KraneShares ETC Plc

Director’s report and audited financial statements

For the financial year ended 31 December 2025

Registered number

760531

KraneShares ETC Plc

Contents

Page(s)

Directors’ and other information 2

Directors’ Report 4

Directors' Responsibilities Statement 12

Independent auditor’s report 13

Statement of Comprehensive Income 20

Statement of Financial Position 21

Statement of Changes in Equity 22

Statement of Cash Flows 23

Notes to the financial statements 24

KraneShares ETC Plc

Directors and other information

Directors

Jonathan Krane (American)

Benjamin Murahwi (Irish)

Caroline Jones (Irish) (Appointed 29 April 2025, resigned 05 May 2025)

Matthew Tracey (Irish)

Registered Office

4th Floor

35 Shelbourne Road

Ballsbridge

Dublin 4

Ireland

Company Secretary and Corporate

Service Provider

Waystone Centralised Services (IE) Limited*

4th Floor

35 Shelbourne Road

Ballsbridge

Dublin 4

Ireland

Administrator

SEI Global Services, Inc

1 Freedom Valley Drive Oaks

PA 19456

United States

Arranger & Investment

Advisor

Krane Funds Advisors, LLC

280 Park Ave 32nd Floor

New York, NY 10017

United States

*Waystone Corporate Services (IE) Limited has merged with Waystone Centralised Services (IE) Limited effective

from 1st March 2025.

KraneShares ETC Plc

Directors and other information (

continued)

Trustee & Security Trustee

Waystone Centralised Services (IE) Limited*

4th Floor

35 Shelbourne Road

Ballsbridge

Dublin 4

Ireland

Custodian & Banker

Brown Brothers Harriman & Co.

140 Broadway

New York

New York 10005-1101

United States

Account Bank &

Citibank N.A., London Branch

Principal Paying Agent

Canada Square

London

United Kingdom

Solicitor

Matheson

70 Sir John Rogerson's Quay

Dublin 2

Ireland

Independent Auditor

Grant Thornton

Chartered Accountants and Statutory Audit Firm

13-18 City Quay

Dublin 2

Ireland

Broker

StoneX Financial Inc.

230 S. LaSalle Street

Suite 10-500

Chicago

Illinois 60604

United States

*Waystone Corporate Services (IE) Limited has merged with Waystone Centralised Services (IE) Limited effective

from 1st March 2025.

KraneShares ETC Plc

Directors’ Report

For the financial year ended 31 December 2025

The Board of Directors (the "Directors") present their annual report and the audited financial statements of

Kraneshares ETC Plc (the "Company") for the financial year ended 31 December 2025. The Company falls within

the Irish regime for the taxation of qualifying companies as set out in Section 110 of the Taxes Consolidation Act

1997 (as amended).

Principal activities

The Company is a public limited liability company, incorporated on 25 March 2024 in Ireland under the Companies

Act 2014 (the "Act"). The Company has been established for the purpose of issuing KraneShares ETC Securities

(the "ETC securities" or "debt at fair value through profit and loss"). The return on each Series of ETC securities

is linked to the performance of specified reference indices comprised of one or more futures contracts in respect of

major global carbon allowances.

The ETC securities will be issued under the KraneShares ETC Securities Programme of the Company (the

“Programme”). ETC securities are designed to track the price of one or more futures contracts in respect of major

global carbon allowances, and to provide investors with a similar return that the investor would have gained

through investing directly in the underlying types of Carbon Allowance referenced by the Reference Index (less

applicable fees). The aggregate number of ETC securities that will be issued under the Programme will not at any

time exceed USD 50,000,000,000, this being the Programme maximum number of ETC securities.

The Authorised Participants, in respect of each Series, are such entities which, from time to time, are party to an

authorised participant agreement with the Company. The Authorised Participants are the only entities permitted to

buy ETC securities directly from the Company or to request that the Company buy back ETC securities. Authorised

Participants may, but do not have to, act as market makers for the ETC securities by buying and selling ETC

securities to and from investors either on exchanges or in over-the-counter transactions.

The ETC securities will be backed by futures contracts, cash and cash equivalents and other assets held with a

broker or in a segregated custody account of the Company with the Custodian.

Business review and key performance indicators

The Company is a Special Purpose Vehicle (the ''SPV'') whose sole business is the issue of asset-backed securities.

The Company has established a Programme for the issue of ETC Securities whose return is linked to the performance

of carbon future contracts.

Financial year ended

31 Dec 2025

USD

Financial period from

25 Mar to 31 Dec 2024

USD

(a) Net gain on financial assets at FVTPL

1,469,156

616,154

(b) Net loss on debt at FVTPL

(1,881,902)

(315,426)

(208,720)

(263,720)

(d) Financial assets at FVTPL

439,967

293,438

(e) Financial liabilities at FVTPL

(55,000)

(263,720)

(f) Debt at FVTPL

(12,021,866)

(11,940,426)

Under this Programme, the Noteholders (the “Noteholders”) were seeking and obtained exposure to performance

of the Carbon Allowance Linked Securities listed on Deutsche Börse, Borsa Italiana and London Stock Exchange.

The KraneShares Global Carbon Strategy ETC is intended to track the level of its reference index, the S&P Global

Carbon Credit Index, which offers broad coverage of cap and-trade carbon allowances by tracking the most traded

carbon credit futures contracts. The index covers the major European and North American cap-and-trade programs:

European Union Allowances (EUA), California Carbon Allowances (CCA), United Kingdom Allowances (UKA),

Washington State Carbon Allowances (WCA), and the Regional Greenhouse Gas Initiative (RGGI), which covers

the Northeast US Power Market. For the financial year ended 31 December 2025, the performance of the Carbon-

Linked securities indicated a 24.91% (31 December 2024: 2.72%) growth in comparison to the issue date 02

KraneShares ETC Plc

Directors’ report (continued)

For the financial year ended 31 December 2025

Business review and key performance indicators (continued)

October 2024. The fair value of the ETC securities issued by the Company is determined by reference to the fair

value associated with future contracts at fair value through profit or loss. Refer to note 11 and note 13 for the fair

value of the future contracts as at 31 December 2025.

Significant events during the financial year

The significant events that occurred during the financial year are set out below.

On 16 January 2025, ETC securities were listed on London Stock Exchange.

As at 31 December 2025, ETC securities were listed in following exchanges:

Exchange

Ticker

Currency

Listing Date

SEDOL

ISIN

Deutsche Börse

KRBN GY

EUR

03-Oct-24

BSRH0H6

XS2879867773

Borsa Italiana

KRBN IM

EUR

03-Oct-24

BSTJGN8

XS2879867773

London Stock Exchange

KRBN LN

USD

16-Jan-25

BSRH0B0

XS2879867773

London Stock Exchange

KRBP LN

GBP

16-Jan-25

BR4Y040

XS2879867773

Subsequent events

On 26 March 2026, subsequent to the reporting date, the Company issued an additional series of the KraneShares

California Carbon Allowance ETC listed on the London Stock Exchange. The newly issued series trade under the

tickers KCCA LN (USD) and KCCP LN (GBP-hedged) and are designed to track the performance of the S&P

Carbon Credit CCA Index, providing exposure to California Carbon Allowance futures.

There have been no other significant events after the financial year end up to the date of signing of these financial

statements that require disclosure and/or adjustment to the financial statements.

Future developments

The plan for the foreseeable future is to continue with the issuance of ETC securities under the Programme

mentioned above which may include listings on other stock exchanges.

Going concern

The Directors have assessed the ability of the Company to continue in operational existence for foreseeable future

from the date of approval of the financial statements (the ‘period of assessment’) and have concluded that it is

appropriate to prepare the financial statements on a going concern basis.

The nature of the Company’s business dictates that the outstanding ETC securities may be redeemed at any time

by any authorised participant who has entered into an authorised participant agreement with the Company. As the

redemption of ETC securities will coincide with the sale of an equal amount of the futures contract, no liquidity

risk is considered to arise. The Company has entered into its primary service contracts with service providers on a

non-recourse basis and these costs are being met by Krane Funds Advisors, LLC. Therefore, the Directors are

confident that the Company will have the ability to continue to pay its operating costs and any redemptions that

may arise within the period of assessment.

Based on the above, the Directors have concluded that the Company has no material uncertainties which would

cast significant doubt on the Company’s ability to continue as a going concern over the period of assessment.

KraneShares ETC Plc

Directors’ Report (continued)

For the financial year ended 31 December 2025

Results and dividends for the financial year

The results for the financial year and the Company’s financial position at the end of the financial year are set out

on page 20 and 21 respectively. Profit for the financial year before taxation amounted to USD 500 (31 December

2024: USD 500). The tax on ordinary activities for the financial year is USD 125 (31 December 2024: USD 125).

No dividends are recommended by the Directors for the financial year under review.

Directors, Company Secretary and their interests

In accordance with the requirements of Section 329 of the Companies Act 2014, the Directors and Company

Secretary have confirmed that they had no beneficial interests in the shares, debentures, or other securities of the

Company during the financial year. Waystone Centralised Services (IE) Limited (the "Corporate Service Provider")

provides corporate services to the Company and the Company has no employees. The Corporate Service Provider

received fees during the financial year which includes Directors’ fees of USD 1,000 on an annual basis. Benjamin

Murahwi, Matthew Tracey and Caroline Jones (appointed 29 April 2025, resigned 05 May 2025) are employees of

Waystone Centralised Services (IE) Limited and were Company Directors during the financial year. Jonathan Krane

is an indirect owner of the Arranger and Investment Advisor. The Arranger received fees included in the

administrative expenses during the financial year which includes an allocation of Directors’ fees of USD 1,000 on an

annual basis. Further information is set out in note 21 to the financial statements.

Shares and shareholders

The authorised share capital of the Company is USD 1,000,000 and issued share capital is USD 25,000. The shares

are held by Waystone Centralised Services (IE) Limited (the ''Share Trustee'') under the terms of a declaration of

trust (the "Declaration of Trust") under which the Share Trustee hold the benefit of the shares on trust for charitable

purposes. The Share Trustee has no beneficial interest in and derives no benefit from its holding of the shares.

