Actions and resources

We adhere to the highest standard of quality

in both the final goods and production pro-

cesses throughout the whole value chain. Our

oil-extraction plants are certified with ISO

9001 “Quality management system” and ISO

22000 “Food safety management” standards,

which integrate the principles of the Hazard

Analysis and Critical Control Point (HACCP)

system and application of procedures devel-

oped by the Codex Alimentarius Commission.

Ensuring the quality of crop production

and storage

Within the whole landbank of Kernel, 358

thousand hectares (11 Farming enterprises)

are certified with ISCC EU requirements,

which ensures that crop production is per-

formed in environmentally and socially sound

ways. Under this certification, produced crops

are considered compliant with biofuel supply

chain sustainability requirements outlined in

the EU RED II. At all our grain silos we build

our food safety management system on the

HACCP principles (Hazard Analysis Critical

Control Point), namely: (1) conduct a hazard

analysis, (2) determine critical control points

(CCPs),(3) establish critical limits, (4) estab-

lish monitoring procedures, (5) establish cor-

rective actions, (6) establish verification proce-

dures, and (7) establish record-keeping and

documentation procedures. The implementa-

tion of these principles aims to prevent and re-

duce the occurrence of food safety risks

through analysis and control of biological,

chemical, and physical hazards throughout

the storage chain.

Ensuring the quality and safety of sun-

flower oil

Kernel’s oil-crushing processes in Poltava are

certified in line with ISO 9001 and ISO 22000

standards; bottling processes are additionally

certified in line with the IFS and BRCGS

standards. They also underwent a validation

under the BSCI scheme (grade A), reflecting

our commitment to social responsibility as an

Social Material Impacts, Risks and Opportunities

Value chain

Time horizon

Sustainability matter

IRO

IRO nature

Description

Upstream

Own operations

Downstream

S4 Consumers and end-users

Access to (quality) in-

formation

Risk

Financial

Failure to comply with environmental regulations (e.g., the EU De-

forestation Regulation) may restrict market access and limit busi-

ness opportunities.

● ● M

Health and safety

Positive

impact

Actual

Adherence to rigorous certification standards and proactive man-

agement of the health and safety impacts ensures the high quality of

the consumed products.

● ● ● -

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Social information continued

employer and maintaining high standards of

social performance. Our laboratory is also cer-

tified (ISO 17025 “General requirements for

the competence of testing and calibration la-

boratories”), and conducts regular sample

analysis of sunflower oil, meal, and grain to

confirm their compliance with quality stand-

ards. Our TransBulkTerminal is certified to

conduct fumigation activities in accordance

with Gafta standards.

Furthermore, our production assets are com-

pliant with Kosher, Kosher Passover, Badatz,

and Badatz Passover requirements of Jewish

regulations, as well as the Muslim Halal food

standards. Four of our plants are registered by

the U.S. Food and Drug Administration (FDA),

making our sunflower oil, including high oleic

sunflower oil, in bottles and flexi-tanks suitable

for the USA market. Additionally, one of our

plants obtained a country-specific license to

sell sunflower oil to South Korea.

Six of our oil extraction plants, as well as our

trading entities, are certified in line with ISCC

EU standards, which makes the production of

sunflower oil and meal compliant with the legal

sustainability requirements of the EU Renew-

able Energy Directive (Directive (EU)

2018/2001 also known as RED III) and the

Fuel Quality Directive.

Ensuring the quality and safety of meals

Our whole value chain of protein meal is certi-

fied with the applicable feed quality and safety

standard, namely GMP+. All our oilseed pro-

cessing plants are certified with GMP+R1.0;

our export terminals, as well as trading enti-

ties, Kernel-Trade and Inerco, are certified

with GMP+R1.0, ensuring feed safety in the

production, storage, transshipment, and trade

of meals. In addition, five of our oil extraction

plants, as well as two trading entities, Kernel-

Trade and Inerco, are certified in line with

ISCC PLUS, with regard to meal production.

Our products, namely oil (sunflower, rape-

seed, and soy) and meal (sunflower and rape-

seed), have also been validated and identified

as compliant with country-specific regulations

of the People’s Republic of China.

The Group’s internal quality management

team, responsible for overseeing the entire

food safety system, is regularly inspected and

verified by independent third-party auditors.

The audit scope covers all stages of the value

chain, including production, storage, distribu-

tion, and supply, ensuring that 100% of signif-

icant products are assessed for potential

health and safety improvements. In FY2025, a

total of 265 independent audits were success-

fully passed, which were performed through-

out 435 days.

Supporting decarbonization goals of con-

sumers

Within its climate corporate governance, Ker-

nel seeks to scale up climate mitigation ac-

tions not only across its own operations, but

also in supporting the reduction of Scope 3

emissions for its customers. In Farming, we

ensure traceable accounting of the carbon

footprint of grains and oilseeds, which allows

us to provide tailored batches of low-carbon

products upon a customer's request. In

Oilseed Processing, we aim to leverage our

own generation of renewable energy from bio-

mass to reduce Scope 2 emissions from sun-

flower oil production.

In FY2025, Kernel was chosen as a partner of

the Jumbo Impact Fund - the supply chain en-

gagement program developed by our client

Jumbo Supermarkten. The program seeks to

facilitate the reduction of Jumbo's Scope 3

GHG emissions by co-financing targeted pro-

jects within its value chain. As part of the

Jumbo Impact Fund, we’ve ensured that our

production of bottled sunflower oil is low-car-

bon.

MDR-T; S4-5

Targets

To strengthen our actions in relation to

consumers and end-users and their expecta-

tions, Kernel has set forward-looking targets

that link product quality with sustainability per-

formance. By 2030, we aim to launch a new

product category - sunflower oil with a ver-

ified reduced carbon footprint across the

entire value chain. This target responds to

the market demand for sustainable food prod-

ucts while reinforcing our commitment to cli-

mate action. In addition, we are preparing to

ensure full compliance with the EU Defor-

estation Regulation (EUDR), thereby assur-

ing our customers that our products are not

associated with deforestation or ecosystem

conversion. Together, these targets demon-

strate how Kernel engages with consumers

through innovation and regulatory alignment

to deliver safer, more sustainable, and respon-

sible products.

Metrics

There were no instances of incompliance with

regulations or voluntary codes or human rights

issues, which would have resulted in fines,

penalties, or warnings in FY2025.

Kernel’s specific metrics

Matrix of Kernel’s product quality certification

Standard

Oilseed processing plants

Terminals

Trading

Farming

Total

Bandurka

Kropyvnytskyi

Poltava

BSI

Prydniprovksyi

Starokostiantyniv

TransBulkTerminal

TransGrainTerminal

OilExportTerminal

Kernel-Trade

Inerco

ISO 9001

✓

ISO 22000

✓

GMP+R 1.0

✓

ICS

✓

Kosher

✓

Kosher Passover

✓

Badatz Passover

✓

Halal

✓

FDA registration

✓

ISCC EU

✓

ISCC PLUS

✓

BRCGS

✓

IFS

✓

Gafta

✓

China (sunflower meal)

✓

China (sunflower oil)

✓

China (rapeseed meal)

✓

China (rapeseed oil)

✓

China (soybean oil)

✓

China (soybean meal)

✓

ISO 14001

✓

ISO 45001

✓

Total

109

✓

certificates obtained in FY2025

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Social information continued

S1-3; S3-3; S4-3

Grievance mechanism

Kernel has a grievance mechanism through

which the Group’s employees across all seg-

ments and subsidiaries, suppliers, consum-

ers, local communities, and other stakehold-

ers have an opportunity to submit inquiries

and complaints related to human rights viola-

tions or discriminatory actions, as well as to

receive redress if an investigation determines

that such violations took place. Submissions

to the grievance mechanism can be made via

(1) an anonymous toll-free round-the-clock

hotline, (2) form on Kernel’s website, (3) via

email by writing to hotline@kernel.lu or com-

pliance@kernel.lu, (4) Telegram chatbot “Ker-

nelHotline”. Operation of the grievance mech-

anisms is embedded in the Group’s “Manage-

ment and the Prevention of Fraud and Corrup-

tion” policy and “Code of Conduct”. The policy

not only emphasizes the right but also outlines

the cases when employees are obligated to

report misconduct. Kernel also sends out peri-

odic internal reminders to all employees re-

garding available reporting channels and the

operation of the Hotline.

The Group guarantees confidentiality, protec-

tion of anonymity, and respect for the rights of

whistleblowers. Indeed, Kernel has in place a

Procedure for Whistleblower Protection. Un-

der these frameworks, Kernel is obligated to

protect and assist anyone who submits inquir-

ies (see Annex 3 - Key Policies and Proce-

dures).

Additionally, any employee can flag and report

occupational health and safety risks they ob-

serve and report about hazardous situations

on a worksite by reaching out to their supervi-

sor, field OHS specialist, or the Group’s cor-

porate manager. Employees can also raise

any OHS issues by submitting a “Near Miss”

and “Stop Card” letter forms or contacting the

corporate Hotmail.

All submissions are recorded in the Unified

cordance with the Procedure for Receiving

and Reviewing Information Received via the

Hotline Channels. Reports are forwarded to

the responsible personnel according to the

subject matter, with a copy sent to the Head of

the Compliance Department. Each business

segment and department has defined pro-

cesses and timelines for handling submis-

sions, and compliance specialists monitor ad-

herence to deadlines and the quality of the re-

sponse. Feedback to the whistleblower is pro-

vided by employees who undertook the re-

view, or by the compliance specialist if the re-

sponsible party fails to respond. Regular anal-

ysis of reports is conducted, and findings are

shared with management through a monthly

Hotline report, quarterly reports for the Human

Resources Director, and monthly reports for

directors of the Group’s business segments.

Kernel conducts an annual anonymous survey

to assess employees’ knowledge and under-

standing of compliance requirements and

business ethics. This survey helps evaluate

employees’ awareness and trust in the exist-

ing channels for reporting violations and re-

ceiving feedback. As part of the annual conflict

of interest declaration, employees are asked

whether they have the ability to report viola-

tions via the Hotline channels, which helps de-

termine how well employees know and are

willing to use these communication channels.

The Compliance Department analyzes the col-

lected information and based on the results,

implements measures to improve awareness,

strengthen trust, and enhance relevant proce-

dures and communication channels.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Governance information

G1 Governance

In this section:

• Business conduct

− Corporate culture

− Protection of whistleblowers

− Management of relationships with sup-

pliers, including payment practices

• Corruption and bribery

− Prevention and detection, including

training

− Incidents

G1.IRO-1

Governance-related impacts, risks

and opportunities

Kernel is committed to operating with integrity,

embedding responsibility and ethical conduct

at the core of its corporate culture. Material

IROs related to business conduct, including

corruption and bribery, were identified through

internal dialogue, analysis of governance per-

formance metrics, and sectoral benchmark-

ing, taking into account both our own opera-

tions and business relationships across the

value chain.

For further details on the methodological ap-

proach applied under the DMA, see pages 48-

49. The table below summarizes the material

IROs identified for G1 Governance, including

their location in the value chain and the

timeframe over which associated risks, oppor-

tunities, and potential impacts, both positive

and negative, may materialize.

G1.GOV-1

Governance bodies

Detailed information about Kernel’s govern-

ance structure, as well as the role of govern-

ance bodies related to business conduct, is

provided in the Corporate Governance sec-

tion.

Regarding the sustainability expertise within

the supervisory body, the Group’s Board of Di-

rectors operates a Sustainability Committee,

comprising three non-executive directors and

the Chief Executive Officer. Members of the

committee bring expertise in sustainability

matters, including climate risks and opportuni-

ties, decarbonization, environmental protec-

tion, and social and human capital develop-

ment. Their expertise covers these matters

from the perspectives of finance, international

trade, and strategic development. Within the

Executive Management Team, key sustaina-

bility-related expertise is concentrated across

several functions, namely:

• Sustainability function

• Corporate social responsibility function

• Occupational health and safety function

• Ecology and environmental compliance

function

• Quality management function

MDR-P; G1-1

Policies

We have zero tolerance for any fraudulent and

corrupt activities, both among our employees

and counterparties. Our position on anti-cor-

ruption and approach towards ensuring ethical

compliance is embodied in Kernel’s

“Corporate Governance Charter”, “Code of

Conduct”, “Conflict of Interest Management

and the Prevention of Fraud and Corruption”

policy (which was reviewed and updated in

FY2025), and the “Supplier Code of Conduct”.

In addition, all our agreements and tendering

processes include the mandatory Anti-corrup-

tion clause.

The Protection of Whistleblowers procedure

ensures that employees are encouraged and

safeguarded when reporting misconduct and

incidents related to anti-corruption. The

Group’s Sanctions policy plays a crucial role

in managing critical issues such as exports to

sanctioned countries. It provides Kernel’s

partners with a clear understanding of the

Group's position on sanctions regulations, in-

cluding those imposed as a result of the Rus-

sian invasion of Ukraine.

See Annex 3 – Key Policies and Procedures

for a detailed description of all Kernel policies.

G1-2

Management of relationships with

suppliers

Quality interactions with suppliers are one of

the key aspects of Kernel’s ESG and climate

governance agenda. Kernel’s process of sup-

ply chain management consists of four stages:

• Setting E&S standards. Our expectations

of suppliers’ environmental and social per-

formance are defined by relevant provisions

of the Code of Interaction with Suppliers

and the Anti-Corruption Clause, which re-

flect Kernel’s commitments to the principles

of the UN Global Compact and Sustainable

Development Goals. They include require-

ments on ethics, fair business practices, hu-

man rights, occupational health and safety,

and environmental protection.

• Ensuring obligatory E&S compliance.

Before entering into business relationships,

all counterparties are obligated to sign Ker-

nel’s Anti-Corruption Clause in the contract.

Kernel is entitled to verify compliance with

relevant provisions and terminate contracts

if non-compliance is identified.

• Compliance verification. The procedure

for confirming suppliers’ compliance with

Kernel’s E&S requirements consists of two

levels. First, all potential counterparties un-

dergo initial screening by the corporate

Economic Security Service. Environmental

Governance Material Impacts, Risks and Opportunities

Value chain

Time horizon

Sustainability matter

IRO

IRO nature

Description

Upstream

Own operations

Downstream

G1 Governance

Corporate culture

Positive

impact

Actual

Adherence to corporate culture influences employees to behave

more ethically

● ● ● -

Protection of

whistleblowers

Positive

impact

Actual

Promotion of early reporting of unethical behavior or misconduct fos-

ters transparency and accountability within the organization and im-

proves the social well-being of employees

● -

Management of relation-

ships with suppliers, in-

cluding payment prac-

tices

Positive

impact

Actual

Timely payments strengthen relationships with suppliers and overall

value chain resilience

● ● ● -

Opportunity

Strategic

Opportunity to promote sustainability and innovation by building

strong supplier partnerships

● ● ● M

Prevention and detec-

tion of corruption, in-

cluding training

Positive

impact

Actual

Anti-bribery and anti-corruption training supporting employees in pre-

venting and detecting bribery ● -

Corruption and bribery

incidents

Negative

impact

Actual

Bribery incidents provoke loss of credibility and strain stakeholder re-

lationships

● -

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Governance information continued

and social criteria are included in the scope

of initial screening, focusing on the analysis

of the location and nature of suppliers’ op-

erations, certification by relevant E&S

standards, such as ISCC, ISO14001, and

ISO18001, as well as the outcomes of envi-

ronmental inspections, etc. The second

level of verification is an audit that involves

visits to suppliers.

• Production facilities, interviews with

management and personnel, and review

of relevant documentation. During the

verification process, we provide feedback to

suppliers on possible ways to improve their

E&S performance, if required.

• Application of business consequences.

Based on the results of audits, Kernel either

continues cooperation with counterparties

or suggests corrective measures if non-

compliance with our E&S requirements is

identified and monitors their implementa-

tion. Another possible consequence of sup-

pliers’ non-observance is the termination of

business relationships.

G1-3

Prevention and detection of corrup-

tion and bribery

Responsibility to enforce provisions of policies

and procedures on corruption prevention lies

centrally on Kernel’s compliance officer, who

reports directly to the CEO and the Audit Com-

mittee. Integrity across the Group is anchored

in the “Tone at the Top,” ensuring that leader-

ship sets clear expectations for ethical behav-

ior. Regional compliance coordinators support

this framework by implementing standards on

the ground and promoting continuous im-

provement in compliance practices across op-

erational assets. In addition, the Compliance

Officer provides confidential guidance to em-

ployees on compliance matters, ensuring that

all staff have access to trusted advice when

needed.

All Group operations are subject to regular

screening for corruption risks. In total, 19 risks

were identified, with the most significant in-

cluding: (1) obtaining undue benefits, which

might lead to financial losses and reputational

damages; (2) conflict of interest; (3) working

for other companies and entrepreneurial activ-

ities. To mitigate these risks, managers and

specialists are required to submit annual con-

flict of interest declarations, while all employ-

ees receive training to identify and address

potential conflicts. In addition, corruption risk

screening forms an integral part of the hiring

process, particularly for candidates with prior

government backgrounds.

To address corruption risks among counter-

parties, Kernel’s security department performs

KYC (Know Your Customer) compliance as-

sessments for all business partners and

responds to integrity concerns submitted

through the Hotline (19 calls in FY2025).

Where medium or high corruption risks, con-

flicts of interest, or potential international sanc-

tions are identified, compliance officers con-

duct enhanced due diligence; 110 such cases

were reviewed in FY2025. The compliance

manager also scrutinizes contracts where

counterparties either reject or propose

amendments to the Anti-Corruption clause,

which occurred in 87 instances during the fi-

nancial year. Stakeholders can report con-

cerns through dedicated, including anony-

mous, channels, with all cases managed by

the compliance officer and full protection en-

sured for whistleblowers.

MDR-A; G1-4

Actions and resources

Upholding anti-corruption and anti-bribery

principles remains a core element of Kernel’s

approach to business conduct. In FY2025, no

additional corrective actions were required

due to the continuous improvements made as

part of the compliance process.

MDR-T

Targets

In line with our policies, we are committed to

conducting business in a legal, ethical, and

transparent manner. No targets are set for in-

cidents of corruption and bribery, due to their

context-dependent nature. Furthermore, we

continuously monitor and assess our business

conduct metrics, striving for year-on-year im-

provement.

Metrics

G1-4

Incidents of corruption or bribery

In FY2025, Kernel had no convictions or fines

for violations of anti-corruption laws.

G1-6

Payment practices

Kernel’s payment practices are strictly regu-

lated by commercial contracts with suppliers,

which set a maximum period of 3 days within

which the Group is obligated to pay. This

clause applies to all suppliers; however, with

small and medium-sized enterprises, which

usually are producers of grain and oilseeds,

Kernel aims to pay even sooner than required

by contract. In FY2025, there were no legal

proceedings for late payments.

MDR-M

Governance accounting methodology

Incidents of corruption and bribery

Data on incidents of corruption and bribery, as

well as other compliance-related metrics, are

consolidated and monitored by Kernel’s com-

pliance officer. The Group’s HR Business

Partners are responsible for data on employ-

ees dismissed for corruption.

Key anti-corruption and compliance indicators in FY2025

(as of 30 June)

Number of confirmed incidents of corruption

Number of employees dismissed for corruption

Number of public legal cases on corruption brought against Kernel

Number of confirmed incidents of contracts with business partners being terminated

due to corruption

Total number of submissions to Kernel’s channels of informing on misconduct

Total number of managers and specialists who completed the procedure on declara-

tion of conflicts of interest

2,513

Total number of employees who took anti-corruption trainings

2,322

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

List of annexes

Annex 1 – Statement on due diligence

Core elements of due diligence

Disclosure requirement

a) Embedding due diligence in governance, strategy and business model

SBM-3

GOV-2

GOV-3

b) Engaging with affected stakeholders in all key steps of the due diligence

ESRS 2 IRO-1

ESRS 2 SBM-2

S1-1, S1-2

S3-1, S3-2

S4-1, S4-2

G1-1

ESRS 2 MDR-P/S1-1

ESRS 2 MDR-P/S3-1

ESRS 2 MDR-P/S4-1

c) Identifying and assessing adverse impacts

ESRS 2 IRO-1

E1 SBM-3

E1 IRO-1

E2 IRO-1

E4 IRO-1; E4 SBM-3

E5 IRO-1

S1 SBM-3

S3 SBM -3

S4 SBM-3

G1 IRO-1

d) Taking actions to address those adverse impacts

ESRS 2 MDR-A/E1-3

ESRS 2 MDR-A/E2-2

ESRS 2 MDR-A/E4-3

ESRS 2 MDR-A/E5-2

ESRS 2 MDR-A/S1-4

ESRS 2 MDR-A/S3-4

S3-3

ESRS 2 MDR-A/S4-4

S4-3

G1-1, G1-2, G1-3

e) Tracking the effectiveness of these efforts and communicating

MDR-T/E1-4

E1-5, E1-6, E1-8

E2-4, E2-5

ESRS 2 MDR-T/E4-4

ESRS 2 MDR-T/E5-3

E5-5

ESRS 2 MDR-T/S1-5

S1-6, S1-9, S1-10, S1-16, S1-12, S1-13, S1-14, S1-15, S1-17

ESRS 2 MDR-T/S3-5

ESRS 2 MDR-T/S4-5

G1-4, G1-6

Annex 2 – List of data points that derive from other EU legislation

Disclosure

Requirement

Datapoint

SFDR

reference

Pillar 3

reference

Benchmark

Regulation

reference

EU Climate Law

reference

Material/

Not material

Page

ESRS 2 GOV-1

21 (d): Board's gender diversity

Indicator number 13 of

Table #1 of Annex 1

Commission Delegated

Regulation

(EU) 2020/1816, Annex II

Material

ESRS 2 GOV-1

21 (e): Percentage of board

members who are independent

Delegated Regulation

(EU) 2020/1816, Annex II

Material

ESRS 2 GOV-4

30: Statement on due diligence

Indicator number 10 Ta-

ble #3 of Annex 1

Material

45; 84

ESRS 2 SBM-1

40 (d)i: Involvement in activities

related to fossil fuel activities

Indicators number 4 Ta-

ble #1 of Annex 1

Article 449a;

Regulation (EU)

No 575/2013;

Commission Implement-

ing Regulation

(EU) 2022/2453

Table 1: Qualitative infor-

mation on Environmental

risk and

Table 2: Qualitative infor-

mation on Social risk

Delegated Regulation

(EU) 2020/1816, Annex II

Not material

ESRS 2 SBM-1

40 (d)ii: Involvement in activities

related to chemical production

Indicator number 9 Table

#2 of Annex 1

Delegated Regulation

(EU) 2020/1816, Annex II

Not material

ESRS 2 SBM-1

40 (d)iii: Involvement in activities

related to controversial weapons

Indicator number 14 Ta-

ble #1 of Annex 1

Delegated Regulation

(EU) 2020/1818, Arti-

cle 12(1) Delegated Reg-

ulation (EU) 2020/1816,

Annex II

Not material

ESRS 2 SBM-1

40 (d)iv: Involvement in activities

related to cultivation and produc-

tion of tobacco

Delegated Regulation

(EU) 2020/1818, Arti-

cle 12(1) Delegated Reg-

ulation (EU) 2020/1816,

Annex II

Not material

ESRS E1-1

14: Transition plan to reach cli-

mate neutrality by 2050

Regulation

(EU) 2021/1119, Arti-

cle 2(1)

Material

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

List of annexes continued

ESRS E1-1

16 (g): Undertakings excluded

from Paris-aligned Benchmarks

Article 449a;

Regulation (EU)

No 575/2013;

Commission Implement-

ing Regulation

(EU)

2022/2453 Template

1: Banking book-Climate

Change transition risk:

Credit quality of expo-

sures by sector, emis-

sions and residual ma-

turity

Delegated Regulation

(EU) 2020/1818, Arti-

cle12.1 (d) to (g), and Ar-

ticle 12.2

Not material

ESRS E1-4

34: GHG emission reduction tar-

gets

Indicator number 4 Table

#2 of Annex 1

Article 449a;

Regulation (EU)

No 575/2013;

Commission Implement-

ing Regulation

(EU)

2022/2453 Template

3: Banking book – Cli-

mate change transition

risk: alignment metrics

Delegated Regulation

(EU) 2020/1818, Article 6

Material

ESRS E1-5

38: Energy consumption from

fossil sources disaggregated by

sources (only high climate impact

sectors)

Indicator number 5 Table

#1 and Indicator n. 5 Ta-

ble #2 of Annex 1

Material

ESRS E1-5

37: Energy consumption and mix

Indicator number 5 Table

#1 of Annex 1

Material

ESRS E1-5

40 to 43: Energy intensity associ-

ated with activities in high climate

impact sectors

Indicator number 6 Table

#1 of Annex 1

Material

ESRS E1-6

44: Gross Scope 1, 2, 3 and To-

tal GHG emissions

Indicators number 1

and 2 Table #1 of Annex

Article 449a; Regulation

(EU) No 575/2013;

Commission Implement-

ing Regulation

(EU)

2022/2453 Template

1: Banking book – Cli-

mate change transition

risk: Credit quality of ex-

posures by sector, emis-

sions and residual ma-

turity

Delegated Regulation

(EU) 2020/1818, Arti-

cle 5(1), 6 and 8(1)

Material

ESRS E1-6

53 to 55: Gross GHG emissions

intensity

Indicators number 3 Ta-

ble #1 of Annex 1

Article 449a; Regulation

(EU) No 575/2013;

Commission Implement-

ing Regulation

(EU)

2022/2453 Template

3: Banking book – Cli-

mate change transition

risk: alignment metrics

Delegated Regulation

(EU) 2020/1818, Arti-

cle 8(1)

Material

ESRS E1-7

56: GHG removals and carbon

credits

Regulation

(EU) 2021/1119, Arti-

cle 2(1)

Not material

ESRS E1-9

66: Exposure of the benchmark

portfolio to climate-related physi-

cal risks

Delegated Regulation

(EU) 2020/1818, Annex II

Delegated Regulation

(EU) 2020/1816, Annex II

Not material

ESRS E1-9

66 (a): Disaggregation of mone-

tary amounts by acute and

chronic physical risk

66 (с): Location of significant as-

sets at material physical risk

Article 449a; Regulation

(EU) No 575/2013;

Commission Implement-

ing Regulation

(EU) 2022/2453 para-

graphs 46 and 47; Tem-

plate 5: Banking book -

Climate change physical

risk: Exposures subject to

physical risk.

Not material

ESRS E1-9

67 (c): Breakdown of the carrying

value of its real estate assets by

energy-efficiency classes

Article 449a; Regulation

(EU) No 575/2013;

Commission Implement-

ing Regulation

(EU) 2022/2453 para-

graph 34;

Template 2: Banking

book -Climate change

transition risk: Loans col-

lateralized by immovable

property - Energy effi-

ciency of the collateral

Not material

ESRS E1-9

69: Degree of exposure of the

portfolio to climate- related op-

portunities

Delegated Regulation

(EU) 2020/1818, Annex II

Not material

ESRS E2-4

28: Amount of each pollutant

listed in Annex II of the E-PRTR

Regulation (European Pollutant

Release and Transfer Register)

emitted to air, water and soil

Indicator number 8 Table

#1 of Annex 1 Indicator

number 2 Table #2 of An-

nex 1 Indicator number 1

Table #2 of Annex 1 Indi-

cator number 3 Table #2

of Annex 1

Material

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

List of annexes continued

ESRS E3-1

9: Water and marine resources

Indicator number 7 Table

#2 of Annex 1

Not material

ESRS E3-1

13: Dedicated policy

Indicator number 8 Table

2 of Annex 1

Not material

ESRS E3-1

14: Sustainable oceans and seas

Indicator number 12 Ta-

ble #2 of Annex 1

Not material

ESRS E3-4

28 (с): Total water recycled and

reused paragraph

Indicator number 6.2 Ta-

ble #2 of Annex 1

Not material

ESRS E3-4

29: Total water consumption in

m3 per net revenue on own oper-

ations

Indicator number 6.1 Ta-

ble #2 of Annex 1

Not material

ESRS 2-SBM 3-E4

16 (a)i

Indicator number 7 Table

#1 of Annex 1

Material

ESRS 2-SBM 3-E4

16 (b)

Indicator number 10 Ta-

ble #2 of Annex 1

Not material

ESRS 2-SBM 3-E4

16 (c)

Indicator number 14 Ta-

ble #2 of Annex 1

Not material

ESRS E4-2

24(b): Sustainable land, agricul-

ture practices or policies

Indicator number 11 Ta-

ble #2 of Annex 1

Material

ESRS E4-2

24(с): Sustainable oceans/seas

practices or policies

Indicator number 12 Ta-

ble #2 of Annex 1

Not material

ESRS E4-2

24 (d): Policies to address defor-

estation

Indicator number 15 Ta-

ble #2 of Annex 1

Material

ESRS E5-5

37 (d): Non-recycled waste

Indicator number 13 Ta-

ble #2 of Annex 1

Material

ESRS E5-5

39: Hazardous waste and radio-

active waste

Indicator number 9 Table

#1 of Annex 1

Material

ESRS 2-SBM3-S1

14 (f): Risk of incidents of forced

labour

Indicator number 13 Ta-

ble #3 of Annex I

Not material

ESRS 2-SBM3-S1

14 (g): Risk of incidents of child

labour

Indicator number 12 Ta-

ble #3 of Annex I

Not material

ESRS S1-1

20: Human rights policy commit-

ments

Indicator number 9 Table

#3 and Indicator number

11 Table #1 of Annex I

Material

69-70; 87

ESRS S1-1

21: Due diligence policies on is-

sues addressed by the funda-

mental International Labor Or-

ganisation Conventions 1 to 8

Delegated Regulation

(EU) 2020/1816, Annex II

Material

ESRS S1-1

22: processes and measures for

preventing trafficking in human

beings

Indicator number 11 Ta-

ble #3 of Annex I

Not material

ESRS S1-1

23: workplace accident preven-

tion policy or management sys-

tem

Indicator number 1 Table

#3 of Annex I

Material

69-70; 87

ESRS S1-3

32 (с): grievance/complaints han-

dling mechanisms

Indicator number 5 Table

#3 of Annex I

Material

ESRS S1-14

88 (b) and (с): Number of fatali-

ties and number and rate of

work-related accidents

Indicator number 2 Table

#3 of Annex I

Delegated Regulation

(EU) 2020/1816, Annex II

Material

ESRS S1-14

88 (e): Number of days lost to in-

juries/ accidents/ fatalities or ill-

ness

Indicator number 3 Table

#3 of Annex I

Material

ESRS S1-16

97 (a): Unadjusted gender pay

gap paragraph

Indicator number 12 Ta-

ble #1 of Annex I

Delegated Regulation

(EU) 2020/1816, Annex II

Not material

ESRS S1-16

97 (b): Excessive CEO pay ratio

paragraph

Indicator number 8 Table

#3 of Annex I

Not material

ESRS S1-17

103 (a): Incidents of discrimina-

tion paragraph

Indicator number 7 Table

#3 of Annex I

Not material

ESRS S1-17

104 (a): Non-respect of UNGPs

on Business and Human Rights

and OECD Guidelines

Indicator number 10 Ta-

ble #1 and Indicator n. 14

Table #3 of Annex I

Delegated Regulation

(EU) 2020/1816, Annex II

Delegated Regulation

(EU) 2020/1818 Art 12 (1)

Not material

ESRS 2-SBM3-S2

11 (b): Significant risk of child la-

bour or forced labour in the value

chain

Indicators number 12 and

n. 13 Table #3 of Annex I

Not material

ESRS S2-1

17: Human rights policy commit-

ments

Indicator number 9 Table

#3 and Indicator n. 11 Ta-

ble #1 of Annex 1

Not material

ESRS S2-1

18: Policies related to value

chain workers

Indicator number 11 and

n. 4 Table #3 of Annex 1

Not material

ESRS S2-1

19: Non-respect of UNGPs on

Business and Human Rights

principles and OECD guidelines

Indicator number 10 Ta-

ble #1 of Annex 1

Delegated Regulation

(EU) 2020/1816, Annex II

Delegated Regulation

(EU) 2020/1818, Art 12

(1)

Not material

ESRS S2-1

19: Due diligence policies on is-

sues addressed by the funda-

mental International Labor Or-

ganisation Conventions 1 to 8

Delegated Regulation

(EU) 2020/1816, Annex II

Not material

ESRS S2-4

36: Human rights issues and inci-

dents connected to its upstream

and downstream value chain

Indicator number 14 Ta-

ble #3 of Annex 1

Not material

ESRS S3-1

16: Human rights policy commit-

ments

Indicator number 9 Table

#3 of Annex 1 and Indica-

tor number 11 Table #1 of

Annex 1

Material

76; 87

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

List of annexes continued

ESRS S3-1

17: Non-respect of UNGPs on

Business and Human Rights, ILO

principles or OECD guidelines

Indicator number 10 Ta-

ble #1 Annex 1

Delegated Regulation

(EU) 2020/1816, Annex II

Delegated Regulation

(EU) 2020/1818, Art 12

(1)

Material

ESRS S3-4

36: Human rights issues and inci-

dents

Indicator number 14 Ta-

ble #3 of Annex 1

Material

ESRS S4-1

16: Policies related to consumers

and end-users

Indicator number 9 Table

#3 and Indicator number

11 Table #1 of Annex 1

Material

ESRS S4-1

17: Non-respect of UNGPs on

Business and Human Rights and

OECD guidelines

Indicator number 10 Ta-

ble #1 of Annex 1

Delegated Regulation

(EU) 2020/1816, Annex II

Delegated Regulation

(EU) 2020/1818, Art 12

(1)

Not material

ESRS S4-4

35: Human rights issues and inci-

dents

Indicator number 14 Ta-

ble #3 of Annex 1

Material

ESRS G1-1

10 (b): United Nations Conven-

tion against Corruption

Indicator number 15 Ta-

ble #3 of Annex 1

Not material

ESRS G1-1

10 (d): Protection of whistle-blow-

ers

Indicator number 6 Table

#3 of Annex 1

Not material

ESRS G1-4

24 (a): Fines for violation of anti-

corruption and anti-bribery laws

Indicator number 17 Ta-

ble #3 of Annex 1

Delegated Regulation

(EU) 2020/1816, An-

nex II)

Material

ESRS G1-4

24 (b): Standards of anti- corrup-

tion and anti- bribery

Indicator number 16 Ta-

ble #3 of Annex 1

Material

Annex 3 – Key Policies and Procedures

Policy

Description of key contents

Scope

Responsible for

implementation

Internationally

recognized

instruments

Availability

Sustainable

Development and CSR

Policy

The Policy is built around commitment to three dimensions: social, eco-

nomic, and environmental responsibility —

all contributing to sustainable

development and the achievement of strategic objectives.

