IMC S.A.

Annual / Quarterly Financial Statement • May 3, 2024

IMC S.A. Société anonyme ANNUAL ACCOUNTS FOR THE FINANCIAL YEAR ENDED 31 ST DECEMBER 2023 AND THE REPORT OF THE R É VISEUR D’ENTREPRISES AGR ÉÉ 16, Rue Erasme L-1468 Luxembourg ______ RCS Luxembourg : B157843 IMC S.A. NOTES TO THE ANNUAL ACCOUNTS ON 31 ST DECEMBER 2023 Management Responsibility Statement .................................................................................. 16 Note 1 - GENERAL INFORMATION ....................................................................................... 17 Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ....................................... 18 Note 2.1 - Basis of preparation ............................................................................................... 18 Note 2.2 - Significant accounting policies ............................................................................... 18 Note 2.2.1 - Financial assets .................................................................................................. 18 Note 2.2.2 - Debtors ............................................................................................................... 18 Note 2.2.3 - Foreign currency translation ............................................................................... 18 Note 2.2.4 - Provisions ........................................................................................................... 19 Note 2.2.5 - Creditors ............................................................................................................. 19 Note 3 - FINANCIAL FIXED ASSETS .................................................................................... 20 Note 4 - DEBTORS ................................................................................................................. 21 Note 5 - SUBSCRIBED CAPITAL ........................................................................................... 21 Note 6 - SHARE PREMIUM ACCOUNT ................................................................................. 22 Note 7 - RESERVES .............................................................................................................. 22 Note 8 - MOVEMENT FOR THE YEAR ON THE RESERVES AND PROFIT AND LOSS ITEMS ..................................................................................................................................... 22 Note 9 - CREDITORS ............................................................................................................. 23 Note 10 - STAFF ..................................................................................................................... 23 Note 11 - OTHER OPERATING CHARGES .......................................................................... 23 Note 12 - EMOLUMENTS GRANTED TO THE MEMBERS OF THE MANAGEMENT AND SUPERVISORY BODIES AND COMMITMENTS IN RESPECT OF RETIREMENT PENSIONS FOR FORMER MEMBERS OF THOSE BODIES ............................................... 23 Note 13 - ADVANCES AND LOANS GRANTED TO THE MEMBERS OF THE MANAGEMENT AND SUPERVISORY BODIES .................................................................... 24 Note 14 - TAXATION .............................................................................................................. 24 Note 15 - OFF-BALANCE SHEET COMMITMENTS .............................................................. 24 Note 16 - SUBSEQUENT EVENTS ........................................................................................ 24 Note 17 - AUDITOR'S FEES .................................................................................................. 24 Note 18 – OPERATING ENVIRONMENT AND GOING CONCERN ...................................... 25 IMC S.A. Notes to the annual accounts as at 31 st December 2023 16 Management Responsibility Statement This statement is provided to confirm that, to the best of our knowledge, the annual accounts for the year ended 31 st December 202 3 , and the comparable information, have been prepared in compliance with the Luxembourg legal and regulatory requirements relating to the preparation of the annual accounts and give a true and fair view of the Company’s assets, liabilities, financial position and profit or loss of IMC S.A. and that the single management report includes a fair review of the development and performance of the business and the position of IMC S.A. with a description of the principal risks and uncertainties that it faces. Signed Signed Alex Lissitsa Dmytro Martyniuk Director Director IMC S.A. Notes to the annual accounts as at 31 st December 2023 17 Note 1 - GENERAL INFORMATION IMC S.A. (hereafter "the Company") was incorporated on 28 th December 2010 and is organized under the laws of Luxembourg as a Société anonyme for an unlimited