Kernel S A : Condensed Consolidated Interim Financial Statements for 6 months ended 31 December 2023

Management Discussion and Analysis

for the three and the six months ended 31 December 2023

Income statement highlights

• The consolidated revenue of Kernel Holding S.A. group of companies (hereinafter "Kernel", the "Company", or the "Group") in Q2 FY2024 decreased by 16% y-o-y, to USD 1,044 million, attributable to lower grain and sunflower oil prices. At the same time, revenues in October-December 2023 almost doubled as compared to the previous quarter, driven by increased exports via Black Sea ports, which were unavailable for operations during the first three months of FY2024.
• Net loss arising from changes in the fair value of biological assets amounted to USD 12 million in Q2 FY2024, on the back of low grain and oilseeds prices.
• Reflecting the revenue dynamics, the Group's cost of sales in Q2 FY2024 declined 14% y-o-y (but added 68% q-o-q), to USD 813 million.
• As a result, gross profit for the last three months of 2023 decreased by 26% y-o-y but boosted 4.2x q-o-q, landing at USD 218 million.
• Other operating income for three months ending 31 December 2023 totaled USD 41 million, primarily consisting of a received one- off insurance payment of USD 33 million for property damage and business interruption.
• Other operating expenses during the reporting period amounted to USD 11 million, largely attributed to losses incurred from demurrage, dispatch, and other fines.
• General and administrative expenses in Q2 FY2024 decreased by 10% y-o-y,reaching USD 53 million, reflecting lower payroll-relatedcosts.

• Net impairment losses on financial assets came to USD 12 million, reflecting the provisions recognized on the Group's accounts receivable.
• The Group also recognized USD 9 million net loss from impairment of assets, comprising write-offs of inventories and PP&E due to Russian attacks on Group's port infrastructure, but also reversals from a previously recognized loss.
• Kernel's EBITDA in Q2 FY2024 dropped by 26% y-o-y to USD 205 million, with segment contributions being as follows:
• • The Oilseed Processing segment generated USD 76 million in EBITDA, marking a 15% growth y-o-y and 30% up q-o-q. This growth was propelled by strong sales volumes of sunflower oil and meal, seasonally strong crush margins, and supported also by the contribution from the renewable energy business line.
  • The Infrastructure and Trading segment achieved USD 37 million in EBITDA in Q2 FY2024, marking a remarkable 5x growth compared to the previous quarter. This growth can be attributed to the robust performance of the export terminals and grain trading business, fueled by the re-opening of Ukrainian deep-water Black Sea ports for export operations, and decent result from the Avere prop-trading arm. However, the additional USD 12 million provisions on accounts receivable were recognized given the deterioration of the financial position of counterparties.
  • The Farming segment achieved USD 103 million EBITDA in Q2 FY2024, on the back of accelerated sales of crops in the reported period. Specifically, over 1 million tons of grain produced by the

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Farming segment were sold in Q2 FY2024, capitalizing on the opportunity to export goods via the re-established grain corridor.

• Unallocated corporate expenses in Q2 FY2024 settled at USD

11 million, a 79% reduction y-o-y, supported by the reversal of the previously recognized losses not attributable to other segments.

At the same time, Q2 FY2024 EBITDA is 10x above the previous quarter's level, reflecting the substantial improvement in the operating conditions given the availability of the Ukrainian Black Sea ports for export operations. Nevertheless, while the operating environment improved, risks remain high, with key concerns being war-related risks in Ukraine and global low soft commodity prices.

• Net finance costs in Q2 FY2024 diminished by 38% y-o-y, standing at USD 19 million. While the Group incurred USD 38 million in finance costs, it also recognized an unusually high USD 19 million finance income (including USD 6 million non-cash gain recognized on the repayment of some of the Group's credit facilities with a discount to par).
• Net foreign exchange gain in the reporting period amounted to USD 2 million, primarily reflecting non-cash gains recognized after the revaluation of intra-group balances in local currency.
• Other expenses in Q2 FY2024 amounted to USD 14 million, primarily comprising USD 7 million social spending of the Group for the period, and USD 6 million provisions created under legal disputes.
• Accounting also for USD 12 million in income tax expenses, net profit attributable to shareholders for Q2 FY2024 amounted to USD 133 million, marking a 36% decline y-o-y but a significant improvement from the USD 31 million loss recognized in the previous quarter, highlighting the Group's earnings volatility dependent on the operating environment.