Social responsibility

focuses on developing human potential, ensuring

occupational health and safety, fostering opportunities for self-

realization

and professional growth, and contributing to the resolution of socially sig-

nificant issues, including support for local communities in regions of op-

eration.

Economic responsibility

is aimed at maximizing profitability through the

efficient use of resources, adoption of innovative technologies, continu-

ous process improvement, and transparent business practices. The Com-

pany is committed to responsible land use and to producing high-qu

ality

products that meet international standards, business ethics, and cus-

tomer needs.

Environmental responsibility

prioritizes energy efficiency, minimizing

environmental impacts, reducing greenhouse gas emissions, increasing

recycling and waste minimization, and preserving soil health and natural

regenerative capacity.

Group

Value chain

Head of Sustainable Devel-

opment

Head of CSR

SDGs

UN Global Compact

Corporate

website

Environmental

Protection Policy

The Policy sets out goals to prevent and minimize negative impacts on

the environment, ensure effective management of environmental risks,

and establish a unified approach to environmental management. It em-

phasizes continuous improvement and performance enhancement in en-

vironmental protection, developing systems for monitoring environmental

impacts, and ensuring openness and transparency in environmental com-

munications.

Group

Value chain

Head of Environmental Pro-

tection

Head of Sustainable Devel-

opment

ISO 14001

National legislation

Corporate

website

Human Rights Policy

The Policy establishes guiding principles for the Company’s approach to

human rights, decision-

making, and expected behavior. It aims to foster

a strong compliance culture and uphold ethical standards in employee

relations, while ensuring respect for human

rights and providing effective

remedies in cases of violation. The Policy ensures that all universally rec-

ognized human rights are upheld within the Company, demonstrates that

respect for rights and freedoms is fundamental to business resilience, and

sets

out concrete actions to make these principles clear to employees and

partners.

Group

Value chain

Head of Compliance Depart-

ment

UN Guiding Principles on

Business and Human Rights

ILO Fundamental Conven-

tions

OECD Guidelines

National legislation

Corporate

website

Stakeholder

Engagement Policy

The Policy defines Kernel’s commitment to building transparent, con-

structive, and long-term relationships with its stakeholders. It defines

Stakeholder Engagement Plan, which tailors engagement methods for

each stakeholder group and outlines their key concerns, the approaches

used to address them, and the outcomes we aim to achieve.

The policy emphasizes contribution to sustainable regional development,

grievance mechanisms for confidential feedback, transparent communi-

cation on follow-

up actions, and continuous improvement through regular

evaluation and benchmarking of engagement practices.

Group

Head of CSR

Head of Sustainable Devel-

opment

Directors of the Division/De-

partment Heads

Aarhus Convention

Corporate

intranet

DE&I Policy

The Policy aims to ensure equal respect and unbiased treatment for peo-

ple of all cultures, backgrounds, and positions across the Group. It pro-

motes equality, inclusion, and diversity, fostering human dignity and zero

tolerance for discrimination. By creating opportunities, empowering un-

derrepresented groups, and removing barriers for youth, women, people

with disabilities, those nearing retirement, and employees from diverse

regions, the Policy advances inclusivity.

Group

Value chain

Head of Human Resources

Department

UN Global Compact

UN SDGs

UN Entity for Gender Equality

and the Empowerment of

Women and International La-

bor Organization Conven-

tions

Corporate

website

Anti-discrimination

Policy

The Policy outlines the company’s commitment to preventing discrimina-

tion and unlawful harassment, protecting employees, counterparties, cus-

tomers, and stakeholders. It reinforces the creation of a safe, diverse, and

Group

Value chain

Head of Human Resources

Department

UN Global Compact

Corporate

website

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

List of annexes continued

respectful workplace where all individuals are treated with dignity. It en-

sures that all stakeholders are aware of the Policy, with clear procedures

to properly investigate and address any allegations of violations.

Occupational Health and

Safety (OHS) Policy

The Policy is aimed at creating a safe working environment, fostering a

strong safety culture, and implementing measures to protect the health

and lives of employees during their professional activities. The Policy fo-

cuses on identifying and eliminating ha

zards, managing related risks, and

ensuring the efficient operation of assets through continuous improve-

ment of the OHS system. Key measures include analyzing incidents and

implementing corrective actions, reducing risks to personnel during mili-

tary aggres

sion, monitoring OHS performance indicators and reporting on

results, and providing psychosocial support to employees to help prevent

mental and behavioral disorders.

Group

Head of Occupational Safety

Department

OHSAS 18001/ISO 45001

National legislation

Corporate

intranet

Compensation and

Benefits Policy

The Policy is designed to ensure fair compensation for employees based

on their qualifications, performance, and contribution to the Company’s

goals. The Policy promotes external fairness by aligning remuneration

levels with market standards, while also en

suring transparency and clarity

of reward conditions for all employees. It aims to motivate staff to achieve

strategic objectives, while creating the conditions necessary to attract and

retain talented employees.

Group

Head of Human Resources

Department

Directors of the Division/De-

partment Heads

National legislation

Corporate

intranet

Security Policy

The Policy is aimed at ensuring the safety and protection of its people,

assets, and operations. The Policy establishes effective measures to pre-

vent, monitor, and respond to security risks, including those arising from

external threats, while maintaining business continuity.

Group

Head of Security Department

Corporate

intranet

Resilience in Times of

War Policy

The Policy is designed to ensure the uninterrupted operation of the

Group, maintain financial stability, protect employees and assets, pro-

mote social responsibility, and comply

with legal and ethical standards

during times of war. It establishes measures for maintaining critical busi-

ness processes, developing emergency response plans, securing finan-

cial reserves, and supporting employees through training, adaptation, and

timely

communication. Beyond internal resilience, the Policy encourages

volunteer and charity initiatives, supporting communities in rebuilding in-

frastructure and addressing urgent needs.

Group

Head of Human Resources

Department

Directors of the Division/De-

partment Heads

Corporate

intranet

Policy of Working with

Veterans

The Policy is designed to support the professional and social reintegration

of veterans. It aims to create favorable conditions for the return of demo-

bilized employees and the recruitment of veteran candidates,

promoting

their integration into society and professional life, and fostering an inclu-

sive workplace that ensures both comfort and productivity.

Group

Head of Human Resources

Department

National legislation

Corporate

intranet

Social Impact and

Community Engagement

Policy

The Policy sets out Kernel’s commitment to creating lasting positive out-

comes in the regions where it operates. It defines the principles of social

influence and cooperation with communities, ensures transparent and

systematic management of engagement with local authorities and stake-

holders, and establishes effective mechanisms for addressing social is-

sues together. The policy guides the implementation of long-

term social

programs and projects that contribute to sustainable regional develop-

ment, while promo

ting a unified approach to collaboration that delivers

lasting results for both the Company and the communities it serves.

Group

Head of CSR

UN Global Compact

UN Guiding Principles on

Business and Human Rights

Corporate

intranet

Safety and Quality Man-

agement Policy

The Policy aims to ensure proper control at all key stages of the produc-

tion process, from the purchase of raw materials through their handling,

storage, and processing to the production of finished products and their

shipment, in accordance with establish

ed procedures, regulations, and

instructions. It promotes the use of advanced methods for quality assess-

ment, thorough documentation of laboratory quality control processes,

and the implementation of motivational strategies to foster high-

quality,

productive, and engaged employee performance.

Group

Value chain

Head of Quality Management

ISO standards

FSSC 22000

IFS standards

GMP +1B, +B3, +B4

ISCC standards

National legislation

Corporate

website

Code of Conduct

The Code of Conduct reflects Kernel’s core values and guiding principles,

setting the foundation for responsible and sustainable business practices.

It emphasizes financial stability, strategic system management, and the

effective use of assets and resourc

es, while fostering synergy through

business integration and innovation. It promotes sustainable business

reputation - transparency, honesty, and compliance with laws and regu-

lations, alongside a commitment to sustainable development, social re-

sponsibility

, workplace health, and environmental stewardship. The Code

recognizes the importance of strong leadership, professional teams, and

entrepreneurial involvement, guided by partnership, shared goals, mutual

respect, and trust.

Group

All employees

UN Guiding Principles on

Business and Human Rights

National legislation

Corporate

website

Corporate

Governance Charter

The Corporate Charter outlines the principles and framework guiding Ker-

nel’s corporate management and operations. It sets out the roles of share-

holders, the Board, and executive management, outlines the work of key

committees, and establishes principles for financial reporting, risk man-

agement, disclosure, and sustainability.

Group

Board of Directors

Executive Management

Team

Best Practices for WSE

Listed Companies 2021

The X Principles of Corporate

Governance of the Luxem-

bourg Stock Exchange

Corporate

website

Code of Interaction with

Suppliers

The Code establishes clear standards for fair business practices, respect

for human rights and environmental responsibility with suppliers. Kernel

builds supplier relationships on openness, trust, and integrity by holding

transparent tenders, ensuring equa

l treatment, and providing channels to

report violations. Suppliers are required to maintain fair working condi-

tions, prohibit child and forced labor, prevent discrimination and harass-

ment, uphold health and safety standards, and respect cultural diversity

and freedom of association. The Code also emphasizes minimizing envi-

ronmental impact, maintaining sustainable and efficient operations, deliv-

ering high-

quality products and services, and safeguarding confidential

information and personal data. Compliance with these principles is sub-

ject to verification, and violations may result in exclusion from tenders,

termination of contracts, or cessation of cooperation.

Group

Value chain

All employees

Corporate

website

Conflict of Interest Man-

agement and the Pre-

vention of Fraud and

Corruption Policy

The Policy is designed to foster a strong compliance culture and protect

the Company from risks related to conflicts of interest, fraud, and corrup-

tion. It defines the types of conflicts of interest and situations requiring

resolution, as well as the mecha

nisms for addressing them. The policy

Group

CEO

Directors of the Division/De-

partment Heads

FCPA

UKBA

UNCAC

Corporate

intranet

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

List of annexes continued

also outlines clear rules for tenders and procurement, interactions with

public officials, the handling of business gifts and hospitality, financial re-

porting standards, and procedures for reporting violations, ensuring in-

tegrity and transparency across all business operations.

The Convention on Combat-

ing Bribery of Foreign Public

Officials in International Busi-

ness Transactions

OECD Convention

Protection of Whistle-

blowers Procedure

The Procedure is designed to safeguard employees who report concerns

by preventing workplace discrimination against whistleblowers and their

close relatives employed within the Company. The procedure is covered

by Conflict of Interest Management and the Prevention of Fraud and Cor-

ruption Policy. It establishes measures to avoid harassment or violations

of whistleblowers’ rights, provides guidance on appropriate behavior in

cases of confirmed retaliation, and reduces risks associated with potential

misuse of authority by managers.

Group

Head of Compliance Depart-

ment

Corporate

intranet

Sanctions Policy

The Policy establishes Kernel’s commitment to monitoring, assessing,

and managing sanctions-

related risks across all business operations. Its

purpose is to protect the Company’s reputation, avoid cooperation with

parties subject to international or nationa

l sanctions, and safeguard

against related financial, operational, and legal risks while ensuring busi-

ness continuity.

Group

Valur chain

Head of Compliance Depart-

ment

National legislation

Corporate

website

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Corporate Governance

Main characteristics of Kernel

Group structure

Kernel Holding S.A. (the “Company”) is a Lux-

embourg-based public limited liability com-

pany (RCS Luxembourg B109173) estab-

lished on 15 June 2005, with its registered of-

fice at 8A, Boulevard Joseph II, L-1840 Lux-

embourg. It serves as the holding entity for a

group of companies, collectively referred to as

the “Group” or “Kernel”.

The list of primary subsidiaries is disclosed on

page 114 of this report.

Listing on the WSE

The Company's shares have been listed on

the main market of the Warsaw Stock Ex-

change (“WSE”) since November 2007.

On 13 April 2023, the Board of Directors de-

cided to delist the Company from the WSE,

and on 12 May 2023, the Company applied to

the Polish Financial Supervision Authority

(“PFSA”) for approval.

On 13 October 2023, the group of minority

shareholders of the Company initiated legal

proceedings to cancel the Board’s delisting

decision. Given that, in March 2024, the PFSA

informed the Company about the suspension

of the administrative proceedings on the

delisting of the Company from the Warsaw

Stock Exchange. The PFSA will not issue the

decision on granting permission to withdraw

the Company's shares from trading on the reg-

ulated market until the District Court in Luxem-

bourg has resolved the allegations raised by

minority shareholders. Consequently, the pro-

cess of the Kernel’s delisting from the WSE

was ongoing as of 30 June 2025.

Share capital and significant share-

holdings

The issued capital of the Company as of 30

June 2025 consisted of 293,429,230 fully paid

ordinary single-class shares without indication

of the nominal value. Ordinary shares have

equal voting rights and rights to receive divi-

dends.

According to notifications received by the

Company, one shareholder owned more than

5% of the Company’s voting shares as of 30

June 2025:

• Namsen Limited (hereinafter “Namsen”), a

legal entity directly controlled by the

Chairman of the Board of Directors and

founder of the business, Mr. Andrii Ver-

evskyi, owns 95.07% of voting shares.

Over the course of FY2025, Namsen in-

creased its stake in the Company from 94.4%

to 95.07% of total shares issued, as a result of

the acquisition of shares, as disclosed in the

Current report no. 02/2025.

As of 30 June 2025, the Company held

300,000 shares as treasury stock without vot-

ing and dividend rights, representing 0.1% of

the subscribed share capital. The increase in

the treasury shares during FY2025 resulted

from a transaction under the long-term man-

agement incentive plan, whereby one benefi-

ciary exercised a put option to sell a fixed num-

ber of the Company’s shares back to the Com-

pany at the predetermined exercise price. The

total cash consideration paid amounted to

USD 6.6 million.

As of 30 June 2025, there were no outstanding

options granting rights to acquire shares of the

Company to which the Company is a party.

Corporate governance framework

Kernel is committed to high standards of cor-

porate governance and is guided by the cor-

porate governance framework determined by:

• the corporate law of the Grand Duchy of

Luxembourg as a place of incorporation (in-

cluding voluntary compliance with most of

the provisions of the X Principles of Corpo-

rate Governance of the Luxembourg Stock

Exchange); and

• the corporate governance rules set out in

the Best Practice for WSE Listed Compa-

nies 2021 as a place of Company’s shares

listing. Paragraph 29 of the Warsaw Stock

Exchange Rules requires issuers to publish

a report indicating which rules the issuer

complies with and which rules the issuer

does not comply with permanently. The

Company published such a report on 12 Au-

gust 2021, available on the Company’s

website. The Company applied all the prin-

ciples except for detailed principles 1.4.,

1.4.1., 1.4.2., 1.5., 2.1., 2.11.3., 2.11.5.,

2.11.6., 3.6., 3.9., 6.2., 6.3., 6.4.

The key documents defining the Company’s

corporate governance principles include the

Articles of Association and the Corporate Gov-

ernance Charter. Additionally, Kernel has a

Remuneration Policy, which is approved and

periodically reviewed by the general meeting

of shareholders and applies to both the Board

of Directors and the Executive Management

Team. All these documents can be accessed

on the Company’s website.

Following a regular review of the Company’s

……………………………………………………………………...

Ownership structure as of 30 June 202

owned

% of voting

/dividend

Namsen

278,947,016

95.07%

95.16%

Other

14,182,214

4.83%

4.84%

Treasury

300,000

0.10%

0.00%

Total

293,429,230

100.0%

………………………………………………………………………………………………………………………………………………….

Sell-out

On 28 January 2025, the Company received a notification from Namsen Limited about the

manager's transactions that occurred on 27 January 2025. As a result of these transactions,

Namsen Limited acquired 2,032,127 Company's shares at a price of EUR 3.93 per share,

thereby increasing its total shareholding to 278,947,016 shares of Kernel Holding S.A., repre-

senting 95.07% of total shares issued and voting rights.

Consequently, Namsen has become the majority shareholder within the meaning of the Lux-

embourg Law of 21 July 2012 on mandatory squeeze-out and sell-out of securities of compa-

nies currently admitted or previously admitted to trading on a regulated market or having been

offered to the public and amending the law of 23 December 1998 establishing a financial sector

supervisory commission.

On 29 July 2025, the Company received a notification from Namsen that 1) certain minority

shareholder had decided to exercise their right to sell their shares, thereby initiating the sell-

out procedure; 2) KPMG prepared the valuation report to determine the fair price of Company’s

shares; 3) Namsen proposed price of PLN 19.45 per shares to be used in the sell-out.

As of the date of this report, no further updates or decisions have been communicated by the

Commission de Surveillance du Secteur Financier regarding the fair price or next steps in the

sell-out procedure.

Governance structure

Executive

Management Team

Board of Directors

•

Audit Committee

• Sustainability Committee

• Nomination and Remu-

neration Committee

General meeting of

shareholders

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Corporate Governance continued

adherence to the best corporate governance

practices, the Board believes that the Com-

pany has made its best efforts to comply with:

• the applicable corporate governance princi-

ples;

• disclosure obligations concerning compli-

ance with corporate governance principles

defined in the WSE Rules;

• regulations on current and periodic reports

published by the Company as a securities

issuer, according to WSE Rules.

General Meeting of Sharehold-

ers

The General Meeting of Shareholders is the

Company's highest governance body, pos-

sessing the broadest power to order, carry out,

or ratify all acts relating to the Company's op-

erations. Detailed information on the organiza-

tion and functioning of the General Meeting of

Shareholders can be found in the Articles of

Association and the Corporate Governance

Charter, both of which are available on the

Company’s website.

To safeguard the Company’s corporate gov-

ernance framework and mitigate legal uncer-

tainty, an extraordinary general meeting of

shareholders was held on 12 August 2024

to reapprove all the resolutions adopted at the

annual general meeting of shareholders held

on 11 December 2023 (the “AGM 2023”). This

precautionary step was taken in response to

legal actions initiated by shareholders repre-

senting approximately 0.4% of the Company’s

share capital. Among other things, they seek

to suspend the effects of the minutes of the

AGM 2023 and annul the decisions taken.

Such frivolous litigations might have had a

negative impact on Kernel, including disrup-

tion to the Company’s orderly operations, po-

tentially complicating both reporting and audit-

ing processes and/or creating a vacuum of

corporate powers at some stage. As a precau-

tionary measure, shareholders were invited to

vote again on each agenda item. This was to

either maintain the effect of their vote ex-

pressed at the AGM 2023 (if applicable) or to

cast a new vote on each agenda item (if no

vote was expressed at the AGM 2023 or they

wished to change their previous vote).

The annual general meeting held on 10 De-

cember 2024 (the “AGM 2024”):

• approved the management report of the

Board of Directors, the consolidated finan-

cial statements of the Group, and the

standalone annual accounts of the Com-

pany, along with the report of the independ-

ent auditor for the year ended 30 June

2024;

• approved, on an advisory basis, the remu-

neration report for the FY2024;

• granted discharge to the directors of the

Company for their mandates in FY2024;

• renewed the mandates of all directors and

approved the fees for executive and non-ex-

ecutive directors for the year ended 10 De-

cember 2025;

• re-appointed PwC as the independent audi-

tor of the Company;

All recent general meetings were held with the

physical presence of shareholders, alongside

through the direct electronic voting and proxy

voting via an independent representative.

The next annual general meeting of share-

holders is scheduled for 10 December 2025.

All documents related to the general meetings

of shareholders and the resolutions adopted

are available on the Company’s website.

GOV-1

Board of Directors

The Company is managed by the Board of Di-

rectors (the “Board”), which is the ultimate de-

cision-making body, except for powers re-

served for the general meeting of sharehold-

ers as stipulated by law, the Articles of Asso-

ciation, and the Corporate Governance Char-

ter. The Board is vested with the broadest

powers to perform all acts of administration

and disposition in compliance with the Com-

pany’s corporate purpose. The Board resolves

to take its decisions objectively, in the best

corporate interest of the Company. The Board

is collectively responsible and accountable to

the shareholders for the proper conduct of the

business, the long-term success of the Com-

pany, the effectiveness of the reporting sys-

tem, and the corporate governance frame-

work.

The responsibilities of the Board include ap-

proval and review of strategies and policies,

governance of the Company, and manage-

ment supervision. More detailed responsibili-

ties are specified in the Company’s Corporate

Governance Charter.

All Directors are equally accountable for the

proper stewardship of the Company’s affairs.

The non-executive directors have a responsi-

bility to ensure that the business strategies

proposed are fully discussed and critically re-

viewed. This enables the Directors to promote

the success of the Company for the benefit of

its shareholders, while having regard to,

among other matters, the interest of employ-

ees, the fostering of business relationships

with customers, suppliers, and other stake-

holders, as well as promoting the impact of the

Company’s operations on the communities

and the environment in which the business op-

erates.

The Board approves every investment, divest-

ment, acquisition, disposal, and funding trans-

action exceeding in value 5% of the average

12 months trailing daily market capitalization

of the Company.

Board composition

The Board is composed of eight directors, five

of which are executive (including a Chairman)

and three are non-executive directors. There

were no changes in the composition of the

Board in FY2025.

Our non-executive directors are highly experi-

enced and influential, with diverse back-

grounds across various industries and coun-

tries. They bring a strong blend of skills and

business acumen, significantly enhancing the

effectiveness of the Board and its Commit-

tees.

………………………………………………………………………………………………………………………………………..........................................................................................................................

Composition of the Board of Directors as of

3 October 2025

75%

25%

Male

Female

Gender

13%

75%

13%

<40

41-50

>50

Age

50%

13%

38%

<5 years

5-10 years

>10 years

Tenure

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Corporate Governance continued

...................................................................................................……………………........................................................................................................................................................................................................................

Effective and experienced leadership

Kernel Holding S.A. is governed by the Board of Directors composing of eight members, including three non-executive directors, two of whom are

independent. Key information on Directors is as follows (with further details available on Company’s

website).

Andrii Verevskyi, 5

Chairman of the Board, Founder

Andrii Miski-Oglu, 48

Independent non-executive director

Tenure: 18 years

Skills and experience:

Founded the Group’s business in 1995,

holding various executive positions

within the Group. Presently, he over-

sees the strategic development and

overall management of the Group.

Board Committee:

Nomination & Remuneration Commit-

tee

Tenure: 4 years

Skills and experience:

Mr. Miski-Oglu has 21 years of

experi-

ence in public accounting and audit

EY, involved in major EY Global audit

related initiatives. He holds CPA

in the

US since 2011 and a member of The

American Institute of Certified Public

Accountants (AICPA).

Board Committee:

Chairman of the

Audit Committee, Nomination & Remu-

neration Committee

Daria Danilczuk, 38

Non-executive director

Mykhaylo Mishov, 43

Independent non-executive director

Tenure: 4 years

Skills and experience:

Agricultural commodity broker, special-

ized in Black Sea commodity markets,

experienced in international trade and

biofuels trade and regulatory frame-

work.

Board Committee:

Chairwoman of the Sustainability Com-

mittee, Audit Committee

Tenure: 4 years

Skills and experience:

Mr. Mishov has over 18 years’ experi-

ence in consulting, including Ernst &

Young, Deloitte and KPMG, leading nu-

merous strategy and performance im-

provement projects for agribusiness cli-

ents.

Board Committee:

Chairman of the Nomination & Remu-

neration Committee, Audit Committee,

Sustainability Committee

Sergiy Volkov, 45

Chief Financial Officer

Yevgen Osypov, 49

Chief Executive Officer

Tenure: 2 years

Skills and experience:

Mr. Volkov is responsible for the overall

financial management of Kernel. He

holds CPA certification.

Board Committee:

None

Tenure: 8 years

Skills and experience:

Mr. Osypov is responsible for the day

to-

day management of the Company’s

subsidiaries, execution of strategy,

budgets, and Board decisions. He com-

pleted several educational programs in

Harvard Business School.

Board Committee:

Sustainability Committee

Anastasiia Usachova, 54

Executive Director

Yuriy Kovalchuk, 44

Corporate Investment Director

Tenure: 18 years

Skills and experience:

Mrs. Usachova is responsible for the

overall financial oversight of Kernel.

She holds an MBA degree from IMD

(Switzerland).

Board Committee:

Sustainability Committee

Tenure: 14 years

Skills and experience:

Mr. Kovalchuk contributes to strategy

formulation and is responsible for the

execution of investment projects. Yuriy

has been a Fellow with Association o

Chartered Certified Accountants

(FCCA), since September 2013.

Board Committee:

None

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Corporate Governance continued

All directors’ mandates, including that of the

Chairman, expires at the Annual General

Meeting in December 2025.

The Nomination & Remuneration Committee

regularly reviews the Board’s composition to

ensure a diverse, balanced mix of competen-

cies, skills, experience, and knowledge of the

Company’s affairs. Key principles for the nom-

ination, appointment, and re-election of Direc-

tors are outlined in the Corporate Governance

Charter, available on Kernel’s website.

Board diversity

Diversity among Directors enhances the

Board's performance and efficiency, serving

the Company’s best interests. The Board's di-

versity is supported by Kernel’s Diversity,

Equality, and Inclusion Policy, adopted by

management in 2018 and approved by the

AGM on 10 December 2021. The policy is con-

sistently applied by the Nomination & Remu-

neration Committee and the Executive Man-

agement Team in employee and management

appointments.

The Company benefits from diversity in:

• gender;

• age and tenure;

• professional experience (industry and op-

erations expertise, soft commodities trad-

ing, finance and audit, banking and invest-

ments, and sustainability);

• nationality and culture (the Board in-

cludes citizens of Ukraine, along with one

Luxembourg resident, one Polish citizen,

and two U.S. citizens).

Directors consider diversity when evaluating

the Board's effectiveness. In the FY2025 an-

nual self-evaluation, all Directors acknowl-

edged the Board’s sufficient range of exper-

tise, attitudes, and external relationships.

Directors’ independence

Each independent director annually submits a

statement confirming compliance with the in-

dependence criteria outlined in Annex II of the

European Commission Recommendation of

15 February 2005. These statements are pub-

lished on the Company’s website.

According to statements received in 2025, two

of the three non-executive directors met the in-

dependence criteria. None of the three non-

executive directors have any material relations

with shareholder holding at least 5% of the

Company’s total voting rights.

Conflict of interest

A Corporate Governance Charter adopted in

May 2018 emphasized the disclosure of con-

flicts of interest among Directors. Any Director

having a direct or indirect conflict of interest

must inform the Board thereof and shall refrain

from deliberating or voting on the relevant item

on the agenda. Any conflict of interest should

be properly declared and documented.

Members of the Board shall refrain from pro-

fessional or other activities which might cause

a conflict of interest or adversely affect their

reputation as members of the governing bod-

ies of the Company, and where a conflict of

interest arises, immediately disclose it.

The following non-exhaustive list is an exam-

ple of the duties that shall be followed by the

Directors:

• duty not to accept any benefits from third

parties, which may give rise to personal fi-

nancial interest and/or gain;

• duty to disclose any interest in a proposed

transaction or arrangement with the Com-

pany and a separate and independent duty

to disclose any arrangement with the Com-

pany; and

• duty to avoid conflicts of interest unless au-

thorized.

There were no cases of conflict of interest

among Directors declared over the course of

FY2025.

As of October 2025, non-executive directors

occupied the following positions in companies

outside Kernel:

• Mrs. Daria Danilczuk is a commodities bro-

ker and trading expert at JDI Brokers, Swit-

zerland.

• Mr. Mykhaylo Mishov is Supply Chain Strat-

egy Lead at SC Johnson, Chicago, United

States.

• Mr. Andrii Miski-Oglu does not occupy posi-

tions in companies outside Kernel as of the

date of publication of this report.

Board committees

The Board has established three committees:

• Audit Committee;

• Nomination & Remuneration Committee

(hereinafter “N&R Committee”);

• Sustainability Committee.

This structure ensures efficient performance,

as specific matters are first discussed by spe-

cialized bodies with relevant expertise before

being presented to the Board.

The Board regularly reviews the need for new

committees to adapt to changing business

needs. Following the annual review in July

2025, it was concluded that no new commit-

tees are needed at this time.

Board self-evaluation

In line with the best corporate governance

standards, the Board conducts a formal self-

evaluation of its performance, effectiveness,

operating efficiency, composition,

organizational structure, compliance with gov-

ernance rules, and relationships with execu-

tive management and stakeholders. The 2025

survey found no major issues in these areas.

The Board recognized the quality and timeli-

ness of information provided, the effective-

ness of its practices and meetings, appropri-

ate composition, clearly defined roles, and

well-established committee practices.

During the year, the non-executive directors

convened without the participation of execu-

tive directors to assess the performance of the

executive directors and the Executive Man-

agement Team, review progress against stra-

tegic objectives, and evaluate the Group’s po-

sition within the sector and market. The prac-

tice of convening such meetings forms an in-

tegral part of the Board’s governance frame-

work, enabling the non-executive directors to

exercise independent judgment, provide con-

structive challenge to executive leadership,

and ensure that oversight of performance re-

mains robust.

Professional development

To ensure that Directors maintain the skills

and knowledge necessary to effectively con-

tribute to the Board’s discussions, the Group’s

Human Resources Director engages with Di-

rectors to determine and agree upon individual

training and development requirements.

During FY2025 the Directors undertook tar-

geted professional development programs tai-

lored to their specific roles and responsibili-

ties, including:

• Andrii Miski-Oglu – Audit Committees in a

New Era of Governance (Harvard Business

School): enhancing understanding of evolv-

ing regulatory requirements, strengthening

internal controls, risk management, and fos-

tering transparency with investors;

• Daria Danilczuk-Masri – Wharton ESG Ex-

ecutive Certificate for Senior Leaders:

deepening expertise in developing and im-

plementing ESG strategies aligned with

business goals, engaging key stakeholders,

managing ESG-related risks, and measur-

ing performance.

Independent advice

All directors can consult the corporate secre-

tary for assistance with governance, corporate

administration, and legal matters. Directors

may also seek advice from independent pro-

fessional advisors on governance or business-

related issues pertinent to their duties, at the

Company’s expense.

Board activity report

The Board held fifteen meetings in FY2025, in-

cluding two in-person meeting in Luxembourg

and thirteen via teleconference. The average

attendance rate for all directors was 88%

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Corporate Governance continued

during this period.

Typically, at each meeting, the Chairman of

the Board and other executive directors report

on the strategy implementation and recent de-

velopments, along with management ac-

counts. The Board’s work plan (minutes and

circular resolutions) for FY2025 included,

among others, the following items:

• review of the impact of the Russia-Ukraine

war on operations;

• review of the Company’s strategy and

budget approval;

• review and approval of annual, semi-an-

nual, and quarterly accounts;

• review of operations updates and manage-

ment accounts;

• convening annual and extraordinary gen-

eral meetings of shareholders;

• review of corporate-governance-related

questions;

• oversight of risk management: approval of

top risks for the Company and mitigation

plan, review of reports on top risks mitiga-

tion activities; update on implementing the

risk management system; review of risk lim-

its;

• review of outstanding legal cases;

• updates from Audit Committee, N&R Com-

mittee, and Sustainability Committee;

• review of the performance of the Group sus-

tainability function;

• review and approvals of financing and in-

vestment transactions;

• various ad-hoc items and other corporate

decisions.

Executive Management Team

The Executive Management Team is respon-

sible for the overall financial and operating re-

sults of the Company’s subsidiaries, heading

operating segments and providing support

functions on a daily basis. The Executive Man-

agement Team focuses on strategy imple-

mentation, financial and competitive perfor-

mance, commercial and technological devel-

opments, succession planning, and organiza-

tional development.

The Executive Management Team is headed

by the Chief Executive Officer (the “CEO”),

who is appointed and removed by the Board

and reports directly to it. The CEO is respon-

sible for the day-to-day management of the

Company’s subsidiaries, execution of strat-

egy, budgets, and Board decisions. The CEO

delegates his/her responsibilities to the other

members of the Executive Management

Team.

The Executive Management Team consists of

15 professionals including the CEO, benefiting

from the diversity among its members. All the

members of the Executive Management Team

other than the CEO are appointed and

removed, as applicable, by the Board upon

proposal by the N&R Committee after prior

consultation with the CEO, save where he is

subject to the procedure. As such, after the re-

porting date, in August 2025, the Board:

• acknowledged the transition of Mr. Yurii Pu-

hach from his mandate as Director, Produc-

tion Assets Management (as a member of

the Executive Management Team) to Pro-

ject Manager (a role outside the Executive

Management Team) with effect as of 19 Au-

gust 2025;

• acknowledged the transition of Mr. Oleg

Tkachenko from his mandate as Director,

Security (as a member of the Executive

Management Team) to a new role responsi-

ble for Capital Construction (a role outside

the Executive Management Team) with ef-

fect as of 26 August 2025;

• resolved to appoint Mr. Hryhorii Kapustian

as a new Director, Production Assets Man-

agement (as a member of the Executive

Management Team) with effect as of 19 Au-

gust 2025;

• resolved to appoint Mr. Aibiek Toktomushev

as the new Director, Security (as a member

of the Executive Management Team) with

effect as of 26 August 2025.

