What a 14,300-Hectare Land-Bank Transaction Reveals About Agribusiness Valuation

01

What the annual report disclosed

According to Kernel’s annual report:

• in May 2026, the group disposed of an entity managing approximately 14,300 hectares of leasehold farmland in the Kharkiv region;
• the carrying amount of the disposed entity’s net assets was USD 2.129 million at the disposal date;
• the accounting gain on disposal was USD 22.802 million;
• cash consideration received was USD 24.931 million;
• net cash inflow was USD 24.919 million, equal to the consideration less USD 12 thousand of cash held by the disposed entity;
• Kernel retained no interest in the entity after completion.

The management report also states that associated agricultural machinery and a grain silo were disposed of with the leasehold land bank. The report does not support allocating the entire transaction amount to the land bank or assigning a standalone value to each component.

These are facts from the public report. Any conclusion about the economic value of individual components requires the transaction documents, the detailed asset and liability perimeter, and an appropriate valuation method.

02

Why dividing by hectares gives a misleading benchmark

The mechanical calculation is straightforward:

USD 24.931 million ÷ 14,300 ha ≈ USD 1,743/ha.

The arithmetic is correct. The economic interpretation is not. The result is neither a price for agricultural land nor a universal value for one hectare of lease rights. The numerator is the cash consideration for an entity with a defined transaction perimeter. The denominator is the approximate size of a leasehold land bank, not an area of farmland owned by the seller.

The division ignores:

• machinery, infrastructure, inventories and other assets within the perimeter;
• cash, debt, payables and receivables;
• working-capital requirements and closing adjustments;
• earnings, people, contracts, logistics and the operating model;
• lease maturity, quality and renewal risk;
• regional, security, legal and tax risks.

The per-hectare quotient can therefore be used only as a prompt for further questions. It should not be transferred to another agribusiness as a market rate.

03

Five figures that should not be confused

1. Cash consideration

This is the amount agreed for the defined transaction subject. It depends on the perimeter, price mechanism, debt, cash, working capital and other contractual adjustments.

2. Net cash inflow to the seller

This is the cash-flow amount recorded in the financial statements. In this case, it was lower than the consideration by the amount of cash held inside the disposed entity.

3. Equity value

Equity value is the value attributable to the owners after accounting for debt, cash and agreed adjustments. In a specific deal, the transaction documents determine how the headline amount becomes the final amount payable.

4. Enterprise value

Enterprise value describes the operating business independently of its financing structure. A simplified bridge links it to equity value through net debt, but an actual agreement may also include debt-like items, lease liabilities, working capital and other adjustments.

5. Gain on disposal

This is an accounting result arising from the relationship between consideration, the carrying amount of net assets and other accounting components. It is not the target’s EBITDA, the buyer’s return or the market value of farmland.

04

What a buyer is actually valuing

Agribusiness value is built around the business’s ability to generate cash flow and preserve its operating platform after a change of control.

The land bank

The land bank in this case was leasehold. A buyer reviews more than total area:

• the legal entities holding the leases and evidence of registered rights;
• lease maturity and the concentration of expiries by year;
• renewal terms, pre-emption rights and renewal history;
• rent, indexation, actual payments and arrears;
• field concentration, access and distance to operating infrastructure;
• disputes, encumbrances and inconsistencies between cadastral and contractual data;
• landowner relations and the risk of losing operationally critical parcels.

The same area can support very different operating value. A compact land bank with long, registered leases and consistent payment records is not equivalent to a fragmented portfolio with short maturities and documentation gaps.

Earnings and quality of performance

EBITDA or another operating measure must be normalised. The review separates one-off income and expenses, related-party transactions, owner-specific costs, unusual harvest outcomes, grants, insurance proceeds and other items that do not represent sustainable earnings.

A buyer also examines yields, crop mix, margins, drying and storage requirements, logistics, currency exposure and dependence on individual counterparties.

Machinery, infrastructure and future CAPEX

Machinery or a grain silo does not automatically create a premium. Ownership, encumbrances, technical condition, utilisation, maintenance needs and post-closing investment must be reviewed.

Debt, cash and working capital

Two businesses with the same EBITDA can produce different proceeds for their owners. Bank debt, accrued interest, overdue liabilities, leases, cash and the agreed level of working capital all affect the equity bridge.

If the business requires additional seasonal funding before planting, a buyer will include that need in the model. If the company holds excess cash or working capital above the agreed target, the adjustment may work in the opposite direction.

05

Table: what the key metrics mean

06

How to use comparable transactions properly

A public deal is useful when it helps frame the right questions. Before comparing transactions, review:

1. Transaction form: shares, separate assets or a combination.
2. Perimeter: legal entities, assets, contracts, inventory and liabilities included.
3. Land rights: ownership, leases, emphyteusis, maturity, geography and documentation quality.
4. Financial profile: normalised EBITDA, debt, cash, working capital and seasonality.
5. Assets: machinery, real estate, storage, logistics and required CAPEX.
6. Context: transaction date, region, security environment, logistics and access to finance.
7. Price mechanism: locked box, completion accounts, deferred consideration, earn-out or other adjustments.

Without these comparisons, a number from another deal creates false precision. The market approach works through structured adjustments, not by copying an arithmetic quotient.

07

Seller checklist before valuation

• Define the legal entities, shares, assets and liabilities that may form the transaction perimeter.
• Prepare financial and management reporting with explanations for one-off items.
• Map loans, security, leases, accrued items and other debt-like obligations.
• Support inventory, receivables, payables and seasonal working-capital requirements.
• Reconcile the land register with leases, cadastral data, registered rights and payment records.
• Inventory machinery and infrastructure and estimate deferred CAPEX.
• Prepare a map of disputes, tax risks, permits and material contracts.
• Present a valuation range with transparent assumptions instead of one “price per hectare”.

08

Buyer checklist

• Identify which value figure is being quoted and how it adjusts at completion.
• Verify the perimeter and avoid double-counting assets.
• Normalise EBITDA and review conversion of earnings into cash.
• Agree definitions of net debt, working capital and debt-like items.
• Perform legal and operational due diligence on the land bank.
• Assess machinery, infrastructure and post-acquisition investment.
• Review taxes, disputes, encumbrances, permits and change-of-control terms.
• Test sensitivities to yields, commodity prices, logistics, funding and loss of leases.

09

Conclusion

The 14,300-hectare public case is useful because it shows how different cash consideration, net cash inflow, carrying value of net assets and accounting gain can be. It does not provide a ready-made “price per hectare”.

A defensible agribusiness valuation starts with the transaction perimeter. It then examines normalised earnings, debt and cash, working capital, leasehold land-bank quality, machinery, infrastructure, CAPEX and risk. Only after that can comparable transactions support a reasoned valuation range.