Cash flow highlights

• Operating profit before working capital changes in Q2 FY2024 decreased by 25% y-o-y,to USD 224 million, mirroring the trend observed in EBITDA.
• Changes in the working capital resulted in a cash release of USD

4 million in October-December 2023.

• Cash inflow from investing activities totaled USD 165 million in Q2 FY2024, primarily consisting of 1) USD 210 million withdrawal of pledged deposits previously used as collateral for certain credit facilities and 2) USD 41 million used for the purchase of property, plant, and equipment (including the purchase of a Supramax-sizebulk carrier).
• Net cash used in financing activities during the three months ended 31 December 2023 totaled USD 622 million, including USD 644 million repayment of borrowings and USD 32 million proceeds raised from new borrowings.

Credit highlights

• As of 31 December 2023, the Group's debt liabilities totaled USD 995 million, marking a 39% decrease q-o-q. In December 2023, the Group made repayments exceeding USD 600 million on PXF and bilateral credit lines, considering the substantially improved export logistics environment, stabilized business outlook, and sufficient accumulated liquidity buffer.
• • Consequently, the Group's debt liabilities as of the reporting date consisted of long-term facilities arranged by EIB and EBRD (USD 181 million) 1 , Eurobonds (USD 597 million), USD 32 million due to Ukrainian subsidiary of International bank, and lease liabilities totaling USD 174 million and related to farmland lease agreements and recognized under the IFRS 16 standard.
  • The Group initiated the termination of the existing standstill arrangements to eliminate operating and financing restrictions imposed by waiver letters2 about all pre-war credit facilities. The Company will revert to the terms outlined in loan agreements with EIB and EBRD assuming the repayment of borrowings according to the originally agreed-upon schedule. This shall ensure that no "potential event of default" status continues under Eurobonds.
• As a result, the Group's cash balance squeezed to USD 542 million as of the end of December 2023, a 47% q-o-q decline. Net debt

1 As of 31 December 2023, however, such facilities were treated as short-term because the Group did not possess an unconditional right to defer the settlement of those loans until their initial contractual settlement date.

2 See current report no 26/2023 dated 22 October 2023for more details.

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totaled USD 453 million, down 27% q-o-q.

• Commodity Inventories1 ("CI") as of 31 December 2023 remained virtually unchanged as compared to the previous quarter, at USD 448 million.
• • While the Group substantially offloaded its stock of sunflower meal during Q2 FY2024, it accumulated the stock of sunflower seeds and kept flat the stock of grain. Consequently, Commodity Inventories included 1.7 million tons of grains (mostly corn and wheat), 97 thousand tons of sunflower oil, 39 thousand tons of sunflower and rapeseed meal, and 492 thousand tons of sunflower seeds as of 31 December 2023.
• As Commodity Inventories fully covered net debt, the Net debt adjusted for CI amounted to only USD 4 million as of 31 December 2023, representing a USD 177 million decline during Q2 FY2024.
• Consequently, the Group's leverage as of 31 December 2023 dropped to 1.4x Net-debt-to-EBITDA and 0.0x Adjusted-net-debt-to- EBITDA. The interest coverage ratio calculated on the last twelve- month basis remained unchanged as compared to the previous quarter, at 3.1x EBITDA-to-Interest.

Market environment and operations

Export logistics

• Operating environment in Q2 FY2024 substantially improved. While deep-seawaters were inaccessible for exports from Ukraine in Q1 FY2024 and port infrastructure had been suffering from regular Russian air attacks, a temporary corridor to Ukrainian Black Sea ports established by the Ukrainian Navy in autumn 2023 revitalized export logistics. As a result, Ukrainian agri exports recovered, and Kernel shipped 1.7 million tons of grain for export in October- December 2023, a record quarterly volume since the beginning of the full-scaleinvasion of Ukraine, as compared to a mere 0.2 million tons of grain export in the previous quarter.
• With stabilized Black Sea exports, the cost of logistics (in-land, freight, and insurance) reduced, leaving room for margins along the grain export value chain, which positively contributed to the Group's Infrastructure and Trading segment EBITDA in Q2 FY2024.