There are no other rights that pertain to the shares and the shareholders.

The shareholders’ rights and the operations of the shareholders meetings are defined in the Company’s Constitution

and complies with the Companies Act 2014.

Principal risk and uncertainties

The Directors consider that the principal risks and uncertainties facing the Company arise from the nature of its

business as a special purpose vehicle established for the issuance of exchange-traded commodity securities. These

risks include both financial and non-financial risks.

The principal financial risks to which the Company is exposed include credit risk, market risk (including price,

foreign exchange and interest rate risk), liquidity risk and operational risk. These risks, together with the Company’s

risk management objectives and policies, are described in detail in Note 22 to the financial statements.

In addition, the Company is exposed to the following non-financial principal risks and uncertainties:

x Regulatory and legal risk: The Company operates within a highly regulated environment across multiple

jurisdictions. Changes in laws, regulations or regulatory guidance affecting exchange-traded products, carbon

allowance markets, taxation (including Section 110 status), or securities listing requirements may have an impact

on the Company or the market for its ETC securities.

x Operational and service provider dependency risk: The Company has no employees and relies on a number of

key third-party service providers, including the Administrator, Custodian, Broker, Corporate Services Provider

and Arranger. The failure, withdrawal or underperformance of any of these service providers could disrupt the

Company’s operations. This risk is mitigated through contractual arrangements and ongoing oversight by the

Directors.

KraneShares ETC Plc

Directors’ Report (continued)

For the financial year ended 31 December 2025

Principal risk and uncertainties (continued)

x Business model and concentration risk: The Company is a single-purpose entity with a limited product range and

is therefore exposed to concentration risk. Future performance is dependent on continued investor demand and the

ability to issue additional Series under the Programme.

As a public limited company, the Company may be subject to the Irish implementation of the Central Securities

Depositories Regulation (CSDR). At EU level, the regulatory position has been clarified following the adoption of

the European Commission’s Omnibus reform package, which significantly narrows the scope of application of

certain regulatory requirements. The Company continues to monitor the implementation of these reforms at national

level and will assess any resulting regulatory obligations as appropriate

The Directors will also continue to monitor and respond to any potential imposition of tariffs, including associated

retaliatory tariffs, that may be introduced by the US government. Such tariffs could adversely impact the market

for carbon futures, potentially affecting pricing dynamics, market liquidity and trading volumes

Market conditions, interest rates, and economic, regulatory, or financial developments could significantly affect a

single industry or a group of related industries, and the securities of companies in that industry or group of industries

could react similarly to these or other developments. Depending on the composition of Company’s Underlying

Index, the Company may be subject to principal risks, as outlined in prospectus.

Political donations

The Electoral Act, 1997 requires companies to disclose all political donations over EUR 200 in aggregate made

during a financial year. The Directors, on enquiry, have satisfied themselves that no such donations more than this

amount have been made by the Company during the financial year ended 31 December 2025 (31 December 2024:

USD Nil).

Accounting records

The Corporate Services Provider is responsible for keeping adequate accounting records, as outlined in Section 281

to 285 of the Companies Act 2014, that are sufficient to:

x correctly record and explain the transactions of the Company;

x enable, at any time, the assets, liabilities, financial position and profit or loss of the Company to be determined

with reasonable accuracy; and

x enable the Directors to ensure that the financial statements comply with the Companies Act and enable

those financial statements to be audited.

In this regard Waystone Centralised Services (IE) Limited being the Corporate Service Provider of the Company,

have been appointed for the purpose of maintaining adequate accounting records. Accordingly, the accounting

records are kept at the Company’s registered address of 4th Floor, 35 Shelbourne Road, Ballsbridge, Dublin 4,

Ireland.

Research and development costs

The Company did not incur any research and development costs during the financial year (2024: USD Nil).

KraneShares ETC Plc

Directors’ Report (continued)

For the financial year ended 31 December 2025

Audit committee

In accordance with Section 1551(11)(c) of the Companies Act 2014, if the sole business of the Public Interest Entity

(PIE) Irish SPV relates to the issuing of asset backed securities, the PIE SPV is exempt from the requirement to

establish an audit committee.

Given the contractual obligations of the Administrator, Corporate Service Provider and the limited recourse nature

of the ETC securities the Company may participate in, the Directors have concluded that there is currently no need

for the Company to have a separate audit committee for the Directors to perform effective monitoring and oversight

of the internal control and risk management systems of the Company in relation to the financial reporting process.

Accordingly, the Company has availed itself of the exemption under Section 1551 of the Companies Act 2014.

Board-level oversight and governance arrangements

Notwithstanding the exemption, the full Board of Directors retains collective responsibility for oversight of the

Company’s financial reporting, risk management and internal control environment.

In practice:

x The Directors review and approve the annual and interim financial statements, significant accounting

judgements, critical estimates and key disclosures.

x The Directors oversee the performance and independence of the external auditor, including approval of

audit fees and consideration of audit scope, findings and recommendations.

x The external auditor reports directly to the Board, and audit matters, including significant risks, internal

control observations and independence confirmations, are discussed with the Directors without

management present where considered appropriate.

x The Directors monitor the effectiveness of the financial reporting process through regular reporting from

the Administrator and the Corporate Services Provider, who are contractually obliged to maintain

appropriate accounting records, controls and review procedures.

Compensating controls and service provider framework

The Company operates a fully delegated operating model and relies on a number of regulated and experienced

service providers. As part of this arrangement:

x The Administrator, Corporate Services Provider and other key service providers operate their own internal

control frameworks, governance structures and compliance functions, which are subject to regulatory

oversight.

x The Corporate Services Provider has primary responsibility for maintaining accounting records and

preparing financial statements for review and approval by the Directors.

x The Directors periodically review the performance of key service providers and may request additional

reporting or assurance where deemed necessary.

x Given the limited recourse nature of the Company and the segregation of assets, operational and financial

reporting risks are considered proportionate to the nature and scale of the Company’s activities.

Based on the above arrangements, the Directors are satisfied that appropriate governance, oversight and control

mechanisms are in place to ensure the integrity of the Company’s financial reporting and audit process,

notwithstanding the absence of a formal audit committee.

Corporate governance statement

Introduction

For the financial year ended 31 December 2025, the Company has been following the listing rules of the

Deutsche Börse, Borsa Italiana and London Stock Exchange. For the financial year ended 31 December 2025, the

Company has been following the Companies Act 2014. The Company does not apply additional requirements in

addition to those required by the above. Each of the service providers engaged by the Company is subject to

their own corporate governance requirements.

KraneShares ETC Plc

Directors’ Report (continued)

For the financial year ended 31 December 2025

Corporate governance statement (continued)

Financial Reporting Process

The Directors are responsible for establishing and maintaining adequate internal control and risk management

systems of the Company in relation to the financial reporting process. Such systems are designed to manage rather

than eliminate the risk of failure to achieve the Company’s financial reporting objectives and can only provide

reasonable and not absolute assurance against material misstatement or loss.

The Directors have established processes regarding internal control and risk management systems to ensure its

effective oversight of the financial reporting process. These include appointing SEI Global Services, Inc (the

"Administrator") to perform certain administrative functions for the Company in relation the ETC securities,

including, among other things, assisting in the making of certain non-discretionary determinations and calculations

in accordance with the Terms and Conditions of the ETC securities, including, without limitation, the determination

and publication of the Carbon Entitlement, the Cash Value per ETC security and the Total Expense Ratio on a daily

basis and the Corporate Service Provider to maintain the accounting records of the Company. Waystone Centralised

Services (IE) Limited are contractually obliged to maintain proper books and records as required by the Corporate

Service agreement. Waystone Centralised Services (IE) Limited is also obliged to prepare, for review and approval

by the Directors, the annual report including financial statements intended to give a true and fair view.

The Directors evaluate and discuss significant accounting and reporting issues as the need arises. From time to

time the Board of Directors may examine and evaluate the Administrators and Corporate Service Providers

financial accounting and reporting routines and monitors and evaluates the external auditors’ performance,

qualifications, and independence. The Corporate Services Provider has operating responsibility for internal

control in relation to the financial reporting process and reports to the Directors.

Risk Assessment

The Directors are responsible for assessing the risk of irregularities whether caused by fraud or error in financial

reporting and ensuring the processes are in place for the timely identification of internal and external matters with

a potential effect on financial reporting. The Directors have also put in place processes to identify changes in

accounting rules and recommendations and to ensure that these changes are accurately reflected in the

Company’s financial statements. More specifically:

x The Corporate Service Provider has a review procedure in place to ensure errors and omissions in the financial

statements are identified and corrected;

x Regular training on accounting rules and recommendations is provided to the accountants employed by the

Corporate Service Provider;

x Accounting bulletins, issued by the Corporate Service Provider, are distributed to all accountants employed by

the Corporate Service Provider; and

x The Company's financial statements are prepared by the accountants employed by the Corporate Service

Provider, Waystone Centralised Services (Ireland) Limited.

Control Activities

The Corporate Service Provider is contractually obliged to design and maintain control structures to manage the

risks which the Board of Directors judge to be significant for internal control over financial reporting. These

control structures include appropriate division of responsibilities and specific control activities aimed at

detecting or preventing the risk of significant deficiencies in financial reporting for every significant account in

the financial statements and the related notes in the Company’s annual report.

KraneShares ETC Plc

Directors’ Report (continued)

For the financial year ended 31 December 2025

Corporate governance statement (continued)

Monitoring

The Directors have a quarterly process to ensure that appropriate measures are taken to consider and address the

shortcomings identified and measures recommended by the independent auditor.

Given the contractual obligations on the Administrator and Corporate Services Provider, the Directors have

concluded that there is currently no need for the Company to have a separate internal audit function for the

Directors to perform effective monitoring and oversight of the internal control and risk management systems of the

Company in relation to the financial reporting process.