The full list of the members of the Executive

Management Team, including short biog-

raphies for each member is available on the

Company’s website.

Responsibilities of the Executive Management

Team are described in more detail in the Com-

pany’s Corporate Governance Charter, avail-

able on the Company’s website.

Various committees are operating on the Ex-

ecutive Management Team level, including

the Strategy Committee, the Investment Com-

mittee, the Trade Committee, and the Risk

Committee.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Corporate Governance continued

Remuneration report

This remuneration report is published in ac-

cordance with article 7ter of the Luxembourg

law of 24 May 2011 on the exercise of certain

rights of shareholders at general meetings, as

amended.

The compensation principles for the Board

and the Executive Management Team are

specified in the Remuneration Policy of the

Company. The Group pays remuneration to

the Board and the Executive Management

Team only in accordance with the Remunera-

tion Policy. The Remuneration Policy must be

submitted to a vote by the general meeting at

every material change and, in any case, at

least every four years.

The most recent approval of the Remunera-

tion Policy took place at the annual general

meeting held on 11 December 2023, where

shareholders:

• approved an amendment to the long-term

management incentive plan in the form of

share put option agreements; and

• approved the Remuneration Policy, follow-

ing the requirements of Article 7bis of the

Luxembourg law of 24 May 2011 on the ex-

ercise of certain rights of shareholders at

general meetings, as amended.

Remuneration of the Board

The compensation of the Company’s Directors

solely consists of the fixed fees paid for the

services rendered in their capacity as mem-

bers of the Board of Directors. No perfor-

mance-based variable component, pension,

retirement, or similar benefits are provided by

the Company. This ensures a certain degree

of independence when it comes to fulfilling the

Board’s duties towards the Executive Man-

agement Team. On top of that, Directors are

reimbursed for certain travel, hotel, and other

expenses related to the exercise of their du-

ties.

The fees paid to the independent directors and

the fees paid to executive directors are ap-

proved at the annual general shareholders’

meeting. Further details on the remuneration

of the Board are available in the Company’s

Remuneration Policy. Non-executive Direc-

tors are reimbursed for educational expenses

related to enhancing the competencies neces-

sary for their duties.

Three executive Directors in their capacity as

members of the Executive Management Team

also receive compensation for their services

provided to subsidiaries of the Company, with

such compensation being paid by the subsidi-

aries of the Company. One other executive Di-

rector, not being a member of the Executive

Management Team, also receives

compensation as an employee of the Com-

pany.

Remuneration of the Executive Man-

agement Team

Compensation of the members of the Execu-

tive Management Team (15 people in total) is

based on a pay-for-performance principle, re-

warding sustainable growth and long-term

value creation for shareholders of the Com-

pany. A significant portion of the remuneration

comes from a variable part depending on the

Group’s consolidated financial performance.

For details, please see the figure above.

The principles of the remuneration of the Ex-

ecutive Management Team are specified in

the Remuneration Policy.

Members of the Executive Management Team

are not granted any pension, retirement, or

similar benefits provided by the Company,

apart from those required by law.

The Company believes that the Remuneration

Policy strongly contributes to the long-term

shareholder value creation and the Com-

pany’s stability.

Nomination and Remuneration Com-

mittee

The Nomination and Remuneration Commit-

tee (the “N&R Committee”) is a continuously

operating collective body of the Board. It is es-

tablished from among the members of the

Board and consists of three members, includ-

ing a chairman elected by the members of the

N&R Committee amongst themselves. The

majority of the members of the N&R Commit-

tee (including the chairman) are non-executive

independent Directors.

The role of the N&R Committee is to assist the

Board in fulfilling its responsibilities by review-

ing, advising, and making recommendations

to the Board, the Chairman, and the CEO on

the nomination to the Board and Executive

Management Team and their remuneration.

The N&R Committee assists the Board in

nominating and assessing candidates for both

directorship and managerial positions, estab-

lishing and reviewing the compensation princi-

ples specified in the Remuneration Policy. The

N&R Committee ensures that only persons

with adequate competencies, experience, and

skills are appointed to the Board. The N&R

Committee also supports the Board in prepar-

ing the Board’s remuneration proposals for the

shareholders’ general meeting. A detailed list

of N&R Committee responsibilities is available

in the Corporate Governance Charter, pub-

lished on the Company’s website.

Nomination and Remuneration Com-

mittee’s activity report

The N&R Committee held two meetings during

the reporting period, discussing the perfor-

mance of the CEO and the Executive Manage-

ment Team, the remuneration of the executive

management team, and amendments to the

option period under the management incen-

tive plans. The attendance rate of the Commit-

tee members was 100%.

Additionally, the N&R Committee held two ad-

hoc meetings after the reporting date, in Au-

gust 2025, to discuss the nomination of new

directors to the Executive Management Team.

At the additional meeting held in October

2025, the N&R Committee settled on the Ex-

ecutive Management Team compensation for

FY2025 standing at USD 23,812 thousand (in-

cluding a bonus of USD 21,192 thousand) for

15 key executives, as compared to the total

compensation of USD 27,074 thousand (in-

cluding a bonus of USD 24,000 thousand) for

15 key executives a year ago.

……………………………………………………………………………………………………………………………………….................

Remuneration of the Board of Directors

USD thousands

FY2021

FY2022

FY2023

FY2024

FY2025

Chairman of the Board

200

Other executive Directors

Non-executive Directors

260

275

240

232

Total Board of Directors

500

515

480

472

Excluding reimbursement of travelling expenses incurred by Directors in performing their duties.

………………………………………………………………………………………………………………………………………..............

Remuneration of the Executive Management Team

USD thousands

FY2021

FY2022

FY2023

FY2024

FY2025

Total remuneration

29,334

8,492

20,585

27,074

23,812

Base salary

2,834

2,949

2,683

3,074

2,620

Short-term variable bonus

26,500

5,543

17,902

24,000

21,192

Number of executive managers

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Corporate Governance continued

Compensation structure of the Executive Management Team

Fixed

remuneration

Members of the Executive Management Team receive a base salary determined at the discretion of the Board, commen-

surate with the respective position and the individual profile of the relevant members in terms of qualifications, skill set,

and

experience. Al

l amounts are fixed and shall be paid monthly. In FY2025, the aggregated base salary for 15 members of

the Executive Management Team amounted to USD 2,620 thousand paid by the subsidiaries of the Company.

Variable

remuneration

An annual variable monetary bonus (if applicable) is paid as well. Such bonus is determined by the formula approved by

the Board of Directors upon the recommendation of the N&R Committee. The bonus shall reward the members of the

Executive Management team

for the financial performance of the Group, which derives from the financial performance of

each of its subsidiaries where each respective member of the Executive Management Team is employed or has contractual

obligations. The structure of the variable remuneration is as follows:

• The bonus pool for 13 members of the Executive Management Team (the “Bonus Pool”

) is expressed as a percentage

of the consolidated EBITDA of the Group less the consolidated financial costs of the Group normalized for the effect of

certain one-off and nonrecurring transactions (“EBITDA Less Finance Costs”

), with a minimum threshold level of USD

123 million required to activate the pay-

out. The Bonus Pool as a percentage of EBITDA Less Finance Costs is gradually

increasing starting from 0.46% of EBITDA Less F

inance Costs in case EBITDA Less Finance Costs exceeds USD 123

million and reaching 3.66% of EBITDA Less Finance Costs in case EBITDA Less Finance Costs exceeds USD 443

million. The exact allocation of the Bonus Pool between the relevant members of the Exe

cutive Management Team is

determined by the N&R Committee.

• Two members of the Executive Management Team have different metrics determining their variable remuneration, in-

cluding the financial results of the business divisions they lead, the Group EBITDA and personal key performance indi-

cators.

The variable remuneration is paid by the subsidiaries of the Company for duties and services provided by members of the

Executive Management Team to subsidiaries of the Company. In FY2025, the aggregated variable remuneration for 15

members of the Executive Management Team amounted to USD 21,192 tho

usand to be paid by the subsidiaries of the

Company.

Long-term manage-

ment incentive plan

Seven beneficiaries are subject to the long-term management incentive plan, of whom four currently hold positions within

the Executive Management Team and the remaining three occupy other roles within the Company, having been members

of the Executive Management Team when the plan was introduced. The plan was designed to reward

such members of

the Executive Management Team for accomplishing individual performance goals related to the duties and services pro-

vided by such individuals to subsidiaries of the Company, altogether contributing to the better financial and non-

financial

results of the group of companies to which the Company belongs over the long-

term period and aligning the interests of

the Executive Management Team with those of the shareholders of the Company.

The long-term management incentive plan was duly reviewed by the N&R Committee and approved by the Board of Direc-

tors after the generic terms thereof having been approved by the general meeting of shareholders. Seven beneficiaries

were granted put options

providing the right but not the obligation to sell a fixed number of Company’s shares owned by

management at the moment at Put Price during the exercise period:

•

The exercise period shall commence on 1 November 2025 and end on 31 December 2026 (or, in certain cases, 31

December 2027). The option period was postponed by 12 months (originally scheduled to begin on 1 November 2024)

as the beneficiaries agreed to suppo

rt the Company’s liquidity position in light of its debt burden and related future

outflows, the uncertainty of financial performance due to the ongoing war in Ukraine, and the currency and capital flow

restrictions imposed by the Ukrainian authorities. If

no put options are exercised during the exercise period, they shall

lapse.

Put option also provides for acceleration events which dictate that the put options may be exercised before the

commencement of the exercise period if the following events occur: 1) the cessation of trading of Company's shares at

the Warsaw Stock Exchange or any other recognized stock exchange; or 2) a change of control event where the share-

holding of Namsen Limited or its ultimate beneficial owner in Kernel's total votes falls belo

w twenty five percent (25%).

In such cases, put options may be exercised only after 12 months following the occurrence of the relevant events.

•

The Put Price is determined as lower of (1) USD 23.80; or (2) operating profit before working capital changes minus

interest paid plus interest received minus interest tax paid, minus maintenance capital expenditures in the fixed amount

of USD 155,000,000,

where all amounts, except for the maintenance capital expenditures, are specified in USD in the

relevant paragraph of the consolidated statement of cash flows of the audited annual consolidated accounts of the Com-

pany and its subsidiaries for the Financial Years 2022-2024, divided by 3, divided by 12%, and divided by 84,031,230.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Corporate Governance continued

Accountability and audit

Going concern

The Group’s business activities, together with

the factors affecting its performance, position,

and future development are set out in the man-

agement report on pages 1-38.

The financials

of the Group, its liquidity position, borrowing

facilities, and applicable terms are described

in the financial statement’s accounts.

Current economic conditions have fostered

the development of several risks and uncer-

tainties for the Company, in particular, related

to the war in Ukraine (see details in the Risks

and Uncertainties section of this report).

The Directors have reviewed the current and

projected financial position of the Company,

making reasonable assumptions about the fu-

ture trading and production performance, as

well as the debt requirements. The results

show that the Company should be able to

operate within the levels of its available

capital. Therefore, the Board has a reasona-

ble expectation that the Company has ade-

quate resources to continue in operational ex-

istence for the foreseeable future. Accord-

ingly, the Board continues to adopt the going

concern basis in preparing the annual report

and accounts.

Takeover disclosure

The Company’s shares are in electronic form

(77,429,230 shares) and registered form

(216,000,000 shares) and are freely transfer-

able, subject only to the provisions of law and

the Company’s Articles of Association. There

are no agreements between the Company and

its employees or directors providing compen-

sation for the loss of office or employment

(whether through resignation, purported re-

dundancy, or otherwise) that would occur be-

cause of a takeover bid. Put options granted

under management incentive plans incorpo-

rate accelerated vesting in the event of a take-

over.

The Group, in the ordinary course of business,

has entered into various agreements with cus-

tomers and suppliers around the world. Some

of the Company’s borrowing agreements,

which either by their nature or value may rep-

resent significant agreements, do provide for

the right of termination upon a change of con-

trol of the Company. The commercial sensitiv-

ity of these agreements prevents their details

from being disclosed.

Except for the preceding disclosure, there are

no other significant agreements to which the

Company is a party that take effect, alter, or

terminate upon a change of control following a

takeover of the Company.

Audit Committee

The Audit Committee is a continuously operat-

ing collective body of the Board. It consists of

three members including a chairman, all of

whom are non-executive directors and two of

whom meet the independence criteria. The

members have competence in accounting and

audit, and competence relevant to the sector

in which the company is operating. The Audit

Committee is fully capable of overseeing the

affairs of the Company in the areas of ade-

quacy and effectiveness of the Kernel’s sys-

tem of financial reporting, corporate govern-

ance, internal controls, and risk management.

The functioning and key responsibilities of the

Audit Committee are described in the Articles

of Association and further specified in the Cor-

porate Governance Charter.

Audit Committee activity report

The Audit Committee had eight meetings in

FY2025, including two in-person meetings in

Luxembourg and the rest via teleconference.

The average attendance rate of Committee

members was 100% for the reporting period.

The Chief Financial Officer was invited and at-

tended all the meetings of the Audit Commit-

tee. Additionally, the Audit Committee invited

the CEO, head of internal audit, compliance

officer, sustainability manager, head of report-

ing and controls, head of IT, and head of busi-

ness continuity to its meetings. The represent-

atives of the external auditor (PwC) were in-

vited and attended four meetings of the Audit

Committee.

During its meetings, the Audit Committee had

one closed session with the external auditor

and one session with the head of internal audit

to communicate without the presence of exec-

utives.

Additionally, the decisions of the Audit Com-

mittee were taken via two circular resolutions

signed throughout FY2025.

To execute its key functions and discharge its

responsibilities as outlined in the Corporate

Governance Charter, the Audit Committee,

during FY2025:

• assisted the Board in monitoring the relia-

bility and integrity of the financial infor-

mation provided. The committee reviewed

the consolidated quarterly, semi-annual,

and annual financial reports of the Group,

standalone annual accounts of the Com-

pany, Avere financial statements, reviewed

critical accounting policies and manage-

ment estimates, among other things;

• conducted oversight over the perfor-

mance of the internal audit function, in-

cluding the review of the internal audit activ-

ities and action plans and reports. The Audit

Committee had one face-to-face discussion

with the head of the internal audit in the ab-

sence of executives;

• conducted oversight over the perfor-

mance of the external audit function in-

cluding review of the annual audit plan and

scope of semiannual accounts review and

areas of focus, review of auditor reports,

presentations and additional auditors’ re-

port, and management letter review. The

Audit Committee had one face-to-face dis-

cussion with the external auditors in the ab-

sence of executives. The Audit Committee

monitored the fee cap of non-audit services,

and reviewed the contract with auditors (in-

cluding a review of expected fees for the au-

dit and consulting services) and the inde-

pendence of the external auditor;

• conducted oversight over the risk man-

agement function. The Audit Committee

assisted the Board in the discharge of its

risk management responsibilities, monitor-

ing and examining the effectiveness of the

Company’s internal control and risk moni-

toring system; reviewing top risks, risk miti-

gation plans, and results of risk mitigation

activities, overseeing group risk manage-

ment procedures; reviewing trade manage-

ment position risk mitigation activities; re-

view of climate, physical, and transitional

risks relevant to Kernel’s operations;

• conducted oversight over the compliance

function, including implementation of the

Corporate Governance Charter provisions,

compliance with good corporate govern-

ance practices concerning the functioning of

the Audit Committee, and reviewing reports

from the Kernel Compliance Officer on the

progress achieved in the enhancement of

the Company’s compliance function;

• discussed various ad-hoc items.

During FY2025, the Audit Committee also re-

ceived several updates on specific matters, in-

cluding the Group’s cyber security and related

mitigation measures, preparation to the report-

ing under EU Corporate Sustainability Report-

ing Directive (CSRD), as well as development

of the group-wide business continuity strategy.

After each meeting, the chairman of the Audit

Committee reports to the Board on the key

matters discussed, along with the Commit-

tee’s recommendations on items requiring

Board approval.

In line with the best corporate governance

practices, the Audit Committee conducted an

annual self-evaluation assessment in FY2025,

assessing its effectiveness, composition, and

working practices. The review indicated poten-

tial areas of Audit Committee performance

and activities improvement and resulted in a

clear action plan based on the results of the

self-evaluation procedure.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Corporate Governance continued

Additionally, in 2025, the Audit Committee as-

sessed the efficiency of internal control, risk

management and compliance systems, and

internal audit function. The Audit Committee

agreed that the overall assessment of the in-

ternal control and risk management system is

rather effective, the overall assessment of the

compliance system is effective, and the overall

assessment of the internal audit function is ef-

fective.

Internal audit

As an integral part of the system of internal

control, the Company has an internal audit de-

partment headed by an experienced profes-

sional reporting directly to the Board of Direc-

tors via the Audit Committee and to the CEO

of the Company as a chairman of the Risk

Committee within the Executive Management

Team and working closely with the Board. In-

ternal audit is a separate independent unit in

the Group’s organizational structure.

Internal auditing strengthens the Company`s

ability to create, protect, and sustain value by

providing the Board and Management Team

with independent, risk-based, and objective

assurance, advice, insight, and foresight. In-

ternal auditing enhances the Company`s:

• Successful achievement of its objectives;

• Governance, risk management, and control

processes;

• Decision-making and oversight;

• Reputation and credibility with its stakehold-

ers;

• Ability to serve the public interest.

The independence rules defined in accepted

Global Internal Audit Standards apply to mem-

bers of the internal audit department.

The main responsibilities of the internal audit

are:

• to maintain continuous support for the Di-

rectors on risk management, internal con-

trols, and mitigation activities by undertak-

ing regular or ad hoc reviews;

• to provide an independent and objective

evaluation of the effectiveness and effi-

ciency of corporate governance, internal

control, and risk-management systems

within the operational framework of the

Company;

• to assist personnel and management of the

Company in improving the effectiveness of

risk identification and internal control sys-

tems in operations; advise and consult them

regarding how to effectively execute their

responsibilities, including recommendations

on specific improvements in policies and

procedures; and

• to assist in open and two-way communica-

tion among internal and external auditors,

management and personnel, the Audit

Committee, and the Board.

The Head of internal audit regularly presents

the results of its work to the Audit Committee,

including communication with the committee

members in the absence of executives.

External audit

PwC Société cooperative (“PwC”), with its reg-

istered office at 2, rue Gerhard Mercator B.P.

1443 L-1014 Luxembourg and register num-

ber B 65 477 with the Luxembourg Trade and

Companies Register, acts as an external au-

ditor of Kernel’s consolidated and standalone

accounts since FY2022.

PwC attended four meetings of the Audit Com-

mittee in FY2025, presenting the review of the

semi-annual accounts, and audit plan for

FY2025, and presenting to the Audit Commit-

tee the approach to accounting and audit of

various business operations, among other

things. The Audit Committee reviews and

monitors the level of fees paid by the Com-

pany to the external auditor, preapproves per-

missible non-audit services, and monitors the

cap on non-audit fees.

Remuneration to auditors in FY2025

amounted to USD 818 thousand (including

USD 55 thousand non-audit services), as

compared to USD 804 thousand (including

USD 26 thousand non-audit services) in

FY2024.

GOV-2

Sustainable development

The sustainability function at Kernel is gov-

erned by the Board via a Sustainability Com-

mittee, which has the purpose of:

• overseeing the overall performance of the

sustainability corporate function of the Com-

pany and the Group;

• ensuring the implementation of the environ-

mental, social, and sustainability govern-

ance agendas across all business opera-

tions; and

• connecting these agendas with the Group’s

strategy, business objectives, and capital

allocation decisions.

The Sustainability Committee had one meet-

ing during the reporting period, discussing the

following:

• update on the business opportunities re-

lated to sustainability function and climate

change;

• progress on non-financial data accounting

and audit, including integration of the EU

standard on non-financial corporate report-

ing, development of internal procedures and

policies;

• Kernel's participation at 29th Conference of

Parties.

At the meeting held in July 2025, the Sustain-

ability Committee discussed:

• results and procedures of Kernel’s double-

materiality assessment;

• final structure of the Sustainability section of

the Annual Report.

Business ethics and compli-

ance

Kernel has embedded strong ethical stand-

ards in the Company’s everyday operations,

as outlined in the Code of Conduct. Addition-

ally, the AGM held on 10 December 2021 ap-

proved the Diversity, Equality, and Inclusion

Policy of the Company and its subsidiaries.

Kernel implemented a Corporate Compli-

ance Program (“CCP”) designed to align the

Company’s practices with international best

standards. The program combines internal

and external control mechanisms, ensuring

consistent monitoring, evaluation, and im-

provement of compliance processes. Inde-

pendent reviews have recognized the signifi-

cant progress achieved in strengthening the

system while also outlining areas for continu-

ous enhancement, which remain a focus of

management.

The compliance function within Kernel is led

by a dedicated compliance officer, who reports

directly to the CEO and Board of Directors via

the Audit Committee of the Board. The compli-

ance officer attends all Audit Committee meet-

ings and provides compliance system and

control updates at least twice a year.

We prioritize strong relationships with counter-

parties, assessing their risks based on trust-

worthiness, corruption, and sanctions in line

with our risk appetite. Anti-corruption and anti-

sanctions clauses are included in all contracts

with counterparties. These clauses consider

both national and foreign legislation require-

ments in connection with the Russian war in-

vasion of Ukraine. We’ve updated our anti-cor-

ruption provisions to align with legislative

changes, strengthened controls, enhanced

due diligence processes, and revised contract

……………………………………………………………………..

External auditor’s fees

USD thousand

717

526

781

778

763

294

257

1,011

783

781

804

818

FY2021 FY2022 FY2023 FY2024 FY2025

Audit fees Non-audit services

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Corporate Governance continued

templates and clauses accordingly.

Kernel is a member of the Ukrainian Network

of Integrity and Compliance (UNIC) and a sig-

natory of the UN Global Compact and the

Memorandum of UN Collective Action to Com-

bat Corruption. These platforms are effective

for sharing best practices in preventing corrup-

tion between companies and promoting a cor-

porate culture of integrity in the agricultural

sector.

In recent years, Kernel has made continuous

efforts to promote gender equality and inclu-

sion, actively creating and supporting favora-

ble workplaces. Gender diversity and equality

are core values, with dignity and honesty at

the foundation. Kernel remains committed to

addressing gender asymmetry across all ar-

eas of the company.

In FY2025, the Group continued to implement

its Equal Opportunities and Cultural Diversity

Policy, reinforcing its long-standing commit-

ment to gender equality, inclusion, and the

promotion of respectful and safe workplaces.

Diversity and equal treatment are deeply em-

bedded in the Group’s values, grounded in the

principles of dignity and integrity. Kernel re-

mains focused on addressing gender asym-

metry across all areas of its operations. A sur-

vey conducted in June 2025 among employ-

ees indicated that 100% of respondents re-

ported no experience of gender-based ine-

quality in the workplace.

Key actions taken in 2024-2025 to further

strengthen the Group’s compliance and ethi-

cal culture included:

• Adoption of a Human Rights Compliance

Policy, formalizing the Group’s approach to

respecting and protecting fundamental hu-

man rights across its operations;

• Implementation of an Anti-Money Launder-

ing Policy, aimed at enhancing internal

safeguards and risk management proce-

dures in line with applicable regulations;

• Launch of an e-learning course titled “Pre-

venting Sexual Violence in the Workplace”,

completed by more than 4 thousand em-

ployees. Additionally, a dedicated anti-vio-

lence webinar featuring a professional psy-

chologist was held to address practical pre-

vention tools and reinforce a zero-tolerance

approach to misconduct;

• Revision and enhancement of the Conflict

of Interest Management and Anti-Fraud and

Corruption Policy, including updated train-

ing materials and employee briefings. A

new brochure, Illegal and Inadmissible Ac-

tions, was distributed across the organiza-

tion to illustrate the key policy changes and

reinforce ethical standards;

• Continued application of the Anti-Corruption

Clause in all contracts with counterparties,

ensuring alignment with the Group’s compli-

ance requirements throughout the supply

chain;

• Development and deployment of a video-

based compliance training course, “Compli-

ance on the Guard of Business”, focused on

anti-corruption and equality. Nearly 5 thou-

sand employees completed the course, sig-

nificantly expanding coverage beyond what

traditional face-to-face training could

achieve. The video is now part of the

onboarding process for all new hires and

will be redistributed annually to all existing

employees.

Kernel’s compliance efforts focus on:

• preventing fraud, corruption, and other

misconduct (see details in section Anti-cor-

ruption);

• managing risks related to unreliable

counterparties and international sanc-

tions. Compliance officer and security de-

partment check business partners for com-

pliance risks: sanctions, corruption, money

laundering, terrorism financing;

• ensuring the Company’s activities comply

with various external initiatives (GDPR;

United Nations Global Compact; equality,

diversity, and inclusion initiatives, etc.);

• ensuring employee adherence to internal

policies, including the Code of Conduct,

Policy for managing conflicts of interest,

combating fraud and corruption, and other

internal documents on compliance. The

compliance officer oversees incident man-

agement for all stakeholders.

To enhance employee awareness of business

ethics, we offer an e-learning course on the

Code of Conduct. All new employees must

achieve a minimum 80% pass rate during

onboarding.

PricewaterhouseCoopers Assurance, Société coopérative,

2 rue Gerhard Mercator, L-2182 Luxembourg

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

Cabinet de révision agréé. Expert-comptable (autorisation ministérielle n°10181659)

R.C.S. Luxembourg B294273 - TVA LU36559370

www.pwc.lu

Audit report

To the Shareholders of

Kernel Holding S.A.

Report on the audit of the consolidated financial statements

Our opinion

In our opinion, the accompanying consolidated financial statements give a true and fair view of the

consolidated financial position of Kernel Holding S.A. (the “Company”) and its subsidiaries (the “Group”)

as at 30 June 2025, and of its consolidated financial performance and its consolidated cash flows for the

year then ended in accordance with IFRS Accounting Standards as adopted by the European Union.

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

What we have audited

The Group’s consolidated financial statements comprise:

• the consolidated statement of financial position as at 30 June 2025;

• the consolidated statement of profit or loss for the year then ended;

• the consolidated statement of profit or loss and other comprehensive income for the year then ended;

• the consolidated statement of changes in equity for the year then ended;

• the consolidated statement of cash flows for the year then ended; and

• the notes to the consolidated financial statements, including material accounting policy information

and other explanatory information.

101

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 consolidated financial statements” 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 Group 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 consolidated financial statements. 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 25 to the consolidated financial statements.

Material uncertainty related to going concern

We draw attention to Note 4 to the consolidated financial statements, 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 3, indicate that a

material uncertainty exists that may cast significant doubt on the Group’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 consolidated financial statements of the current period. These matters were addressed in the

context of our audit of the consolidated financial statements 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.

102

Key audit matter

How our audit addressed the key audit matter

Revaluation of classes of property, plant

and equipment in the oilseed processing

segment

As disclosed in Note 5 to the consolidated

financial statements, management performed

a revaluation of specific classes of property,

plant and equipment within the oilseed

processing segment carried under the

revaluation model of USD 481 million.

The fair value was determined in accordance

with IFRS 13 Fair Value Measurement, using

depreciated replacement cost (DRC) method,

adjusted for the economic obsolescence

determined based on discounted cash flow

(DCF) model, if the expected cash flows are

lower than those obtained using depreciated

replacement cost.

The valuation is highly judgemental and

requires the use of unobservable inputs. The

assumptions with the most significant impact

on the discounted cash flows results were

sales prices of sunflower oil, the purchase

price of sunflower seeds, processing volume

and discount rate for the oilseed processing

segment.

Taking into account the significant

management judgements and the magnitude

of the amounts involved, we considered this to

be a key audit matter.

Refer to Notes 5 and 14 to the consolidated

financial statements for the related

disclosures.

Our audit procedures included the following:

• Engaging our internal valuation experts to assess the appropriateness

of the methodology applied by the external independent valuer in

determining DRC amounts and the appropriateness of the methodology

applied by the Group in calculating the discounted cash flow results;

• Verifying input data used by the external independent valuer in

determination of the depreciated replacement cost of assets;

• Engaging our internal valuation experts to assess the reasonableness of

the discount rate used;

• Evaluating management's ability to reasonably estimate cash flow

forecasts by comparing actual results to management's historical

forecasts;

• Evaluating and challenging significant assumptions used by

management in the calculations of economic obsolescence, such as

sales prices of sunflower oil, the purchase price of sunflower seeds, and

processing volume;

• Checking the sensitivity analysis over significant assumptions used;

• Verifying the mathematical accuracy and integrity of calculations and the

adequacy of the Group’s disclosures in Notes 5 and 14 to the

consolidated financial statements.

Valuation of current biological assets

The Group measures biological assets at fair

value less costs to sell in accordance with

IAS 41 Agriculture and IFRS 13 Fair Value

Measurement. As of 30 June 2025, the Group

had current biological assets comprising

mainly winter and spring crops of the 2024/25

season, which were not yet harvested in the

amount of USD 229 million.

The Group calculates the fair value less costs

to sell on the basis of the discounted cash flow

forecasts, applying the following significant

assumptions:

• crop yields;

• grain sales prices net of transportation

costs.

Our audit procedures included the following:

• Gaining an understanding of management’s process for the

development of significant assumptions used in the valuation and

assessing the appropriateness of the valuation methodology applied;

• Evaluating and challenging significant assumptions used in the

valuation, such as crop yields and grain sales prices net of transportation

costs, based on the internal and external data which supports these

assumptions;

• Checking the sensitivity analysis over significant assumptions used;

• Verifying the mathematical accuracy and integrity of calculations and the

adequacy of the Group’s disclosures in Note 5 and 12 to the

consolidated financial statements.

103

Key audit matter

How our audit addressed the key audit matter

Taking into account the significant

management judgements and the magnitude

of the amounts involved, we considered this to

be a key audit matter.

Refer to Note 5 and 12 to the consolidated

financial statements for the related disclosure.

Other information

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

information stated in the annual report including the Management Report and the Corporate Governance

Statement but does not include the consolidated financial statements and our audit report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not

express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other

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

inconsistent with the consolidated financial statements 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 for the consolidated financial

statements

The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial

statements in accordance with IFRS Accounting Standards as adopted by the European Union, and for

such internal control as the Board of Directors determines is necessary to enable the preparation of

consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Board of Directors is responsible for assessing 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.

The Board of Directors is responsible for presenting and marking up the consolidated financial statements

in compliance with the requirements set out in the Delegated Regulation 2019/815 on European Single

Electronic Format (“ESEF Regulation”).

104

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

consolidated financial statements

The objectives of our audit are to obtain reasonable assurance about whether the consolidated financial

statements 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

consolidated financial statements.

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 consolidated financial statements,

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 Group’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 Group’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 consolidated financial statements or, if such disclosures are inadequate,

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 Group to cease to continue as a going

concern;

• evaluate the overall presentation, structure and content of the consolidated financial statements,

including the disclosures, and whether the consolidated financial statements represent the underlying

transactions and events in a manner that achieves fair presentation;

105

• plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the

financial information of the entities and business units within the Group as a basis for forming an

opinion on the consolidated financial statements. We are responsible for the direction, supervision

and review of the audit work performed for purposes of the group audit. We remain solely responsible

for our audit opinion.

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 consolidated financial statements 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 consolidated financial statements 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 Management Report is consistent with the consolidated financial statements and has been prepared

in accordance with applicable legal requirements.

The Corporate Governance Statement is included in the Management Report. 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 consolidated financial statements 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 consolidated financial statements of the Group as at 30 June 2025

with relevant statutory requirements set out in the ESEF Regulation that are applicable to consolidated

financial statements.

106

For the Group it relates to the requirement that:

• the consolidated financial statements are prepared in a valid XHTML format;

• the XBRL markup of the consolidated financial statements uses the core taxonomy and the common

rules on markups specified in the ESEF Regulation.

In our opinion, the consolidated financial statements of the Group as at 30 June 2025 have been prepared,

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

Luxembourg, 3 October 2025

PricewaterhouseCoopers Assurance, Société coopérative

Represented by

Andrei Chizhov

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

107

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Statement of the Board of Directors’ Responsibilities for the

Preparation and Approval of the Consolidated Financial

Statements

for the year ended 30 June 2025

The Board of Directors is responsible for the preparation, publishing and fair presentation of the consolidated financial statements in accordance

with Luxembourg legal and regulatory requirements relating to the preparation and presentation of the consolidated financial statements, and for

such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free

from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Board of Directors is responsible for assessing 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.

We confirm that to the best of our knowledge and belief:

• The consolidated financial statements of Kernel Holding S.A. (the “Company”) presented in this Annual Report and established in conformity

with International Financial Reporting Standards as adopted by the European Union give a true and fair view of the consolidated statements of

comprehensive income, changes in equity and cash flows for the year that ended, and notes to the consolidated financial statements, including

a summary of significant accounting policies; and

• The Management Report includes a fair review of the development and performance of the business and position of the Company and the

undertakings included within the consolidation taken as a whole, together with a description of the principal risks and uncertainties it faces.

03 October 2025

On behalf of the Board of Directors

Andrii Verevskyi Sergiy Volkov

Chairman of the Board of Directors Director, Chief Financial Officer

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

108

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Selected Financial Data

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

USD

PLN

EUR

30 June 2025

30 June 2024

30 June 2025

30 June 2024

30 June 2025

30 June 2024

Revenue

4,115,042

3,581,462

16,142,075

14,534,289

3,785,016

3,312,136

II.