period. The registered office of the Company is established at 16, Rue Erasme L-1468 Luxembourg. The Company's financial year starts on 1 st January and ends on 31 st December of each year. The object of the Company is the direct and indirect acquisition and holding of participating interests, in any form whatsoever, in Luxembourg and/or in foreign undertakings, as well as the administration, development and management of such interests. This includes but is not limited to, investment in, acquirement of, disposal of, granting or issuing of preferred equity certificates, whether convertible into shares or not, loans, bonds, notes debentures and other debt instruments, shares, warrants and other equity instruments or rights, including , but not limited to, shares of capital stock, limited partnership interests, limited liability company interests, preferred stock, convertible securities and swaps, and any combination of the foregoing, in each case whether readily marketable or not, and obligations (including but not limited to synthetic securities obligations) in any type of company, entity or other legal person The Company may also use its funds to invest in real estate, in intellectual property rights or any other movable or immovable assets in any form or of any kind. The Company may grant pledges, guarantees, liens, mortgages and any other form of securities as well as any form of indemnities, to Luxembourg or foreign entities, in respect of its own obligations and debts. The Company may also provide assistance in any form (including but not limited to the granting of advances, loans, money deposits and credits as well as the providing of pledges, guarantees, liens, mortgages and any other form of securities, in any kind of form) to the Company's subsidiaries or companies in which the Company has a participating interest. On a more occasional basis and within the legal limits, the Company may provide the same kind of assistance to companies or undertakings which are part of the same group of companies to which the Company belongs to or to other persons or third parties, provided that doing so falls within the Company's best interest and does not trigger any license requirements. In general the Company may carry out any commercial, industrial or financial operation and engage in such other activities as the Company deems necessary, advisable, convenient, incidental to, or not inconsistent with, the accomplishment and development of the foregoing. Notwithstanding the above, the Company shall not enter into any transaction which would cause it to be engaged in any activity which would be considered as a regulated activity or that would require the Company to have any other license. The Company and its subsidiaries is an integrated agricultural company in Ukraine. The main areas of the Group’s activities are: - cultivation of grain and oilseeds crops; The Company is listed on Warsaw Stock Exchange. IMC S.A. Notes to the annual accounts as at 31 st December 2023 18 Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Note 2.1 - Basis of preparation The annual accounts have been prepared in accordance with Luxembourg legal and regulatory requirements under the historical cost convention. The accounting records and annual accounts are prepared in Euro. Accounting policies and valuation rules are, besides the ones laid down by the law of 19 th December 2002 as amended, determined and applied by the Board of Directors. The preparation of annual accounts requires the use of certain critical accounting estimates. It also requires the Board of Directors to exercise their judgment in the process of applying the accounting policies. Changes in assumptions may have a significant impact on the annual accounts in the period in which the assumptions changed. Management believes that the underlying assumptions are appropriate and that the annual accounts therefore present the financial position and results fairly. The Company makes estimates and assumptions that affect the reported amounts of assets and liabilities in the next financial year. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Company also prepares consolidated financial statements, which are published according to the provisions of the Luxembourg law. The consolidated financial statements of the Company are available at its registered office or alternatively at www.imcagro.com.ua . Note 2.2 - Significant accounting policies The main valuation rules applied by the Company are the following: Note 2.2.1 - Financial assets Shares in affiliated undertakings and loans to these undertakings are valued at historical cost including the expenses incidental thereto. In case of durable depreciation in value according to the opinion of Management, value adjustments are made in respect of financial assets, so that they are valued at the lower figure to be attributed to them at the balance sheet date. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply. Note 2.2.2 - Debtors Debtors are valued at their nominal value. They are subject to value adjustments where their recovery is compromised. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply. Note 2.2.3 - Foreign currency translation Transactions expressed in currencies other than Euro are translated into Euro at the exchange rate effective at the time of the transaction. Formation expenses and long-term assets IMC S.A. Notes to the annual accounts as at 31 st December 2023 19 expressed in currencies other than Euro are translated into Euro at the exchange rate effective at the time of the transaction. At the balance sheet date, these assets remain translated at historical exchange rates. Cash at bank is translated at the exchange rate effective at the balance sheet date. Exchange losses and gains are recorded in the profit and loss account of the year. Other assets and liabilities are translated separately respectively at the lower or at the higher of the value converted at the historical exchange rate or the value determined on the basis of the exchange rates effective at the balance sheet date. The unrealized exchange losses are recorded in the profit and loss account. The exchange gains are recorded in the profit and loss account at the moment of their realization. Where there is an economic link between an asset and a liability, these are valued in total according to the method described above and the net unrealized losses are recorded in the profit and loss account whereas the net unrealized exchange gains are not recognized. Note 2.2.4 - Provisions Provisions are intended to cover charges or debts, the nature of which is clearly defined and which, at the date of the balance sheet, are either likely to be incurred or certain to be incurred but uncertain as to their amount or the date on which they will arise. Provisions may also be created to cover charges that have originated in the financial year under review or in a previous financial year, the nature of which is clearly defined and which, at the date of the balance sheet, are either likely to be incurred or certain to be incurred but uncertain as to their amount or the date on which they will arise. Provisions for taxation Provisions for taxation corresponding to the tax liability estimated by the Company for the financial years for which the taxation has not yet been made by the tax authorities are recorded under the caption "Tax debts". The advance payments are shown in the assets of the balance sheet under the “Other receivables” item. Note 2.2.5 - Creditors Debts are recorded at their reimbursement value. Where the amount repayable on account is greater than the amount received, the difference is recorded in the profit and loss account when the debt is issued. IMC S.A. Notes to the annual accounts as at 31 st December 2023 20 Note 3 - FINANCIAL FIXED ASSETS The movements for the year are as follows: Affiliated undertakings Total Shares EUR EUR Gross book value - opening balance 14,920,882.19 14,920,882.19 Gross book value - closing balance 14,920,882.19 14,920,882.19 Accumulated value adjustment - opening 0.00 0.00 Accumulated value adjustment - closing 0.00 0.00 Net book value - closing balance 14,920,882.19 14,920,882.19 Net book value - opening balance 14,920,882.19 14,920,882.19 The companies in which the Company holds at least 20% of the capital or in which it is jointly and severally liable are the following: Company name Registered address Capital held fraction Closure date last year Net equity at closure date (USD) Results from last year (USD) Unigrain Holding Limited 6, loanni Stylianou, 2nd Floor, Flat 202, Nicosia 2003, Cyprus 100.00% 31/12/2022 59,986,142.00 11,956,657.00 Négoce Agricole S.à r.l. 16, rue Erasme, L- 1468 Luxembourg 100.00% 31/12/2022 202,489.73 21,522.12 IMC S.A. Notes to the annual accounts as at 31 st December 2023 21 Note 4 - DEBTORS Debtors are composed as follows : 2023 2022 EUR EUR Amounts owed by affiliated undertakings becoming due and payable within one year Other receivables 2,392,985.81 2,354,545.77 becoming due and payable after more than one year Loans and advances 7,733,586.09 7,695,539.70 Total 10,126,571.90 10,050,085.47 The company granted a loan to a group company for an amount of EUR 7,429,094.96 (USD 8,200,000.00). The loan bears interest at a rate of 4% per annum and matures on December 31, 2024. As at 31st December 2023, the Company has dividends receivable from Unigrain Holding Limited in the amount of EUR 2,392,985.81 (2022: 2,354,545.77). As at 1st January 2023, the balance of dividends receivable from Unigrain Holding Limited amounted to EUR 2,354,545.77 (USD 2,715,000.00). During the year, Unigrain Holding Limited declared additional dividend of EUR 661,264.79 (USD 710,000.00) to the Company and paid it during the year to the Company. Note 5 - SUBSCRIBED CAPITAL The subscribed capital amounts to EUR 44,375.58 and is divided into 35,500,464 shares without indication of nominal value. 