Capital Structure

The sole shareholder in the Company is Waystone Centralised Services (IE) Limited holding 25,000 shares. No

person has any special rights of control over the Company’s share capital. With regard to the appointment and

replacement of Directors, the Company is governed by the Constitution and Irish Statute comprising the Companies

Act 2014. The Constitution may be amended by special resolution of the shareholders.

Powers of Directors

The Directors are responsible for managing the business affairs of the Company in accordance with the Constitution.

The Directors may delegate certain functions to the Administrator and other parties, subject to the supervision and

direction by the Directors. The Directors have delegated the day-to-day administration of the Company to the

Administrator.

Diversity Report

The Company has not adopted a formal diversity policy in relation to its Board of Directors. Under S.I. No.

360/2017 – European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings

and groups) Regulations 2017, only certain large undertakings that exceed specific size thresholds are required to

disclose such a policy. As the Company does not meet these thresholds, it is not subject to the mandatory diversity

disclosure requirements under these Regulations.

Independent auditor

Grant Thornton, Chartered Accountants and Statutory Audit Firm, were first appointed as statutory auditor of the

Company on 08 August 2024 and have been reappointed annually thereafter. The auditors have expressed their

willingness to continue in office in accordance with Section 382(2) of the Companies Act 2014.

Relevant audit information

The Directors believe that they have taken all steps necessary to make themselves aware of any relevant audit

information and have established that the Company’s statutory auditors are aware of that information. In so far as

they are aware, there is no relevant audit information of which the Company’s statutory auditors are unaware.

Directors' compliance statement

The Directors acknowledge that they are responsible for securing the Company's compliance with its relevant

obligations and have, complied with its relevant obligations as defined in Section 225 of the Companies Act 2014;

Pursuant to Section 225(2)(b) of the Act, the Directors confirm that:

there is an adequate structure in place, that is designed to secure material compliance with the Company’s

relevant obligations; and

relevant arrangements and structures have been put in place that provide a reasonable assurance of compliance

in all material respects by the Company with its relevant obligations, which arrangements and structures may,

if the Directors so decide, include reliance on the advice of one or more than one person employed by the

Company or retained by it under a contract for services, being a person who appears to the Directors to have

the requisite knowledge and experience to advise the Company on compliance with its relevant obligations.

KraneShares ETC Plc

Directors’ Report (continued)

For the financial year ended 31 December 2025

Responsibility statement

Each Director whose names and functions appear on page 2 confirm to the best of their knowledge:

the financial statements, prepared in accordance with IFRS Accounting Standards as adopted by European

Union ('IFRS') give a true and fair view of the assets, liabilities, financial position and profit or loss of the

Company; and

the presented Directors’ Report provides a fair review of the development and performance of the business and

the position of the Company, together with a description of the principal risks and uncertainties that it faces.

This statement is made in accordance with the Transparency (Directive 2004/109/EC) Regulations, 2007.

On behalf of the Board

Benjamin Murahwi

Matthew Tracey

Director

Date:



KraneShares ETC Plc

Directors' Responsibilities Statement

For the financial year ended 31 December 2025

The Directors are responsible for preparing the Directors’ Report and the audited financial statements, in

accordance with the applicable laws and regulations.

Irish Company law requires the Directors to prepare financial statements giving a true and fair view of the state

of affairs of the Company and the profit or loss of the Company for each financial year. Under that law, the

Directors have elected to prepare the financial statements in accordance with IFRS Accounting Standards as

adopted by European Union ('IFRS').

Under company law, the Directors must not approve the financial statements unless they are satisfied that they

give a true and fair view of the assets, liabilities and financial position, of the Company as at the financial year

and of the profit or loss of the Company for the financial year, and otherwise comply with the Companies Act

2014.

In preparing these financial statements, the Directors are required to:

x select suitable accounting policies and then apply them consistently;

x make judgements and estimates that are reasonable and prudent;

x state whether applicable Accounting Standards have been followed, subject to any material departures

disclosed and explained in the financial statements;

x assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going

concern; and

x use the going concern basis of accounting unless they intend to liquidate the Company or cease operations or

have no realistic alternative but to do so.

The Directors are responsible for ensuring that the Company maintains adequate accounting records for the

purpose of providing a true explanation of the transactions of the Company, facilitating a reasonably accurate

analysis of the financial statements, and ensuring compliance with the Companies Act 2014, and that the

statements are in a position to be audited. The Directors also have the additional responsibility of safeguarding

the assets of the Company and adopting a duty of care by taking appropriate steps in preventing and detecting

fraud and other irregularities.

The Directors are also responsible for preparing a Directors’ Report that complies with the requirements of the

Companies Act 2014.

On behalf of the Board

Benjamin Murahwi

Matthew Tracey

Director

Date:



Independent auditor’s report

To the members of KraneShares ETC Plc

1ϯ

Report on the audit of the financial statements

Opinion

We have audited the financial statements of KraneShares ETC Plc (or the “Company”), which comprise

the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes

in Equity and the Statement of Cash Flows for the financial year ended 31 December 2025, and the related

notes to the financial statements, including the material accounting policy information.

The financial reporting framework that has been applied in the preparation of the financial statements is

Irish law, including the Commission Delegated Regulation 2019/815 regarding the single electronic

reporting format (or “ESEF”), and IFRS Accounting Standards as adopted by the EU (“IFRS”) (“the

relevant accounting framework”).

In our opinion, the Company’s financial statements:

x give a true and fair view of the assets, liabilities, and financial position of the Company as at 31

December 2025 and of its profit or loss and cash flows for the financial year then ended;

x have been properly prepared in accordance with the relevant accounting framework, and

x have been properly prepared in accordance with the requirements of the Companies Act 2014.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (Ireland) (or “ISAs

(Ireland)”) and applicable law. Our responsibilities under those standards are further described in the

‘Auditor’s responsibilities for the audit of the financial statements’ section of our report. We are

independent of the Company in accordance with the ethical requirements that are relevant to our audit of

the financial statements in Ireland, including the Ethical Standard for Auditors (Ireland) issued by the Irish

Auditing and Accounting Supervisory Authority (or “IAASA”), and the ethical pronouncements established

by Chartered Accountants Ireland, applied as determined to be appropriate in the circumstances for the

Company. We have fulfilled our other ethical responsibilities in accordance with these requirements. We

believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors’ use of going concern basis of

accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors

assessment of the Company’s ability to continue as a going concern basis of accounting included:

x Obtaining and reviewing the Directors’ formal assessment of going concern;

x Discussing the use of going concern basis of accounting with the Directors and challenging their

conclusion by reviewing post year end performance and latest available management accounts;

x Reviewing subsequent events that may warrant a significant uncertainty regarding the going

concern assumption;

x Making enquiries with Directors and reviewing the board minutes in order to understand the future

plans and to identify potential contradictory information; and

x Assessing the adequacy of the disclosures with respect to the going concern assumption.

Based on the work we have performed, we have not identified any material uncertainties relating to events

or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to

continue as a going concern for the foreseeable future.

We have nothing material to add or draw attention to in relation to the directors’ statement in the financial

statements about whether the directors considered it appropriate to adopt the going concern basis of ac-

counting in preparing the financial statement.

Independent auditor’s report (continued)

To the members of KraneShares ETC Plc

1ϰ

Conclusions relating to going concern (continued)

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in

the relevant sections of this report.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our

audit of the financial statements of the current financial year and include the most significant assessed risks

of material misstatement (whether or not due to fraud) we identified, including those which had the greatest

effect on: the overall audit strategy, the allocation of resources in the audit, and the directing of efforts of

the engagement team. These matters were addressed in the context of our audit of the financial statements

as a whole, and in forming our opinion thereon, and therefore we do not provide a separate opinion on

these matters.

Overall audit strategy

We designed our audit by determining materiality and assessing the risks of material misstatement in the

financial statements. In particular, we looked at the valuation of financial assets and liabilities at fair value

through profit and loss and the selection of pricing sources to value financial assets and liabilities at fair

value through profit and loss. We also addressed the risk of management override of internal controls,

including evaluating whether there was any evidence of potential bias that could result in a risk of material

misstatement due to fraud.

Based on our considerations as set out below, our areas of focus included:

x Valuation (accuracy, valuation and allocation) of financial assets at fair value through profit and

loss; and

x Valuation (accuracy, valuation and allocation) of financial liabilities at fair value through profit and

loss

How we tailored the audit scope

The Company is a public limited liability Company and qualifies for the regime contained in Section 110 of

the Irish Taxes Consolidation Act, 1997. The Company has issued listed debt securities on Borsa Italiana

(Italian Stock Exchange), Deutsche Börse (Frankfurt Stock Exchange) and London Stock Exchange.

The Directors control the affairs of the Company and they are responsible for the overall investment policy,

which they determined. The Company delegated the day-to-day administration of the Company to the

Administrator. The Company engages the Corporate Service Provider to manage certain duties and

responsibilities including the maintenance of the accounting records. The financial statements, which

remain the responsibility of the Directors, are prepared on their behalf by the Corporate Service Provider.

We tailored the scope of our audit taking into account the types of investments within the Company, the

involvement of third party service providers, the accounting processes and controls, and the industry in

which the Company operates.

In establishing the overall approach to our audit we assessed the risk of material misstatement at a Company

level, taking into account the nature, likelihood and potential magnitude of any misstatement. As part of

our risk assessment, we considered the Company’s interaction with the Administrator and Corporate

Service Provider and we assessed the control environment in place at the Administrator and Corporate

Service Provider.

Independent auditor’s report (continued)

To the members of KraneShares ETC Plc

1ϱ

Key audit matters (continued)

Materiality and audit approach

The scope of our audit is influenced by our application of materiality. We set certain quantitative thresholds

for materiality. These, together with qualitative considerations, such as our understanding of the Company

and its environment, the history of misstatements, the complexity of the Company and the reliability of the

control environment

, helped us to determine the scope of our audit and the nature, timing and extent of

our audit procedures and to evaluate the effect of misstatements, both individually and on the financial

statements as a whole.

Based on our professional judgement, we determined materiality for the Company as follows: 1% of Total

Assets as at 31 December 2025. We considered Total Assets to be the most appropriate benchmark on

which to base our materiality, based on the principal activities of the Company and significance of the asset

they hold.