Infrastructure and Trading

• Leveraging the temporary corridor for commercial navigation established by the Ukrainian Navy, Kernel was able to increase export terminal throughput volume by 11.2x q-o-q, to 1,805 thousand tons in October-December 2023. This volume covers the transshipment of grains, sunflower oil, and sunflower meal. The growth reflects a modest 5% y-o-y increase, as the Group benefitted from the Black Sea Grain Initiative during the respective period of FY2023. Nevertheless, export terminals operated below the pre-war capacity levels, suffering from damages caused by Russian missile attacks on the Group's port infrastructure in the summer of 2023.
• • During October-December 2023, Kernel also provided transshipment services to third parties, totaling 65 thousand tons handled via Transbulkterminal. To maximize the capacity utilization of our terminals, the Group will continue to offer such services to third parties throughout the season.
• In line with the export terminal throughput volume recovery, the Group's grain export volume from Ukraine surged by 8.4x q-o-q in Q2 FY2024, reaching 1,705 thousand tons.
• Grain prices remained low during the reporting period and relentlessly continued their downward trend in January-February 2024.
• Segment EBITDA in Q2 FY2024 amounted to USD 37 million,

reflecting a significant 40% year-on-year decrease, although

1 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 as "Readily marketable inventories", but after the beginning of the war in Ukraine the

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Export of agricultural commodities by transport mode

Source: Ministry of Agrarian Policy and Food of Ukraine

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Ukraine grain export prices

USD per ton, FOB Ukraine

showing a notable 5x increase compared to the previous quarter. This performance was bolstered by the robust performance of the export terminals business line and grain trading activities, which include prop-trading operations conducted by Avere. However, the segment's earnings were dampened by the need to write off receivables from counterparties and impair assets that were damaged as a consequence of Russian military attacks on the Group's port infrastructure.

Oilseed Processing

• Sunflower seed harvest in Ukraine in 2023 surged by 14% y-o-y,reaching 14 million tons in 2023. However, given that the previous season's supply benefitted from a large carry-overstock, the supply of sunflower seeds in the current season remains virtually unchanged y-o-y.At the same time, the demand for the feedstock increased, as smaller market players that had been idle last season resumed their operations. Therefore, a relative tightness in the supply of oilseeds towards the end of the season is anticipated, which is likely to exert a negative impact on margins and capacity utilization closer to the end of the season.
• Approaching the full capacity utilization at its crushing plants, Kernel processed 811 thousand tons of sunflower seeds in Q2 FY2024, posing a hefty 24% y-o-ygrowth for a low comparison base, as operations in last season were undermined by electricity outages

Group faced difficulties selling such inventories, and therefore such inventories cannot any longer be considered as readily marketable. When calculating Commodity inventories, the Group does not include inventories which are located on territories occupied by Russia and inventories which are recognized among the assets held for sale.

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Sunflower oil price

USD per ton of sunflower oil sold in bulk, FOB Six Ports

Source: Agricensus, Kernel1

Note 1: the presented chart serves for illustration purposes only and does not necessary reflect prices for the sunflower oil of Black Sea origin.

arising from Russia's attacks on Ukraine's energy infrastructure. As before, two of the Group's eight plants remain inaccessible for operations due to the constant missile and artillery strikes, being located in the Kharkiv region near the border with Russia.

• Sunflower oil sales in Q2 FY2024 increased by 13% y-o-y, exceeding 388 thousand tons, on the back of the strong sunflower seed processing volumes and supported by multiple export logistics options available, including deep-water Ukrainian Black Sea ports. Bottled sunflower oil sales amounted to 6% of total sales volumes.
• Oilseed Processing segment EBITDA increased by 15% y-o-yin
  Q2 FY2024, amounting to USD 76 million, driven by:
• • disproportionately high sunflower meal export shipments in Q2 FY2024. Due to export logistics restrictions in Q1 FY2024, the Group shifted a significant portion of sunflower meal export shipments from Q1 to Q2 FY2024. As a result, Kernel exported 399 thousand tons of sunflower meal in October-December 2023, compared to 159 thousand tons in the previous quarter;
  • record-highquarterly sunflower oil sales volume since the beginning of Russia's full-scale invasion of Ukraine in February 2022;
  • the segment performance was supported by USD 7 million EBITDA attributable to proceeds from sales of the renewable energy generated at Kernel's crushing plants from the biomass.
• As a result, EBITDA margin in Q2 FY2024 increased by 2% y-o-y to USD 195 per ton of oil sold. Pure crush margin in the current season, however, is lower as compared to the previous season, due to depressed global sunflower oil prices and intensified competition among crushers in Ukraine.