2023 EUR Subscribed capital - opening balance 44,375.58 Subscribed capital - closing balance 44,375.58 As of 31 st December 2023, there are no beneficial units, convertible bonds and similar securities or rights. IMC S.A. Notes to the annual accounts as at 31 st December 2023 22 Note 6 - SHARE PREMIUM ACCOUNT The movements on the "Share premium account" item during the year are as follows: Share premium Total 2023 2023 EUR EUR Share premium and similar premiums - opening balance 17,843,364.03 17,843,364.03 Share premium and similar premiums - closing balance 17,843,364.03 17,843,364.03 Note 7 - RESERVES Note 7.1 - Legal Reserve The Company is required to allocate a minimum of 5% of its annual net income to a legal reserve, until this reserve equals 10% of the subscribed share capital. This reserve may not be distributed. Note 8 - MOVEMENT FOR THE YEAR ON THE RESERVES AND PROFIT AND LOSS ITEMS The movements for the year are as follows: Legal reserve Profit or loss brought forward Profit or loss for the financial year EUR EUR EUR As at 31/12/2022 4,148.40 1,072,594.84 6,269,133.74 Movements for the year: - Allocation of previous year’s profit or loss 0.00 6,269,133.74 -6,269,133.74 - Profit or loss for the year 0.00 0.00 -261,277.75 As at 31/12/2023 4,148.40 7,341,728.58 -261,277.75 IMC S.A. Notes to the annual accounts as at 31 st December 2023 23 Note 9 - CREDITORS Amounts due and payable for the accounts shown under “creditors” are as follows: Within one year Total 2023 Total 2022 EUR EUR EUR Trade creditors 138,158.43 138,158.43 138,877.01 Tax debts 62,871.72 62,871.72 0.00 Other debts 125,646.88 125,646.88 99,411.20 Total 326,677.03 326,677.03 238,288.21 Note 10 - STAFF There were no staff employed during the year. Note 11 - OTHER OPERATING CHARGES The other operating charges are composed as follows: 2023 2022 EUR EUR Software licences 3,600.00 0.00 Director's fees 607,501.14 483,806.27 Fines, sanctions and penalties -59.80 0.00 Total 611,160.94 483,806.27 Note 12 - EMOLUMENTS GRANTED TO THE MEMBERS OF THE MANAGEMENT AND SUPERVISORY BODIES AND COMMITMENTS IN RESPECT OF RETIREMENT PENSIONS FOR FORMER MEMBERS OF THOSE BODIES The emoluments granted to the members of the management and supervisory bodies in this capacity and the obligations arising or entered into in respect of retirement pensions for former members of those bodies for the financial year are broken down as follows : 2023 2022 EUR EUR Emoluments Management bodies 607,501.14 483,806.27 Total 607,501.14 483,806.27 IMC S.A. Notes to the annual accounts as at 31 st December 2023 24 Note 13 - ADVANCES AND LOANS GRANTED TO THE MEMBERS OF THE MANAGEMENT AND SUPERVISORY BODIES No commitment or guaranty has been taken on behalf of the members of the administrative, managerial and supervisory bodies. Note 14 - TAXATION The Company is subject to the general taxation rules applicable to commercial companies in Luxembourg. Note 15 - OFF-BALANCE SHEET COMMITMENTS The off-balance sheet commitments of the Company in relation to the bank loans taken by the subsidiaries are as follows: Bank Guarantor Year of guarantee Total amount of guarantee limit , USD A mount of guarantee drawn as at 31.12.2023, USD JSC Ukrsibbank IMC S.A. 2017 10,000,000.00 7,898,000.00 JSC Raiffaisen Bank aval IMC S.A. 2020 11,500,000.00 11,500,000.00 European Bank for Reconstruction and Development IMC S.A. 2023 13,000,000.00 13,000,000.00 Note 16 - SUBSEQUENT EVENTS There were no other material events after the end of the reporting date, which have a bearing on the understanding of the annual accounts. Note 17 - AUDITOR'S FEES All fees paid and payable for the current fiscal year by the Company to the auditor are as follows : Fees billed by approved audit firm (Crowe network) Fees billed by other Luxembourg firms (BDO Audit, BDO Tax) Fee Category For the year ended 31/12/2023 For the year ended 31/12/2022 For the year ended 31/12/2023 For the year ended 31/12/2022 Audit fees 129,174.54 38,095.24 43,239.00 96,622.88 Audit related fees 18,427.50 0.00 21,222.00 19,304.83 Tax fees 0.00 0.00 6,303.60 2,627.13 147,602.04 38,095.24 70,764.60 118,554.84 IMC S.A. Notes to the annual accounts as at 31 st December 2023 25 Note 18 – OPERATING ENVIRONMENT AND GOING CONCERN Operating environment IMC S.A. and its subsidiaries (the “Group”) is an integrated agricultural company in Ukraine. Despite the war and continued Russian attacks on critical infrastructure facilities, in 2023 Ukraine's economy began to gradually recover. In 2023, the real GDP