We have set performance materiality for the Company at 60% of materiality, having considered the business

risks and fraud risks associated with the Company and it’s the control environment. This is to reduce to an

appropriately low level the probability that the aggregate of uncorrected and undetected misstatements in

the financial statements exceeds materiality for the financial statements as a whole.

We agreed with the Directors that we would report to them misstatements identified during our audit above

5% of materiality, as well as misstatements below that amount that, in our view, warranted reporting for

qualitative reasons.

Significant matters identified

The risks of material misstatement that had the greatest effect on our audit, including the allocation of our

resources and effort, are set out below as significant matters together with an explanation of how we tailored

our audit to address these specific areas in order to provide an opinion on the financial statements as a

whole. This is not a complete list of all risks identified by our audit.

Significant matter

Description of Significant Matter and Audit Response

Valuation

(

accuracy,

valuation and

allocation

) of

financial assets

fair value through

profit and loss

(Notes 3(a), 11

and

22 (c))

There is a risk that the financial assets at fair value through profit and loss held

by the Company and included in the Statement of Financial Position

as at 31

December 2025 are not valued at fair value in line with IFRS 9,

Financial

Instruments.

Significant auditor’s attention was deemed appropriate

the financial assets at fair

value through profit and loss represents a principal element of the financial

statements and significantly impacts the Company’s performance and financial

position. As a result, we considered this as a key audit matter.

The following audit work has been performed to address the risks:

x obtained and reviewed the Administrator’s SOC 1 type 2 report

and its

bridging letter for the gap period, and assessed the design and

implementation of the relevant controls throughout the financial year;

x re-performed the assigned valuation of each instrument using

independently sourced third party market prices;

x completed a reconciliation of the independent prices obtained to the

prices as per the accounting records; and

x reviewed the adequacy of disclosures in the financial statements in

accordance with IFRS.

Our planned audit procedures were completed without material exception.

Independent auditor’s report (continued)

To the members of KraneShares ETC Plc

1ϲ

Significant matter

Description of Significant Matter and Audit Response

Valuation

(

accuracy,

valuation and

allocation

) of

financial

liabilities

at fair value

through profit and

loss

(Notes 3(a), 13

and

22 (c))

There is a risk that the financial liabilities at fair value through profit and loss held

by the Company and included in the Statement of Financial Position

as at 31

December 2025 are not valued at fair value in line with IFRS 9,

Financial

Instruments.

Significant auditor’s attention was deemed appropriate because

the financial

liabilities at fair value through profit and loss represents a principal element of

the financial statements and significantly impacts the Company’s performance

and financial position. . As a result, we considered this as a key audit matter.

The following audit work has been performed to address the risks:

x obtained and reviewed the Administrator’s SOC 1 type 2 report

and its

bridging letter for the gap period, and assessed the design and

implementation of the relevant controls throughout the financial year;

x re-performed the assigned valuation of each instrument using

independently sourced third party market prices;

x completed a reconciliation of the independent prices obtained to the

prices as per the accounting records; and

x reviewed the adequacy of disclosures in the financial statements in

accordance with IFRS.

Our planned audit procedures were completed without material exception.

Other information

The Directors are responsible for the other information. Other information comprises information

included in the annual report, other than the financial statements and the auditor’s report thereon, including

the Directors’ Report. Our opinion on the financial statements does not cover the other information and,

except to the extent otherwise explicitly stated in our report, we do not express any form of assurance

conclusion thereon.

Other information (continued)

Our responsibility is to read the other information and, in doing so, consider whether the other information

is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise

appears to be materially misstated. If we identify such material inconsistencies in the financial statements,

we are required to determine whether there is a material misstatement in the financial statements or a

material misstatement of the other information. 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.

Opinion on the matters prescribed by the Companies Act 2014

We have obtained all the information and explanations which we consider necessary for the purposes of

our audit.

In our opinion, the accounting records of the Company were sufficient to permit the financial statements

to be readily and properly audited.

The Statement of Comprehensive Income and Statement of Financial Position are in agreement with the

accounting records and returns.

Independent auditor’s report (continued)

To the members of KraneShares ETC Plc

ϭϳ

Opinion on the matters prescribed by the Companies Act 2014 (continued)

In our opinion, based on the work undertaken in the course of our audit:

x the information given in the Directors’ Report for the financial year is consistent with the financial

statements.

x the Directors’ report has been prepared in accordance with applicable legal requirements, excluding

the requirements on sustainability reporting in Part 28.

Based on our knowledge and understanding of the Company and its environment obtained in the course

of the audit, we have not identified any material misstatements in the Directors’ Report.

Matters on which we are required to report by exception

The Companies Act 2014 requires us to report to you if, in our opinion, the requirements of sections 305

to 312 of the Act, which relate to disclosure of directors’ remuneration and transactions with Directors,

have not been complied with by the Company. We have nothing to report in this regard.

Corporate governance statement

In our opinion, based on the work undertaken in the course of our audit of the financial statements, the

description of the main features of the internal control and risk management systems in relation to the

financial reporting process, specified for our consideration and included in the Corporate Governance

Statement, is consistent with the financial statements and has been prepared in accordance with section

1373(2)(c) of the Companies Act 2014.

Based on our knowledge and understanding of the Company and its environment obtained in the course

of our audit of the financial statements, we have not identified material misstatements in the description of

the main features of the internal control and risk management systems in relation to the financial reporting

process included in the Corporate Governance Statement.

Responsibilities of Directors and those charged with governance for the financial

statements

s explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the

preparation of the financial statements in accordance with the applicable financial reporting framework that

give true and fair view, and for such internal control as they determine necessary to enable the preparation

of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Company’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 directors either intends to liquidate the Company or to cease

operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process,

and for the preparation of financial statements that give a true and fair view.

Auditor’s responsibilities for the audit of financial statements

The objectives of an auditor are to obtain reasonable assurance about whether the financial statements as

a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s 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 ISAs (Ireland) 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

financial statements.

Independent auditor’s report (continued)

To the members of KraneShares ETC Plc

1ϴ

Auditor’s responsibilities for the audit of financial statements (continued)

A further description of our responsibilities for the audit of the financial statements is located on the Irish

Auditing and Accounting Supervisory Authority’s website at: https://iaasa.ie/publications/description-of-

the-auditors-responsibilities-for-the-audit-of-the-financial-statements/. This description forms part of our

auditor’s report.

Explanation as to what extent the audit was considered capable of detecting irregularities, including

fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design

procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of

irregularities, including fraud. Owing to the inherent limitations of an audit, there is an unavoidable risk

that material misstatement in the financial statements may not be detected, even though the audit is properly

planned and performed in accordance with the ISAs (Ireland). The extent to which our procedures are

capable of detecting irregularities, including fraud is detailed below.

The Company is subject to laws and regulations that directly affect the financial statements, including

companies and financial reporting legislation such as the Transparency (Directive 2004/109/EC)

Regulations, 2007, Borsa Italiana (Italian Stock Exchange), Deutsche Börse (Frankfurt Stock Exchange)

and London Stock Echange Listing Rules. We assessed the extent of compliance with these laws and

regulations as part of our procedures on the related financial statement items, including assessing the

financial statement disclosures and agreeing them to supporting documentation when necessary.

The Company is subject to other laws and regulations, for example, Irish tax legislation, where the

consequences of non-compliance could have a material impact on amounts or disclosures in the financial

statements, such as through the imposition of fines or litigation.

The primary responsibility for the prevention and detection of irregularities, including fraud, rests with

those charged with governance and Directors. There is an inherent risk that an audit may not detect all

material misstatements in the financial statements, despite properly planning and performing our audit in

accordance with auditing standards. In addition, as with any audit, there remains a higher risk of non-

detection of irregularities, as these may involve collusion, forgery, intentional misrepresentations and

omissions, or the override of internal controls. We are not responsible for preventing non-compliance and

cannot be expected to detect non-compliance with all laws and regulations.

In response to these principal risks, our audit procedures included but were not limited to:

x application of professional scepticism throughout the audit;

x consideration by the audit engagement partner of the experience and expertise of the engagement

team to ensure that the team had appropriate competence and capabilities to identify or recognise

non-compliance with the laws and regulation;

x gaining an understanding of the Company’s current activities, the scope of authorisation and the

effectiveness of its control environment to mitigate risks related to fraud;

x discussion amongst the engagement team in relation to the identified laws and regulations and

regarding the risk of fraud, and remaining alert to any indications of non-compliance or

opportunities for fraudulent manipulation of financial statements throughout the audit;

x evaluating management’s incentives and opportunities for fraudulent manipulation of the financial

statements (including the risk of override of controls);

x enquiries of Directors on the policies and procedures in place regarding compliance with laws and

regulations, including consideration of known or suspected instances of non-compliance and

whether they have knowledge of any actual, suspected or alleged fraud;

x inspection of the Company’s regulatory and legal correspondence and review of minutes of

Director’s meetings during the year to corroborate enquiries made;

Independent auditor’s report (continued)

To the members of KraneShares ETC Plc

1ϵ

Auditor’s responsibilities for the audit of financial statements (continued)

Explanation as to what extent the audit was considered capable of detecting irregularities, including

fraud (continued)

x identifying and testing journal entries to address the risk of inappropriate journals and management

override of controls;

x designing audit procedures to incorporate unpredictability around the nature, timing or extent of

our testing;

x challenging assumptions and judgements made by management in their significant accounting

estimates; and

x review of the financial statement disclosures to underlying supporting documentation and inquiries

of Directors.

The purpose of our audit work and to whom we owe our responsibilities

This report is made solely to the Company’s members, as a body, in accordance with section 391 of the

Companies Act 2014. Our audit work has been undertaken so that we might state to the Company’s

members those matters we are required to state to them in an auditor’s report and for no other purpose.

To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the

Company and the Company’s members as a body, for our audit work, for this report, or for the opinions

we have formed.