Farming

• As of December 2023, Kernel completed the harvesting of 2023 crop. The Group achieved a record corn yield of 10.1 tons per hectare (up

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Segment volumes

Differences are possible due to rounding.

15% y-o-y) on the back of extremely supporting weather conditions during the season. Sunflower yield reached 2.8 tons per hectare (a 10% growth y-o-y), and soybean yield amounted to 2.9 tons per hectare.

• The Segment EBITDA for October-December 2023 reached USD 103 million, driven by the expedited sales of crops harvested by the Farming segment in Q2 FY2024. However, the farming business's overall profitability in the current season is diminished compared to FY2023, primarily due to depressed grain and oilseed prices and increased production costs per hectare for all crops except corn. These challenges are unlikely to be offset by higher crop yields.
• Kernel planted 93 thousand hectares of winter wheat and 14 thousand hectares of winter rapeseed for the 2024 harvest. As of the publication date of this report, crops in the fields are in normal condition.

Investments and M&A

• In December 2023, Kernel completed the acquisition of 100% of corporate rights in Reni-Oil LLC, a sunflower oil transshipment terminal with 15 thousand tons of one-timesunflower oil storage in the Reni port, for USD 24.75 million. Situated along the Danube River, this asset is important for the Group, providing the capability to export sunflower oil even in the event of a blockade of the Black Sea ports.
• In December 2023, the Group acquired a bulk carrier with a grain cargo capacity of 50 thousand tons. As the third vessel in Kernel's fleet, the bulker represents a significant addition to enhance the Group's transportation and logistics capabilities.
• In Q2 FY2024, the Group allocated additional investments towards the rehabilitation of vegetable oils transshipment in the port of Chornomorsk, which was acquired by the Group in July 2023. The facility had been inactive and inadequately maintained for an extended period. The loading of the first vessel with sunflower oil commenced in January 2024, marking a significant milestone in its operational revival.
• In December 2023, Kernel launched the Group's fifth co-

Net yields 1, tons / hectare

Harvest size, thousand tons

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generation heat and power facility at one of its oil extraction plants, with 21 MW installed electricity generation capacity. It contributes to the Group's resilience to the risk of potential power outages.

• The Group is progressing as planned toward the commissioning of its new cutting-edgeoilseed processing plant located in the Khmelnytskyi region, slated for spring 2024. As of the date of this report's publication, initial commissioning activities have already commenced. Boasting an annual processing capacity of 1 million tons of sunflower seeds, this facility is poised to become Ukraine's largest of its kind.

War impact

• During October-December 2023, Kernel's assets and infrastructure remained intact, with no critical damages resulting from missile or artillery strikes. Therefore, no significant war-related losses were recognized. However, two of the Group's plants remained inoperative due to their proximity to the Russian border and constant missile and artillery strikes, rendering safe operations on these assets impossible.
• Despite the high probability of Russian shelling targeting vital Ukrainian energy infrastructure, as experienced in the previous winter, there were no major power outages in Q2 FY2024. The Group is better prepared to mitigate possible disruptions to its operations in FY2024.
• While personnel-related challenges have been manageable so far, the anticipated escalation of conscription efforts in Ukraine heightens operational risks for the Group. In response, Kernel has initiated a specialized training program aimed at empowering women to acquire new skill sets, enabling them to seamlessly step into roles that do not necessitate significant physical exertion, thereby mitigating potential business disruptions.
• As of the date of this report's publication, and since the beginning of the full-scale invasion of Ukraine, 1,521 of the Group's employees were mobilized to the Armed Forces of Ukraine or joined the Territorial Defense units. Among them, 678 have been demobilized and resumed their work. Unfortunately, Kernel has mourned the loss of 42 of its dedicated employees who sacrificed their lives in defense of Ukraine. Sorrowfully, because of the ongoing hostilities, 90 employees suffered injuries.