of Ukraine grew, according to various estimates, by 5-5.5%. This is a recovery growth after a sharp decline of 30.4% in 2022. Despite the recovery, GDP is still about a quarter smaller than in 2021. Inflation at the end of 2023 decreased to 5.1% in annual terms, while a year ago its value reached 26.6%. Ukraine entered 2023 with the official exchange rate fixed at 36.6 UAH/USD, which was maintained by the NBU for most of the year. Since October, the National Bank switched to a managed flexibility regime, but due to the significant volume of currency interventions, exchange rate fluctuations were not significant and the average annual official exchange rate remained at the level of 36.6 UAH/USD, although at the end of the year the exchange rate increased to 38 UAH/USD. Overall, the banking system remains stable, sufficiently capitalized, liquid and profitable. In 2023, Ukraine continued to receive foreign financial aid — more than in 2022 (USD 42.5 billion in 2023 versus USD 31.1 billion in 2022), and more regularly and predictably. Aid mostly came in the form of loans (63% of all financial aid) rather than grants; but these loans were very preferential and necessary for Ukraine, as they allowed to finance important budgetary needs already today. Foreign aid covered 71% of the needs of the state budget, the rest was financed mostly through the issuance of government bonds. Thanks to foreign financial assistance, foreign exchange reserves in 2023 reached historically record levels of USD 40.5 billion. A high level of reserves is a kind of safety cushion in case of interruptions with further aid flows. In 2023, Ukraine created its own Ukrainian maritime corridor to the Black Sea ports of Odesa region after Russia stopped fulfilling its agreements under the Grain Agreement (signed on 22 July 2022 in Istanbul). This made it possible to gradually increase not only the export of grain, but also to restore the sea export of other goods, as well as to renew the sea import. Going concern IMC S.A. and its subsidiaries (the “Group”) is an integrated agricultural company in Ukraine. IMC S.A. is the direct shareholder of Unigrain Holding Limited (Cyprus) and of Négoce Agricole S.A. (Luxembourg) and is a pure holding company. Unigrain Holding Limited owns various agricultural companies operating in Ukraine, and Négoce Agricole S.A. trades the cereals produced. IMC S.A. therefore depends on the dividend income from these subsidiaries. Going concern at the level of IMC S.A. is as a consequence highly dependent on the going concern of the underlying operating companies. Ukraine continues to face the ongoing full-scale Russian invasion since 24 February 2022, with significant war operations in the south and east of the country and drone and rocket attacks against civilian infrastructure throughout the whole territory of Ukraine. War affected IMC S.A. Notes to the annual accounts as at 31 st December 2023 26 the economic and social life of the country and posed a number of operational issues for the Company. At the time of publication of this Report the war is ongoing and the significant general uncertainties inherent to the continued war exist. The Group’s management has analyzed the observable impact of the War on its business as described below, but not limited to: - As of 31 December 31 2023, 94 employees of IMC are currently serving in the Armed Forces of Ukraine. All our enterprises have received the status of critically important enterprises for the functioning of the economy and ensuring the livelihood of the population in a special period. During 2023 more than 500 employees have had official deferment from service to perform their official duties. The Group does not have a labor shortage and has managed to retain its staff. All of the staff at the enterprises returned to work in the office or in production. - No critical assets preventing the Group to continue operations are damaged or located in the uncontrolled territories. All of the Group’s inventories are in good condition and are in safe storage. - It was sown 100% of the land bank in 2023 (73% in 2022) . The structure of crops was changed in the direction of decreasing areas under corn in favor of sunflower and wheat in 2023 - corn 40%, sunflower 28%, wheat 27% (58%, 22% and 18% in 2022 respectively). - There was temporary instability of work of the Group due to electricity outages in Ukraine caused by Russia's attacks on Ukrainian power generation and distribution infrastructure. In order to avoid downtime, the companies of the Group were provided with heat and power units. - In July 2023 Russia terminated The Black Sea Grain Initiative (“Grain deal”), that has led to the temporary suspension of shipping routes for the export of grain from Ukraine. However, from the second half of August 2023 the