Report on other legal and regulatory requirements

We were appointed by the Board of Directors on 8 August 2024 to audit the financial statements for the

financial year ended 31 December 2025. The period of total uninterrupted engagement including previous

renewals and reappointments of the firm is 2 years.

We have not provided non-audit services prohibited by the IAASA’s Ethical Standard and have remained

independent of the Company in conducting the audit.

The audit opinion is consistent with the additional report to the Board of Directors.

John Glennon

For and on behalf of

Grant Thornton

Chartered Accountants & Statutory Audit Firm

13-18 City Quay,

Dublin 2

Ireland

Date: $SULO

KraneShares ETC Plc

Statement of Comprehensive Income

For the financial year ended 31 December 2025

Financial

year

Financial

period

ended

from 25-Mar

31-Dec-2025

to 31-Dec-24

Note

USD

Investment income

Net gain on financial assets at fair value through profit or loss

Net

gain/ (loss)

on financial liabilities at fair value through profit and

loss

Net loss on debt at fair value through profit and loss

6,12

1,469,156

208,720

(1,881,902)

616,154

(263,720)

(315,426)

Total investment (loss)/ gain

(204,026)

37,008

Interest and similar income

192,285

26,763

Administrative expenses

(80,304)

(22,487)

Net gain/(loss) on foreign exchange translation

92,545

(40,784)

Profit for the financial year/period before taxation

500

Tax on ordinary activities

(125)

Total comprehensive income for the financial year/ period

375

All of the items dealt with in arriving at the income for the financial year/period are from continuing

operations, no income is recognised in other comprehensive income.

The notes on pages 24 to 48 form an integral part of the audited financial statements.

KraneShares ETC Plc

Statement of financial position

As at 31 December 2025

31-Dec-25

31-Dec-24

Note

USD

Assets

Cash and cash equivalents

1,748,353

616,213

Margin account

9,894,214

11,302,651

Financial assets at fair value through profit or loss

439,967

293,438

Other receivables

27,395

25,000

Total assets

12,109,929

12,237,302

Liabilities

Other payables

7,313

7,781

Financial liabilities at fair value through profit or loss

55,000

263,720

Debt at fair value through profit or loss

12,021,866

11,940,426

Total liabilities

12,084,179

12,211,927

Equity

Called up share capital

25,000

Retained earnings

750

375

Total equity

25,750

25,375

Total liabilities and equity

12,109,929

12,237,302

On behalf of the Board:

The notes on pages 24 to 48 form an integral part of the audited financial statements.

Benjamin Murahwi

Matthew Tracey

Director

Date:



KraneShares ETC Plc

Statement of

Changes in Equity

For the financial

year ended 31 December 2025

Called up share

capital

Retained

Total

earnings

equity

USD

Balance as at 01 January 2025

25,000

375

25,375

Issue of shares during the financial year

Total comprehensive income for the financial year

375

Balance as at 31 December 2025

25,000

750

25,750

For the financial

period from 25 March 2024 to 31 December 2024

Called up share

capital

Retained

Total

earnings

equity

USD

Balance as at 25 March 2024

Issue of shares during the financial period

25,000

Total comprehensive income for the financial

period

375

Balance as at 31 December 2024

25,000

375

25,375

The notes on pages 24 to 48 form an integral part of the audited financial statements.

KraneShares ETC Plc

Statement of Cash Flows

For the financial year ended 31 December 2025

Financial year

ended

Financial period

from

25-Mar 2024 to

31-Dec-25

31-Dec-24

Note

USD

Cash flows from operating activities

Profit for the financial year/period

500

Adjustments for:

Unrealised gain on financial assets at fair value

through profit or loss

(

146,529)

(293,438)

Unrealised (gain)/loss on financial liabilities at fair

value through profit or loss

(

208,720)

263,720

Unrealised loss on debt at fair value through profit

or loss

,12

1,77

1,922

315,426

Taxation

(125)

Movements in working capital

Increase in other receivables

(Decrease)/increase in other payable

(2,395)

(468)

(25,000)

7,781

(Decrease)/increase in margin accounts

1,408,437

(11,302,651)

Net cash provided by operating activities

2,822,622

(11,033,787)

Cash flows from financing activities

Proceeds from share issued

Net proceeds from the issue of Notes

Net payment on the redemption of Notes

1,559,518

(3,250,000)

25,000

11,625,000

Net cash flows (used in)/provided by financing

activities

(1,

690,482)

11,650,000

Decrease/(increase) in cash and cash equivalents

1,132,140

616,213

Cash and cash equivalents at the start of the

financial year/period

616,213

Cash and cash equivalents at end of financial

year/period

1,748,353

616,213

Cash and cash equivalents components:

Cash and cash equivalents

1,748,353

616,213

The notes on pages 24 to 48 form an integral part of the audited financial statements.

KraneShares ETC Plc

Notes to the financial statements

For the financial year ended 31 December 2025

1. General information

The Company is a public limited liability company, incorporated on 25 March 2024 under the name of

Kraneshares ETC Plc in Ireland under the Companies Act 2014 (the "Act"). The Company has been established

for the purpose of issuing KraneShares ETC Securities (the "ETC securities"). At financial year end, the

Company had one Series of ETC securities in issue - KraneShares Global Carbon Strategy ETC. The return on

KraneShares Global Carbon Strategy ETC securities is linked to the performance of specified reference indices

comprised of one or more futures contracts in respect of major global carbon allowances. The ETC securities

are listed on Deutsche Borse, Borsa Italiana and London Stock Exchange. The Company is a qualifying

Company within the meaning of Section 110 of the Taxes Consolidation Act 1997.

The Company has no direct employees.

2. Basis of preparation

(a) Statement of compliance

The audited financial statements for the financial year ended 31 December 2025 and comparative financial

period from 25 March 2024 to 31 December 2024 have been prepared in accordance with IFRS Accounting

Standards as adopted by European Union ('IFRS') and in accordance with the Companies Act, 2014.

The material accounting policy information, set out below, have been applied in preparing the financial

statements for the financial year ended 31 December 2025.

The financial statements of the Company have been prepared on a going concern basis.

The nature of the Company’s business dictates that the outstanding ETC securities may be redeemed at any time

by any authorised participant who has entered into an authorised participant agreement with the Company. As

the redemption of ETC securities will coincide with the sale of an equal amount of the futures contract, no

liquidity risk is considered to arise. The Company has entered into its primary service contracts with service

providers on a non-recourse basis and these costs are being met by Krane Funds Advisors, LLC. Therefore, the

Directors are confident that the Company will have the ability to continue to pay its operating costs and any

redemptions that may arise within the period of assessment.

Therefore, the Directors believe that the Company will continue in operational existence for the foreseeable

future and is financially sound. The Directors are satisfied that, at the time of approving the financial statements,

it is appropriate to adopt the going concern basis in preparing the financial statements of the Company.

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis except for the following:

x Financial assets at fair value through profit and loss (“future contracts”)

x Financial liabilities at fair value through profit or loss ; and

x Debt at fair value through profit and loss.

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

2. Basis of preparation (continued)

The financial statements are presented in United States Dollar (''USD'') which is the Company’s functional

currency. Functional currency is the currency of the primary economic environment in which the entity operates.

The financial debt at fair value through profit or loss is primarily denominated in USD. The Directors of

the Company believe that USD most faithfully represents the economic effects of the underlying transactions,

events and conditions.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the

dates of the transactions. Foreign currency assets and liabilities are translated into the functional currency using

the exchange rate prevailing at the financial year end date. Foreign exchange gains and losses arising from

translation are included in the Statement of Comprehensive Income.

Net gain on foreign exchange translation

Foreign exchange gains and losses relating to cash and cash equivalents are presented in the Statement of

Comprehensive Income within ‘Net gain/(loss) on foreign exchange translation’. Foreign exchange gains and

losses relating to the financial assets and liabilities carried at fair value through profit or loss are presented in the

Statement of Comprehensive Income within Net gain on financial assets at fair value through profit and loss and

Net loss on financial liabilities at fair value through profit and loss.

(d) Use of estimates and judgements

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires

management to exercise its judgement in the process of applying the Company’s accounting policies. The

estimates and associated assumptions are based on historical experience and various other factors that are

believed to be reasonable under the circumstances, the results of which form the basis of making the judgements

about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results

may differ from these estimates. There are no significant estimates or judgements in the financial statements for

the financial year ended 31 December 2025 (2024: None).

(e) Standards, amendments, or interpretations

The below new and amended IFRS standards and interpretations are effective for annual periods beginning on

or after 1 January 2025. These amendments have not had any material impact on the disclosures or on the

amounts reported in these financial statements.

Standard

Title of Standard or Interpretation

Effective Date

IAS 21

Lack of exchangeability (Amendments to IAS 21)

01 January 2025

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

2. Basis of preparation (continued)

(e) Standards, amendments, or interpretations (continued)

Standards not yet effective, but available for early adoption

The following new and revised IFRS Standards that have been issued but are not yet effective:

Standard

Title of Standard or Interpretation

Effective Date

IFRS 9 and IFRS 7

Amendments to the Classification and

Measurement of Financial Instruments

(Amendments to IFRS 9 and IFRS 7)

1 January 2026

IFRS 1, IFRS 7, IFRS 9, IFRS

10, IAS 7

Annual Improvements to IFRS Accounting

Standards – Volume 11

1 January 2026

IFRS 9, IFRS 7

Contracts Referencing Nature-dependent

Electricity (Amendments to IFRS 9 and IFRS

1 January 2026

IFRS 18

Presentation and Disclosure in Financial

Statements

1 January 2027

The Company has not early adopted the above new standards or interpretations that are not yet effective. The

Directors have assessed the potential impact of these standards and interpretations on the Company’s financial

statements. IFRS 18 Presentation and Disclosure in Financial Statements was issued in April 2024 and is

effective for annual periods beginning on or after 1 January 2027. While the adoption of this standard is not

expected to have a material impact on the Company’s profit or equity on initial application, it is expected to

result in changes to the presentation, classification and disclosure of items within the financial statements. IFRS

18 is expected to result in changes to the presentation and classification of certain items within the statement of

comprehensive income, including the introduction of defined subtotals and categories such as operating,

investing and financing activities. The Company is currently assessing the detailed impact of the standard. No

quantitative impact has been determined at this stage.