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Bulk carrier acquired in December 2023

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Principal Risks and Uncertainties

for the three and the six months ended 31 December 2023

Kernel's management identifies ten principal risks that could materially influence the Company's operations and financial results:

Strategic (Business) risks:

• Logistics disruption;
• Loss of critical infrastructure;
• Low global soft commodity prices;
• Loss of inventories;

Financial risks:

• Liquidity associated risks;

Operational risks:

• Trade position management issues;
• Credit and counterparty risks;
• Information security and IT;
• Investment projects management;
• Human capital risk.

For a detailed disclosure of the possible impact of most of the key risks and our management approach, please refer to pages 35-40 of the annual report for the year ended 30 June 2023, available at www.kernel.ua.

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

• Weak harvest in Ukraine;
• Failure to maintain the integrity of the leasehold farmland bank;
• Fraudulent activities;
• A shortfall of proceeds from sales of renewable energy;
• Increase in competition;
• Sustainability-relatedrisks: non-compliance with environmental standards; undermined profitability due to more severe environmental requirements applicable to farming and oilseed processing related to the implementation of the European Green Deal; low sustainability 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 result of adverse market conditions, could result in the impairment of tangible and intangible assets, including goodwill;
• The risk of fluctuations in the exchange rate of the Ukrainian hryvnia to the US dollar;
• The risk of disruption or limitation of natural gas or electricity supply;
• The risk of disruptions in Kernel Holding S.A.'s manufacturing operations;
• The risk of product liability claims;
• The risk of potential liabilities from investigations, litigation, and fines regarding antitrust matters;
• The risk that Kernel Holding S.A.'s governance and compliance processes may fail to prevent regulatory penalties or reputational harm, both at operating subsidiaries and in joint ventures; and
• The risk that Kernel Holding S.A.'s insurance policies may provide inadequate coverage.

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Significant Events

for the three and the six months ended 31 December 2023

• On 11 December 2023, Kernel Holding S.A. held its Annual General Meeting of Shareholders, which adopted the following resolutions with immediate effect:
• • The general meeting, after having reviewed the management report of the board of directors of the Company and the report of the independent auditor of the Company, approves these reports.
  • The general meeting, after having reviewed the management report of the board of directors of the Company and the report of the independent auditor of the Company, approves in their entirety the Consolidated Financial Statements of the Company for the financial year ended on 30 June 2023, with a resulting consolidated net loss attributable to equity holders of the Company of two hundred ninety-nine million one hundred and ninety-two thousand US dollars (USD 299,192,000. -).
  • The general meeting, after having reviewed the management report of the board of directors and the report of the independent auditor of the Company, approves in their entirety the Parent Company's annual accounts (unconsolidated) for the financial year ended on 30 June 2022, with a resulting net profit for Kernel Holding S.A. as parent company of the Kernel Holding S.A. group of one hundred twenty-one million one hundred ninety- eight thousand nine hundred fifty-six US dollars and seventy-five cents (USD 121,198,956.75).
  • The general meeting approves the proposal of the board of directors (i) to carry forward the net profit of the Parent Company annual accounts (non-consolidated) of one hundred twenty-one million one hundred ninety-eight thousand nine hundred fifty-six US dollars and seventy-five cents (USD 121,198,956.75) and (ii) after allocation to the legal reserve of the Company, to declare a dividend at nil for the financial year ended on 30 June 2023.
  • The general meeting decides to grant discharge to the directors of the Company for their management duties and the exercise of their mandates in the course of the financial year ended on 30 June 2023.
  • The general meeting, having acknowledged the end of the mandates of directors and in consideration of the proposal to reappoint Mr. Andrii Miski-Oglu, Mrs. Daria Anna Danilczuk, Mrs. Anastasiia Usachova, Mr. Mykhaylo Mishov, Mr. Yevgen Osypov, Mr. Yuriy Kovalchuk for a one-year term, decides to renew the mandate of Mr. Andrii Miski-Oglu, Mrs. Daria Anna Danilczuk, Mrs. Anastasiia Usachova, Mr. Mykhaylo Mishov, Mr. Yevgen Osypov, Mr. Yuriy Kovalchuk for a one-year term mandate, which shall terminate on the date of the general meeting of shareholders to be held in 2024.
  • Following the resignation letter of Mrs. Viktoriia Lukianenko from her mandate as executive director of the Company on 07 November 2023, the General Meeting of shareholders resolves to acknowledge the resignation of Mrs. Viktoriia Lukianenko from her mandate as executive director of the Company with effect as of 12 December 2023.
    The general meeting of shareholders further decides to grant her full discharge for the exercise of her mandate.
  • The general meeting of shareholders further resolves to appoint Mr. Sergiy Volkov, born on 04 March 1980 in Kyiv, Ukraine, and residing professionally at 49 Obolonskyi Avenue, apartment 71, Kyiv, Ukraine, as executive director of the Company until the next annual General Meeting of shareholders of the Company to be held in 2024.
  • The general meeting acknowledges and, to the extent necessary, ratifies the payment of the annual director fees (tantiemes) paid to Mr Andrii Miski-Oglu and Mr Mykhailo Mishov, as non-executive directors, for their previous term in office, which amounted in total to one hundred sixty thousand US dollars (USD 160,000.-).
    The general meeting acknowledges, approves and, to the extent necessary, ratifies the payment of the attendance fees (jetons de