Profit from operating activities

361,046

276,428

1,416,275

1,121,800

332,090

255,641

III.

Profit before income tax

287,243

211,052

1,126,768

856,491

264,206

195,181

IV.

Profit for the period

237,596

167,628

932,018

680,268

218,541

155,022

Net cash generated by operating activities

241,664

472,136

947,975

1,916,022

222,283

436,631

VI.

Net cash used in investing activities

(40,343)

(112,548)

(158,253)

(456,742)

(37,107)

(104,084)

VII.

Net cash used in financing activities

(393,392)

(504,102)

(1,543,159)

(2,045,747)

(361,843)

(466,194)

VIII.

Total net cash flow

(192,071)

(144,514)

(753,437)

(586,467)

(176,667)

(133,647)

IX.

Total assets

3,320,426

3,396,911

12,007,989

13,696,345

2,830,663

3,175,432

Current liabilities

666,854

1,367,062

2,411,611

5,511,994

568,492

1,277,929

XI.

Non-current liabilities

574,586

163,555

2,077,933

659,454

489,835

152,891

XII.

Issued capital

7,749

28,023

31,244

6,606

7,244

XIII.

Total equity

2,078,986

1,866,294

7,518,445

7,524,897

1,772,336

1,744,612

XIV.

Weighted average number of shares

293,276,353

256,839,066

293,276,353

256,839,066

293,276,353

256,839,066

XV.

Profit per ordinary share (in USD/PLN/EUR)

0.81

0.65

3.19

2.65

0.75

0.60

XVI.

Diluted number of shares

293,276,353

256,839,066

293,276,353

256,839,066

293,276,353

256,839,066

XVII.

Diluted profit per ordinary share (in

USD/PLN/EUR)

0.81

0.65

3.19

2.65

0.75

0.60

XVIII.

Book value per share (in USD/PLN/EUR)

7.09

6.35

25.64

25.60

6.04

5.94

XIX.

Diluted book value per share (in

USD/PLN/EUR)

7.09

6.35

25.64

25.60

6.04

5.94

Please see Note 4 for the exchange rates used for conversion.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

109

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Consolidated Statement of Financial Position

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

Notes

As of 30 June 2025

As of 30 June 2024

Assets

Current assets

Cash and cash equivalents

8, 32

617,511

809,584

Trade accounts receivable

9, 32

252,660

305,246

Prepayments to suppliers

91,804

120,870

Corporate income tax prepaid

6,434

227

Taxes recoverable and prepaid

125,837

114,127

Inventory

363,467

277,660

Biological assets

230,669

187,712

Other financial assets

13, 32

315,913

339,929

Total current assets

2,004,295

2,155,355

Non-current assets

Property, plant and equipment

946,342

944,104

Right-of-use assets

245,611

172,931

Intangible assets

34,788

36,394

Goodwill

13,196

Deferred tax assets

51,698

35,626

Non-current financial assets

6,025

23,307

Other non-current assets

18,471

15,998

Total non-current assets

1,316,131

1,241,556

Total assets

3,320,426

3,396,911

Liabilities and equity

Current liabilities

Trade accounts payable

108,348

109,672

Advances from customers and other current liabilities

257,285

192,397

Corporate income tax liabilities

39,664

31,433

Short-term borrowings

148,887

315,166

Current portion of long-term borrowings

22,239

—

Current portion of lease liabilities

34,021

27,206

Current bonds issued

20, 32

—

597,580

Interest on bonds issued

20, 32

3,616

7,612

Other financial liabilities

18, 32

52,794

85,996

Total current liabilities

666,854

1,367,062

Non-current liabilities

Long-term borrowings

82,307

—

Bonds issued

20, 32

298,487

—

Lease liabilities

171,234

142,534

Deferred tax liabilities

19,194

20,035

Other non-current liabilities

3,364

986

Total non-current liabilities

574,586

163,555

Equity attributable to Kernel Holding S.A. equity holders

Issued capital

7,749

Share premium reserve

457,935

Additional paid-in capital

39,944

Revaluation reserve

103,766

96,178

Translation reserve

(1,055,011)

(1,029,114)

Retained earnings

2,523,546

2,291,951

Total equity attributable to Kernel Holding S.A. equity holders

2,077,929

1,864,643

Non-controlling interests

1,057

1,651

Total equity

2,078,986

1,866,294

Total liabilities and equity

3,320,426

3,396,911

Book value

2,077,929

1,864,643

Number of shares

2, 33

293,129,230

293,429,230

Book value per share (in USD)

7.09

6.35

Diluted number of shares

293,129,230

293,429,230

Diluted book value per share (in USD)

7.09

6.35

On behalf of the Board of Directors

Andrii Verevskyi Sergiy Volkov

Chairman of the Board of Directors Director, Chief Financial Officer

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

110

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Consolidated Statement of Profit or Loss

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

On behalf of the Board of Directors

Andrii Verevskyi Sergiy Volkov

Chairman of the Board of Directors Director, Chief Financial Officer

Notes

For the year ended

30 June 2025

For the year ended

30 June 2024

Revenue

4,115,042

3,581,462

Net change in fair value of biological assets and agricultural produce

6,590

(10,447)

Cost of sales

(3,553,173)

(2,888,959)

Gross profit

568,459

682,056

Other operating income

67,808

76,593

Other operating expenses

(46,414)

(28,405)

General and administrative expenses

(235,268)

(213,373)

Net impairment losses on financial assets

(2,485)

(11,217)

Reversal of impairment losses/(impairment) of assets

8,946

(229,226)

Profit from operating activities

361,046

276,428

Finance costs

(77,668)

(119,079)

Finance income

45,395

49,819

Foreign exchange (loss)/gain, net

(5,249)

32,972

Other expenses, net

(36,281)

(29,088)

Profit before income tax

287,243

211,052

Income tax expenses

(49,647)

(43,424)

Profit for the period

237,596

167,628

Profit for the period attributable to:

Equity holders of Kernel Holding S.A.

238,161

167,952

Non-controlling interests

(565)

(324)

Earnings per share

Weighted average number of shares

293,276,353

256,839,066

Profit per ordinary share (in USD)

0.81

0.65

Diluted number of shares

293,276,353

256,839,066

Diluted profit per ordinary share (in USD)

0.81

0.65

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

111

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Consolidated Statement of Profit or Loss and

Other Comprehensive Income

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

Notes

For the year ended

30 June 2025

For the year ended

30 June 2024

Profit for the period

237,596

167,628

Other comprehensive income/(loss)

Items that will not be reclassified subsequently to profit or loss:

Revaluation of property, plant and equipment

9,252

(9,909)

Income tax related to components of other comprehensive income

(1,664)

1,784

Items that may be reclassified subsequently to profit or loss:

Exchange differences on translating foreign operations

(25,926)

(97,188)

Other comprehensive loss

(18,338)

(105,313)

Total comprehensive income for the period

219,258

62,315

Total comprehensive income attributable to:

Equity holders of Kernel Holding S.A.

219,852

62,802

Non-controlling interests

(594)

(487)

On behalf of the Board of Directors

Andrii Verevskyi Sergiy Volkov

Chairman of the Board of Directors Director, Chief Financial Officer

Exchange differences on translating foreign operations decreased mostly as a result of foreign exchange rate change.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

112

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Consolidated Statement of Changes in Equity

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

On behalf of the Board of Directors

Andrii Verevskyi Sergiy Volkov

Chairman of the Board of Directors Director, Chief Financial Officer

Attributable to Kernel Holding S.A. shareholders

Issued

capital

premium

reserve

Additional

paid-in

capital

Treasury

Revalua-

tion

reserve

Translation

reserve

Retained

Earnings

Total

Non-

controlling

interests

Total

equity

Balance as of 30 June 2023

2,219

500,378

39,944

(96,897)

104,303

(932,089)

2,123,999

1,741,857

2,138

1,743,995

Profit for the period

—

167,952

(324)

167,628

Other comprehensive loss

—

(8,125)

(97,025)

—

(105,150)

(163)

(105,313)

Total comprehensive income for

the period

—

(8,125)

(97,025)

167,952

62,802

(487)

62,315

Increase of share capital

5,704

54,280

—

59,984

—

59,984

Cancellation of treasury shares

(174)

(96,723)

—

96,897

—

Balance as of 30 June 2024

7,749

457,935

39,944

—

96,178

(1,029,114)

2,291,951

1,864,643

1,651

1,866,294

Profit for the period

—

238,161

(565)

237,596

Other comprehensive income/(loss)

—

7,588

(25,897)

—

(18,309)

(29)

(18,338)

Total comprehensive income for

the period

—

7,588

(25,897)

238,161

219,852

(594)

219,258

Other (Note 2)

—

(6,566)

—

(6,566)

Balance as of 30 June 2025

7,749

457,935

39,944

—

103,766

(1,055,011)

2,523,546

2,077,929

1,057

2,078,986

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

113

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Consolidated Statement of Cash Flows

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

Notes

As of

30 June 2025

As of

30 June 2024

Operating activities:

Profit before income tax

287,243

211,052

Adjustments for:

Amortization and depreciation

105,283

104,723

Finance costs

77,668

119,079

Finance income

(45,395)

(49,819)

Net impairment losses on financial assets

2,485

11,217

Loss on disposal of property, plant and equipment

394

530

Net foreign exchange loss/(gain)

6,169

(32,717)

(Reversal) of impairment losses/impairment of assets

(8,946)

229,226

Write-downs of inventories to net realizable value

685

2,783

Net change in fair value of biological assets and agricultural produce

(6,590)

10,447

Loss/(gain) on sales of Subsidiaries

5,232

(2,448)

Net loss/(gain) arising on financial instruments

4,680

(16,540)

Other accruals

5,473

16,469

Operating profit before working capital changes

434,381

604,002

Changes in working capital:

Change in trade receivable

53,001

10,425

Change in other financial assets

(49,422)

(19,228)

Change in prepayments and other current assets

36,872

30,859

Change in taxes recoverable and prepaid

(10,455)

36,391

Change in biological assets

17,010

(17,181)

Change in inventories

(143,493)

(16,899)

Change in trade accounts payable

(7,203)

(45,292)

Change in advances from customers and other current liabilities

1,109

(397)

Cash generated from operations

331,800

582,680

Interest paid

(78,198)

(110,878)

Interest received

32,070

32,777

Income tax paid

(44,008)

(32,443)

Net cash generated by operating activities

241,664

472,136

Investing activities:

Purchase of property, plant and equipment

(72,956)

(142,578)

Proceeds from disposal of property, plant and equipment

4,841

10,175

Payment for lease agreements

(1,426)

Purchase of intangible and other non-current assets

(11,902)

(2,489)

Proceeds from disposal of intangible and other non-current assets

947

—

Acquisition of subsidiaries, net of cash acquired

(4,029)

(24,745)

Disposal of subsidiaries

92,452

Pledge deposits withdrawal

1,303

121,400

Proceeds from disposal of/(Payment to acquire) financial assets

42,839

(165,337)

Net cash used in investing activities

(40,343)

(112,548)

Financing activities:

Net proceeds from/(repayment of) credit lines

14,310

(35,319)

Proceeds from short-term and long-term borrowings

149,607

109,463

Repayment of short-term and long-term borrowings

(223,489)

(619,580)

Repayment of lease liabilities

(34,171)

(20,046)

Proceeds from share premium reserve increase

—

54,280

Issued capital

—

5,704

Corporate bonds repaid

(300,000)

—

Net cash used in financing activities

(393,743)

(505,498)

Effects of exchange rate changes on the balance of cash held in foreign cur-

rencies

351

1,396

Net decrease in cash and cash equivalents

(192,071)

(144,514)

Cash and cash equivalents, at the beginning of the year

809,579

954,093

Cash and cash equivalents, at the end of the year

617,508

809,579

For non-cash financing activities please see Note 8.

On behalf of the Board of Directors

Andrii Verevskyi Sergiy Volkov

Chairman of the Board of Directors Director, Chief Financial Officer

During the year ended 30 June 2025, the Group made certain corrections and reclassifications, please see Note 4 for more details.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

114

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

1. Corporate Information

Kernel Holding S.A. (hereinafter referred to as the “Holding” or the “Company”) incorporated under the legislation of Luxembourg on 15 June 2005

(number B 109,173 in the Luxembourg Register of Companies) is the holding company for a group of entities (hereinafter referred to as the

“Subsidiaries”), which together form Kernel Group (hereinafter referred to as the “Group” or the “Kernel Group”). The principal place of production

facilities of the Group is in Ukraine.

Kernel Holding S.A. has been a publicly traded company since 2007. Kernel Holding S.A. made an announcement on 13 April 2023, indicating

that their Board of Directors had decided to withdraw the company's shares from trading on the Warsaw Stock Exchange's regulated market.

However, as of 30 June 2025, and as of the date of these consolidated financial statements issue the delisting process has not been completed

and it is expected to be finalized upon resolution of legal proceedings disclosed in Note 30.

The Group’s principal business activities comprise the production and export of sunflower oil and sunflower meal in bulk, the production and sale

of bottled sunflower oil, the wholesale trade of grain, primarily corn, soybean, wheat, and barley, as well as farming operations, and the provision

of logistics and transshipment services. As of 30 June 2025, the Group employed 10,760 people (30 June 2024: 10,904 people).

The Group’s financial year runs from 1 July to 30 June.

As of 30 June, the primary Subsidiaries of the Group and their principal activities were as follows:

Group’s effective ownership

interest and voting rights as of

Subsidiary

Principal activity

Country of incorporation

30 June 2025

30 June 2024

Inerco Trade SA

Trading in sunflower oil,

meal and grain.

Switzerland

100.0%

Kernel-Trade, LLC

Ukraine

100.0%

Avere Commodities SA

Switzerland

75.0%

100.0%

Estron Corporation Ltd

The holding ownership interests

subsidiaries, their financing

and strategic management.

Cyprus

100.0%

Poltavsky VOEP, PJSC

Oilseed crushing plants. Pro-

duction of sunflower oil and

meals.

Ukraine

99.7%

Bandursky VOEP, LLC

Ukraine

100.0%

Kropyvnytskyi OEP, PJSC

Ukraine

99.2%

Black Sea Industries Ukraina Limited, LLC

Ukraine

100.0%

Prydniprovskyi OEZ, LLC

Ukraine

100.0%

Starokostiantynivskyi OEZ, LLC

Ukraine

100.0%

Transbulkterminal, JV LLC

Provision of grain, oil, and

meals

handling and transship-

ment services.

Ukraine

100.0%

Transgrainterminal, LLC

Ukraine

100.0%

Oilexportterminal, LLC

Ukraine

100.0%

Kononivsky Elevator, LLC

Grain elevators. Provision of

grain and oilseed cleaning, dry-

ing, and storage services.

Ukraine

100.0%

AF Khliborob, LLC

Agricultural farms. Cultivation of

agricultural products: corn,

wheat, soybean, sunflower

seed, rapeseed, forage, pea

and barley.

Ukraine

100.0%

Prydniprovskyi Krai, ALLC

Ukraine

100.0%

Druzhba-Nova, ALLC

Ukraine

100.0%

Druzhba 6, PE

Ukraine

100.0%

Semerenky Agrofarm, LLC

Ukraine

100.0%

Hovtva, ALLC

Ukraine

100.0%

These consolidated financial statements were authorized for release by the board of directors of Kernel Holding S.A. on 3 October 2025.

As of 30 June 2025, legal ownership of Avere Commodities SA was 75.0% and economic ownership was 100.0%, out of which 37.5% are distributed under the

employee profit-sharing arrangement (Note 25).

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

115

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

2. Change in Issued Capital

Since 15 June 2005, the parent company of the Group is Kernel Holding S.A. (Luxembourg). The issued capital of the Holding as of 30 June 2025,

consisted of 293,429,230 ordinary shares without indication of the nominal value (30 June 2024: 293,429,230). Ordinary shares have equal voting

rights and rights to receive dividends (except for own shares purchased).

The shares were distributed as follows:

As of 30 June 2025

As of 30 June 2024

Equity holders

Shares allotted

and fully paid

owned

Shares allotted

and fully paid

Owned

Namsen Limited

278,947,016

95.16%

276,914,889

94.37%

Free float

14,182,214

4.84%

16,514,341

5.63%

Total

293,129,230

100.00%

293,429,230

100.00%

As of 30 June 2025 and 30 June 2024, the Company’s immediate majority shareholder was Namsen Limited (“Namsen Ltd”) and the Group was

ultimately controlled by Mr. Andrii Verevskyi. As of 30 June 2025 and 2024, 100% of the beneficial interest in Namsen Ltd was held by Mr. An-

drii Verevskyi.

In December 2024, the Group purchased 300,000 of its own shares (0.10% of total share capital) for USD 6,566 thousand. These shares are

classified as treasury shares and deducted from equity. Treasury shares are excluded from the weighted average number of shares used to

calculate earnings per share and book value per share.

Luxembourg companies are required to allocate to a legal reserve a minimum of 5% of the annual net income until this reserve equals 10% of the

subscribed issued capital. This reserve, in the amount of USD 775 thousand as of 30 June 2025 (30 June 2024: USD 221 thousand), may not be

distributed as dividends.

3. Operating Environment

On 24 February 2022, Russia launched a full-scale military invasion of Ukraine. In response, Ukraine declared martial law, which remains in effect

as of the date of approval of these consolidated financial statements.

Hostilities continue in the eastern and southern regions of Ukraine along the

frontline, with certain towns and cities in these areas remaining temporarily occupied. Sporadic missile and drone strikes are also conducted across

the country.

Ukraine’s economy retains the characteristics of an emerging market. Its development is significantly influenced by fiscal and monetary policies

implemented by the Government of Ukraine, as well as by changes in the legal, regulatory, and political environment, which can occur rapidly.

As of June 2025, annual inflation declined to 14.3% (14.1% as of July 2025), with consumer prices influenced by adverse weather conditions

affecting fruit and berry harvests, higher meat prices due to increased production costs and reduced livestock numbers, global oil price increases,

and depreciation of the hryvnia against the euro. Strong consumer demand and elevated costs for raw materials and labor also contributed. While

headline inflation exceeded the April macroeconomic forecast, the National Bank of Ukraine (the “NBU”) expects inflationary pressures to ease in

the coming months, supported by monetary policy measures.

Economic growth remains constrained by intensified air attacks and the destruction of industrial facilities, infrastructure, and housing. The NBU

projects real GDP growth of 2.1% for the 2025 calendar year, with recovery dependent on the course of the war. Under the baseline scenario, the

economy is expected to gradually return to normal functioning, with GDP growth of 2%–3% projected for 2026–2027. A faster normalization would

support higher private investment and consumption, potentially increasing GDP growth to 3%–3.5%.

Agricultural output in 2025 has been adversely affected by frosts and heavy rains between April and July, which reduced yields of grains, oilseeds,

and other crops. Rapeseed harvests suffered severe frost damage in several western and central regions, leading to near-total losses in some

areas. According to the Ministry of Agrarian Policy and Food of Ukraine, total grain production is forecast to decline by up to 10% and oilseed

production by up to 5% compared with the 2024 period.

In the first half of 2025, Ukraine continued to secure substantial external financing to address the consequences of Russian aggression. Interna-

tional support covered social and humanitarian expenditures, allowing domestic fiscal resources to remain focused on security and defense. During

this period, the Ministry of Finance raised USD 22 billion in external funding, including USD 17.6 billion under the Extraordinary Revenue Acceler-

ation for Ukraine (ERA) initiative, which provides loans to be repaid from future revenues of immobilized Russian assets. In July 2025, an additional

EUR 1 billion was secured from the EU. Other key programs included the Ukraine Facility, the Extended Fund Facility, and related initiatives. Since

the beginning of the full-scale war, Ukraine’s international partners have committed more than USD 137 billion in budget support.

As of July 2025, Ukraine’s international reserves amounted to USD 43.0 billion, a 4.5% decrease from June 2025, driven by NBU foreign exchange

interventions and external debt repayments. Despite the decline, reserves remain sufficient to cover 4.7 months of future imports, supporting

financial and exchange rate stability.

To enhance financial stability, the National Bank of Ukraine (“NBU”) introduced a managed exchange rate flexibility regime in October 2023. This

approach, with interventions limited to smoothing volatility, has helped reduce foreign exchange imbalances, support reserve accumulation, and

strengthen the resilience of Ukraine’s economy to external influence.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

116

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

On 24 July 2025, the NBU kept its key policy rate unchanged at 15.5% (compared to 13.0% in July 2024) to support foreign exchange market

stability, anchor inflation expectations, and guide inflation towards its 5% target. The NBU noted that headline inflation may temporarily rise, while

core inflation is expected to continue declining, with overall inflation projected to return to a downward trajectory in the coming months.

As of the date of issue of these consolidated financial statements, the war continues. The ongoing aggression by the Russian Federation increases

the risk of a long-term reduction in Ukraine’s economic potential, particularly due to the loss of population, territory, and production capacity. The

speed of economic recovery will depend on the duration and intensity of the conflict. Prolonged high-intensity warfare would prevent the economy

from returning to normal functioning and delay inflation returning to target levels.

4. Material Accounting Policy Information

Basis of Preparation and Accounting

The consolidated financial statements of the Group have been prepared in accordance with IFRS Accounting Standards as adopted by the Euro-

pean Union.

The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of property, plant

and equipment for the oilseeds processing segment, biological assets, agricultural produce and certain financial assets and liabilities measured at

fair value. The consolidated financial statements have been prepared on a going concern basis.

The Group’s Subsidiaries maintain their accounting records in local currencies in accordance with the accounting and reporting regulations of the

countries of their incorporation. Local statutory accounting principles and procedures may differ from those generally accepted under IFRS Ac-

counting Standards. Accordingly, the consolidated financial statements, which have been prepared from the Group’s Subsidiaries’ accounts under

local accounting regulations, reflect adjustments necessary for such financial statements to be presented in accordance with IFRS Accounting

Standards.

Going concern

The Group continues to operate in a highly challenging environment caused by Russia’s full-scale invasion of Ukraine, which began on 24 February

2022. Despite these circumstances, Kernel Group has demonstrated resilience and operational adaptability. Management has implemented

measures to safeguard employees and assets while ensuring continuity of operations.

In assessing the going concern assumption, the following events, conditions and results were considered for the year ended 30 June 2025 and up

to the date of authorization of these consolidated financial statements:

• Ukraine’s grain export processes remained stable throughout the financial year. The commercial navigation corridor, maintained by the Ukrainian

Navy, ensured regular vessel traffic and uninterrupted exports of grain and oilseed products;

• Despite ongoing hostilities, the Group did not incur significant damage to its core assets or facilities, and logistics operations continued without

material disruption;

• The Group retained its position as the largest grain exporter and sunflower oil producer in Ukraine, with production and sales volumes remaining

stable despite the numerous challenges faced;

• The Group’s long-term investment in renewable energy enhanced resilience against power outages. Biomass-based “green” energy project

reached a combined turbine capacity of 84.4 MW, reducing reliance on external supplies and strengthening energy security;

• The Group further strengthened its debt profile and liquidity position during the year, fully repaying USD 300,000 thousand of Eurobonds maturing

on 17 October 2024. At the same time, short-term and long-term borrowings, including current portion, decreased by USD 61,733 thousand,

while total loans outstanding amounted to USD 253,433 thousand at year-end;

• For the year ended 30 June 2025, the Group generated profit after tax for the period of USD 237,596 thousand and positive net cash flows from

operating activities in the amount of USD 241,664 thousand (30 June 2024: USD 167,628 thousand and USD 472,136 thousand, respectively).

Management has prepared cash flow forecasts for the 12 months from the date of approval of these consolidated financial statements. In preparing

these forecasts, management applied the following key assumptions:

• There will be no significant further advancement of Russian troops into the territory of Ukraine and no escalation of military actions that could

materially affect the Group’s assets;

• Ukraine’s deep-water ports will remain open and operational during the next financial year, allowing the Group to continue its export activities.

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

been prepared.

The forecast indicates that the Group has sufficient resources to continue its operations and to meet its obligations as they fall due. Accordingly,

management believes that it is appropriate to prepare these consolidated financial statements on a going concern basis.

Management acknowledges that the future development and duration of military actions represent a material uncertainty that may cast significant

doubt on the Group’s ability to continue as a going concern and, therefore, may result in the Group being unable to realize its assets and discharge

its liabilities in the normal course of business. Despite this material uncertainty related to the war in Ukraine, management continues to take actions

to minimize its impact on the Group and therefore believes that the application of the going concern assumption in the preparation of these consol-

idated financial statements remains appropriate.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

117

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

Adoption of New and Revised Standards

The Group has adopted all new and revised IFRS Accounting Standards that became effective for annual periods beginning on or after 1 July

2024.

Classification of liabilities as current or non-current (Amendments to IAS 1): The amendments aim to promote consistency in applying the

requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement

date should be classified as current (due or potentially due to be settled within one year) or non-current.

Lease Liability in a Sale and Leaseback (Amendments to IFRS 16): Under the amendments, the seller-lessee must determine the “lease

payments” or “revised lease payments” in a way that prevents the recognition of any gain or loss related to the right of use retained by the seller-

lessee after the lease commencement date.

Non-current Liabilities with Covenants (Amendments to IAS 1): The amendment clarifies how conditions with which an entity must comply

within twelve months after the reporting period affect the classification of a liability.

Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7): The amendments to IAS 7 require entities to provide disclosures regarding

their supplier finance arrangements, allowing users of financial statements to evaluate how these arrangements impact the entity’s liabilities and

cash flows. Additionally, IFRS 7 has been updated to include supplier finance arrangements as an example under the disclosure requirements

related to an entity’s exposure to liquidity risk concentration.

Standards and Interpretations Issued but not Effective

At the date of authorization of these consolidated financial statements, the following standards, and interpretations, as well as amendments to the

standards had been issued but were not yet effective:

Standards and Interpretations

Effective for the annual period

beginning on or after

Lack of Foreign Currency Exchangeability (Amendments to IAS 21)

1 January 2025

Contracts Referencing Nature-dependent Electricity (Amendments to IFRS 9 and IFRS 7)

1 January 2026

Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7)

1 January 2026

Annual Improvements to IFRS Accounting Standards (Amendments to IFRS 1, IFRS 7, IFRS 9, IFRS 10 and

IAS 7)

1 January 2026

Presentation and Disclosure in Financial Statements (Amendments to IFRS 18)

1 January 2027

Subsidiaries without Public Accountability: Disclosure (Amendments to IFRS 19)

1 January 2027

Management is in the process of evaluating the impact of these standards and interpretations on the Group’s consolidated financial statements in

future periods.

Functional and Presentation Currency

The Group’s presentation currency is the United States dollar (“USD”). The functional currency of the majority of the Group’s foreign Subsidiaries

is their local currency, except for businesses engaged in the production and sale of sunflower oil and export terminals, for which USD was deter-

mined as the functional currency.

Foreign Currencies

Transactions in currencies other than the functional currencies of the Group`s companies are initially recorded at the rates of exchange prevailing

on the dates of the transactions. Subsequently, monetary assets and liabilities denominated in such currencies are translated at the rates prevailing

on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing

at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not

retranslated.

On consolidation, the assets and liabilities of the Subsidiaries are translated at exchange rates prevailing on the reporting date. Income and expense

items are translated at the average exchange rates for the period, unless the exchange rates fluctuate significantly during that period, in which

case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognized in Consolidated Statement

of Profit or Loss and Other Comprehensive Income accumulated in “Translation reserve”.

The exchange rates during the period of the financial statements were as follows:

Currency

Closing rate as of

30 June 2025

Average rate for the

year ended 30 June 2025

Closing rate as of

30 June 2024

Average rate for the

year ended 30 June 2024

USD/UAH

41.6409

41.4619

40.5374

37.7892

USD/EUR

0.8525

0.9198

0.9348

0.9248

USD/PLN

3.6164

3.9227

4.0320

4.0582

Rates established by NBU might differ from the commercial rates. Therefore, these rates might not be the ones at which the assets could be

realized, or liabilities could be settled. Additionally, certain restrictions of the National Bank of Ukraine (NBU) on foreign currency transactions

remained in place, although they were progressively eased during the financial year, including the introduction of an investment limit mechanism

in May 2025 and further liberalization measures enacted in August 2025.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

118

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

The average exchange rates for each period are calculated as the arithmetic means of the exchange rates for all trading days during this period.

The sources of exchange rates are the official rates set by the National Bank of Ukraine for USD/UAH and by the National Bank of Poland for

USD/EUR and USD/PLN.

All foreign exchange gain or loss that occurs on revaluation of monetary balances, presented in foreign currencies, is allocated as a separate line

in the Consolidated Statement of Profit or Loss.

Basis of Consolidation

The consolidated financial statements incorporate the consolidated financial statements of the Holding and companies controlled by the Holding

(“Subsidiaries”) as of 30 June 2025.

The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities) controlled by

the Company and its Subsidiaries. Control is achieved when the Company:

• has power over the investee;

• is exposed, or has rights, to variable returns from its involvement with the investee; and

• has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the

three elements of control listed above.

When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient

to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances

in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power, including:

• the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

• potential voting rights held by the Company, other vote holders, or other parties;

• rights arising from other contractual arrangements;

• any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities

at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Consolidation of a Subsidiary begins when the Company obtains control over the Subsidiary and ceases when the Company loses control of the

Subsidiary. Specifically, income and expenses of a Subsidiary acquired or disposed of during the year are included in the Consolidated Statement

of Profit or Loss and Other Comprehensive Income from the date the Company gains control until the date when the Company ceases to control

the over Subsidiary.

All inter-company transactions and balances between the Group’s enterprises are eliminated for consolidation purposes. Unrealized gains and

losses resulting from inter-company transactions are also eliminated, except for unrealized losses that cannot be recovered.

Non-controlling interests in Subsidiaries are identified separately from the Group’s equity therein. Non-controlling interests as of the reporting date

represent the non-controlling equity holders’ portion of the fair values of the identifiable assets and liabilities of the Subsidiary at the acquisition

date and the non-controlling equity holders’ portion of movements in equity since the date of acquisition. Profit or loss and each component of the

other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. The total comprehensive income of

Subsidiaries is attributed to the equity holders of the Company and to non-controlling interests even if this results in the non-controlling interests

having a deficit balance.

Business Combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured

at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the

Group to the former owners of the acquire and equity interests issued by the Group in exchange for control of the acquire. Acquisition costs are

expensed when incurred and included in general and administrative expenses.

At the acquisition date, identifiable assets acquired, and liabilities assumed are recognized at their fair value, except that:

• Deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognized and measured in accordance

with IAS 12 Income Taxes and IAS 19 Employee Benefits, respectively;

• The Group shall recognize right-of-use assets and lease liabilities for leases identified in accordance with IFRS 16 in which the acquiree is the

lessee. The Group shall measure the lease liability at the present value of the remaining lease payments (as defined in IFRS 16) as if the

acquired lease were a new lease at the acquisition date. The Group shall measure the right-of-use asset at the same amount as the lease

liability, adjusted to reflect favorable or unfavorable terms of the lease when compared with the market;

• The acquirer shall measure the value of a reacquired right recognized as an intangible asset based on the remaining contractual term of the

related contract regardless of whether market participants would consider potential contractual renewals when measuring its fair value;

• Liabilities or equity instruments related to share-based payment arrangements of the acquire or share-based payment arrangements of the

Group entered into to replace share-based payment arrangements of the acquire are measured in accordance with IFRS 2 Share-based Payment

at the acquisition date; and

• Assets and liabilities that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations

are measured in accordance with that standard.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

119

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

For each business combination, the Group measures the non-controlling interests in the acquiree either at fair value or at a proportionate share of

the acquirer’s identifiable net assets. If the initial accounting for a business combination cannot be completed by the end of the reporting period in

which the combination occurs, only provisional amounts are reported, which can be adjusted during a measurement period of 12 months after the

acquisition date.

Changes in the Group’s ownership interests in Subsidiaries that do not result in the Group losing control over the Subsidiaries are accounted for

as equity transactions. The carrying amounts of the Group’s interests and non-controlling interests are adjusted to reflect changes in their relative

interests in Subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consider-

ation paid or received is recognized directly in equity and attributed to the equity holders of the Holding.

Goodwill

Goodwill arising from a business combination is recognized as an asset at the date that control is acquired (acquisition date). Goodwill is measured

as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree, and the fair value of the

acquirer’s previously held equity interest (if any) in the entity net of the acquisition date amounts of the identifiable assets acquired and the liabilities

assumed.

Goodwill is not amortized but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be

impaired and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of

goodwill relating to the entity sold. If, after reassessment, the net of the acquisition date amounts of the identifiable assets acquired and liabilities

assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the

acquirer’s previously held interest in the acquire (if any), the excess is recognized immediately in profit or loss as a bargain purchase gain.

For impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating units) (“CGU”) that are

expected to benefit from the synergies of the combination. The cash-generated units or groups of units are identified at the lowest level at which

goodwill is monitored for internal management purposes, being the legal entity, which represents a production site of the Group, except for the

Farming segment where the whole segment is determined as one CGU and two grain export terminals which represent a single CGU.

Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at

the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes

place either in the principal market for the asset or liability or in the absence of a principal market, in the most advantageous market for the asset

or liability. The principal or most advantageous market must be accessible to the Group.

The fair value of an asset or a liability is measured using the assumptions market participants would use when pricing the asset or liability, assuming

that market participants act in their best economic interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset

in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Group uses

valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximizing the use

of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorized within the fair value

hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

• Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

• Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognized in the consolidated financial statements on a recurring basis, the Group determines whether transfers

have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value

measurement as a whole) at the end of each reporting period.