3. Material accounting policy information

The principal accounting policies applied in the preparation of these financial statements are set out below.

These policies have been consistently applied for the financial year presented, unless otherwise stated.

(a) Financial instruments

Classification of financial assets

The Company has classified financial assets into the following categories:

Financial assets at fair value through profit and loss (“future contracts”):

x Derivative financial instruments

Financial assets at amortised cost:

x Cash and cash equivalents

x Margin account

x Other receivables carried at amortised cost

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

3. Material accounting policy information (continued)

(a) Financial instruments (continued)

The classification is determined by both:

Characteristics of the contractual cash flows

In order for a financial asset to be classified and measured at amortised cost, it needs to give rise to cash flows

that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment

is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash flows that are

not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.

Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are

subject to impairment. Gains and losses are recognised in the Statement of Comprehensive Income when the

asset is derecognised, modified or impaired.

Business model assessment

The Company makes an assessment of the objective of the business model at a Series level, as this reflects how

portfolios of assets are managed to achieve a particular objective, rather than management’s intentions for

individual assets.

The assessment considers the following:

x The strategy for the series as communicated by management;

x How the performance of the Series is evaluated and reported to senior management;

Financial assets that are held for trading or managed within a business model that is evaluated on a fair value

basis are measured at FVTPL because the business objective is neither hold-to-collect contractual cash flows nor

hold-to-collect-and sell contractual cash flows.

Initial Recognition

All financial assets and all financial liabilities (including financial liabilities at fair value through profit or loss) are

recognised initially on the trade date, which is the date that the Company becomes a party to the contractual

provisions of the instrument. The Company issues ETC securities to provide investors with exposure to the

performance of the future contracts. The ETC securities are issued in the form of debt instruments that are

backed by fully allocated future holdings of the relevant ETC. An ETC security is issued or redeemed when a

corresponding amount of future contract has transferred into or from the allocated accounts maintained by the

Custodian. The Company has designated its debt instruments at fair value through profit or loss.

Classification of financial liabilities

Financial liabilities at fair value through profit or loss:

x Derivative financial instruments

Debt at fair value through profit and loss

x ETC Securities issued

Financial liabilities at amortised cost:

x Other payables

The ETC securities issued by the Company have been designated at fair value through profit or loss on initial

recognition. This designation was made in order to eliminate an accounting mismatch that would otherwise arise

from measuring the related futures contracts at fair value. As a result, both the ETC securities and the underlying

futures contracts are measured at fair value, with gains or losses on both recognised in the Statement of

Comprehensive Income.

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

3. Material accounting policy information (continued)

(a) Financial instruments (continued)

Initial Recognition

All financial liabilities (including financial liabilities designated at fair value through profit or loss) are initially

recognised on the trade date, being the date on which the Company becomes a party to the contractual provisions

of the instrument.

The Company issues ETC securities to provide investors with exposure to the performance of futures contracts.

ETC securities are issued in the form of debt instruments that are backed by fully allocated futures holdings. An

ETC security is issued or redeemed when a corresponding amount of futures contracts is transferred into or out

of the allocated accounts maintained by the Custodian.

The Company has designated its ETC securities as financial liabilities at fair value through profit or loss in order

to eliminate an accounting mismatch that would otherwise arise from measuring futures contracts at fair value.

The ETC securities have been designated at fair value through profit or loss in order to eliminate an accounting

mismatch, that would otherwise arise with the future contracts, enabling both the ETC securities and the future

contracts to be measured at fair value with gains or losses on both being recognised in the Statement of

Comprehensive Income.

Subsequent measurement

After initial measurement, the Company measures financial instruments which are classified at fair value through

profit or loss at their fair value. The Company measures financial liabilities which are classified at fair value

through profit or loss at their fair value. Subsequent changes in the fair value of financial liabilities and financial

assets at fair value through profit or loss are recognised directly in the Statement of Comprehensive Income.

The exchange quoted price of the ETC securities is determined by reference to the underlying future contracts.

Changes in the fair value of the ETC securities are recognised in the Statement of Comprehensive Income. Any

return in excess of the principal amount per ETC security shall be characterised as an interest payment in respect

of the ETC securities.

Impairment of financial assets

The ‘expected credit loss’ (ECL) model is used to measure impairment of financial assets. The ECL model

applies to financial assets measured at amortised cost, but not to investments in equity instruments. For

financial assets measured at amortised cost, the Company applies the simplified approach, recognising lifetime

expected credit losses where applicable. In assessing ECL, the Company considers the credit quality of

counterparties, historical default experience, forwardဩlooking information and any mitigating factors,

including credit ratings, counterparty financial strength and the nature of contractual arrangements.

The Directors review the ECL assessment at each reporting date and are satisfied that any expected credit

losses on financial assets measured at amortised cost are not material to the financial statements.

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

3. Material accounting policy information (continued)

Fair value measurement principles

The futures contracts are recorded at fair value less costs to sell using the last available prices quoted in active

markets.

The fair value of the ETC securities is determined by reference to the underlying future contracts. Changes in the

fair value of the ETC securities are recognised in the Statement of Comprehensive Income.

Derivative financial instruments

Derivatives are financial instruments whose value is derived from an underlying variable, such as interest rates,

foreign exchange rates, commodity prices, equity prices, or market indices. Derivatives require little or no initial

investment and are settled at a future date, either through physical delivery or more commonly by net cash

settlement.

Futures contracts are purchased or sold to gain exposure to or manage exposure to changes in the value of carbon

allowances or foreign currencies (foreign currency exchange rate risk). The Company measures derivative financial

instruments at their fair value through profit or loss both on initial recognition and on an ongoing basis.

Derivatives are not formally designated into a qualifying hedge relationship and therefore all changes in their fair

value are recognised immediately in the Statement of Comprehensive Income.

Derivative contracts that have a positive fair value are presented as financial assets at fair value through profit or

loss in the Statement of Financial Position. Similarly, derivative contracts with a negative fair value are presented

as liabilities at fair value through profit or loss.

Derivatives include futures contracts that are exchange-traded agreements between the Company and a counterparty

to buy or sell a specific quantity of an underlying instrument at a specified price and on a specified date. Depending

on the terms of a contract, it is settled either through physical delivery of the underlying instrument on the settlement

date or by payment of a cash amount on the settlement date. Most futures contracts (by volume) are liquidated prior

to expiry to avoid physical delivery. Upon entering a futures contract, the Company is required to deposit initial

margin with the broker in the form of cash in an amount that varies depending on a contract’s size and risk profile.

The initial margin deposit must then be maintained at an established level over the life of the contract.

Cash deposited as initial margin is recognised in the Statement of Financial Position and are shown as margin

account in the Statement of Financial Position. Pursuant to the contract, the Company agree to receive from or pay

to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”).

When the contract is closed, derivative is derecognised on net basis and a realized gain or loss is recorded in the

Statement of Comprehensive Income equal to the difference between the notional amount of the contract at the time

it was opened and the notional amount at the time it was closed. The use of futures contracts involves the risk of an

imperfect correlation in the movements in the price of futures contracts and interest rates, foreign currency exchange

rates or underlying assets.

Derecognition

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or

it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which

substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred

financial assets that is created or retained by the Company is recognised as a separate asset or liability

The Company derecognises financial liability when its contractual obligations are discharged, cancelled or expired.

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

3. Material accounting policy information (continued)

(b) Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term investments

in an active market with original maturities of three months or less. As at 31 December 2025 all cash and cash

equivalents were held with the Custodian.

Cash collateral provided by the Company is identified in the Statement of Financial Position as margin accounts

and is not included as a component of cash and cash equivalents. For collateral other than cash, if the party to

whom the collateral is provided has the right by contract or custom to sell or re-pledge the collateral, the

Company classifies that asset in its Statement of Financial Position separately from other assets and identifies

the asset as pledged collateral. Where the party to whom the collateral is provided does not have the right to sell

or re-pledge, a disclosure of the collateral provided is made in the notes to the financial statements.

(d) Other receivables

Other receivables do not carry any interest, are short-term in nature and have been reviewed for impairment.

Other receivables are accounted for at amortised cost.

(e) Other payables

Other payables are accounted at amortised cost.

(f) Offsetting

Financial assets and liabilities are offset and the net amount presented in the Statement of Financial Position

when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net

basis or to realize the asset and settle the liability simultaneously.

(g) Share capital

Share capital is issued in United States Dollar ("USD"). Dividends are recognised as a liability in the financial

year in which they are approved.

(h) Interest and similar income

Interest income is recognised on a time-proportionate basis using the effective interest method. Interest income

from cash and cash equivalents and margin account is recognised in other income.

(i) Net gain on financial assets at fair value through profit or loss

Net changes in the fair value of derivative financial instruments relate to futures contracts entered into by the

Company. These contracts are used to provide economic exposure to carbon credits, ensuring that the Company’s

cash holdings remain economically backed by carbon-related exposure through a forward contract structure.

These derivatives are not designated as accounting hedges under IFRS 9. As such, gains or losses arising from

changes in the fair value of these contracts are recognised in the Statement of Comprehensive Income in the

financial year in which they occur. The fair value of these futures contracts is determined by reference to quoted

market prices at the reporting date.

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

3. Material accounting policy information (continued)

(j) Net loss on financial liabilities at fair value through profit and loss

Net changes in the fair value of derivative financial instruments relate to futures contracts entered into by the

Company. These contracts are used to provide economic exposure to carbon credits, ensuring that the Company’s

cash holdings remain economically backed by carbon-related exposure through a forward contract structure.

These derivatives are not designated as accounting hedges under IFRS 9. As such, gains or losses arising from

changes in the fair value of these contracts are recognised in the Statement of Comprehensive Income in the

financial year in which they occur. The fair value of these futures contracts is determined by reference to quoted

market prices at the reporting date.