présence) to Mrs. Daria Anna Danilczuk, as non-executive director, for her previous term in office which amounts in total to eighty thousand US dollars (USD 80,000.-).

The general meeting acknowledges, approves and, to the extent necessary, ratifies the payment of the attendance fees (jetons de présence) to Mrs. Daria Anna Danilczuk, as non-executive director, for the period between 16 September 2022 and 20 December 2022 which amounts in total to twenty thousand nine hundred sixteen US dollars (USD 20,916.-).

The general meeting approves a total gross annual amount of one hundred sixty thousand US dollars (USD 160,000. -) as the annual director fees (tantiemes) of Andrii Miski-Oglu and Mykhailo Mishov, as non-executive directors, for the new one- year mandate, which shall terminate on the date of the Annual General Meeting of shareholders to be held in 2024.

The general meeting approves a total of eight thousand US dollars (USD 8,000) per each statutory session of the board of directors, each statutory session of the audit committee, and each statutory session of the sustainability committee, as attendance fees (jetons de présence) for Mrs. Daria Anna Danilczuk, as non-executive director, for the new one-year mandate, which shall terminate on the date of the Annual General Meeting of shareholders to be held in 2024.

• The general meeting, having acknowledged that fees (tantiemes) paid to the executive directors for their previous term as members of the board of directors amounted in total to two hundred forty thousand US dollars (USD 240,000. -), approves the executive directors' fees for the new one-year mandate, which shall terminate on the date of the annual general meeting of shareholders to be held in 2024, for a total gross annual amount of two hundred forty thousand US dollars (USD 240,000. -) including two hundred thousand US dollars (USD 200,000. -) to be paid to the chairman of the board of directors.
• The general meeting grants discharge to the independent auditor of the Company, PwC Société cooperative, having its registered office at 2, rue Gerhard Mercator B.P. L-1014 Luxembourg, registered with the Luxembourg Trade and Companies' Register under number B 65 477 for the financial year ended on 30 June 2023.
• The general meeting, following proposal by the board of directors to reappoint PwC Société cooperative, having its registered office at 2, rue Gerhard Mercator B.P. L-1014 Luxembourg, registered with the Luxembourg Trade and Companies' Register under number B 65 477 as independent auditor of the Company, resolves to reappoint PwC Société cooperative, having its registered office at 2, rue Gerhard Mercator B.P. L-1014 Luxembourg, registered with the Luxembourg Trade and Companies' Register under number B 65 477 as independent auditor of the Company for a one-year term mandate, which shall terminate on the date of the annual general meeting of shareholders to be held in 2024.
• The general meeting acknowledges, approves and, to the extent necessary, ratifies the amendment to the management incentive plan and the respective authorization granted and adopted by the extraordinary General Meeting held on 30 August 2021 (the "Authorization"), and the relevant put option agreements, in order to increase the maximum number of ordinary shares of the Company without nominal value that the current beneficiaries and the new beneficiaries of the put option have the right to sell to the Company and to require the Company to purchase, from two million seven hundred ninety-two thousand four hundred thirty-five (2,792,435) up to two million nine hundred six thousand four hundred forty-five (2,906,445), under the same terms and conditions.
• The General Meeting of shareholders noted that, pursuant to the Article 7bis of the Luxembourg law of 24 May 2011 on the exercise of certain rights of shareholders at General Meetings,