For the transactions and activities in financial instruments, the Group could conclude enforceable master netting or similar arrangements, each

agreement between the Group and the counterparty allows for net settlement of the relevant financial assets and liabilities when both elect to settle

on a net basis (Note 32). In the absence of such an election, financial assets and liabilities may be settled on a gross basis, however, each party

to the master netting or similar agreement will have the option to settle all such amounts on a net basis in the event of default of the other party.

Per the terms of each agreement, an event of default includes failure by a party to make payment when due, failure by a party to perform any

obligation required by the agreement (other than payment) if such failure is not remedied within periods of 30 to 60 days after notice of such failure

is given to the party or bankruptcy.

Inventories

Inventories are stated at a lower cost or net realizable value. Cost comprises direct materials and, where applicable, direct labor costs and those

overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the first-in, first-out

(FIFO) method. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the

estimated costs necessary to make the sale.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

120

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

Biological Assets and Agricultural Produce

The Group classifies crops in fields and cattle as biological assets.

Biological assets are stated at fair value, less estimated costs to sell at both initial recognition and as of the reporting date, with any resulting gain

or loss recognized in the Consolidated Statement of Profit or Loss. Costs of selling include all costs that would be necessary to sell the assets,

including costs necessary to get the assets to the market.

Agricultural produce harvested from biological assets is measured at its fair value less costs to sell estimated at the point of harvest. A gain or loss

arising from the initial recognition of agricultural produce at fair value less costs to sell is included in the Consolidated Statement of Profit or Loss.

The Group presents gain/(loss) on revaluation attributable to the agricultural produce sold during the year in the Net change in fair value of biological

assets and agricultural produce.

Biological assets for which quoted market prices are not available are measured using the present value of expected net cash flows from the sale

of an asset discounted at a current market-determined rate. The objective of a calculation of the present value of expected net cash flows is to

determine the fair value of a biological asset in its present location and condition.

The cost of agricultural preparation of fields before seeding is recorded as work-in-progress in inventories. After seeding, the cost of field preparation

is recognized as biological assets held at fair value less costs to sell.

The Group classifies biological assets as current or non-current depending upon the average useful life of the group of biological assets. All of the

Group’s biological assets except non-current cattle were classified as current, as their average useful life is less than one year.

Property, Plant, and Equipment

Buildings, constructions, production machinery and equipment (Oilseed Processing segment) are accounted for at revalued amounts, being the

fair value, which is determined using external professional expert evaluation. Revaluations are performed with sufficient regularity such that the

carrying amount does not differ materially from that which would be determined using fair values at the reporting date. Any accumulated deprecia-

tion at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount

of the asset.

If the asset’s carrying amount is increased as a result of a revaluation, the increase is credited directly to other comprehensive income and accu-

mulated in the revaluation reserve in equity. However, such an increase is recognized in the Consolidated Statement of Profit or Loss to the extent

that it reverses an impairment of the same asset previously recognized in the Consolidated Statement of Profit or Loss. If the asset’s carrying

amount is decreased as a result of a revaluation, the decrease is recognized in the Consolidated Statement of Profit or Loss. However, such a

decrease is debited directly to the Other Comprehensive Income or Loss to the extent of any credit balance existing in the revaluation surplus with

respect to that asset.

Depreciation on revalued assets is charged to the Consolidated Statement of Profit or Loss. On the subsequent sale or retirement of revalued

assets, the revaluation surplus remaining in the revaluation reserve is transferred directly to retained earnings. No transfer is made from the

revaluation reserve to retained earnings except when an asset is derecognized. Property, plant and equipment are depreciated over the estimated

useful economic lives of assets under the straight-line method.

Useful lives of property, plant, and equipment are as follows:

Buildings and constructions

20 - 50 years

Production machinery and equipment

10 - 20 years

Agricultural equipment and vehicles

5 - 30 years

Other fixed assets

5 - 20 years

Construction in progress (CIP) and uninstalled equipment

not depreciated

Except for land, buildings and constructions and production machinery and equipment of the Oilseed Processing segment, all other property, plant

and equipment is stated at historical cost less accumulated depreciation and accumulated impairment losses. Land is carried at cost less accumu-

lated impairment losses and is not depreciated.

Capitalized costs include major expenditures for improvements and replacements that extend the useful lives of assets or increase their revenue-

generating capacity. Repairs and maintenance expenditures that do not meet the foregoing criteria for capitalization are presented in the Consoli-

dated Statement of Profit or Loss as incurred.

Construction in progress consists of costs directly related to the construction of property, plant and equipment including an appropriate allocation

of directly attributable variable overhead incurred during construction. Depreciation of these assets commences when the assets are put into

operation.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the

continued use of the asset. Any gain or loss arising from the disposal or retirement of an item of property, plant and equipment is determined as

the difference between the sales proceeds and the carrying amount of the asset and is recognized in the Consolidated Statement of Profit or Loss.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

121

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

Leases

The Group assesses whether a contract is, or contains, a lease at the inception of the contract. The Group recognizes right-of-use assets and

corresponding lease liabilities with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with

a lease term of 12 months or less).

For the short-term leases, the Group recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease

unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using

the incremental borrowing rate. The incremental borrowing rate is determined as reference interest rates which were derived from the yields of

corporate bonds in the currency similar to the lease contracts, for a period of up to 10 years.

Lease payments included in the measurement of the lease liability comprise:

• Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable:

• Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;

• The amount expected to be payable by the lessee under residual value guarantees.

• The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and

• Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.

• The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the

case for leases of the Group, the Group’s incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the

funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, collateral, and

conditions.

• To determine the incremental borrowing rate, the Group:

− where possible, uses recent third-party financing received by the Group as a starting point, adjusted to reflect changes in financing conditions

since third party financing was received,

− uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk, and

− adjusts specific to the lease, e.g., term, country, currency, and collateral

The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:

• The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a

purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.

• The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which

cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments

change is due to a change in a floating interest rate, in which case a revised discount rate is used).

• A lease contract is modified, and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured

based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of

the modification.

The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement

day, any lease incentives received, and any initial direct costs. Right-of-use assets are depreciated on a straight-line basis from the commencement

date of the lease.

The commencement date is the date on which a lessor makes an underlying asset available for use by a lessee.

The right-of-use assets and lease liabilities are presented as separate lines in the consolidated statement of financial position.

Finance costs, which represent the difference between the total lease payments included in the measurement of the lease liability and the initial

amount of the lease liability, are charged to profit or loss over the term of the relevant lease so as to produce a constant periodic rate of charge on

the remaining balance of the obligations for each accounting period.

Intangible Assets

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated depreciation and accumulated impairment

losses. Amortization is primarily recognized within “Cost of Sales” on a straight-line basis over their estimated useful lives. The amortization method

and estimated useful life are reviewed annually with the effect of any changes in estimate being accounted for on a prospective basis. Intangible

assets with indefinite useful lives that are acquired separately shall not be amortized and are carried at cost less accumulated impairment loss.

Trademarks

The “Schedry Dar”, “Stozhar”, “Zolota” and “Domashnya” are separately acquired trademarks that have indefinite useful lives and are not amortized

but tested for impairment by comparing their recoverable amount with their carrying amount annually on 30 June and whenever there is an indication

that the trademarks may be impaired.

Impairment of tangible and intangible assets, except Goodwill

On each reporting date, the Group reviews the carrying amounts of the Group’s non-current assets to determine whether there is any indication

that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to

determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

122

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows

are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks

specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than it is carrying amount, the carrying amount of the asset

(or cash-generating unit) is reduced to its recoverable amount. The cash generating unit represents the lowest level within the Group at which the

goodwill is monitored by management and which is not larger than a segment. An impairment loss is recognized immediately in the Consolidated

Statement of Profit or Loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation

decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate

of its recoverable amount to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined

had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized

immediately in the Consolidated Statement of Profit or Loss, unless the relevant asset is carried at a revalued amount, in which case the reversal

of the impairment loss is treated as a revaluation increase.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, and deposits held with banks with original maturities of three months or less. Cash and cash

equivalents are carried at amortized cost because: (i) they are held for collection of contractual cash flows and those cash flows represent SPPI,

and (ii) they are not designated at FVTPL. Restricted balances are excluded from cash and cash equivalents for the consolidated statement of

cash flows.

Financial Instruments

Financial assets and financial liability are recognized in the Group’s Consolidated Statement of Financial Position when, and only when, the Group

entity becomes a party to the contractual provisions of the instrument.

Financial assets are classified into the following categories financial assets at amortized cost or at fair value through profit or loss (FVTPL). The

classification depends on the business model and contractual cash flow characteristics of the financial assets or financial liabilities and is deter-

mined at the time of initial recognition.

Financial assets and financial liabilities are initially measured at fair value, except for trade receivables and trade payables that do not have a

significant financing component which are measured at transaction price. All recognized financial assets are measured subsequently in their entirety

at either amortized cost or fair value, depending on the classification of the financial assets. All financial liabilities are measured subsequently at

amortized cost using the effective interest method or at FVTPL. Transaction costs that are directly attributable to the acquisition or issue of financial

assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from

the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acqui-

sition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

Cash flows arising from the trading of government bonds are presented on a net basis within investing activities, as these represent non-core, non-

revenue generating transactions undertaken under a distinct trading model. The government bonds held by the Group are measured at fair value

through profit or loss (FVTPL) in accordance with IFRS 9. The classification is based on the Group’s business model, as these instruments are not

held solely to collect contractual cash flows, nor are they held both to collect contractual cash flows and to sell.

Amortized cost and effective interest method

The Group measures financial assets at amortized cost if both of the following conditions are met:

• The financial asset is held within a business model with the objective of holding financial assets in order to collect contractual cash flows; and

• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the

principal amount outstanding.

Financial assets at amortized cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses

are recognized in profit or loss when the asset is derecognized, modified or impaired.

The effective interest method calculates the amortized cost of a debt instrument and allocates interest income over the relevant period. The effective

interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part

of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appro-

priate, a shorter period, to the net carrying amount on initial recognition.

Interest income is recognized on an effective interest basis for debt instruments other than those financial assets classified as at fair value through

profit or loss. The effect of initial recognition of financial assets and liabilities obtained/incurred at terms below the market is recognized net of the

tax effect as an income or expense, except for financial assets and liabilities with shareholders or entities under control of the Beneficial Owner,

whereby the effect is recognized through equity.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

123

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

Financial assets at FVTPL

Financial assets that do not meet the criteria for being measured at amortized cost are measured at FVTPL. Specifically:

• Investments in equity instruments are classified as at FVTPL on initial recognition;

• Debt instruments that do not meet the amortized cost criteria are classified as at FVTPL. In addition, debt instruments that meet either the

amortized cost criteria may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a meas-

urement or recognition inconsistency (so called “accounting mismatch”) that would arise from measuring assets or liabilities or recognizing the

gains and losses on them on different bases. The Group has not designated any debt instruments as at FVTPL. Financial assets at FVTPL are

measured at fair value at the end of each reporting period, with any fair value gains or losses recognized in profit or loss to the extent they are

not part of a designated hedging relationship. The net gain or loss recognized in profit or loss includes any dividend or interest earned on the

financial asset.

Derecognition of financial assets

The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial

asset and all the risks and rewards to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership

and continues to control the transferred asset, the Group recognizes its retained interest in the asset and associated liability for amounts it may

have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to

recognize the financial asset and also recognizes collateralized borrowing for the proceeds received.

On derecognition of a financial asset other than in its entirety (e.g. when the Group retains an option to repurchase part of a transferred asset or

retains a residual interest that does not result in the retention of substantially all the risks and rewards of ownership and the Group retains control),

the Group allocates the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement,

and the part it no longer recognizes based on of the relative fair values of those parts on the date of the transfer. The difference between the

carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized and

any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in the Consolidated Statement

of Profit or Loss. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues

to be recognized and the part that is no longer recognized based on the relative fair values of those parts.

Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses (“ECL”) on a financial asset, other than those at FVTPL, at the end of each

reporting period. The amount of ECL and other current assets is updated at each reporting date to reflect changes in credit risk since the initial

recognition of the respective financial instrument.

The Group applies a simplified approach permitted by IFRS Accounting Standards to measuring ECL which uses a lifetime expected loss allowance

for trade receivables. The ECL on trade receivables and other current assets is estimated using a provision matrix, based on historical credit loss

experience and credit rating of customers, adjusted on observable and reasonable information.

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument.

In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are

possible within 12-months after the reporting date.

The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic

prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered bankruptcy proceedings, or in the case of trade

accounts receivable, when the amounts are over three years past due, whichever occurs sooner. Financial assets written off may still be subject

to enforcement activities under the Group’s recovery procedures, considering legal advice where appropriate. Any recoveries made are recognized

in profit or loss.

Definition of default

The Group considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates

that financial assets that meet either of the following criteria are generally not recoverable:

• when there is a breach of financial covenants by the debtor; or

• information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Group,

in full (without taking into account any collateral held by the Group).

Irrespective of the above analysis, the Group considers that default has occurred when a financial asset is more than 90 days past due unless the

Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

Financial liabilities measured subsequently at amortized cost

Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held for trading, or (iii) designated as at

FVTPL, are measured subsequently at amortized cost using the effective interest method.

Financial liabilities include balances of bank loans and credit lines. Cash movements from bank loans and credit lines, which meet requirements of

IAS 7 for net presentations are presented in the consolidated statements of cash flows in line “Net proceeds from/(repayment of) credit lines”. Other

related cash movements, which do not meet requirements for net presentation are presented on gross basis in lines “Proceeds from short-term

and long-term borrowings” and “Repayment of short-term and long-term borrowings”.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

124

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent consideration of an acquirer in a business combination, (ii)

held for trading or (iii) it is designated as at FVTPL.

A financial liability is classified as held for trading if:

• it has been acquired principally for the purpose of repurchasing it in the near term; or

• on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of

short‑term profit‑taking; or

• it is a derivative, except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument.

A financial liability other than a financial liability held for trading or contingent consideration of an acquirer in a business combination may be

designated as at FVTPL upon initial recognition if:

• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

• the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed, and its performance is evaluated

on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping

is provided internally on that basis; or

• it forms part of a contract containing one or more embedded derivatives, and IFRS 9 permits the entire combined contract to be designated as

at FVTPL.

Financial liabilities at FVTPL are measured at fair value, with any gains or losses arising on changes in fair value recognized in profit or loss to the

extent that they are not part of a designated hedging relationship. The net gain or loss recognized in profit or loss incorporates any interest paid on

financial liability.

However, for financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial liability that is attributable

to changes in the credit risk of that liability is recognized in other comprehensive income, unless the recognition of the effects of changes in the

liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. The remaining amount of

change in the fair value of liability is recognized in profit or loss. Changes in fair value attributable to a financial liability’s credit risk that is recognized

in other comprehensive income are not subsequently reclassified to profit or loss; instead, they are transferred to retained earnings upon derecog-

nition of the financial liability.

Derecognition of financial liabilities

The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired. The difference

between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

When the Group exchanges with the existing lender one debt instrument into another one with the substantially different terms, such exchange is

accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Group accounts for

substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new

liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any

fees paid net of any fees received and discounted using the original effective rate is at least 10 per cent different from the discounted present value

of the remaining cash flows of the original financial liability. If the modification is not substantial, the difference between:

1. the carrying amount of the liability before the modification; and

2. the present value of the cash flows after modification should be recognized in the statement profit or loss as the modification gain or loss within

other operating income and expenses.

Derivative Financial Instruments

The Group enters a variety of derivative financial instruments including futures, options, and physical contracts to buy or sell commodities, which

do not qualify for the “own use” exemption under IFRS 9. These instruments are used primarily for economic risk management and pricing purposes.

All derivatives are initially recognized at fair value on the date the contract is entered into and are subsequently remeasured at fair value at each

reporting period.

The resulting gain or loss is recognized immediately in the profit or loss within Cost of sales (for the derivative purchase contracts) or gains or

losses from sales-related derivatives are reflected in Other operating expenses or income. Fair value is determined using quoted market prices,

third-party broker quotations, or appropriate valuation techniques when observable inputs are not available. Derivatives expected to be settled

within a year after the end of the reporting period are classified as current liabilities or current assets. If settlement is expected beyond one year,

the instrument is classified as non-current.

Treasury shares

Own equity instruments held by the Group (“Treasury shares”) shall be deducted from equity. No gain or loss shall be recognized in profit or loss

on the purchase, sale, issue, or cancellation of the Group’s own equity instruments. These treasury shares may be acquired and held by the entity

or by other members of the Group. Any difference between the carrying amount and the consideration, if reissued, will be recognized in the share

premium reserve.

Provisions

A provision is recognized in the Consolidated Statement of Financial Position when the Group has a legal or constructive obligation because of a

past event, and it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate of the obligation

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

125

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

amount can be made. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at

the reporting date, considering the risks and uncertainties surrounding the obligation.

Revenue recognition

Revenue is derived principally from the sale of goods and finished products, farming and rendering services. Revenue from contracts with custom-

ers is recognized when control of the goods or services is transferred to the customer at an amount that reflects the consideration to which the

Group expects to be entitled in exchange for those goods or services.

The point of revenue recognition for sale of commodity goods is dependent upon contract sales terms (Incoterms). When goods are sold on a Cost

and freight (CFR) or Cost, insurance, and freight (CIF) basis, the Group is responsible for providing services such as carriage and freight to the

customer. The Group recognizes revenue from each separate performance obligation and allocates part of the transaction price to carriage and

freight services incorporated in some contracts that the Group undertakes to perform. The Group allocates the transaction price based on the

relative stand-alone selling prices of the commodities and supporting services. The revenue from these carriage and fright services is recognized

over time.

A receivable is recognized by the Group when the control over goods is transferred to the wholesaler as this represents the point of time at which

the right to consideration becomes unconditional, as only the passage of time is required before payment is due. The timing of billing is generally

close to the timing of performance obligation satisfaction, respectively, the amount of contract assets and contract liabilities is not material. When

the Group obtains a contract from a customer, the Group enters into a contract with one of those service providers, directing the service provider

to render freight and other services for the customer. The Group is obliged to pay the service provider even if the customer fails to pay.

Revenue derived from freight, storage and other services is recognized over time, as the customers simultaneously receive and consume the

benefits provided by the Group in respect of the related services. This recognition method is consistent with the revenue disclosures presented for

each reportable segment.

Revenue, as well as other transactions and balances with other related parties, are incurred with legal entities that are associated with close family

members of the ultimate controlling party of the Group and members of the Group’s management.

Employee benefits

Wages, salaries, contributions to the pension and social insurance funds, paid annual leave and sick leave, bonuses, and non-monetary benefits

are accrued in the year in which the associated services are rendered by the employees of the Group. The Group recognizes a liability and an

expense for short-term bonuses and other short-term profit-sharing arrangements when the reporting entity has a present legal or constructive

obligation to make payments as a result of past events and a reliable estimate can be made of the amount payable.

Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a

substantial period to get ready for their intended use or sale, are added to the cost of those assets, until the assets are substantially ready for their

intended use or sale. All other borrowing costs are recognized in the Consolidated Statement of Profit or Loss in the period in which they are

incurred.

Taxation

Income taxes have been provided for in the consolidated financial statements in accordance with legislation currently enacted in the legal jurisdic-

tions where the operating entities are located. Income tax expense represents the sum of the tax currently payable and deferred tax expense.

Current and deferred tax for the year

Current and deferred tax are recognized in the Consolidated Statement of Profit or Loss, except when they relate to items that are recognized in

other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income

or directly in equity, respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is

included in the accounting for the business combination.

Current tax

The current income tax charge is the amount expected to be paid to, or recovered from, taxation authorities with respect to taxable profit or losses

for the current or previous periods. It is calculated using tax rates that have been enacted or substantially enacted by the reporting date in the

countries where the Holding and its Subsidiaries operate and generate taxable income. Taxable profit differs from “profit before tax” because of

items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible taxes other than income

tax are recorded within operating expenses. Some of the Group’s companies that are involved in agricultural production are exempt from income

taxes and pay the Unified Agricultural Tax instead.

Deferred tax

Deferred income tax is recognized on temporary differences arising between the carrying amount of assets and liabilities in the financial statements

and their corresponding tax bases used in the computation of taxable profit. Deferred tax balances are measured at tax rates enacted or substan-

tively enacted at the end of the reporting period that are expected to apply to the period when the temporary differences will reverse, or the tax loss

carried forward will be utilized. Deferred tax assets for deductible temporary differences and tax losses carried forward are recorded only to the

extent that it is probable that future taxable profit will be available against which the deductions can be utilized.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

126

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable

that sufficient taxable profits will be available to allow all or part of the assets to be recovered.

Deferred tax liabilities for taxable temporary differences associated with investments in Subsidiaries and joint ventures are recognized, except

when the Group can control the reversal of the temporary difference, and it is probable that the temporary difference will not reverse in the fore-

seeable future. In addition, a deferred tax liability is not recognized if the temporary difference arises from the initial recognition of goodwill.

Deferred tax assets and liabilities are offset when:

• The Group has a legally enforceable right to set off the recognized amounts of current tax assets and current tax liabilities;

• The Group has the intention to settle on a net basis, or to realize the asset and settle the liability simultaneously;

• The deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority in each future period in which

significant amounts of deferred tax liabilities and assets are expected to be settled or recovered.

Share-based options and payments

The Group recognizes a compound financial instrument if an entity has granted the counterparty the right to choose whether a share-based payment

transaction is settled in cash or by issuing equity instruments, which includes a debt component (i.e. the counterparty’s right to demand payment

in cash) and an equity component (i.e. the counterparty’s right to demand settlement in equity instruments rather than in cash). The Group measures

the debt component of the compound financial instrument first and then measures the fair value of the equity component, considering that the

counterparty must forfeit the right to receive cash in order to receive the equity instrument. The fair value of the compound financial instrument is

determined as the sum of the fair values of the two components.

For cash-settled share-based payments, a liability is initially recognized for the goods or services acquired, measured initially at the fair value of

the liability. At each reporting date until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured, with any

changes in fair value recognized in in the Consolidated Statement of Profit or Loss for the year.

Corrections and reclassifications

In accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, the Group has made corrections and reclassifications

in the comparative financial information as of 30 June 2024 presented in these consolidated financial statements for the year ended 30 June 2025.

Notes to the consolidated financial statements:

• Note 14 Property, plant and equipment – amounts in the columns “Cost as of 30 June 2024” and “Accumulated depreciation and impairment

losses as of 30 June 2024” were reduced by USD 53,328 thousand and USD 63,242 thousand, within the lines “Buildings and constructions”

and “Production machinery and equipment” respectively, to correct presentation of impairment loss of items carried under the revaluation model.

• Note 31 Financial risk management – was corrected to add remaining contractual cashflows until maturity for its derivative financial liabilities

related to swap contracts. Additionally, the Group added amounts of its exposure to foreign currency risk to include transactions with currency

swap contracts. The correction was necessary to meet IFRS 7 disclosure requirement.

• Note 32 Financial instruments - was corrected to enhance presentation of derivative financial instruments subject to offsetting and to exclude

certain balances of derivatives financial instruments, which are not subject to offsetting.

• The Group’s revenue by type of goods was presented in Note 7 Revenue and Key Data by Operating Segment to enhance alignment of revenue

presentation by products and segments.

In the consolidated statement of cash flows, reclassifications were made to correct presentation of cash flows within financing activities. For the

year ended 30 June 2024, the Group introduced new lines “Net proceeds from/(repayment of) credit lines” of USD 35,319 thousand for fast-moving

loans, “Proceeds from short-term and long-term borrowings” of USD 109,463 thousand and “Repayment of short-term and long-term borrowings”

of USD 619,580 thousand instead of “Proceeds from borrowings” and “Repayment of borrowings” of USD 245,019 thousand and USD 790,455

thousand, respectively.

5. Critical Accounting Judgments and Key Sources of Estimation Uncertainty

The application of IFRS Accounting Standards requires management to make reasonable judgments, assumptions and estimates. These estimates

and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the

consolidated financial statements. The estimates are based on the information available as of the reporting date. Actual results could differ from

these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in

which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both

current and future periods.

Critical Judgments in Applying Accounting Policies

The following are the critical judgments, apart from those involving estimations (see below), that management has made in the process of applying

the Group’s accounting policies and that have the most significant effect on the amounts recognized in the consolidated financial statements.

Revaluation of Property, Plant and Equipment

The Group recognizes the buildings, constructions, production machinery, and equipment used in the Oilseed Processing segment at fair value,

which is valued by external independent appraiser, at least triennially or more often, depending on the external and internal factors. A revaluation

surplus is credited to Revaluation reserve within equity. All other classes of property, plant and equipment are recognized at historical cost less

depreciation.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

127

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

As of 30 June 2025, the Group performed a revaluation of the buildings, constructions, production machinery, and equipment used in the Oilseed

Processing segment, which are carried out at fair value. Valuation was conducted in accordance with International Valuation Standards and Inter-

national Financial Reporting Standard 13 “Fair Value Measurement”. While performing valuation the following techniques were used:

• Cost approach (depreciated replacement cost);

• Income approach (discounted cash flow models).

The Group involved an independent appraiser to identify the depreciated replacement cost of assets, while discounted cash flow models were

prepared by the internal valuation team and technicians. The depreciated replacement cost was calculated as either cost to reproduce the asset

adjusted by the observable inflation rate and change in currency exchange rates or cost of a new market analogue both adjusted by unobservable

index of physical depreciation. The higher the cost to reproduce the asset or cost of a new market analogue, the higher the depreciated replacement

cost.

Key assumptions used in depreciated replacement cost (“DRC”) as well as their sensitivities are outlined as follows:

Description

DRC as of 30

June 2025

Value tech-

niques

Fair value

hierarchy

Unobservable

inputs

Range of unobservable

inputs (weighted average)

Relationship of unobservable in-

puts to DRC

Buildings and con-

structions

276,471

Depreciated re-

placement cost

Level 3

Index of physi-

cal depreciation

– 80% (21%)

The higher the index of physical de-

preciation, the lower the DRC

Production machin-

ery and equipment

226,854

Depreciated re-

placement cost

Level 3

Index of physi-

cal depreciation

– 82% (19%)

The higher the index of physical de-

preciation, the lower the DRC

If the above unobservable inputs to the valuation model were 5 p. p. higher/lower while all other variables were held constant, the DRC of the

buildings and constructions and production machinery and equipment would decrease/increase by USD 39,119 thousand and

USD 38,970 thousand, respectively.

The results of revaluation using the depreciated replacement cost were then compared with results of income approach (Level 3 of unobservable

inputs) for corresponding assets to test whether economic obsolescence exists. Cash flow forecasts used in the income approach were based on

financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period were extrapolated using the

estimated growth rates. Other key assumptions used in the discounted cash flow forecasts, and their sensitivity is disclosed in Note 14.

Key sources of estimation uncertainty

The following are the key assumptions concerning the future and other key sources of estimating uncertainty at the end of the reporting period that

have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Impairment of Property, Plant and Equipment

The Group assesses non-financial assets for indicators of impairment at each reporting date. Where such indicators exist, or where there are

indications that a previously recognized impairment may no longer exist or may have decreased, management performs a detailed impairment

review of the Group’s non-current assets.

Management makes key assumptions regarding factors that have been materially influenced by the full-scale Russian invasion of Ukraine. These

assumptions reflect events and conditions that may indicate impairment, including:

• temporary suspension of operations;

• breaches of supply and purchase contracts;

• restrictions on market access for product deliveries;

• limitations on export routes;

• declines in profitability and physical damage to assets resulting from the invasion; and

• volatility in commodity prices, including consideration of future pricing trends, where fluctuations of 5–10% are common in the industry.

The Group tested its non-current assets for impairment by comparing their carrying amounts with their recoverable amounts, defined as the higher

of value in use and fair value less costs of disposal.

Impairment testing was performed at the cash-generating unit (“CGU”) level for all segments, covering property, plant and equipment, intangible

assets, right-of-use assets, and goodwill. Where impairment was identified, the loss was allocated first to goodwill and then to other intangible

assets, property, plant and equipment, and right-of-use assets on a pro rata basis.

In assessing for impairment, assets that do not generate independent cash flows are allocated to the appropriate cash-generating unit.

The recoverable amount was determined primarily on a value-in-use basis, using discounted cash flow projections. Future cash flows were esti-

mated from financial budgets approved by management covering a five-year period, and extrapolated beyond this period using growth rates con-

sistent with industry forecasts. The cash flows were discounted to present value using pre-tax discount rates that reflect the specific risks associated

with the relevant CGUs, their functional currency, and the country of operation. Key assumptions and sensitivities are disclosed in Note 14.

For previously impaired assets or CGUs, if the recoverable amount exceeds the carrying amount, the impairment loss is reversed in the consoli-

dated statement of profit or loss.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

128

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

Impairment of Right of Use Assets

The Group allocated the right of use assets to a cash generating unit, for impairment test within the respective CGU. The majority of the Group’s

right-of-use assets relate to leasehold land for agricultural purposes, being part of the Farming segment.

Details of the management assumptions used to assess the recoverable amount of cash-generating units in which right of use assets were allocated

are provided in Note 5 under the Impairment of Property, Plant and Equipment section and Note 14.

Functional currencies of different entities of the Group

Different entities within the Group have different functional currencies, based on the underlying economic conditions of their operations. This

determination of what the specific underlying economic conditions require judgment. In making this judgment, the Group evaluates among other

factors, the location of activities, the sources of revenue and risks associated with activities, denomination of currencies of operations of different

entities and degree of independence of subsidiaries’ business model. Specifically, in determination of the functional currencies of Kernel Trade

LLC, the Group based its judgement on the fact that the company operates internationally on the markets mainly influenced by the US Dollar (not

Ukrainian Hryvnia) and its major activities include the sale of goods to foreign customers. Moreover, most of its operations are denominated in US

Dollars and also, the US Dollar is the currency in which its business risks and exposures are managed, and the performance of their business is

measured. In determining the functional currency of the oil-processing plants and transshipment terminals, the Group based its judgement on the

degree of independence of those companies’ business model of Kernel Trade LLC.

Fair Value of Biological Assets and Agricultural Produce

Biological assets are recorded at fair value less costs to sell. The fair value of growing crops is determined using a discounted cash flow model

based on the expected crops’ yield by sowing area size, the market price for respective crops, and after allowing for harvesting costs, contributory

asset charges for the land and sowing areas and other costs yet to be incurred in getting the harvest to maturity.

The Group estimates the fair values of biological assets and agricultural produce based on the following assumptions:

• Expected crop yields (for crops in fields);

• Average weight and quality of animals;

• Productive life of one milk cow;

• Estimated future sales prices;

• Projected production costs and costs to sell; and

• Discount rate.

Although some of these assumptions are obtained from published market data, a majority of these assumptions are estimated based on the Group’s

historical and projected results (Note 12).

6. Operating Segments

Operating segments are reported in a manner consistent with the internal reporting as provided to the chief operating decision-makers for the

purpose of allocating resources and assessing performance. The executive management, who are members of the Board of Directors of the

Company, are identified as chief operating decision makers.

For the purposes of the consolidated financial statements, operating segments are defined based on the nature of activities, products sold, or

services provided. The segmentation presented consists of the structure of financial information regularly reviewed by the Group’s executive man-

agement, including the Chief Executive Officer. Segment performance is evaluated primarily on the basis of “EBITDA” (Earnings Before Interest,

Taxes, Depreciation, and Amortization. EBITDA is calculated as the profit from operating activities adding back amortization and depreciation.

The Group presents its results of activities within three operating segments:

• Oilseed Processing combines oilseed origination, edible oil production and sales of bottled sunflower oil. Sunflower oil in bulk is mostly sold

further to the Infrastructure and Trading segment for global marketing.

• Infrastructure and Trading segment, the Group combines results of Avere's global physical and proprietary trading operations, silo services,

transportation and logistics assets, export terminals, vessels, grain origination, and export operations in Ukraine. This segment comprises inter-

connected business units that together form an integrated supply chain linking Ukrainian farmers to global markets. Management treats export

terminals and grain storage facilities as production assets that support the grain merchandising business.

• Farming segment, the Group reports result of its crop production business, which includes growing corn, wheat, soybean, sunflower seed, and

rapeseed on the leasehold land, as well as some minor crops and small cattle farming operations.

The measures of profit and loss, and assets and liabilities are based on the Group accounting policies, which comply with IFRS Accounting Stand-

ards, as adopted by the European Union.

Reconciliation eliminates intersegment items. The data of segments is calculated as follows:

• Intersegment sales reflect intergroup transactions effected on an arm’s length basis.

• Capital expenditures, amortization and depreciation related to property, plant and equipment, and intangible assets are allocated to segments

when possible.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

129

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

The “Other” column reflects income and expenses not allocated to segments, which are related to the administration function of the Group.

Since the financial management of the Group’s companies is carried out centrally, borrowings, bonds, deferred taxes, and some other assets and

liabilities are not allocated directly to the respective operating segments and are presented in the “Other” column. Consequently, the assets and

liabilities shown for individual segments do not include borrowings, bonds, deferred taxes, and some other assets and liabilities.

Seasonality of operations

The Oilseed Processing segment typically experiences seasonally lower sales in the first quarter of the financial year, corresponding to the end

of the crushing season and reduced production levels. The Farming segment reflects seasonality associated with seeding and harvesting cam-

paigns, which generally occur from November to May and June to November, respectively. The Infrastructure and Trading segment usually rec-

ords higher volumes in the months following the start of the harvesting campaign (July for early grains and September for autumn-harvested

crops). Additionally, the Farming segment is generally subject to a greater impact from IAS 41 valuation of biological assets in the last quarter of

the financial year, when more acreage is revalued at fair value less costs to sell. A significant effect from IAS 41 valuation of agricultural produce

is also typically observed in the first half of the financial year, following the completion of the harvesting campaign.