(k) Net loss on debt at fair value through profit and loss

Net changes in fair value of debt designated at fair value through profit or loss relates to ETC securities issued and

includes all realised and unrealised fair value changes. Any return in excess of the principal amount per ETC

security shall be characterised as an interest payable in respect of the ETC securities.

(l) Administrative expenses

All of the following fees and expenses payable in respect of the Company are paid as one single fee, which will

not exceed amounts described below. This is referred to as the total expense ratio or “TER”. Each Series

(currently one in issue) pays an “all in one” operational fee to the Arranger. The TER is calculated and accrued

daily from the Net Asset Value of each ETC security and payable monthly in arrears to the Arranger at the rate

set out below. The following fees and operational expenses of the Company shall be paid out of the TER:

All the ordinary operating and administrative expenses of the Company, including, but not limited to, Corporate

Service Providers’, auditors’, legal advisors’, Investment Advisor, Manager’s, Administrator’s, Custodian’s,

Index Providers’, and Central Bank of Ireland Levies. These expenses are not recognised by the Company.

The Arranger has agreed to bear the cost of all fees and operational expenses which are over and above the total

expense ratio or “TER” of each class of security.

The TER rate for the Company is listed below.

Class

TER

KraneShares Global Carbon Strategy ETC Securities

78bps

(m) Taxation

Corporation tax is provided on taxable profits at current rates applicable to the Company’s activities in

accordance with Section 110 of the Taxes Consolidation Act 1997. Deferred taxation is accounted for, without

discounting, in respect of all temporary differences between the treatment of certain items for taxation and

accounting purposes which have arisen but not reversed by the reporting date. Provision is made at the tax rates

which are expected to apply in the periods in which the temporary differences reverse. Deferred tax assets are

recognised only to the extent that it is considered more likely than not that they will be recovered.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be

available against which the asset can be utilized. Deferred tax assets are reviewed at each reporting date and

are reduced to the extent that it is no longer probable that related tax benefit will be realised.

Withholding tax is a generic term used for withholding tax deducted at source from the income. The Company

records the withholding tax separately from the gross investment income in the Statement of comprehensive

income.

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

3. Material accounting policy information (continued)

(n) Segment reporting

An operating segment is a component of an entity that engages in business activities from which it may earn

revenues and incur expenses (including revenues and expenses relating to transactions with other components

of the same entity). The Company has no employees, and has only one business unit, thus all administrating

and operating functions are carried out and reviewed by the Administrator, SEI Global Services Inc and

Corporate Services Provider, Waystone Centralised Services (Ireland) Limited.

The Company's principal activity is to invest in futures contracts which are the revenue generating segment of

the Company. The Chief Operating Decision Maker ("CODM") of the operating segment is the Director. The

Company is an SPV whose principal activities are the issuance of ETC securities and investment in futures

contracts. Only one Series is in issue at the financial year end.

4. Net gain on financial assets at fair value through profit or loss

Financial

year

ended

period from

25-Mar to

31-Dec-25

31-Dec-24

USD

Realised gain on financial assets at fair value through profit or loss

1,322,627

322,716

Unrealised gain on financial assets at fair value through profit or loss

146,529

293,438

Net gain on financial assets at fair value through profit or loss

1,469,156

616,154

5. Interest and similar income

Financial

year

ended

period from

25-Mar to

31-Dec-25

31-Dec-24

USD

Interest income from cash and cash equivalents

17,226

4,730

Interest income from margin account

175,059

22,033

192,285

26,763

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

6. Net loss on debt at fair value through profit and loss

Financial

year

ended

period from

25-Mar to

31-Dec-25

31-Dec-24

USD

Net realised loss on debt at fair value through profit or loss

(109,980)

Net loss on debt at fair value through profit or loss

(1,771,922)

(315,426)

(1,881,902)

(315,426)

Each ETC security represents a debt security having a principal amount equal to the Issue Price per ETC security

on the Series Issue Date of that Series. Any return in excess of the principal amount per ETC security is

characterised as an interest payment in respect of the ETC securities. Interest is paid on redemption date.

7. Net loss on financial liabilities at fair value through profit and loss

Financial

year

ended

period from

25-Mar to

31-Dec-25

31-Dec-24

USD

Unrealised gain/(loss) on financial liabilities at fair value through profit and

loss

208,720

(

263,720)

Net gain/(loss) on financial liabilities at fair value through profit or loss

208,720

(263,720)

8. Administrative expenses

Financial

year

ended

period from

25-Mar to

31-Dec-25

31-Dec-24

USD

Arranger fees*

(80,304)

(22,487)

(80,304)

(22,487)

*As described in Note 3(l), each Series pays an “all in one” operational fee to the Arranger, which accrues daily

equal to the total expense ratio ("TER"). The Arranger agrees to pay the costs and expenses of the Company in

exchange for the Company agreeing to pay the Arranger the TER. Fees to arranger are paid monthly.

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

8. Administrative expenses (continued)

Statutory Information

Financial

year

ended

Financial

period from

25-Mar to

31-Dec-25

31-Dec-24

USD

Auditors’ remuneration (excluding VAT)

Statutory Audit

45,818

22,522

Other assurance services

5,874

5,177

*The Company has no employees and services required are contracted from third parties. The Company incurred

an amount of USD 49,354 (2024: USD 36,227 (EUR 34,985)) for the financial year ended 31 December 2025

relating to corporate services provided by Waystone Centralised Services (IE) Limited. Waystone Centralised

Service (IE) Limited allocated approximately USD 1,000 from the corporate service fee received as

consideration for the making available of individuals to act as Directors of the Company for the financial year

ended 31 December 2025. Arranger has allocated approximately USD 1,000 from the arranger fee received as

consideration for the making available of individuals to act as Directors of the Company for the financial year

ended 31 December 2025.

9. Net gain/(loss) on foreign exchange translation

Financial year

Financial period

ended

from 25-Mar to

31-Dec-25

31-Dec-24

USD

Net gain/(loss) on foreign exchange translation

92,545

(40,784)

92,545

(40,784)

10. Tax on ordinary activities

Financial year

Financial period

ended

from 25-Mar to

31-Dec-25

31-Dec-24

USD

Profit on ordinary activities before taxation

500

Corporation tax at 25%

125

Current tax charge

125

*The Company is a qualifying company within the meaning of Section 110 of the TCA,1997. As such, the profits

are chargeable to corporation tax under Case III of Schedule D of the TCA at a rate of 25%, but are computed

in accordance with the provisions applicable to Case I of Schedule D of the TCA. There was no deferred tax

during the financial year.

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

11. Financial assets at fair value through profit or loss

31-Dec-25

31-Dec-24

USD

At the start of financial year

293,438

Unrealised gain on financial asset at fair value through

profit and loss

146,529

293,438

At the end of financial year/period

439,967

293,438

As at 31 December 2025, the Company held open futures contracts with StoneX, with maturity dates in March

2026 and December 2026.

12. Debt at fair value through profit or loss

31-Dec-25

31-Dec-24

USD

At the start of financial year/period

11,940,426

Debt issued

1,559,518

11,625,000

Debt redeemed

(3,250,000)

Unrealised loss on debt at fair value through profit and loss

1,771,922

315,426

At the end of financial year/period

12,021,866

11,940,426

The ETC securities can be redeemed at the option of the Noteholders. Noteholders may request redemption of

the ETC securities at any time, subject to the applicable notice periods and procedures. The final maturity date

of the ETC securities is 02 October 2084.

13. Financial liabilities at fair value through profit or loss

31-Dec-25

31-Dec-24

USD

At the start of financial year/period

263,720

Unrealised (gain)/loss on financial liabilities at fair

value through profit and loss

(208,720)

263,720

At the end of financial year/period

55,000

263,720

As at 31 December 2025, the Company held open future contracts with StoneX, with maturity dates in December

2026.

4. Cash and cash equivalents

31-Dec-25

31-Dec-24

USD

Cash at bank

1,748,353

616,213

1,748,353

616,213

As of 31 December 2025, the cash at bank is held with Brown Brothers Harriman. Credit ratings are disclosed

in note 22.

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

15. Margin Account

31-Dec-25

31-Dec-24

USD

Margin account with StoneX

9,894,214

11,30

2,651

9,894,214

11,302,651

Margin accounts represent margin deposits held in respect of open exchange-traded futures contracts. As of 31

December 2025, the Margin account is held with StoneX. Upon entering into a futures contract, the Company is

required to deposit initial margin with the broker in the form of cash in an amount that varies depending on a

contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over

the life of the contract. Credit ratings are disclosed in note 22.

16. Other receivables

31-Dec-25

31-Dec-24

USD

Other debtors

25,000

Accrued income receivable

2,395

27,395

25,000

17. Other payables

31-Dec-25

31-Dec-24

USD

Accrued fee payable*

7,188

7,656

Corporation tax payable

125

7,313

7,781

*The accrued fee payable relates to the fee calculated on the total expense ratio payable to the Arranger.

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

18. Capital and reserves

31-Dec-25

31-Dec-24

USD

Authorised:

1,000,000 ordinary shares of USD 1 each

1,000,000

Issued, paid and held in trust:

USD

25,000 ordinary shares of USD 1 each

25,000

Presented as follows:

USD

Called up share capital presented as equity

25,000

31-Dec-25

USD

31-Dec-24

USD

At the beginning of the financial year/period

375

Profit during the financial year/period

375

At the end of the financial year/period

750

375

In consideration for the allotment of 25,000 ordinary shares in the Company, with effect from 1 October 2024,

the contribution is held by Waystone Centralised Services (IE) Limited for the account of, and to the order of,

the Company, as its share capital.

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

19. Offsetting

None of the financial assets or financial liabilities are offset in the Statement of Financial Position. The

disclosures set out in the table below include financial assets and financial liabilities that are not subject to an

enforceable master netting agreement or similar agreement that cover similar financial instruments.