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Significant Events continued

for the three and the six months ended 31 December 2023

as amended, companies must establish a remuneration policy as regards directors and must submit it to the vote of shareholders at the General Meeting.

The general meeting of shareholders further noted that according to the article 5.2.4 of the Company's corporate governance charter (the "CGC"), the nomination and remuneration committee (the "N&R Committee") of the Company is in charge of the establishment of the remuneration policies and has therefore drawn up an updated remuneration policy of the directors of the Company and has presented such Remuneration Policy to the vote of the shareholders at the present general meeting of the shareholders of the Company.

The general meeting of the shareholders of the Company approves and ratifies the amended Remuneration Policy.

• On 20 February 2024, the Company convened the extraordinary general meeting of shareholders with the following agenda: "Reduction of the share capital of the Company by an amount of one hundred seventy-fourthousand three hundred thirty-twoUS dollars and forty-onecents (USD 174,332.41) so as to reduce it from its current amount of seven million nine hundred twenty-twothousand six hundred twenty-fourUS Dollars and sixty-fourcents (USD 7,922,624.64) represented by three hundred million thirty-onethousand two hundred thirty (300,031,230) shares without nominal value down to seven million seven hundred forty-eightthousand two hundred ninety-twoUS dollars and twenty-threecents (USD 7,748,292.23) through the cancellation of six million six hundred two thousand (6,602,000) shares held by Etrecom Investments Limited, a wholly-ownedsubsidiary of the Company and subsequent amendment of article 5 of the articles of association of the Company."
• On 20 February 2024, the Company received two legal summonses from a group of eight shareholders who together hold 1,210,430 shares, amounting to 0.4% of the Company's total issued shares (the "Сlaimants"). The details are as follows:
• • The first summons is for summary proceedings, requesting the temporary suspension of decisions made by the Company's Board of Directors on August 21, 2023 (regarding the initiation of a share offering), and on September 1, 2023 (pertaining to the issuance of 216,000,000 new shares in the context of the increase in share capital following subscriptions received by certain shareholders in response to the share offering). Additionally, the claimants seek to suspend all actions taken by Namsen Limited, the Company's largest shareholder, following the capital increase, including the suspension of its voting rights related to the shares acquired thereafter. A preliminary hearing is set to take place on March 18, 2024, where the case will be scheduled for a subsequent hearing the date of which is yet to be determined by the court.
  • The purpose of the second summons is to request the annulment of the Board of Directors' decisions made on August 21 and September 1, 2023, as mentioned previously. Alternatively, the claimants seek compensation for damages from Namsen Limited. The procedural schedule has not been established yet.
• Furthermore, the Company informs that the aforementioned summons follow legal action initiated in October 2023 by the same claimants in the District Court in Luxembourg with the objective:
• • To establish that the Company's directors acted against the Company's interests, were conflicted, and lacked the necessary authority at the Board of Directors' meeting on April 13, 2023.
  • To invalidate all decisions made during the aforementioned Board meeting, including the resolution to delist the Company from the Warsaw Stock Exchange.
  • Alternatively, to appoint an expert to assess (i) the fairness of the public tender offer price announced by Namsen Limited on March 30, 2023, compared to the real value of the Company, and
  • 1. the economic impact of the Board of Directors' decisions, including the delisting, on the Company's corporate interests.

• The Company's management confidently upholds its commitment to act in the best interest of the Company in full compliance with all relevant laws, regulations, and best corporate governance principles throughout its decision-making processes, notably in the delisting from the Warsaw Stock Exchange and the subsequent share offering and capital increase in August and September 2023. The Company is resolutely dedicated to vigorously defending its position.

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