7. Revenue and Key Data by Operating Segment

Key data by operating segment for the year ended 30 June 2025:

Oilseed

Processing

Infrastructure

and Trading

Farming

Other

Reconciliation

Total

Revenue (external)

2,047,930

2,021,729

45,383

—

4,115,042

Intersegment sales

58,719

147,079

422,822

—

(628,620)

—

Total revenue

2,106,649

2,168,808

468,205

—

(628,620)

4,115,042

Net change in fair value of biological assets and

agricultural produce

—

6,590

—

6,590

Cost of sales

(2,003,675)

(1,875,575)

(302,543)

—

628,620

(3,553,173)

Other operating income

14,437

13,571

5,841

33,959

—

67,808

Other operating expenses

—

(2,673)

(43,741)

(46,414)

General and administrative expenses

(12,993)

(117,683)

(27,709)

(76,883)

—

(235,268)

Net reversal of impairment losses/(impairment)

on financial assets

486

(1,917)

(950)

(104)

—

(2,485)

Reversal of impairment losses/(impairment) on

assets

8,022

1,894

(1,020)

—

8,946

Profit/(loss) from operating activities

112,926

189,098

146,811

(87,789)

—

361,046

Amortization and depreciation

34,821

29,034

37,581

3,847

—

105,283

EBITDA

147,747

218,132

184,392

(83,942)

—

466,329

Reconciliation:

Finance costs

(77,668)

Finance income

45,395

Foreign exchange loss, net

(5,249)

Other expenses, net

(36,281)

Income tax expense

(49,647)

Profit for the period

237,596

Total assets

1,297,037

1,125,336

608,700

289,353

—

3,320,426

Capital expenditures

20,239

24,773

23,902

2,409

—

71,323

Liabilities

110,522

232,630

230,417

667,871

—

1,241,440

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

130

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

Key data by operating segment for the year ended 30 June 2024:

The Group revenue by category for the year ended 30 June was as follows:

For the year ended 30 June 2025

For the year ended 30 June 2024

Oilseed

Processing

Infrastructure

and Trading

Farming

Total

Oilseed

Processing

Infrastructure

and Trading

Farming

Total

Revenue from:

- edible oils sold in bulk and

meal

1,791,083

580,758

5,424

2,377,265

1,324,250

385,303

6,483

1,716,036

- agriculture commodities

merchandising

—

1,287,182

9,672

1,296,854

—

1,254,723

20,531

1,275,254

- freight and other services

111,369

153,789

—

265,158

208,785

196,704

—

405,489

- bottled sunflower oil

113,817

—

113,894

102,715

—

102,763

- electricity

31,661

—

31,661

39,866

—

39,866

- farming

—

30,210

—

42,054

Total

2,047,930

2,021,729

45,383

4,115,042

1,675,616

1,836,730

69,116

3,581,462

Revenue is obtained principally from the sale of commodities, recognized once the control of the goods has been transferred from the Group to

the customer. Revenue derived from freight, storage, and other services, presented in the line Revenue from edible oils sold in bulk, and meal, is

recognized over time as the service is rendered.

The transaction price allocated to outstanding performance obligations as of 30 June 2025 is USD 4,737 thousand (30 June 2024:

USD 10,046 thousand). This amount represents revenue from carriage, freight, and insurance services under CIF/CFR Incoterms contracts which

are to be executed in July 2025, when the goods are delivered to the point of destination and under which the Group has already recognized

revenue from the sale of goods at a point in time as of 30 June 2025.

Timing of revenue recognition allocated by the operating segment for the year ended 30 June under requirements of IFRS 15 was as follows:

For the year ended 30 June 2025

For the year ended 30 June 2024

Oilseed

Processing

Infrastructure

and Trading

Farming

Total

Oilseed

Processing

Infrastructure

and Trading

Farming

Total

At a point in time

1,936,059

1,868,442

45,383

3,849,884

1,466,990

1,639,867

69,116

3,175,973

Over time

111,871

153,287

—

265,158

208,626

196,863

—

405,489

Total

2,047,930

2,021,729

45,383

4,115,042

1,675,616

1,836,730

69,116

3,581,462

During the year ended 30 June 2025, revenues of approximately USD 341,897 thousand (2024: USD 206,668 thousand) were derived from a

single external customer. These revenues are attributed to Oilseeds processing and Infrastructure and Trading segments. Export sales accounted

for 94.9% of total external sales during the year (2024: 93.5%).

Oilseed

Processing

Infrastructure

and Trading

Farming

Other

Reconciliation

Total

Revenue (external)

1,675,616

1,836,730

69,116

—

3,581,462

Intersegment sales

188,182

174,408

412,243

—

(774,833)

—

Total revenue

1,863,798

2,011,138

481,359

—

(774,833)

3,581,462

Net change in fair value of biological assets and

agricultural produce

—

(10,447)

—

(10,447)

Cost of sales

(1,652,609)

(1,678,238)

(332,945)

—

774,833

(2,888,959)

Other operating income

50,461

11,227

6,090

8,815

—

76,593

Other operating expenses

(19,038)

(2,024)

(83)

(7,260)

—

(28,405)

General and administrative expenses

(18,154)

(99,078)

(20,370)

(75,771)

—

(213,373)

Net impairment losses on financial assets

(2,492)

(6,770)

—

(1,955)

—

(11,217)

(Loss)/reversal of impairment losses on assets

(172,324)

(60,719)

8,362

(4,545)

—

(229,226)

Profit/(loss) from operating activities

49,642

175,536

131,966

(80,716)

—

276,428

Amortization and depreciation

33,734

28,255

38,836

3,898

104,723

EBITDA

83,376

203,791

170,802

(76,818)

—

381,151

Reconciliation:

Finance costs

(119,079)

Finance income

49,819

Foreign exchange gain, net

32,972

Other expenses, net

(29,088)

Income tax expense

(43,424)

Profit for the period

167,628

Total assets

1,324,217

1,297,675

685,423

89,596

—

3,396,911

Capital expenditures

45,349

88,095

24,811

2,881

—

161,136

Liabilities

86,828

200,274

193,454

1,050,061

—

1,530,617

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

131

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

For the year ended 30 June 2025, revenue from the Group’s five largest customers represented approximately 28.6% of total revenue (for the year

ended 30 June 2024: 24.3%).

The Group’s revenue from external customers (based on the country of incorporation of the sales counterparty) and information about its segment

assets (non‑current assets excluding non-current financial assets and deferred tax assets) by geographical location are detailed below:

Revenue from external customers

Non-current assets

For the year ended

30 June 2025

For the year ended

30 June 2024

As of

30 June 2025

As of

30 June 2024

Europe

2,157,006

1,641,656

Ukraine

1,243,233

1,166,255

of which Switzerland

547,229

517,401

Other locations

15,175

16,368

Asia

1,816,426

1,828,406

of which India

584,325

669,655

Other locations

141,610

111,400

Total

4,115,042

3,581,462

Total

1,258,408

1,182,623

None of the other locations represented more than 10% of total revenue or non-current assets individually.

8. Cash and Cash Equivalents

The balances of cash and cash equivalents were as follows:

As of

30 June 2025

As of

30 June 2024

Cash in banks in USD

449,176

634,531

Cash in banks in UAH

154,850

150,531

Cash in banks in other currencies

13,485

24,522

Total

617,511

809,584

Less bank overdrafts (Note 19)

(3)

(5)

Cash for the purposes of cash flow statement

617,508

809,579

According to the international rating agency Fitch, the credit ratings of the banks where the Group held accounts as of 30 June were as follows:

As of

30 June 2025

As of

30 June 2024

International bank with F1+ rating

219,833

182,512

International bank with F1 rating

220,861

227,899

International bank with F2 rating

6,816

10,026

Banks with lower than F2 rating

135,973

193,172

Banks without international ratings

34,028

195,975

Total

617,511

809,584

As of 30 June 2025, the balances held in Ukrainian subsidiaries of international banks without international ratings amounted to USD 9,601 thou-

sand (30 June 2024: USD 195,974 thousand). The parent institutions of these subsidiaries were predominantly rated F2 or higher by Fitch or by

other equivalent international rating agencies.

As of 30 June 2025 and 30 June 2024, the Management monitors credit risk by assessing the financial position and external credit ratings of the

parent institutions of these subsidiaries, in line with the Group’s treasury policy and IFRS 7 requirements on credit risk disclosure.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

132

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

The reconciliation in the table below presents changes in the Group’s liabilities arising from financing activities by incorporating cash flows and

non-cash changes over the reporting period.

Bank borrowings

(Note 19)

Lease liabilities

(Note 21)

Bonds Issued

(Note 20)

Total

As of 30 June 2023

869,933

197,895

603,823

1,671,651

Repayments net of proceeds, including interest paid

(597,031)

(43,804)

(39,750)

(680,585)

Non-cash movements

Additions and change of terms of lease liabilities

—

17,333

—

17,333

Termination of lease agreements

—

(7,270)

—

(7,270)

Non-cash settlement of lease liabilities

—

(1,888)

—

(1,888)

Amortization of one-off and transaction costs

—

1,369

Interest expense accrued (Note 27)

45,667

25,243

39,750

110,660

Interest expense capitalized

4,245

—

4,245

Foreign exchange movements

1,007

(642)

—

365

Translation difference

—

(17,127)

—

(17,127)

Other changes

(8,655)

—

(8,655)

As of 30 June 2024

315,166

169,740

605,192

1,090,098

Repayments net of proceeds, including interest paid

(89,524)

(48,313)

(330,000)

(467,837)

Non-cash movements

Additions and change of terms of lease liabilities

—

74,472

—

74,472

Termination of lease agreements

—

(5,868)

—

(5,868)

Non-cash settlement of lease liabilities

—

(1,567)

—

(1,567)

Amortization of one-off and transaction cost

—

907

Interest expense accrued (Note 27)

28,587

21,196

26,006

75,789

Interest expense capitalized

395

—

395

Foreign exchange movements

(1,142)

(251)

—

(1,393)

Translation difference

—

(4,084)

—

(4,084)

Other changes

(49)

(70)

(2)

(121)

As of 30 June 2025

253,433

205,255

302,103

760,791

9. Trade Accounts Receivable

The balances of trade accounts receivable were as follows:

As of

30 June 2025

As of

30 June 2024

Trade accounts receivable

265,820

321,742

Allowance for expected credit losses

(13,160)

(16,496)

Total

252,660

305,246

The average credit period on sales of goods is 25 days (2024: 33 days). The carrying value of trade accounts receivable approximates the fair

value.

As of 30 June 2025, a receivable balance of USD 242,306 thousand was due from international customers and the remaining USD 10,354 thousand

was receivable from Ukrainian buyers (30 June 2024: USD 285,734 thousand and USD 19,512 thousand respectively).

Expected credit losses on trade receivables are estimated using a provision matrix, based on the Group’s historical default experience and an

assessment of the debtors’ current financial position. The estimates are further adjusted for debtor-specific factors, industry-wide economic condi-

tions, and both current and forward-looking information available at the reporting date. The Group recognizes a full (100%) loss allowance for all

receivables more than 90 days past due, as historical evidence indicates that such balances are generally not recoverable.

The changes in expected credit loss provisions are recognized in the line Net reversal/(impairment) losses on financial assets. For the year ended

30 June 2025, a decrease in loss allowance was USD 2,262 thousand (for the period ended 30 June 2024: USD 5,706 thousand). Subsequent

recoveries of amounts previously written off are credited against the same line item.

The following table details the risk profile of trade accounts receivable as of 30 June based on the Group’s provision matrix:

As of 30 June 2025

As of 30 June 2024

Days past due

Not past due

Less than 90

More than 90

Total

Not past due

Less than 90

More than 90

Total

Expected loss rate

0.34%

0.71%

80.86%

0.27%

0.33%

98.97%

Gross carrying amount

199,359

51,479

14,982

265,820

262,717

43,215

15,810

321,742

Loss allowance

(680)

(365)

(12,115)

(13,160)

(708)

(141)

(15,647)

(16,496)

Total

198,679

51,114

2,867

252,660

262,009

43,074

163

305,246

Differences in expected loss rate are possible due to rounding

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

133

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

The movements in allowance for credit loss relating to trade accounts receivable as of 30 June are presented below:

Trade accounts receivables

Lifetime ECL

Individually

assessed

Total

Loss allowance as of 30 June 2023

9,859

4,055

13,914

Increase in loss allowance recognized in profit or loss during the year

3,442

2,264

5,706

Trade receivables written off during the year as uncollectible

(388)

—

(388)

Unused amount reversed

—

(2,736)

Loss allowance as of 30 June 2024

12,913

3,583

16,496

Decrease in loss allowance recognized in profit or loss during the year

(2,092)

(170)

(2,262)

Unused amount reversed

—

(1,074)

Loss allowance as of 30 June 2025

10,821

2,339

13,160

Trade receivables are written off when it is unlikely that they will be recovered, based on indicators such as a debtor's failure to make payments or

other evidence demonstrating an inability to settle the outstanding amount.

10. Taxes Recoverable and Prepaid

The balances of taxes recoverable and prepaid were as follows:

As of

30 June 2025

As of

30 June 2024

Value-added tax recoverable and prepaid

125,686

113,900

Other taxes recoverable and prepaid

151

227

Total

125,837

114,127

Value-added tax (“VAT”) recoverable and prepaid primarily relates to VAT credits on purchases of agricultural products in the domestic market of

Ukraine. Management expects that these balances will be fully recovered within 12 months after the reporting date either through the cash collection

or offsetting against corresponding VAT liabilities. For the year ended 30 June 2025, the amount of VAT refunded by the government in cash was

USD 257,360 thousand (30 June 2024: USD 272,150 thousand).

11. Inventory

The balances of inventories were as follows:

As of

30 June 2025

As of

30 June 2024

Finished products

186,698

71,209

Goods for resale

80,803

72,699

Raw materials

69,318

96,452

Fuel

5,644

8,331

Work in progress

2,362

2,179

Products of agriculture

2,248

15,377

Packaging materials

1,570

1,509

Other inventories

14,824

9,904

Total

363,467

277,660

As of 30 June 2025, inventories carrying amount to USD 143,930 thousand (as of 30 June 2024: nil) have been pledged as security for short-term

borrowings (Note 19).

12. Biological Assets

The balances of biological assets were as follows:

As of 30 June 2025

As of 30 June 2024

Units

Carrying amount

Units

Carrying amount

Non-current assets

Non-current cattle, heads

3,683

4,957

4,772

6,521

Total

4,957

6,521

Current assets

Crops in fields, hectares

341,942

229,200

334,327

186,051

Current cattle, heads

3,360

1,469

4,580

1,661

Total

230,669

187,712

For the year ended 30 June 2025, the Group recognized a gain of USD 6,590 thousand due to changes in the fair value of biological assets (2024:

loss of USD 10,447 thousand). For the year ended 30 June 2025, the Group incurred a revaluation loss of USD 47,736 thousand on agricultural

products at the point of harvest (2024: loss of USD 51,838 thousand), and a revaluation gain of USD 56,808 thousand on crop-bearing fields (2024:

gain of USD 41,872 thousand), and a revaluation loss of USD 2,482 thousand on livestock (2024: loss of USD 481 thousand).

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

134

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

The balances of crops in fields were as follows:

As of 30 June 2025

As of 30 June 2024

Hectares

Value

Hectares

Value

Corn

171,875

124,774

86,486

42,020

Wheat

94,690

55,831

93,112

62,009

Sunflower

46,336

34,788

66,946

45,031

Soybean

23,836

10,713

72,286

28,466

Rapeseed

3,975

2,577

13,720

8,332

Other

1,230

517

1,777

193

Total

341,942

229,200

334,327

186,051

The following table represents the changes in the carrying amounts of crops in fields during the years ended 30 June 2025 and 2024:

Capitalized

expenditures

Fair value

movement

Fair value of

biological

assets

As of 30 June 2023

172,709

(26,470)

146,239

Expenditures capitalized in biological assets (harvest 2023)

100,871

—

100,871

Decrease due to harvest (harvest 2023)

(273,580)

26,470

(247,110)

Expenditures capitalized in biological assets (harvest 2024)

155,027

—

155,027

Gain arising from changes in fair value of biological assets (sowing under harvest 2024)

—

44,916

Translation difference

(10,848)

(3,044)

(13,892)

As of 30 June 2024

144,179

41,872

186,051

Expenditures capitalized in biological assets (harvest 2024)

84,855

—

84,855

Decrease due to harvest (harvest 2024)

(229,018)

(41,872)

(270,890)

Expenditures capitalized in biological assets (harvest 2025)

172,131

—

172,131

Gain arising from changes in fair value of biological assets (sowing under harvest 2025)

—

57,053

Translation difference

245

(245)

—

As of 30 June 2025

172,392

56,808

229,200

The fair value of agricultural produce at the date of harvest was estimated based on prices observed in active markets and is classified within Level

2 of the fair value hierarchy. Crops in fields and non-current livestock are measured using a discounted cash flow approach, considering region-

specific prices and other relevant metrics for each asset group. These biological assets are classified within Level 3 of the fair value hierarchy.

Current livestock is measured based on market prices of animals of similar age, breed, and genetic merit and is classified within Level 2 of the fair

value hierarchy. Changes in livestock balances primarily reflect the transfer of young calves to the mature herd, along with variations in market

prices and exchange rates between reporting dates.

The table below presents the Group’s biological assets classified according to the fair value hierarchy:

As of 30 June 2025

As of 30 June 2024

Level 2

Level 3

Total

Level 2

Level 3

Total

Livestock

Mature – Milk cows

—

4,957

—

6,521

Immature – Milk cows

822

—

822

988

—

988

Immature – Calves

647

—

647

673

—

673

Crops in fields

—

229,200

—

186,051

Total

1,469

234,157

235,626

1,661

192,572

194,233

There have been no changes in the valuation techniques applied and any transfers between fair value hierarchy levels during the year.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

135

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

The following table shows the valuation techniques used in measuring, as well as unobservable inputs of the crops in field and milk cows.

Sensitivity of the input to fair value

increase/ (decrease)

As of 30 June 2025

As of 30 June 2024

As of 30 June 2025

As of 30 June 2024

Descrip-

tion

Valuation

techniques

Unobservable

Inputs

Range of unobservable inputs

Input 5%

higher

Input 5%

lower

Input 5%

higher

Input 5%

lower

Crops in

fields

Discounted

cash flows

Crops yield

2.24 – 8.41 tons per hec-

tare

2.00 – 7.34 tons per hec-

tare

19,306

(19,299)

15,093

(15,094)

Crops prices

180 – 485 USD per ton

153 – 411 USD per ton

19,306

(19,299)

15,093

(15,094)

Discount rate

24.80% (in UAH, short-

term)

25.00% (in UAH, short-

term)

(628)

636

(400)

405

Milk cows

Discounted

cash flows

Milk yield – liter per

cow

17.84 – 22.25 liters per cow

per day

18.42 – 22.18 liters per cow

per day

166

(166)

235

(235)

Milk price – per liter

18.37 - 18.47 UAH

14.71 - 14.95 UAH

1,148

(1,148)

1,210

(1,210)

Weight of the cow –

kg per cow

386 – 500 kg

392 – 517 kg

(83)

(93)

Discount rate

24.80% (in UAH, short-

term)

25.00% (in UAH, short-

term)

(90)

(118)

122

The Group’s agricultural crops are subject to risks arising from climate change, including prolonged droughts, heatwaves, irregular precipitation,

and other extreme weather events, which may negatively impact both yields and crop quality. Such climatic factors contribute to fluctuations in the

fair value of biological assets. To mitigate these risks, the Group has implemented adaptive measures, including soil fertility monitoring, precision

farming technologies, and diversified crop rotation. Despite these efforts, climate variability continues to represent a significant source of uncertainty

in forecasting yields and determining the fair value of biological assets.

13. Other Financial Assets

The balances of other financial assets were as follows:

As of

30 June 2025

As of

30 June 2024

Government bonds

144,402

185,310

Margin account with brokers

67,491

82,215

Loans granted

46,437

22,306

Derivative financial instruments

26,116

25,288

Short-term bank deposits

12,000

12,747

Pledge deposits

—

1,303

Other financial assets

19,467

10,760

Total

315,913

339,929

The Group's exposure to credit risks associated with other financial assets is disclosed in Note 31.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

136

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

14. Property, Plant and Equipment

The following table represents movements in property, plant and equipment for the year ended 30 June 2025:

Oilseed

Processing

Infrastructure

and Trading

Farming

Other

Total

Net Book Value as of 30 June 2024

505,611

368,880

49,279

20,334

944,104

Land

172

3,497

1,048

4,740

Buildings and Constructions

289,500

159,524

11,079

16,405

476,508

Production machinery and equipment

185,096

67,067

1,032

523

253,718

Agricultural equipment and vehicles

7,813

111,255

33,757

1,272

154,097

Other fixed assets

2,955

1,511

2,624

1,071

8,161

CIP and uninstalled equipment

20,075

26,026

764

46,880

Additions in CIP and uninstalled equipment

20,007

22,509

22,784

3,475

68,775

Reclassification

724

113

(887)

—

Land

(240)

—

(216)

Buildings and Constructions

487

(2,087)

(425)

(1,939)

Production machinery and equipment

(656)

(233)

(125)

(2)

(1,016)

Agricultural equipment and vehicles

(16)

(33)

(88)

(28)

(165)

Other fixed assets

451

(41)

(466)

(51)

CIP and uninstalled equipment

903

2,192

258

3,387

Additions from acquisition of subsidiaries

—

3,419

2,866

8,981

15,266

Land

—

144

Buildings and Constructions

—

2,672

2,613

5,290

Production machinery and equipment

—

2,016

1,190

3,219

Agricultural vehicles and equipment

—

770

987

1,845

Other fixed assets

—

2,114

2,233

CIP and uninstalled equipment

—

602

—

1,933

2,535

Transfers

—

Land

110

—

166

303

Buildings and Constructions

5,669

4,081

1,546

1,483

12,779

Production machinery and equipment

17,598

4,578

624

—

22,800

Agricultural equipment and vehicles

1,234

4,572

18,874

807

25,487

Other fixed assets

1,120

1,444

1,811

642

5,017

CIP and uninstalled equipment

(25,648)

(14,785)

(22,855)

(3,098)

(66,386)

Revaluation

9,252

—

9,252

Buildings and Constructions

(6,379)

—

(6,379)

Production machinery and equipment

15,634

—

15,634

Other fixed assets

(3)

—

(3)

Disposals (at NBV)

(622)

(201)

(382)

(4,029)

(5,234)

Land

(14)

—

(14)

Buildings and Constructions

(49)

(37)

(44)

—

(130)

Production machinery and equipment

(26)

(14)

(9)

(870)

(919)

Agricultural equipment and vehicles

(37)

(18)

(275)

(963)

(1,293)

Other fixed assets

(6)

(3)

(42)

(2,107)

(2,158)

CIP and uninstalled equipment

(490)

(129)

(12)

(89)

(720)

Disposal of Subsidiaries (at NBV)

—

(6,602)

Transfers from right-of-use assets

—

(99)

Depreciation expense

(34,129)

(27,850)

(14,369)

(1,632)

(77,980)

Buildings and Constructions

(14,097)

(6,501)

(1,234)

(566)

(22,398)

Production machinery and equipment

(17,453)

(6,996)

(716)

(266)

(25,431)

Agricultural equipment and vehicles

(1,575)

(13,503)

(11,282)

(489)

(26,849)

Other fixed assets

(1,004)

(850)

(1,137)

(311)

(3,302)

Impairment and reversal of impairment of property, plant and equipment

5,473

(3,094)

—

2,379

Land

—

(100)

—

(100)

Buildings and Constructions

(1,089)

(2,518)

—

(3,607)

Production machinery and equipment

6,906

(345)

—

6,561

Agricultural equipment and vehicles

(19)

(8)

—

(27)

Other fixed assets

(22)

(65)

—

(87)

CIP and uninstalled equipment

(303)

(58)

—

(361)

Translation difference

(146)

(1,999)

(1,340)

(34)

(3,519)

Land

—

(26)

(5)

—

(31)

Buildings and Constructions

(2)

(1,386)

(293)

(29)

(1,710)

Production machinery and equipment

—

(407)

(8)

(1)

(416)

Agricultural equipment and vehicles

(142)

(23)

(938)

(3)

(1,106)

Other fixed assets

(2)

(20)

(70)

(1)

(93)

CIP and uninstalled equipment

—

(137)

(26)

—

(163)

Net Book Value as of 30 June 2025

506,170

361,714

58,951

19,507

946,342

Land

186

3,241

1,048

4,516

Buildings and Constructions

274,040

153,748

11,145

15,409

454,342

Production machinery and equipment

207,099

63,663

2,814

252

273,828

Agricultural equipment and vehicles

7,258

102,330

40,818

1,460

151,866

Other fixed assets

3,043

2,512

3,220

934

9,709

CIP and uninstalled equipment

14,544

36,220

913

404

52,081

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

137

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

The following table represents movements in property, plant and equipment for the year ended 30 June 2024:

Oilseed

Processing

Infrastructure

and Trading

Farming

Other

Total

Net Book Value as of 30 June 2023

616,627

340,999

41,559

21,226

1,020,411

Land

266

1,035

1,048

2,379

Buildings and Constructions

272,068

139,352

12,767

16,947

441,134

Production machinery and equipment

132,714

77,337

1,348

964

212,363

Agricultural equipment and vehicles

6,541

104,034

25,843

1,276

137,694

Other fixed assets

1,906

1,557

675

988

5,126

CIP and uninstalled equipment

203,132

17,684

896

221,715

Additions in CIP and uninstalled equipment

44,973

87,804

24,218

1,654

158,649

Reclassification

(93)

(2)

—

Land

—

(13)

—

(12)

Buildings and Constructions

611

—

655

Production machinery and equipment

(657)

—

(4)

(584)

Agricultural equipment and vehicles

(1)

(2)

(41)

—

(44)

Other fixed assets

(2)

(6)

(8)

CIP and uninstalled equipment

(44)

—

(7)

Additions from acquisition of subsidiaries

—

1,449

—

1,449

Buildings and Constructions

—

1,367

—

1,367

Production machinery and equipment

—

Other fixed assets

—

CIP and uninstalled equipment

—

Transfers

—

Land

—

2,809

—

2,823

Buildings and Constructions

78,699

40,396

904

120,065

Production machinery and equipment

132,856

5,656

106

138,619

Agricultural equipment and vehicles

3,430

28,792

21,350

469

54,041

Other fixed assets

2,087

727

1,843

374

5,031

CIP and uninstalled equipment

(217,072)

(78,380)

(24,217)

(910)

(320,579)

Disposals (at NBV)

(1,091)

(8,456)

(423)

(735)

(10,705)

Land

(94)

—

(4)

—

(98)

Buildings and Constructions

(126)

(114)

(139)

—

(379)

Production machinery and equipment

(43)

(158)

(19)

(3)

(223)

Agricultural equipment and vehicles

(25)

(7,980)

(230)

—

(8,235)

Other fixed assets

(158)

—

(28)

(5)

(191)

CIP and uninstalled equipment

(645)

(204)

(3)

(727)

(1,579)

Disposal of Subsidiaries (at NBV)

—

(280)

—

(280)

Buildings and Constructions

—

(215)

—

(215)

Production machinery and equipment

—

(63)

—

(63)

Agricultural equipment and vehicles

—

(1)

—

(1)

CIP and uninstalled equipment

—

(1)

—

(1)

Depreciation expense

(33,047)

(27,027)

(12,173)

(1,731)

(73,978)

Buildings and Constructions

(13,639)

(6,081)

(1,258)

(587)

(21,565)

Production machinery and equipment

(17,028)

(6,817)

(291)

(435)

(24,571)

Agricultural equipment and vehicles

(1,508)

(13,418)

(10,125)

(468)

(25,519)

Other fixed assets

(872)

(711)

(499)

(241)

(2,323)

Impairment and reversal of impairment of property, plant and equipment

(121,075)

(17,647)

746

—

(137,976)

Land

—

(252)

—

(252)

Buildings and Constructions

(48,112)

(9,480)

—

(57,592)

Production machinery and equipment

(62,746)

(7,369)

—

(70,115)

Agricultural equipment and vehicles

—

(84)

—

(84)

Other fixed assets

—

746

—

746

CIP and uninstalled equipment

(10,217)

(462)

—

(10,679)

Translation difference

(683)

(8,049)

(4,656)

(78)

(13,466)

Land

—

(97)

(4)

—

(101)

Buildings and Constructions

(1)

(5,714)

(1,226)

(21)

(6,962)

Production machinery and equipment

—

(1,609)

(112)

—

(1,721)

Agricultural equipment and vehicles

(624)

(86)

(3,040)

(5)

(3,755)

Other fixed assets

(6)

(67)

(107)

(47)

(227)

CIP and uninstalled equipment

(52)

(476)

(167)

(5)

(700)

Net Book Value as of 30 June 2024

505,611

368,880

49,279

20,334

944,104

Land

172

3,497

1,048

4,740

Buildings and Constructions

289,500

159,524

11,079

16,405

476,508

Production machinery and equipment

185,096

67,067

1,032

523

253,718

Agricultural equipment and vehicles

7,813

111,255

33,757

1,272

154,097

Other fixed assets

2,955

1,511

2,624

1,071

8,161

CIP and uninstalled equipment

20,075

26,026

764

46,880

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

138

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

The total cost of property, plant and equipment and total accumulated depreciation and impairment losses as of 30 June 2025 and 2024 were as

follows:

Cost as of

30 June 2025

Accumulated

depreciation and

impairment losses

as of 30 June 2025

Cost

as of

30 June 2024

Accumulated

depreciation

and

impairment losses

as of 30 June 2024

Land

4,516

—

4,740

—

Buildings and constructions

551,822

(97,480)

552,529

(76,021)

Production machinery and equipment

381,552

(107,724)

332,629

(78,911)

Agricultural equipment and vehicles

328,169

(176,303)

312,513

(158,416)

Other fixed assets

31,086

(21,377)

27,203

(19,042)

CIP and uninstalled equipment

52,081

—

46,880

—

Total

1,349,226

(402,884)

1,276,494

(332,390)

Had the Group’s buildings and constructions and production machinery and equipment (Oilseed Processing segment) been measured on a histor-

ical cost basis, their carrying amount would have been as follows:

As of

30 June 2025

As of

30 June 2024

Buildings and constructions

263,082

233,892

Production machinery and equipment

231,933

173,948

Total

495,015

407,840

As a result of revaluation as of 30 June 2025 the Group recognized increments and decrements of USD 19,098 thousand and USD 8,189 thousand

respectively in the Consolidated Statement of Other Comprehensive Income along with impairment losses reversed and impairment losses of

USD 7,849 thousand and USD 6,941 thousand respectively in Consolidated Statement of Profit or Loss.

During the financial year 2025 fixed assets of the Group estimated of USD 341 thousand were damaged due to military operations caused by

shelling from the Russian missiles (2024: port infrastructure assets in the amount of USD 9,795 thousand and elevator blocks in the amount of

USD 1,367 thousand).

As of 30 June 2025, prepayments for property, plant and equipment were in the amount of USD 13,698 thousand (30 June 2024: USD 9,467

thousand).

As of 30 June 2025, property, plant and equipment with a carrying amount of USD 274,849 thousand (30 June 2024: USD 437,930 thousand) were

pledged by the Group as collateral against short-term and long-term bank borrowings (Note 19).

In 2024 and 2025, in response to the ongoing military invasion of Ukraine, the Group reorganized its business processes to address current

challenges and ensure governance continuity. As a result, the 2024 and 2025 evaluation of the recoverable amount of assets or cash-generating

units was based on a single model. Risks and uncertainties caused by the war are incorporated into the discount rate calculation, while cash flow

forecasts are free from those risks and uncertainties.

The recoverable amount of each CGU in which impairment was identified was determined using discounted cash flow projections based on reliable

estimates of future cash flows. Management estimated the budgeted gross margin with reference to expected market developments. The weighted

average growth rates applied were consistent with forecasts published in industry reports. The discount rates used were pre-tax and reflected the

specific risks associated with the relevant segments.

Oilseed Processing segment

The key assumptions applied in the value-in-use and income approach calculations, for the purpose of economic obsolescence test (Note 5), by

the group of CGUs in the Oilseed Processing segment across all forecasted periods are as follows:

Oilseed processing

Processing volume,

thousand ton

Sales price of sunflower

oil, USD per ton

Purchase price of sun-

flower seeds, USD per ton

As of 30 June 2025

3,498

1,020-1,065

476 - 493

As of 30 June 2024

3,285

901 - 950

420 - 441

As of 30 June 2025, a discount rate of 16.9% was applied for both the five-year forecast and the terminal periods (30 June 2024: 18.5% for the

five-year forecast period and 15.5% for the terminal period).

As of 30 June 2025, the growth rate, used for extrapolating of the cash flows for periods over 5 years was set at the level of 2.19% (30 June 2024

– 2.21%).

Impairment losses related to Property, Plant and Equipment of Oilseed processing segment are included to the Cost as of 30 June 2025. Impairment losses related

to Property, Plant and Equipment of other segments are included to the Accumulated depreciation.

During the year ended 30 June 2025, the Group made certain corrections and reclassifications, please see Note 4 for more details.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

139

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

As of 30 June 2025, the sensitivity analysis to the mentioned above key assumptions of the CGUs in the Oilseeds Processing segment are disclosed

in the table below.