temporary humanitarian Black Sea corridor started to operate with no regular schedule, and with vessels moving whenever the security conditions allow. The Group successfully exports through the Black Sea corridor and also uses alternative logistics routes. - To ensure the necessary financing of the Group in 2023, the management was actively negotiated with banks. As a result, the volume of short-term loans aimed at replenishing working capital remained almost at the previous level, while new long-term investment loans were attracted. All loan payments, both interest repayments and principal payments, are made according to the schedules approved by the contracts. The Group has committed to comply with loans covenants. As at 31 December 2023 some of covenants on long-term loans for total amount USD 17 847 thousand was violated by the Group. The Group received from the banks waiver of rights to require compliance with the breached covenant as at 31 December 2023, but after the end of reporting period. As a result, the laons in full amount was reclassified as current portion of long-term loans. In response to abovementioned impacts, the Group has taken the following actions: o The safety and well-being of our employees have been the utmost priority amid military actions in Ukraine resulting from russia’s invasion. IMC has been providing extensive support to its employees. The business processes have been reorganized to adjust to the existing challenges and to provide continuity to the Group’s activities. o It is planned to sow all 100% of the land. For the 2024 season, the traditional group seeding structure has returned - corn 60%, sunflower 22%, wheat 18% (corn 40%, sunflower 28%, wheat 27% for 2023). o To reduce the risk of loss of stocks from destruction due to missile attacks, stocks are placed in different regions and different locations. To reduce the risk of damage of stocks from long-term storage, alternative shipping routes are being developed to prevent IMC S.A. Notes to the annual accounts as at 31 st December 2023 27 accumulation of stocks in warehouses, and plastic sleeves are used for storing crops in order to ensure the most correct storage conditions outside the elevator. o The Group successfully exports through the Black Sea corridor and also uses alternative logistics routes - by rail across the western borders of Ukraine and river navigation through the Danube. To strengthen logistical autonomy, a fleet of grain trucks was purchased, which will help improve operational efficiency and increase IMC's export capabilities. o The Group is fully provided with agricultural materials for the upcoming sowing season 2024, as well as machineries for the field works. o The Group has sufficient working capital and access to financing. The Group has balanced proportions between the volume of renewable short-term credit lines and long- term investment programs. o The Group is fully compliant with all sanction’s rules and regulations against Russia and Belarus. IMC does not cooperate with any company, organization or bank that cooperates or has any business relations with companies, organizations or banks in Russia and Belarus. o The Group's companies continue to pay all taxes required by law and to comply with all business rules, regardless of martial law. Management prepared Groups budget for the next 12 months with the following assumptions: • the impact of the war on business will continue for the next 12 months; • further development of the war will not severely affect the Group's assets; • all of the Group’s assets remain safe and in good condition; • spring sowing and harvesting campaigns will be successful; • repayment of the loans principal occurs according to the terms; • availability of sea export routes via Black Sea; • availability of railway and transport infrastructure within the country. Based on these forecasts, Management concluded that it is appropriate to prepare the consolidated financial statements on a going concern basis. Based on forecast for Group, the forecast budgets for IMC S.A. was prepared. The model does not provide for the receipt of new income from dividends, but cash inflow from existing receivables on dividends is sufficient to cover the company's costs. Based on these forecasts, Management concluded that it is appropriate to prepare the standalone financial statements on a going concern basis. However, due to the currently unpredictable effects of the ongoing War on the significant assumptions underlying forecasts, Management concluded that a material uncertainty exists, which may cast significant doubt about the Group’s and the Company’s ability to continue as a going concern and, therefore, the Group and the Company may be unable to realize its assets and discharge its liabilities in the normal course of business.