CGU

Inputs

Change in input by:

Change in value-in-use and income ap-

proach calculations results:

Poltavsky

VOEP PJSC

Sales price of sunflower oil, USD per ton

Decrease by 3.00%

USD 16,947 decrease

Purchase price of sunflower seeds, USD per ton

Increase by 3.00%

USD 18,699 decrease

Bandursky

VOEP LLC

Sales price of sunflower oil, USD per ton

Decrease by 3.00%

USD 40,984 decrease

Purchase price of sunflower seeds, USD per ton

Increase by 3.00%

USD 43,071 decrease

Discount rates

Increase by 10.00%

USD 11,406 decrease

Processing volume, thousand tons

Decrease by 15.00%

USD 17,222 decrease

BSI LLC

Sales price of sunflower oil, USD per ton

Decrease by 3.00%

USD 39,142 decrease

Purchase price of sunflower seeds, USD per ton

Increase by 3.00%

USD 41,460 decrease

Discount rates

Increase by 10.00%

USD 8,745 decrease

Processing volume, thousand tons

Decrease by 15.00%

USD 18,766 decrease

Kropyvnytskyi

Sales price of sunflower oil, USD per ton

Decrease by 3.00%

USD 14,310 decrease

OEP PJSC

Purchase price of sunflower seeds, USD per ton

Increase by 3.00%

USD 15,935 decrease

Prydniprovskyi

Sales price of sunflower oil, USD per ton

Decrease by 3.00%

USD 55,423 decrease

OEZ LLC

Purchase price of sunflower seeds, USD per ton

Increase by 3.00%

USD 58,351 decrease

Discount rates

Increase by 10.00%

USD 15,352 decrease

Processing volume, thousand tons

Decrease by 15.00%

USD 20,494 decrease

Starokostiantynivskyi

Sales price of sunflower oil, USD per ton

Decrease by 3.00%

USD 38,599 decrease

OEZ LLC

Purchase price of sunflower seeds, USD per ton

Increase by 3.00%

USD 41,421 decrease

Discount rates

Increase by 10.00%

USD 5,285 decrease

Processing volume, thousand tons

Decrease by 15.00%

USD 10,261 decrease

As of 30 June 2025, the sensitivity analysis did not identify the recoverable amount as being sensitive to the reasonably possible changes of

assumptions other than disclosed above.

Farming segment

As of 30 June 2025, the market selling prices of agricultural commodities have been taken into consideration while determining the assumptions

for Farming CGU. The key assumptions applied in the value-in-use approach calculations by segment are as follows:

Farming

Crop yields,

tons per hectare

Sales price of crops,

USD per ton

Transportation cost,

USD per ton

As of 30 June 2025

2.7 – 9.6

215 - 494

10 - 22

As of 30 June 2024

2 - 13.3

194 - 472

8 - 29

As of 30 June 2025, a discount rate of 24.8% was applied for both the five-year forecast and the terminal period (30 June 2024: 25.0 % for the five-

year forecast period and 17.0% for the terminal period).

As of 30 June 2025, the growth rate, used for extrapolating of the cash flows for periods over 5 years was set at the level of 4.53% (30 June 2024

– 4.03%).

As of 30 June 2025, the sensitivity analysis indicated that the recoverable amount of the Farming CGU is not sensitive to any reasonably possible

changes in any assumptions.

Infrastructure and Trading segment

As of 30 June 2025 and 2024, the Infrastructure and Trading segment’s CGUs assumptions rely on transshipment rates and suggested proceeds

volumes. The key assumptions applied in the value-in-use and income approach calculations by the Group of CGUs in the Infrastructure and

Trading segment are as follows:

Infrastructure and Trading

Transshipment rate,

USD per ton

Transshipment volume,

thousand ton

As of 30 June 2025

8 - 10

9,190 – 10,000

As of 30 June 2024

11 - 14

6,800

As of 30 June 2025, a discount rate of 16.9% was applied for both the five-year forecast period and the terminal period (30 June 2024: 18.5% for

the five-year forecast period and 15.5% for the terminal period).

As of 30 June 2025, the growth rate, used for extrapolating of the cash flows for periods over 5 years was set at the level of 2.19% (30 June 2024:

2.21%).

As of 30 June 2025, the sensitivity analysis indicated that the recoverable amount of the Infrastructure and Trading segments is not sensitive to

reasonably possible changes in any assumptions.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

140

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

15. Right-of-Use Assets

The following table represents movements in right-of-use assets for the year ended 30 June 2025:

Land

Agricultural equip-

ment and vehicles

Buildings

Total

Cost as of 30 June 2024

240,429

5,483

7,892

253,804

Additions

111,639

2,325

871

114,835

Acquisition of subsidiaries

1,810

—

1,810

Disposals

(23,947)

(4,893)

(180)

(29,020)

Reclassification

—

1,212

—

1,212

Translation difference

(5,626)

(106)

(28)

(5,760)

Cost as of 30 June 2025

324,305

4,021

8,555

336,881

Accumulated depreciation and impairment as of 30 June 2024

(73,464)

(5,172)

(2,237)

(80,873)

Depreciation

(26,961)

(778)

(752)

(28,491)

Disposals

14,083

4,109

(202)

17,990

Impairment loss on right-of-use assets

(90)

—

(90)

Reclassification

—

(1,212)

—

(1,212)

Translation difference

1,119

(36)

323

1,406

Accumulated depreciation and impairment as of 30 June 2025

(85,313)

(3,089)

(2,868)

(91,270)

Net book value as of 30 June 2025

238,992

932

5,687

245,611

The following table represents movements in right-of-use assets for the year ended 30 June 2024:

Land

Agricultural equip-

ment and vehicles

Buildings

Total

Cost as of 30 June 2023

263,789

7,521

7,514

278,824

Additions

17,248

—

531

17,779

Disposals

(16,848)

(800)

(98)

(17,746)

Translation difference

(23,760)

(1,238)

(55)

(25,053)

Cost as of 30 June 2024

240,429

5,483

7,892

253,804

Accumulated depreciation and impairment as of 30 June 2023

(66,033)

(5,393)

(1,754)

(73,180)

Depreciation

(23,075)

(1,367)

(522)

(24,964)

Disposals

9,790

252

(25)

10,017

Impairment loss on right-of-use assets

(72)

Translation difference

5,926

1,336

7,326

Accumulated depreciation and impairment as of 30 June 2024

(73,464)

(5,172)

(2,237)

(80,873)

Net book value as of 30 June 2024

166,965

311

5,655

172,931

The impairment testing of right-of-use assets, along with the property, plant, and equipment of the Farming segment (Note 14), was conducted by

internal specialists. The recoverable amount of the assets was determined using the value-in-use method, which is based on estimated future cash

flows discounted to their present value using an appropriate discount rate. The cash flow forecasts applied in the value-in-use approach were

derived from financial budgets approved by management, covering five years, and were extrapolated using estimated growth rates for periods

beyond five years. The calculation of the discount rate is based on assumptions specific to the Group and the operating segments to which they

apply.

16. Intangible Assets

The following table represents movements in intangible assets for the year ended 30 June 2025:

Trademarks

Land

lease rights

Other

intangible assets

Total

Cost as of 30 June 2024

22,036

73,503

50,605

146,144

Additions

—

3,288

3,300

Disposals

—

(975)

Disposal of subsidiaries

—

(23,329)

Translation difference

—

(2,721)

(6,158)

(8,879)

Cost as of 30 June 2025

22,036

70,794

23,431

116,261

Accumulated amortization and impairment losses as of 30 June 2024

(8,851)

(64,489)

(36,410)

(109,750)

Amortization charge

—

(683)

(2,379)

(3,062)

Disposals

—

Disposal of subsidiaries

—

23,300

Impairment of intangible assets

—

(676)

Translation difference

—

2,570

6,117

8,687

Accumulated amortization and impairment losses as of 30 June 2025

(8,851)

(62,602)

(10,020)

(81,473)

Net book value as of 30 June 2025

13,185

8,192

13,411

34,788

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

141

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

The following table represents movements in intangible assets for the year ended 30 June 2024:

Trademarks

Land

lease rights

Other

intangible assets

Total

Cost as of 30 June 2023

22,036

80,771

24,812

127,619

Additions

—

2,487

Additions from the acquisition of subsidiaries

—

23,692

Disposals

—

(185)

Translation difference

—

(7,268)

(201)

(7,469)

Cost as of 30 June 2024

22,036

73,503

50,605

146,144

Accumulated amortization and impairment losses as of 30 June 2023

(8,851)

(76,817)

(5,617)

(91,285)

Amortization charge

—

(222)

(1,958)

(2,180)

Disposals

—

187

Reversal of impairment of intangible assets

—

5,281

(29,138)

(23,857)

Translation difference

—

7,269

116

7,385

Accumulated amortization and impairment losses as of 30 June 2024

(8,851)

(64,489)

(36,410)

(109,750)

Net book value as of 30 June 2024

13,185

9,014

14,195

36,394

As of 30 June 2025, the Group’s subsidiaries held the following trademarks: “Schedry Dar”, “Stozhar”, “Zolota” and “Domashnya” with net book

values of USD 4,567 thousand, USD 5,459 thousand, USD 2,980 thousand, and USD 179 thousand, respectively, in 2025 and 2024. These

trademarks are used by the Group for the sale of bottled sunflower oil mostly in the Ukrainian market.

The Group has determined that its trademarks have indefinite useful life. Accordingly, they are not amortized but are tested for impairment annually

on 30 June, and whenever indicators of impairment arise, by comparing their recoverable amount with their carrying amount.

As of 30 June 2025 and 2024, no impairment loss was recognized in respect of trademarks. The recoverable amount was determined using the

fair value less costs of disposal method, applying the royalty relief approach, and is classified within Level 3 of the fair value hierarchy. The valuation

is based on cash flow projections derived from management-approved financial budgets covering a five-year period. The total carrying amount of

the trademarks has been allocated to the respective CGU in Oilseed Processing segment.

The impairment testing of the value of intangible assets including trademarks, as of 30 June 2025 and 2024 was based on the same assumptions

as the impairment test for property, plant and equipment (Note 26). As a result of impairment testing performed as of 30 June 2025 impairment

losses were recognized in the amount of USD 676 thousand.

17. Advances from Customers and Other Current Liabilities

The balance of advances from customers and other current liabilities were as follows:

As of

30 June 2025

As of

30 June 2024

Accrued payroll, payroll-related taxes, and bonuses

172,378

118,747

Liabilities under commission agreements

34,532

18,177

Provisions for legal claims

16,502

Taxes payable and provision for tax liabilities

11,479

6,938

Provision for unused vacations and other provisions

10,615

9,161

Contract liabilities

7,484

18,598

Other current liabilities

4,295

4,274

Total

257,285

192,397

18. Other Financial Liabilities

The balances of other financial liabilities were as follows:

As of

30 June 2025

As of

30 June 2024

Share-based options (Note 29)

29,940

66,241

Derivative financial instruments

11,547

10,446

Accounts payable for property, plant and equipment

5,650

5,896

Other current liabilities

5,657

3,413

Total

52,794

85,996

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

142

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

19. Borrowings

The balance of borrowings was as follows:

As of

30 June 2025

As of

30 June 2024

Current liabilities

Bank credit lines

146,745

147,529

Current portion of long-term borrowings

22,239

—

Interest accrued on short-term borrowings

1,348

3,653

Interest accrued on long-term borrowings

791

—

Bank overdrafts (Note 8)

Short-term borrowings

—

163,979

Total

171,126

315,166

Non-current liabilities

Long-term bank borrowings

82,307

—

Total

82,307

—

The balance of bank credit lines in details by tranches were as follows:

Interest rate

Currency

Amount due

30 June 2025

Amount due

30 June 2024

Ukrainian subsidiary of European bank

12.95%

UAH

57,720

—

Ukrainian subsidiary of European bank

13.00%

UAH

36,022

—

European bank

2.10% plus COF

USD

28,006

17,108

Ukrainian subsidiary of European bank

from 5.30% to 6.50%

USD

15,000

23,000

Ukrainian bank

4.95%

USD

10,000

—

Ukrainian subsidiary of European bank

7.75%

USD

—

35,000

Ukrainian bank

4.35% plus UIRD

UAH

—

23,348

Ukrainian bank

7.25%

USD

—

22,000

European bank

2.50% plus COF

USD

—

12,578

Ukrainian bank

7.00%

USD

—

10,000

Ukrainian subsidiary of European bank

6.75%

USD

—

4,500

Total

146,748

147,534

As of 30 June 2025, the Group reclassified its bank borrowings with an initial long-term contractual maturity in the amount of USD 82,307 thousand

from current to non-current liabilities. This classification reflects the fact that, as of the reporting date, the Group obtained a waiver from one of its

long-term lenders in respect of certain covenant requirements, which remains valid for a period exceeding 12 months from the reporting date. The

presentation as non-current liabilities are based on the updated waiver terms and the Group’s ongoing compliance with the amended covenant

requirements.

The balance of borrowings as of 30 June 2025 and 2024 is disclosed in the table below:

Contractual

maturity

Interest rate in range

Currency

Amount due

30 June 2025

Amount due

30 June 2024

European bank

2030

from 3.03% to 3.10% plus SOFR

USD

49,793

71,137

European bank

2029

from 3.03% to 3.10% plus SOFR

USD

39,753

65,962

Ukrainian bank

2030

4.90% plus UIRD

USD

15,000

—

European bank

2027

4.50% plus SOFR

USD

—

23,040

European bank

2027

USD

—

3,840

Total

104,546

163,979

The Group’s borrowings are subject to financial and non-financial covenants as specified in the respective loan agreements. These covenants are

consistent with industry-standard practices for similar types of financial instruments.

As of 30 June 2025, borrowings are classified as non-current liabilities in the amount of USD 82,307 thousand (30 June 2024: presented as current

liabilities in the amount of USD 130,594 thousand). These borrowings are subject to financial and non-financial covenants as specified in the

respective loan agreements. The covenants are consistent with industry-standard practices for similar financial instruments and are monitored on

a quarterly, semi-annual, or annual basis, depending on the terms of the loan agreement. Certain non-financial covenants are monitored on a

continuous basis throughout the reporting period. A breach of these covenants provides lenders with the right to demand early repayment of the

respective liabilities.

The principal financial covenants for key bank loans include Interest Cover Ratio, Net Leverage Ratio, Adjusted Net Leverage Ratio, and Gearing

The Group’s cost of funding (COF) reflects the weighted average interest rate on its outstanding borrowings. It is used as a reference input in determining discount

rates applied in fair value measurements and value-in-use calculations.

Ukrainian Index of Retail Deposit Rates (UIRD) – is the average retail deposit rate in Ukraine published by the National Bank of Ukraine, used as a reference for

UAH-denominated discount rates.

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.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

143

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

Ratio. Bank loans are also subject to certain restrictions on specific transactions, such as dividend distributions, guarantees for third-party obliga-

tions, investments, or transactions with joint ventures. Also, non-financial covenants include the occurrence of a material adverse event and require

the regular submission of certain reports and other information to creditors.

Standard events of default under these agreements, subject to applicable grace periods and thresholds, include non-payment, cross-default, insol-

vency, and winding-up of the Group or certain subsidiaries, including guarantors under bonds issued.

The loan agreements also contain cross-default provisions, whereby the Group’s default on other loan agreements or bonds issued may result in

lender’s right to request an early repayment of loan liabilities. As of the reporting date, the Group’s management has not identified any breaches

of obligations that could trigger cross-default events and does not expect such events to occur within 12 months after the reporting date.

The Group has assessed all relevant facts and circumstances and considers the risk of covenant non-compliance to be remote. This assessment

considers the Group’s current financial position, historical performance, and established processes for proactively managing key financial metrics.

The Group continuously monitors these metrics to ensure compliance with all covenant requirements.

As of 30 June 2025, the undrawn amount of bank borrowings amounted to USD 312,701 thousand including available facility amounts upon bank

credit lines and long-term financing (30 June 2024: USD 205,731 thousand).

Short-term borrowings from banks were secured as follows:

As of

30 June 2025

As of

30 June 2024

Inventory (Note 11)

143,930

—

Property, plant and equipment (Note 14)

81,927

437,930

Future sales receipts

11,127

—

Total

236,984

437,930

Long-term bank borrowings from banks were secured as follows:

As of

30 June 2025

As of

30 June 2024

Assets pledged

Property, plant and equipment (Note 14)

192,922

—

Total

192,922

—

20. Bonds issued

The balances of bonds issued were as follows:

Maturity

As of

30 June 2025

As of

30 June 2024

US 300,000 thousand 6.75% coupon bonds (issued October 2020)

October 2027

298,487

298,087

US 300,000 thousand 6.50% coupon bonds (issued October 2019)

October 2024

—

299,493

Total

298,487

597,580

As of 30 June 2025, the Group’s bonds were rated CCC by both S&P and Fitch (30 June 2024: CC), consistent with the Ukrainian sovereign rating.

All the notes are unsecured, ranking equally with all existing and future senior unsecured indebtedness of the Company, and have been uncondi-

tionally and irrevocably guaranteed by designated Group subsidiaries on the joint and several basis to the maximum extent permitted by law.

As of 30 June 2025, the carrying amount of bonds classified as non-current liability in the amount of USD 298,487 thousand (30 June 2024:

presented as current liabilities in amount of USD 597,580 thousand) was subject to financial and non-financial covenants as specified in the

respective bond prospectus. Financial covenants are monitored on an annual basis, while non-financial covenants are monitored continuously

during the reporting period. The breach of these covenants gives the bondholders the right to demand early repayment of the respective liabilities.

The bond prospectus includes financial covenants, which are mainly based on the ratios of such financial indicators as fixed charges cover ratio

fixed expenses, level of liabilities and level of total assets and EBITDA of certain subsidiaries of the Group. Bonds are also subject to agreed and

impose restrictions on certain transactions, such as the incurrence of additional indebtedness, restricted payments (including dividends, loans,

capital contributions, investments), asset disposals, mergers, and other investments. Also, non-financial covenants require the regular submission

of certain reports and other information to the trustee.

Standard events of default, typical for this type of instrument, include subject to applicable grace periods and carve-outs, non-payment, cross-

default, insolvency, and judgment defaults affecting the Group or certain subsidiaries, including any guarantors under the bonds.

Bond prospectus also contains cross-acceleration provisions, whereby the Group’s default on other loan agreements or bonds issued may result

in acceleration of the bondholder’s right to request an early repayment of bonds. As of the reporting date, the Group’s management has not

identified any breaches of obligations that could trigger cross-acceleration events and does not expect such events to occur within 12 months after

the reporting date.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

144

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

The Group has assessed all relevant facts and circumstances and considers the risk of covenant non-compliance to be remote. This assessment

reflects the Group’s current financial position, historical performance, and established processes for monitoring and managing key financial metrics.

These metrics are continuously reviewed to ensure compliance with all covenant obligations.

As of 30 June 2024, the Group did not have an unconditional right to defer settlement of its bonds for 12 months or longer as of this date the

effective bank waivers related to its loans covered less than 12 months. Consequently, the Group therefore classified its long-term bonds as short-

term.

As of 30 June 2025, the Group obtained a waiver from one of its lenders in respect of certain non-financial covenants under a loan agreement.

This waiver, effective for 12 months after the reporting date, removed the risk that a potential covenant breach could trigger an early repayment

requirement affecting the Group’s bonds. Accordingly, in line with the requirements of IAS 1 Presentation of Financial Statements, the bonds have

been classified as non-current liabilities in these financial statements (Note 19).

Interest on the coupon bonds is payable semi-annually in arrears in April and October. As of 30 June 2025, accrued interest on the bonds amounted

USD 3,616 thousand (30 June 2024: USD 7,612 thousand).

21. Lease liabilities

The following is the maturity analysis of lease payments under the lease agreements as of 30 June:

Maturity

As of

30 June 2025

As of

30 June 2024

Payable within one year

35,191

29,811

Payable in the second to fifth years

174,591

147,871

Payable after five years

270,124

215,448

Total

479,906

393,130

less

Future finance charges

(274,651)

(223,390)

Present value of lease obligations

205,255

169,740

less

Current portion

(34,021)

(27,206)

Lease obligations, long-term portion

171,234

142,534

22. Income Tax

The Group operates globally and is subject to the tax laws and regulations of multiple jurisdictions and authorities, as well as to tax treaties between

those jurisdictions. The Group’s principal operations are located in Ukraine and Switzerland, where the corporate income tax rates were 18% and

15%, respectively, as of 30 June 2025 and 2024.

A significant portion of the Group’s subsidiaries engaged in agricultural production pay the Fixed Agricultural Tax (FAT) in accordance with the Tax

Code of Ukraine. The UAT is assessed by local authorities and is determined based on the area and valuation of the land used.

The components of income tax expenses were as follows:

For the year ended

30 June 2025

For the year ended

30 June 2024

Current income tax charge

(50,107)

(56,502)

Withholding tax

(18,380)

—

Deferred tax benefit relating to the origination and reversal of temporary differences

18,840

13,078

Total income tax expenses recognized in the reporting period

(49,647)

(43,424)

The income tax expenses are reconciled to the profit before income tax per the Consolidated Statement of Profit or Loss as follows:

As of

30 June 2025

As of

30 June 2024

Profit before income tax

287,243

211,052

Tax expenses at the Ukrainian statutory tax rate of 18%

(51,704)

(37,989)

Income generated by payers that is exempt from taxation (FAT)

10,401

27,197

Tax effect of unused tax losses and tax offsets not recognized as deferred tax assets

5,260

2,356

Previously unrecognized tax losses used to reduce deferred tax expenses

13,990

—

Withholding tax

(18,380)

—

Non-deductible expenses in taxable profit, net

(9,214)

(34,988)

Income tax expenses

(49,647)

(43,424)

For the year ended 30 June 2025, the deferred tax recognized in other comprehensive income was USD 1,664 thousand (for the year ended 30

June 2024: loss of USD 1,784 thousand).

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

145

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

The main components of the deferred tax assets and deferred tax liabilities were as follows:

As of

30 June 2025

As of

30 June 2024

Tax losses carried forward

17,207

20,304

Valuation of property, plant, and equipment

27,377

11,913

Valuation of inventories

5,116

2,367

Others

8,351

8,495

Deferred tax assets

58,051

43,079

Valuation of property, plant, and equipment

(25,814)

(26,019)

Valuation of intangible assets

568

(1,209)

Others

(301)

(260)

Deferred tax liabilities

(25,547)

(27,488)

Net deferred tax assets

32,504

15,591

As of 30 June 2025, deferred tax assets in the amount of USD 30,674 thousand are expected to be recovered or settled within twelve months after

the reporting period (30 June 2024: USD 31,166 thousand).

As of 30 June 2025, based upon projections for future taxable income over the periods in which the taxable temporary differences are anticipated

to reverse, management believes it is probable that the Group will realize the benefits of deferred tax assets of USD 17,207 thousand (30 June

2024: USD 20,304 thousand) recognized concerning tax losses carried forward by the subsidiaries. The amount of future taxable income required

to be generated by the Subsidiaries to utilize the tax benefits associated with the tax loss carried forward is approximately USD 95,594 thousand

(30 June 2024: USD 112,800 thousand). However, the amount of the deferred tax asset considered realizable could be adjusted in the future if

estimates of taxable income are revised.

The Group does not recognize a deferred tax liability for all taxable temporary differences associated with investments in subsidiaries as it can

control the timing of the reversal of such temporary differences and it is probable that they will not reverse in the foreseeable future.

Certain deferred tax assets and liabilities have been offset following the Group’s accounting policy. The following is an analysis of the deferred tax

balances (after offset) as they are presented in the Consolidated Statement of Financial Position:

As of

30 June 2025

As of

30 June 2024

Deferred tax assets

51,698

35,626

Deferred tax liabilities

(19,194)

(20,035)

Net deferred tax assets

32,504

15,591

23. Cost of Sales

The cost of sales was as follows:

For the year ended

30 June 2025

For the year ended

30 June 2024

Cost of goods for resale and raw materials used

3,001,654

2,069,486

Shipping and handling costs

360,336

639,819

Amortization and depreciation

100,229

98,863

Payroll and payroll-related costs

90,954

80,791

Total

3,553,173

2,888,959

For the year ended 30 June 2025 result on operations with commodity futures, options and unrealized forwards, included within the Cost of goods

for resale and raw materials used line, decreased Cost of sales in the amount of USD 198,989 thousand (30 June 2024: USD 137,656 thousand

decrease).

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

146

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

24. Other Operating Income and Expenses

Other operating income and expenses were as follows:

For the year ended

30 June 2025

For the year ended

30 June 2024

Other operating income

Gain on operations with securities

26,408

9,120

Contracts wash-out (price difference settlement)

15,193

5,142

Stock-take surplus

10,392

8,428

Other dispatch fees and fines

5,383

—

Insurance reimbursement

3,319

33,539

Gain on sale of foreign currency

2,015

7,796

Gain on operations with swap contracts

—

5,522

Other operating income

5,098

7,046

Total

67,808

76,593

Other operating expenses

Loss on operations with other derivatives

(25,448)

(10,987)

Loss on operations with swap contracts

(20,966)

—

Other dispatch fees and fines

—

(17,418)

Total

(46,414)

(28,405)

The Group enters wash-out contracts to reduce administrative time and costs. These contracts can be offset based on a mutual agreement with

the same partners who sold or purchased commodities.

25. General and administrative expenses

General and administrative expenses were as follows:

For the year ended

30 June 2025

For the year ended

30 June 2024

Payroll and payroll related costs

189,682

176,151

Audit, legal and other professional fees

14,207

10,317

Repairs and material costs

8,134

6,120

Other expenses

23,245

20,785

Total

235,268

213,373

Audit, legal and other professional fees for the year ended 30 June 2025 included the auditor’s remuneration in the amount of USD 763 thousand

and remuneration for non-audit services was USD 55 thousand (for the year ended 30 June 2024: USD 778 thousand and USD 26 thousand,

respectively). No consultancy services were provided by the auditors for the years ended 30 June 2025 and 2024.

During the year ended 30 June 2025, the Group recognized expenses of USD 31,309 thousand in respect of profit-sharing arrangements (30 June

2024: bonus expenses USD 25,159 thousand). These amounts were included within payroll and payroll-related costs. The liability was recognized

in accordance with the terms of the profit-sharing arrangement in the amount USD 49,268 thousand and was measured by reference to the esti-

mated portion of profits.

26. Reversal of impairment losses/(impairment) of Assets

Reversal of impairment losses/(impairment) of assets were as follows:

For the year ended

30 June 2025

For the year ended

30 June 2024

Reversal of impairment/(impairment) of prepayments to suppliers and other current assets

6,958

(25,596)

Reversal of impairment/(impairment) of property, plant and equipment (Note 14)

2,379

(117,115)

Reversal of impairment losses on VAT recoverable

350

5,538

Reversal of impairment of inventories

4,136

Impairment of goodwill

—

(58,436)

Write-offs of property, plant and equipment

—

(11,162)

Impairment of right-of-use assets and write-offs of inventories

(122)

(2,863)

Impairment of intangible assets (Note 16)

(622)

(23,728)

Total

8,946

(229,226)

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

147

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

27. Finance Costs and Income

Finance costs and income were as follows:

For the year ended

30 June 2025

For the year ended

30 June 2024

Finance costs expensed

Interest expenses on bank loans (Note 8)

(28,587)

(45,667)

Interest expenses on corporate bonds (Note 8)

(26,006)

(39,750)

Interest expenses on lease liabilities (Note 8)

(21,196)

(25,243)

Other finance costs

(1,879)

(8,419)

Total

(77,668)

(119,079)

Finance income

Interest income received on financial assets held for cash management

39,483

42,553

Gain on modification of loan terms

—

6,436

Other financial income

5,912

830

Total

45,395

49,819

Net finance costs

(32,273)

(69,260)

28. Other Expenses, net

Other expenses, net was as follows:

For the year ended

30 June 2025

For the year ended

30 June 2024

Social spending

(30,434)

(25,129)

(Loss)/gain on disposal of Subsidiaries

(5,232)

2,448

Fines and penalties

(221)

(5,746)

Other expenses

(394)

(661)

Total

(36,281)

(29,088)

29. Transactions with Related Parties

As of 30 June 2025 and 2024, the Group is controlled by the Namsen Ltd (Note 2).

The Group had the following balances outstanding with related parties from sales or purchases of goods and services:

Related party

Statement of Financial Position line

Related party balances

as of 30 June 2025

Related party balances

as of 30 June 2024

Entities under Common control

Trade accounts receivable

5,705

23,303

Prepayments to suppliers

27,270

47,112

Other financial assets

23,618

2,327

Non-current financial assets

—

12,961

Trade accounts payable

10,360

1,968

Advances from customers and other current liabilities

34,606

18,177

Key management

Other financial assets

2,913

4,997

Non-current financial assets

980

1,430

Advances from customers and other current liabilities

21,442

24,395

Other financial liabilities

31,961

66,279

Entities under Key Management

control

Non-current financial assets

1,875

1,984

Other related parties

Prepayments to suppliers

—

944

Other financial assets

12,086

Non-current financial assets

—

2,032

The long-term management incentive plan which was signed in 2022 has exercise period commencing on 1 November 2024 and expiring on

31 December 2026. The Company granted management the option to sell to the Company 2,606,445 of its ordinary shares. The consideration for

each share is USD 23.80.

As of 30 June 2025, the fair value of the liability recognized in respect of share options amounted to USD 29,940 thousand (30 June 2024:

USD 66,241 thousand). Part of this obligation was settled through set-off against advances to the same management, and the remaining balance

was presented within Other financial liabilities.

Transactions with related parties are conducted on terms equivalent to those prevailing in arm’s length transactions. Outstanding balances are

unsecured and will be settled in cash. No guarantees have been provided or received in respect of related party receivables or payables. Loans

are provided at interest rates comparable to the average commercial rate.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

148

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

Transactions with related parties were as follows:

Related party

Statement of Profit and Loss line

Related party transac-

tion for the year ended

30 June 2025

Related party transac-

tion for the year ended

30 June 2024

Entities under common

control

Revenue

47,785

50,889

Purchases of various goods and services

(54,380)

(228,982)

Cost of sales

(11,842)

(17,184)

Other expenses

(1,030)

(732)

Other operating income

3,600

—

Other operating expenses

—

(2,839)

Reversal of impairment losses/(impairment) of assets

2,668

(7,595)

Loss on impairment of assets

1,043

—

Key management

General and administrative expenses

(18,828)

(50,529)

Financial costs

—

(1,638)

Finance income

1,643

—

Entities under Key Man-

agement control

Financial costs

—

(3,100)

Finance income

1,963

—

Other related parties

Revenue

982

20,883

Purchases of various goods and services

(6,640)

(3,333)

Finance income

971

1,621

Net impairment losses on financial assets

(20)

(994)

Remeasurement of liability related to options provided to key management as of 30 June 2025 resulted in gain recognized in General, administrative

expenses in the amount of USD 6,617 thousand (30 June 2024: a loss of USD 11,963 thousand).

The Group's key management personnel are the members of the Board of Directors and the management team. The remuneration of Directors

and other members of key management personnel recognized in the Consolidated Statement of Profit and Loss including salaries and other current

employee benefits amounted to USD 24,324 thousand (for the year ended 30 June 2024: USD 27,554 thousand).

30. Commitments and Contingencies

Retirement and Other Benefit Obligations

Employees of the Group receive pension benefits from the government under the laws and regulations of Ukraine. The Group’s contributions to

the State Pension Fund for the year ended 30 June 2025 were USD 19,339 thousand (2024: USD 20,976 thousand).

As of 30 June 2025, and 2024, the Group was not liable for any significant supplementary pensions, post-retirement health care, insurance benefits,

or retirement indemnities to its current or former employees.

Capital Commitments

As of 30 June 2025, the Group had commitments under contracts with a group of suppliers for a total amount of USD 15,781 thousand, mostly for

reconstruction of the grain transshipment complex and for modernization of the oil-crushing plant (30 June 2024: USD 17,833 thousand, mostly for

the construction of port infrastructure and an oilseed crushing plant).

Contractual Commitments on Sales

As of 30 June 2025, the Group had outstanding commercial contracts for the export of 1,348,000 tons of grain, 270,000 tons of vegetable oil, and

98,198 tons of sunflower meal and other related products, with contract values of USD 300,879 thousand, USD 290,550 thousand and USD 28,521

thousand, respectively, in contract prices as of the reporting date.

As of 30 June 2024, the Group had outstanding commercial contracts for the export of 672,500 tons of grain, 186,243 tons of sunflower oil, and

40,440 tons of sunflower meal and other related products, with contract values of USD 166,595 thousand, USD 184,097 thousand and USD 10,924

thousand, respectively, in contract prices as of the reporting date.

Taxation and Legal Issues

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 digitalization 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 within the 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 Ltd residing in Cyprus should be considered as the Ultimate

Parent Entity of the Kernel Group and should therefore have the obligation to apply the Income Inclusion Rule (“IIR”) and be charged with the top-

up tax (“TUT”) due on any low-taxed profits of itself and its low-taxed subsidiaries. On 12 December 2024, the Cyprus House voted to transpose

into law Council Directive (EU) 2022/2523 of 14 December 2022 to ensure a global minimum level of taxation of multinational enterprise groups

and large domestic groups in the Union, also known as the Pillar Two Directive. The Law was published in the Official Government Gazette on 18

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

149

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

December 2024. The Law introduces an IIR for financial years starting from 31 December 2023 in line with the Pillar Two Directive. A Qualified

Domestic Minimum Top-up Tax (“QDMTT”) and an Undertaxed Profits Rule (“UTPR”) are also introduced for financial years starting from 31

December 2024. Therefore, as previously expected, the IIR rule applies to Kernel Group from 1 July 2024.

Pillar 2 Rules also envisage the application of Safe Harbor tests, which are designed to simplify compliance in the initial years of implementation

and reduce the risk of top-up tax in low-risk jurisdictions where the Group has presence. If a jurisdiction meets specific thresholds based on CbCR

data, it has the right to be excluded from detailed GloBE calculations for a transitional period of the first three reporting years, starting from the year

ending 30 June 2025.

Namsen Ltd, as an Ultimate Parent Entity, conducted an assessment and concluded that most of the jurisdictions meet the Safe Harbor tests.

Thus, the tax exposure for Kernel Group is possible only in jurisdictions where QDMTT applies, unless the CbCR Safe Harbor tests are met. It was

assessed that the application of QDMTT had no material impact on the financial statements of the Group for the year ending 30 June 2025.

Tax risk management is integrated into the Group's overall risk management. As of 30 June 2025, companies of the Group were involved in ongoing

litigation with tax authorities concerning tax matters amounting to USD 27,238 thousand (30 June 2024: USD 20,441 thousand). Based on the

Group’s historical experience with similar court cases, management believes it is unlikely that these proceedings will result in a significant outflow

of resources, and accordingly, no provision has been recognized in the Group’s financial statements as at the reporting date.

Ukraine’s tax environment remains complex and characterized by frequent changes in tax legislation and inconsistent application and interpreta-

tion by the tax authorities. This environment may result in increased fiscal pressure on taxpayers. The risk of differing interpretations of tax laws

and regulations, combined with evolving administrative practices can lead to disputes with the tax authorities and potentially result in additional

tax assessments, fines and interest charges.

The transfer pricing legislation allows for additional tax assessment in respect of controlled transactions (transactions between related parties and

certain transactions between unrelated parties) if such transactions are not conducted on an arm’s-length basis. Management has established

internal controls and documentation procedures to comply with applicable transfer pricing legislation. However, tax authorities may challenge the

prices applied under these transactions, particularly as transfer pricing rules and interpretation continue to evolve. As of the reporting date, the

potential impact of any such challenge is uncertain and cannot be reliably estimated. The Group assesses uncertain tax positions in accordance

with IFRIC 23 and recognizes provisions where necessary.

Key aspects of the Ukrainian tax system are the following:

• Ukraine operates a classic corporate income tax system. Under this system, the taxable profit of companies, defined as accounting profit adjusted

for tax differences in accordance with Ukrainian tax legislation, is subject to corporate income tax (“CIT”) at a statutory rate of 18 %.

• Transfer pricing regulations apply to transactions with related non-resident parties and non-resident parties located in low tax jurisdictions (i.e.,

jurisdictions with an effective corporate income tax rate significantly lower than Ukraine’s 18% CIT rate). These rules are applicable where the

company’s annual income exceeds UAH 150 million and the value of transactions with each such non-resident exceeds UAH 10 million.

• The domestic supply of goods and services, as well as the import of goods and certain services, are subject to value-added tax at the standard

rate of 20%. A 0% VAT rate applies to the export of goods from Ukraine. Starting from March 2021, a reduced VAT rate of 14% was applicable

to the domestic supply and import of certain agricultural commodities.

• Payments of passive income (such as interest, royalties, dividends, etc.) to non-resident recipients are subject to withholding tax at the standard

rate 15% unless double tax treaties or the Tax Code of Ukraine provide another tax rate.

• Agricultural producers of raw materials are eligible to apply a simplified tax regime, provided that at least 75% of their income is derived from the

sale of agricultural raw materials produced by such companies. Under this regime, companies are subject to a fixed tax, which is determined

based on the type, location, and monetary value of the farmland they operate.

• The “Transitional Provisions” of the Tax Code of Ukraine have been supplemented by a new subparagraph 69.38, which provides that, tempo-

rarily from 1 August 2023 until the termination or cancellation of martial law on the territory of Ukraine, taxpayers who voluntarily correct errors

that resulted in an understatement of tax liabilities shall be exempt from the accrual and payment of fines and penalties.

• The Diia City regime, which provides special tax and legal benefits for IT companies, has been introduced in Ukraine. Among other provisions,

the regime offers protections against excessive state interference, streamlined hiring procedures for IT professionals (including the use of special

"gig contracts"), and reduced income tax and payroll tax rates for qualifying IT businesses.

As of 30 June 2025, the Group was a party to three 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 as of 13 October 2023 with the objective: 1) To establish that the Group's directors acted against the Group'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 Group 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 Ltd on 30 March 2023, compared to the real

value of the Group, and (ii) the economic impact of the Board of Directors' decisions, including the delisting, on the Group's corporate interests.

These proceedings are currently pending.

• 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 Ltd. These proceedings are

currently pending.

• merits proceedings initiated on 26 April 2024 related mainly to the annulment of the decisions taken at the AGM held on 11 December 2023.

These proceedings are currently pending.

Additionally, on 3 April 2024, the same group of minority shareholders initiated summary proceedings related mainly to the suspension of the

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

150

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

decisions taken at the AGM held on 11 December 2023. On 27 November 2024, the Vice-President of Luxembourg District Court issued a summary

order under which all claims brought by the claimants in legal action against the Group and its majority shareholder, Namsen Ltd, to seek the

suspension of the resolutions adopted during the Group's Annual General Meeting on 11 December 2023, were declared inadmissible and, there-

fore, rejected. Additionally, the claimants were ordered to pay procedural indemnities to both the Group and Namsen Ltd. On 15 May 2025, the

claimants filed the appeal. The appeal proceedings are currently pending.

As of 28 March 2025, the Luxembourg District Court issued a summary order declaring inadmissible and consequently rejecting the claims initiated

on 20 February 2024 against the Company and its majority shareholder, Namsen Ltd. The claims sought interim relief in the form of a suspension

of decisions made by the Company’s Board of Directors regarding the share capital increase carried out in August–September 2023, including the

issuance of 216,000,000 new shares, as previously disclosed. The Court further ordered the claimants to pay procedural indemnities to both the

Group and Namsen Ltd. On 23 May 2025, the claimants filed an appeal. The appeal proceedings are currently pending.

The proceedings are at an early stage, and the outcome of the litigation cannot be reliably assessed at this time. However, the Group’s management

believes that there has been no non-compliance with applicable laws and regulations in relation to the matters raised by the claimants and, accord-

ingly, no outflow of economic benefits is expected.

31. Financial risk management

Capital Risk Management

The Group manages its capital, primarily attributable to equity holders. The object is to ensure that entities in the Group continue as a going

concern, providing returns to shareholders and benefits to other stakeholders, while maintaining an optimal capital structure to reduce the cost of

capital. Management considers the cost of capital and the risks associated with each class of capital and balances its overall structure through

dividend distributions, issuance or repurchase of shares, and the issuance or redemption of debt instruments.

The Group monitors capital based on the carrying amount of equity and borrowings less cash and cash equivalents, as presented in the consoli-

dated statement of financial position. The Group is not subject to any externally imposed capital requirements, other than covenants imposed by

external lenders in respect of bank borrowings and bonds.

Gearing Ratio

The Group monitors its capital structure by calculating a gearing ratio, defined as net debt divided by total capital. Net debt comprises lease

obligations, bonds and borrowings less cash and cash equivalents, while total capital consists of equity and net debt.

Management has not established a formal target level for the gearing ratio but considers it an important measure of financial stability and access

to financing. As of 30 June 2025, the majority of the Group’s debt is due within two to five years.

As of

30 June 2025

As of

30 June 2024

Debt liabilities

(Notes 19, 20, 21)

760,791

1,090,098

Less cash and cash equivalents (Note 8)

(617,511)

(809,584)

Net debt

143,280

280,514

Equity

2,077,929

1,864,643

Total capital

2,221,209

2,145,157

Net debt liabilities to capital

15%

Financial Risk

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

• Credit risk

• Liquidity risk

• Market risk

Risk management policies have been established to identify, assess, and analyze the risks faced by the Group, to manage and continuously

improve an effective risk management and monitoring system, spreading the culture of decision-making in terms of risks, their valuation and

likelihood of occurrence. The Group coordinates roles and participants through training, management standards, and procedures.

Credit Risk

Credit risk is the risk of financial loss to the Group if counterparties may not be able to settle their contractual obligations due to the Group within

their agreed payment terms.

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The characteristics of the Group’s

customer base, including the default risk of the industry and country in which the major customers operate, have less of an influence on credit risk.

The Group has established a credit policy under which each new customer is assessed individually for creditworthiness before standard payment

and delivery terms are offered. The review includes an evaluation of the customer’s financial position, payment history, transaction volume, and

other relevant factors. Sales limits are set for each customer, representing the maximum exposure without requiring further management approval,

Debt includes short-term and long-term borrowings, obligations under leases, bonds issued and accrued interest. Debt liabilities do not include the liabilities associated with assets held for sale.

Equity includes issued capital, share-premium reserve, additional paid-in capital, revaluation reserve, retained earnings, other reserve and translation reserve attributable to Kernel Holding S.A.

shareholders.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

151

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

and these limits are reviewed annually. Customers who do not meet the Group’s benchmark for creditworthiness may only transact on a prepaid

basis and are subject to additional approval requirements. The Group’s maximum exposure to credit risk is disclosed in Note 32.

To mitigate non-payment risk in international markets, the Group presents title documents through banking channels and makes use of payment

instruments such as letters of credit, insurance arrangements, and bank guarantees. In addition, the Group holds collateral against loans provided

to farmers, which includes future harvests, movable and immovable property. Collateral is secured in amounts sufficient to cover the loans based

on current market prices.

The Group’s policy on expected credit losses (“ECL”) for trade receivables is disclosed in Note 9. Other financial assets at amortized cost include

loans to related parties, key management personnel and other receivables, all of which are considered to carry low credit risk.

The Group’s most significant customer is an international customer, who accounted for USD 40,869 thousand out of total trade accounts receivable

as of 30 June 2024 (30 June 2024: most significant customer is an international customer accounted for USD 31,643 thousand).

The entity is also exposed to credit risk on debt investments measured at fair value through profit or loss, including Ukrainian government bonds

and U.S. Treasury bonds (T-bonds). Ukrainian government and local bonds are subject to elevated credit risk due to the downgrade of Ukraine’s

sovereign credit rating since the beginning of the war, while U.S. Treasury bonds are considered to carry low credit risk given the sovereign credit

standing of the United States. Ukrainian government bonds in amount of USD 133,359 thousand are rated C (30 June 2024: USD 185,310 thousand

are rated CC) and U.S. Treasury bonds in amount of USD 11,043 thousand are rated F1+ (30 June 2024: nil) by Fitch respectively.

As of 30 June 2025, 74% (30 June 2024: 59%) of margin accounts with brokers are conducted with the financial institutions rated at F1-B by Fitch

(or analog). Short-term bank deposits are held by the Group in the international banks and Ukrainian subsidiaries of international banks with high

ratings (F1+ - F by Fitch). The Group’s exposure to credit risk for margin accounts with brokers is significantly reduced by placing them with financial

institutions that hold a strong Fitch credit rating of “B” or above, reflecting a high level of creditworthiness.

Liquidity Risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group manages liquidity risk by

maintaining adequate cash and cash equivalents, as well as the availability of funding through the adequacy of the banking facilities by continuously

monitoring forecasted and actual cash flows and by matching the maturity profiles of financial assets and liabilities. Management diversifies funding

sources to ensure that sufficient liquidity is maintained to meet liquidity requirements.

As of 30 June 2025, the carrying amount of the Group’s maximum exposure to financial obligations (including lease liabilities) was

USD 925,297 thousand (30 June 2024: USD 1,286,752 thousand).

All contracts are expected to settle within 12 months. The Group manages liquidity risk by maintaining sufficient cash and cash equivalents The

Group regularly monitors its liquidity position to ensure that it has the ability to meet its short-term obligations.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

152

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods as of

30 June 2025 and 2024. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on

which the Group can be required to pay. The tables include both interest and principal cash flows.

Carrying

amount

Contractual

cash flows

Less than 1

year

1–2 years

2–5 years

More than 5

years

30 June 2025

Non-derivative financial liabilities

Bonds issued (Note 20)

302,103

350,625

20,250

310,125

—

Short-term borrowings (Note 19)

148,887

—

Trade accounts payable

108,348

—

Long-term borrowings, including current portion

(Note 19)

104,546

122,834

28,429

27,929

63,125

3,351

Lease liabilities (Note 21)

205,255

479,906

35,191

39,281

135,310

270,124

Other current liabilities (Note 18)

41,247

—

Other non-current liabilities

3,364

—

657

2,707

—

Total

913,750

1,255,211

382,352

88,117

511,267

273,475

Derivatives

Open currency swap contracts

Inflows

172,000

—

Outflows

(173,251)

—

Derivative financial instruments (Note 18)

11,547

—

Total

10,296

—

30 June 2024

Non-derivative financial liabilities

Bonds issued (Note 20)

605,192

—

Short-term borrowings (Note 19)

315,166

—

Trade accounts payable

109,672

—

Lease liabilities (Note 21)

169,740

393,130

29,811

36,367

111,504

215,448

Other current liabilities (Note 18)

75,550

—

Other non-current liabilities

986

—

493

—

Total

1,276,306

1,499,696

1,135,391

36,860

111,997

215,448

Derivatives

Open currency swap contracts

Inflows

249,500

—

Outflows

(249,590)

—

Derivative financial instruments (Note 18)

10,446

—

Total

10,356

—

The concentration of liquidity risk is limited due to different repayment terms of financial liabilities and sources of borrowing facilities.

Market Risk

The Group`s activities expose it primarily to market risk which is mainly presented as the risk of loss in the value of any financial instrument due to

an adverse fluctuation in market prices, interest rates, and foreign exchange rates, whether arising out of factors affecting specific instruments or

the market in general. The goal of market risk management is to control and manage market risk exposures within acceptable limits while maxim-

izing the return on those risks.

Currency Risk

The functional currency of the majority of the Group’s Subsidiaries is their local currency, except for businesses engaged in the production and

sale of sunflower oil and transshipment services, for which USD was selected as the functional currency.

Currency risk is a risk of financial impact due to exchange rate fluctuations related to transactions and balances in currencies other than functional

currency. The Group enters into such transactions denominated in other currencies, which include capital expenditures, operating expenses, certain

sales of goods, and recognized assets and liabilities denominated in a currency that is not the functional currency of the entity. Exposure of currency

risk is managed by utilizing currency forward contracts and fulfilling comparative analysis between subsidiaries.

The Group mitigates the influence of currency risk in Ukrainian hryvnia through export sales denominated in USD and EUR. For the year ended 30

June 2025, total sales denominated in USD amounted to USD 3,834,995 thousand, and total sales denominated in EUR amounted to USD 57,929

thousand (for the year ended 30 June 2024: USD 3,250,287 thousand and USD 64,367 thousand, respectively).

The Group also utilizes currency swaps, which are derivative instruments under which principal and interest payments are exchanged in different

currencies. These contracts are used to mitigate foreign exchange risks arising from exposures in currencies other than USD across various

financial instruments, and they also enable the Group to optimize its overall financing costs. As of 30 June 2025, the Group’s management monitors

the notional amounts and fair values of these instruments on an ongoing basis.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

153

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

As of 30 June 2025, the Group had open currency swap contracts, all of which are expected to settle within 12 months. The Group continuously

monitors these positions to ensure sufficient liquidity is available to meet the related contractual obligations.

As of 30 June 2025, the Group’s borrowings are denominated primarily in USD and UAH. Interest and principal payments on borrowings are

generally matched with cash flows generated by the Group’s operations, particularly from export sales denominated in USD. This provides a natural

hedge against currency risk for the USD-denominated debt, while borrowings in UAH are used to finance local operating needs. Accordingly, the

Group does not utilize derivative instruments to hedge such exposures.

The table below covers UAH and USD-denominated assets and liabilities carried by Subsidiaries having balances in currencies other than functional

currencies.

The Group’s exposure to foreign currency risk, including the balances outstanding between the Group’s companies as of 30 June 2025 and 2024

was as follows:

30 June 2025

30 June 2024

UAH

USD

UAH

USD

Cash and cash equivalents

152,421

6,702

132,254

163,471

Trade accounts receivable

46,411

101,036

50,856

94,427

Other financial assets

246,920

—

177,655

—

Trade accounts payable

(93,808)

(7)

(69,585)

(1,320)

Current portion of lease liabilities

(1,050)

—

(644)

—

Lease liabilities

(7,626)

—

(6,855)

—

Short-term borrowings from Ukrainian subsidiary of European bank

(93,836)

—

(88,071)

—

Long-term borrowings European Bank

—

(10,140)

—

(12,628)

Open currency swap contracts

(173,251)

—

(249,590)

—

Other financial liabilities

(226,202)

(87)

(189,232)

(642)

Other non-current liabilities

(2,527)

—

(3,081)

—

Net exposure

(152,548)

97,504

(246,293)

243,308

The following table details the Group’s sensitivity to a 10 % change of the UAH against the USD would prompt a fluctuation in the equity and profit

and loss account by the amounts shown below. This sensitivity analysis assumes that all other variables, in particular interest rates, remain con-

stant. The sensitivity analysis includes only outstanding monetary items denominated in a currency other than the functional currency.

A strengthening/depreciation of the UAH against USD on 30 June would have affected the measurement of financial instruments denominated in

a foreign currency and affected profit or loss before income tax by the amounts shown below:

30 June 2025

30 June 2024

Strengthening

Depreciation

Strengthening

Depreciation

UAH (10% movement)

(24,119)

26,089

(46,748)

51,664

Interest Rate Risk

The Group’s main interest rate risk arises from bank borrowings and lease liabilities with variable rates, which expose the group to cash flow interest

rate risk.

The sensitivity analysis in the table below has been determined based on exposure to interest rates for financial liabilities at the end of the reporting

period. For floating rate liabilities, the analysis was prepared assuming the amount of liability outstanding at the end of the reporting period was

outstanding for the whole year. A 100-basis point (“bp”) increase, or decrease, was used when reporting interest rate risk internally to key man-

agement personnel and represents management’s assessment of reasonably possible changes in interest rates.

The interest rate profile of the Group’s interest-bearing financial instruments and its sensitivity to increase or decrease of variable interest rate was

as follows:

Carrying

amount

as of

30 June 2025

Impact on profit before tax from

change in variable rates

Carrying

amount as of

30 June 2024

Impact on profit before tax from

change in variable rates

100 bp higher

100 bp lower

100 bp higher

100 bp lower

Fixed rate

626,248

873,561

Variable rate

134,543

(1,346)

1,346

216,538

(2,166)

2,166

SOFR

90,564

(906)

906

162,157

(1,622)

1,622

COF

28,006

(280)

280

29,686

(297)

297

UIRD

15,016

(150)

150

23,738

(237)

237

LIBOR

957

(10)

957

(10)

Total

760,791

(1,346)

1,346

1,090,099

(2,166)

2,166

The Group does not use any derivatives to manage interest rate risk exposure. The Group manages its interest rate risk by having a balanced

portfolio of fixed and variable-rate loans and borrowings.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

154

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

Commodity Price Risk

The Group is exposed to fluctuations in commodity prices for inventories and the product of production which are not held to meet forward priced

contracts.

The Group is exposed to commodity price risk due to its core activities in the production, processing, and sale of agricultural products such as

grains, oilseeds, and other commodities. Commodity prices are inherently volatile and influenced by a broad range of external factors including

global supply-demand dynamics, geopolitical tensions, weather conditions, trade regulations, currency movements, and transportation disruptions.

The Group remains fully exposed to changes in market prices, which can have a direct and material impact on its financial results. A significant

decline in the price of key agricultural commodities may negatively affect revenue, gross profit, and operating cash flows.

Throughout the 2025 marketing year, shipments via Ukraine’s Black Sea ports operated without disruptions, ensuring stable and efficient export

flows. This operational consistency significantly enhanced the predictability of trading activities, improved the planning of trading books, and sup-

ported effective market risk management. The reliable functioning of these ports reinforced confidence in Ukrainian-origin supply chains across

key global consumption markets.

The stabilization and gradual reduction of freight and insurance premiums for shipments from Ukrainian Black Sea ports, relative to alternative

ports such as Constanta and Varna, positively impacted the Group’s financial performance. This stability allowed for increased agility in our trade

flows and improved our ability to respond efficiently to dynamic changes in global commodity markets. Looking ahead, no significant changes are

anticipated in 2026 marketing year, as the export infrastructure continues to operate reliably.

In 2025 financial year, the Group was exposed to commodity price risk arising from compressed crush margins, which reflected a combination of

below-average oilseed supply in Ukraine, particularly sunflower, and increased farmer holding capacity. Elevated volatility in global vegetable oil

markets, driven by changes in palm oil availability and energy prices, led to irregular selling patterns by farmers, resulting in periods of reduced

crush coverage compared with historical levels. To mitigate these risks, the Group applied a margin-driven switching strategy across its main

oilseeds (sunflower seeds, rapeseeds and soybeans), thereby broadening its product mix and trading opportunities. Risk management measures

included the use of commercial tools, internal logistical solutions, and close coordination between trading and origination functions to align pro-

curement and processing activities. These actions enabled the Group to manage exposure to commodity price fluctuations and reduce the potential

adverse impact on earnings.

Furthermore, the Group assesses potential exposures through internal sensitivity analysis and scenario testing, considering the potential impact of

price movements on profitability and liquidity. These assessments support proactive planning, particularly during periods of elevated market stress

or expected volatility. Management remains focused on enhancing risk management practices through operational excellence and improved market

responsiveness.

The Group measures and limits market risk exposure using a Value at Risk computation for commodity price risk related to its physical marketing

activities.

Value at Risk (VaR) is used by the Group as a statistical measure to estimate the potential loss in value of positions due to adverse market

movements under normal market conditions. The Group calculates VaR over a one-day time horizon with a 95 percent confidence level, using a

Parametric VaR model based on a log-normal assumption of returns. Parameters are estimated using an Exponentially Weighted Moving Average

over a 75-day period with a decay factor of 0.94. The VaR model has inherent limitations: it does not capture the liquidity of different risk positions

and therefore does not estimate potential losses if the Group liquidates large positions over a short period of time. In addition, the model relies on

historical market data, which may not necessarily reflect future market conditions. As of 30 June 2025, the Group’s VaR amounted to USD 5,400

thousand (30 June 2024: USD 6,100 thousand).

The Group’s VaR should be interpreted taking into account the limitations of the methodologies applied. These limitations include:

• The VaR model does not capture the liquidity of different risk positions and therefore does not estimate potential losses if the Group liquidates

large positions over a short period.

• VaR is based on historical data that may not provide the best estimate of the joint distribution of risk factor changes in the future and may fail to

capture the risk of extreme adverse market movements that have not occurred within the historical window used for calculation.

• Model risk: VaR’s accuracy depends on the methods and assumptions used. In particular, the parametric model assumes a log-normal distribu-

tion of returns, which may not hold in real markets.

32. Financial Instruments

The following tables give information on the carrying and fair values of the financial instruments. Fair value is the price that would be received to

sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In the absence of market

values, fair values have been estimated by discounting expected cash flows at prevailing market interest and exchange rates. These estimated fair

values have been determined using market information and appropriate valuation methodologies but may not necessarily reflect the amounts that

the company could realize in the normal course of business.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

155

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

As of 30 June 2025 and 2024, the financial assets and liabilities are presented by class in the tables below at their carrying values:

As of 30 June 2025

As of 30 June 2024

Amortized

cost

FVTPL

Total

Amortized

cost

FVTPL

Total

Assets

Cash and cash equivalents (Note 8)

617,511

—

617,511

809,584

—

809,584

Trade accounts receivable (Note 9)

252,660

—

252,660

305,246

—

305,246

Other financial assets (Note 13) measured at

Amortized cost of which

Margin account with brokers

67,491

—

67,491

82,215

—

82,215

Loans granted

46,437

—

46,437

22,306

—

22,306

Other financial assets

19,467

—

19,467

10,760

—

10,760

Short-term bank deposits

12,000

—

12,000

12,747

—

12,747

Pledge deposits

—

1,303

—

1,303

Other financial assets (Note 13) measured at

FVTPL of which

Government bonds

—

144,402

185,310

Derivative financial instruments

—

26,116

25,288

Non-current financial assets

6,025

—

6,025

23,307

—

23,307

As of 30 June 2025

As of 30 June 2024

Amortized

cost

FVTPL

Total

Amortized

cost

FVTPL

Total

Liabilities

Trade accounts payable

108,348

—

108,348

109,672

—

109,672

Borrowings (Note 19)

253,433

—

253,433

315,166

—

315,166

Lease liabilities

205,255

—

205,255

169,740

—

169,740

Bonds issued and interest accrued (Note 20)

302,103

—

302,103

605,192

—

605,192

Other financial liabilities (Note 18) measured at

Amortized cost of which

Accounts payable for property, plant and equipmen

5,650

—

5,650

5,896

—

5,896

Other current liabilities

5,657

—

5,657

3,413

—

3,413

Other financial liabilities (Note 18) measured at

FVTPL of which

Share-based options

—

29,940

—

66,241

Derivative financial instruments

—

11,547

—

10,446

Other non-current liabilities

3,364

—

3,364

800

186

986

The following table below represents a comparison of carrying amounts and fair value of the financial instruments for which they differ:

As of 30 June 2025

As of 30 June 2024

Financial liabilities

Carrying amount

Fair value

Carrying amount

Fair value

Bonds issued (Note 20)

302,103

267,840

605,192

484,290

Long-term borrowings, including current portion (Note 19)

104,545

105,008

—

For the year ended 30 June 2025, the fair value of bank long-term borrowings was estimated by discounting the expected future cash outflows by

a market rate of interest for bank borrowings of 6.77% that is within level 2 of the fair value hierarchy.

The fair value of Bonds issued was estimated based on directly observable quotations within Level 2 of the fair value hierarchy.

Derivative instruments are carried at fair value for which the Group evaluates the quality and reliability of the assumptions and data used to measure

fair value in the two hierarchy levels, Level 1 and 2, as prescribed by IFRS 13 Fair Value Measurement. Fair values are determined in the following

ways: externally verified via comparison to quoted market prices in active markets (Level 1) or by observable quoted prices sourced from exchanges

or brokers in active markets for identical assets or liabilities (Level 2).

Valuation of the Group’s commodity physical forward contracts categorized within level 2 is based on observable quoted prices sourced from

exchanges or traded reference indices in active markets for identical assets or liabilities and broker markups derived from observable quotations

representing differentials, as required, including geographic location and local supply and demand.

FVTPL – Fair value through profit and loss.

Including accrued interests

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

156

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

The following table below represents the fair values of the derivative financial instruments including trade-related financial and physical forward

purchase as of 30 June 2025 and 2024:

As of 30 June 2025

As of 30 June 2024

Level 1

Level 2

Total

Level 1

Level 2

Total

Other financial assets

Forwards

—

11,974

—

9,964

Futures/Options

14,142

—

14,142

15,324

—

15,324

Other financial liabilities

Forwards

—

9,978

—

9,224

Currency swap contracts

—

1,251

—

Futures/Options

318

—

318

1,222

—

1,222

The major part of other financial liabilities has contractual maturity due within 6 months.

Cash and cash equivalents and short-term borrowings and government bonds are classified as level 2 fair values in the fair value hierarchy due to

the inclusion of directly and indirectly observable inputs. Trade receivables, other current assets and trade accounts payable, other current liabilities

are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.

For the year ended 30 June 2025 and 30 June 2024, the fair value of other non-current assets recognized at amortized cost was estimated by

discounting the expected future cash outflows by a market rate of interest for bank borrowings of 5-10% that is within level 3 in the fair value

hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.

There were no transfers between levels of the fair value hierarchy.

There were no changes in the valuation technique since the previous year.

Offsetting of financial assets and liabilities

The derivative asset and liability are offset, and the net amount is presented in the statement of financial position when the Group has a legally

enforceable right to offset the recognized amounts and intends to either settle on a net basis or realize the asset and settle the liability simultane-

ously.

As of 30 June 2025, Other financial assets include collaterals for derivatives as part of the margin accounts with brokers in the amount of

USD 64,501 thousand (30 June 2024: USD 76,049 thousand). Cash collateral does not qualify for offsetting in accordance with IAS 32, as it does

not satisfy the criteria of a legally enforceable right of set-off and the intention to settle on a net basis. However, under the terms of collateral

agreements (e.g., ISDA master netting arrangements), the Group is permitted to offset cash collateral against the net amount of derivative assets

and liabilities in the event of default. Such rights of set-off are disclosed in accordance with IFRS 7 but are not recognized in the statement of

financial position.

The financial assets and liabilities, which meet the criteria of offsetting as of 30 June 2025 were as follows:

Amounts set off in the statement of

financial position

Amounts not subject

to netting agreements

Total as presented in the

consolidated statements

of financial position

Gross amount

Amounts offset

Net amount

Derivative assets

178,508

(164,366)

14,142

3,986

18,128

Derivative liabilities

(164,685)

164,366

(319)

(9,579)

(9,898)

Total

13,823

—

13,823

(5,593)

8,230

The financial assets and liabilities, which meet the criteria of offsetting as of 30 June 2024 were as follows:

Amounts set off in the statement of

financial position

Amounts not subject

to netting agreements

Total as presented in the

consolidated statements

of financial position

Gross amount

Amounts offset

Net amount

Derivative assets

91,140

(75,817)

15,323

10,001

25,324

Derivative liabilities

(77,142)

75,817

(1,325)

(9,122)

(10,447)

Total

13,998

—

13,998

879

14,877

During the year ended 30 June 2025, the Group made certain corrections and reclassifications, please see Note 4 for more details.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

157

www.ker

nel.ua

The accompanying notes are an integral part of these financial statements.

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Notes to the Consolidated Statements continued

for the year ended 30 June 2025 (in thousands of US dollars, unless otherwise stated)

33. Earnings per Share

Basic earnings per share are computed by dividing net income from continuing operations available to ordinary shareholders by the weighted

average number of ordinary shares outstanding (as of 30 June 2025 and 2024, 293,129,230 and 293,429,230 shares, respectively, and the

weighted average number of ordinary shares in the number of 293,276,353 and 256,839,066 shares for the periods then ended, respectively),

excluding any dilutive effects of stock options. Diluted earnings per share are computed in the same way as basic earnings per share, except that

the weighted average number of ordinary shares outstanding is increased to include additional shares. The number of additional shares is calcu-

lated by assuming that outstanding stock options, except those that are not dilutive, were exercised and that the proceeds from such an exercise

were used to acquire ordinary shares at the average market price during the reporting period. For calculating diluted earnings per share, as of

30 June 2025, an average number of 293,276,353 ordinary shares is considered (30 June 2024: 256,839,066).

34. Subsequent Events

As of 29 July 2025, the Group received a notification from its majority shareholder, Namsen Ltd, which currently holds 278,947,016 shares repre-

senting 95.07% of the total voting rights, regarding the initiation of the sell-out procedure. No outflow of economic benefits for the Group will occur

as the result of this transaction.

Kernel Holding S.A. Annual Report and Accounts for the year ended 30 June 2025 |

158

www.ker

nel.ua

Management

Report

Sustainability

Statement

Corporate

Governance

Financial

Statements

Corporate information

Registered office

Kernel Holding S.A.,

Société anonyme

8A, Boulevard Joseph II

L-1840 Luxembourg

Registered number

B109173

Auditors

PricewaterhouseCoopers

Assurance, Société cooperative,

2, rue Gerhard Mercator B.P.

L-1014 Luxembourg

Investor relations

Mr. Yuriy Kovalchuk,

Corporate Investment Director

Mr. Michael Iavorskyi,

Investor Relations Manager

Ms. Anastasiia Nesterenko,

Investor Relations Specialist

ir@kernel.lu

Kernel Holding S.A. Investor Calendar

Q1 FY2026 Operations Update

24 October 2025

Q1 FY2026 Financial Report

28 November 2025

Annual general shareholders’ meeting

10 December 2025

Q2 FY2026 Operations Update

22 January 2026

H1 FY2026 Financial Report

27 February 2026

Q3 FY2026 Operations Update

20 April 2026

Q3 FY2026 Financial Report

29 May 2026

Q4 FY2026 Operations Update

20 July 2026

FY2026 Financial Report

02 October 2026

Stock information

Exchange

Warsaw Stock Exchange

Stock quote currency

PLN

Shares issued as of 30 June 2025

293,429,230

Bloomberg

KER PW

Refinitiv Eikon ticker

KER.WA

ISIN code

LU0327357389

Cautionary statement

Certain statements in this document are for-

ward-looking statements. By their nature, for-

ward-looking statements involve a number of

risks, uncertainties, or assumptions that could

cause actual results or events to differ materi-

ally from those expressed or implied by the

forward-looking statements. These risks, un-

certainties, or assumptions could adversely

affect the outcome and financial effects of the

plans and events described herein. Forward-

looking statements contained in this document

regarding past trends or activities should not

be taken as a representation that such trends

or activities will continue in the future. You

should not place undue reliance on forward-

looking statements, which speak only as of the

date of this announcement. Except as re-

quired by law, the Company is under no obli-

gation to update or keep current the forward-

looking statements contained in this document

or to correct any inaccuracies that may be-

come apparent in such forward-looking state-

ments.

This document does not constitute or form

part of any offer or invitation to sell or pur-

chase, or any solicitation of any offer to sell or

purchase any shares or securities. It is not in-

tended to form the basis upon which any in-

vestment decision or any decision to purchase

any interest in Kernel Holding S.A. is made.

Information in this document relating to the

price at which investments have been bought

or sold in the past or the yield on investments

cannot be relied upon as a guide to future per-

formance.