Offsetting Financial Assets

31 December 2025:

Offsetting Financial Liabilities

31 December 2025:

Counterparty

Gross

Amount of

recognised

financial

assets

Gross

amounts of

financial

liabilities

offset in the

Statement

of Financial

Position

Net amount

of financial

assets

presented in

the

Statement

of Financial

Position

Financial

instruments

(including

non-

cash

collateral)

Cash

collateral

received

Net amount

USD

StoneX

439,967

(55,000)

384,967

Total

439,967

(55,000)

384,967

Counterparty

Gross

Amount of

recognised

financial

liabilities

Gross

amounts of

financial

assets

offset

in the

Statement

of Financial

Position

Net amount

of financial

liabilities

presented in

the

Statement

of Financial

Position

Financial

instruments

(including

non-

cash

collateral)

Cash

collateral

received

Net amount

USD

StoneX

55,000

(55,000)

Total

55,000

(55,000)

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

19. Offsetting (continued)

Offsetting Financial Assets

31 December 2024:

Offsetting Financial Liabilities

31 December 2024:

20. Ownership of Company

The sole shareholder of the Company is Waystone Centralised Services (IE) Limited holding 25,000 shares of

the Company. All shares are held in trust for charity under the terms of declaration of trust.

The Share Trustee has appointed the Directors to run the day-to-day activities of the Company. The Directors

have considered the issue as to who is the ultimate controlling party. It has been determined that control of the

day-to-day activities of the Company rests with the Directors.

Counterparty

Gross

Amount of

recognised

financial

assets

Gross

amounts of

financial

liabilities

offset in the

Statement

of Financial

Position

Net amount

of financial

assets

presented in

the

Statement

of Financial

Position

Financial

instruments

(including

non-

cash

collateral)

Cash

collateral

received

Net amount

USD

StoneX

293,438

(263,720)

29,718

Total

293,438

(263,720)

29,718

Counterparty

Gross

Amount of

recognised

financial

liabilities

Gross

amounts of

financial

assets

offset

in the

Statement

of Financial

Position

Net amount

of financial

liabilities

presented in

the

Statement

of Financial

Position

Financial

instruments

(including

non-

cash

collateral)

Cash

collateral

received

Net amount

USD

StoneX

263,720

(263,720)

Total

263,720

(263,720)

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

21. Related party transactions

Transactions with Corporate Services Provider

Waystone Centralised Services (IE) Limited provided corporate services during the financial year, including

making available individuals to act as Directors of the Company, company secretarial services and acting as

Share Trustee and Note Trustee. The Company incurred an amount of USD 49,354 (EUR 42,000) for the

financial year ended 31 December 2025 (2024: USD 36,227 (EUR 34,985)) relating to the above services

provided by Waystone Centralised Services (IE) Limited.

All costs and expenses are paid by the Arranger in exchange for a TER paid by the Company. The Corporate

Services Provider provided Company Secretary and corporate services duties during the financial year on an

arm's length basis.

Benjamin Murahwi, Matthew Tracey, and Caroline Jones (appointed 29 April 2025 and resigned 05 May 2025)

are employees of Waystone Centralised Services (IE) Limited and Company Directors during the financial year

and allocated Director’s remuneration of USD 1,000 during the financial year.

Transactions with Arranger

As at 31 December 2025, Krane Funds Advisors LLC acted as the Arranger of the Company during the financial

year which is considered as a key related party to the Company as it has a key contract with the Company and

is responsible for the reimbursement of the operational costs of the Company. The Arranger paid the Company

USD 500 annually in respect of each Series of ETC securities issued under the Programme. During the financial

year ended 31 December 2025, the total expense ratio amounted to USD 80,304 (2024: USD 22,487) of which

is USD 7,188 (2024: USD 7,655) is still payable as at the financial year end. In return for this, the Arranger pays

all operating expenses as described in note 3(l) and 8 to the financial statements. Jonathan Krane is an indirect

owner of the Arranger and Investment Advisor and allocated USD 1,000 Director's remuneration during financial

year.

Transactions with Administrator

SEI Global Services Inc provided certain administrative functions for the Company in relation the ETC securities,

including, among other things, assisting in the making of certain non-discretionary determinations and

calculations in accordance with the Terms and Conditions of the ETC securities, including, without limitation,

the determination and publication of the Carbon Entitlement, the Cash Value per ETC Security and the total

expense ratio on a daily basis during the financial year. The Company incurred an amount of USD 32,630 for the

financial year ended 31 December 2025 (2024: USD 6,148) relating to administration services provided by SEI

Global Services Inc.

All costs and expenses are paid by the Arranger in exchange for a TER paid by the Company.

22. Financial risk management

Risk management framework

The Company has exposure to the following risks from its use of financial instruments:

(a) Credit risk;

(b) Operational risk;

(d) Liquidity risk.

This note presents information about the Company’s exposure to each of the above risks, the Company’s

objectives, policies and processes for measuring and managing risk and the Company’s management of capital.

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

22. Financial risk management (continued)

(a) Credit Risk

Credit/Counterparty risk refers to the risk that the Custodian or Broker will default on its contractual obligations

resulting in the Company being unable to make payment of amounts due to the exchange traded commodity

holders (“ETC holders”). Accordingly, the Company and the ETC holders are exposed to the creditworthiness

of the Custodian and Broker. Consequently, credit risks are ultimately borne by the ETC holders who are

therefore concerned with the Company's procedures and policies in place to mitigate the risks. The Company

has sufficient and adequate control structures in place to manage and mitigate the risks.

The Company’s exposure to credit risk and credit ratings are continuously monitored by the Directors and the

Arranger, through the credit ratings assigned by well-known credit ratings agencies.

Rating Agency

Counterparty

Holding account

Short term

31-Dec-25

Short term

31-Dec-24

Fitch

Brown Brothers

Harriman & Co.

Cash and cash

equivalents

A+

Standard & Poor’s

StoneX Financial

Inc.

Margin account

BB-

Moody's

StoneX Financial

Inc.

Margin account

Ba3

The maximum gross exposure to credit risk at the end of the financial year was:

31-Dec-25

31-Dec-24

USD

Cash and cash equivalents

1,748,353

616,213

Margin account

9,894,214

11,302,651

Financial assets at fair value through profit or loss

439,967

293,438

Other receivables

27,395

25,000

12,109,929

12,237,302

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

22. Financial risk management (continued)

(a) Credit Risk

Concentration risk

Concentration risk can arise from the type of assets held in the portfolio, the maturity of assets, the concentration

of sources of funding, concentration of counterparties or geographical locations.

The table below outlines the fair value of financial asset and liabilities at fair value through profit and loss as at

the financial year end based on emissions trading

By emission trading systems

Fair value of financial assets

31-Dec-25

31-Dec-24

USD

European Union Allowances (EUA)

248,396

252,398

Regional Greenhouse Gas Initiative (RGGI)

41,040

United Kingdom Allowances (UKA)

65,345

Washington State Carbon Allowances (WCA)

21,000

California Carbon Allowances (CCA)

76,800

Euro Currency

28,426

Total

439,967

293,438

Fair value of financial liabilities

California Carbon Allowances (CCA)

(29,780)

United Kingdom Allowances (UKA)

(43,565)

Washington State Carbon Allowances (WCA)

(57,000)

Regional Greenhouse Gas Initiative (RGGI)

(55,000)

Euro Currency

(133,375)

(55,000)

(263,720)

Cap-and-trade programs, also known as emissions trading systems, are market-based policies that set a limit

(the "cap") on emissions and allow companies to trade permits to emit pollutants, creating a financial incentive

for emissions reductions

(b) Operational risk

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the

Company’s processes, personnel and infrastructure, and from external factors other than credit, markets and

liquidity issues such as those arising from legal and regulatory requirements and generally accepted standards

of corporate behavior.

The Board of Directors have established processes to manage operational risks. Those processes include

appropriate segregation of responsibilities and specific control activities. The Board of Directors delegate

management and administration function to the Administrator and Corporate Services Provider.

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

22. Financial risk management (continued)

Market risk is the risk that changes in market prices of the futures contracts will affect the Company's income

or the value of its holdings of financial instruments. Market risk comprises of price risk, interest rate risk and

currency risk. The ETC holders are exposed to the market risk of the asset’s portfolio. Market risk embodies the

potential for both gains and losses and price risk.

Price risk

Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of

changes in market prices (other than those arising from currency risk), whether those changes are caused by

factors specific to the individual financial instrument or its seller, or factors affecting similar financial

instruments traded in the market. The Investment Advisor monitors the price risk of the financial assets and

liabilities at fair value through profit or loss on a daily basis.

The Company uses the hierarchy below for determining and disclosing the fair value of financial instruments by

valuation technique:

The level in the fair value hierarchy in which each fair value measurement is categorised includes:

• Level 1: quoted prices (unadjusted) in an active market for identical assets or liabilities;

• Level 2: inputs other than quoted prices within Level 1 that are observable for the asset or liability, either

directly (i.e. prices) or indirectly (i.e. derived from prices); and

• Level 3: inputs for the asset or liabilities that are not based on observable market data (unobservable inputs).

Fair Value Hierarchy

Valuation technique and key

inputs

Financial assets at fair value

through profit or loss

Level 1

Quoted prices in active markets

Financial liabilities at fair value

through profit or loss

Level 1

Quoted prices in active markets

Debt at fair value through profit or

loss

Level 2

Valuation based on observable

market prices of carbon credits

from exchanges, adjusted by TER.

The Company does not consider market risk to be a significant risk to the Company as any fluctuation in the

value of the futures contracts is ultimately borne by the ETC holders of the relevant securities. Nonetheless, the

price risk is managed by constant monitoring of the market prices of financial instruments.

Futures contracts held by the Company are classified as level 1. The fair value of these contracts is determined

by reference to the exchange-quoted prices of the underlying futures contracts.

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

22. Financial risk management (continued)

Price risk (continued)

ETC securities issued by the Company are classified within level 2. The exchange quoted price of the ETC

securities is determined by reference to underlying future contracts and adjusted for the total expense ratio

payable to the Arranger. This valuation technique represents the price of the ETC securities to which Authorised

Participants subscribe and request buybacks of ETC securities directly with the Company. There are no

significant unobservable inputs to this valuation technique.

31 December 2025

Level 1

Level 2

Level 3

Total

USD

Financial assets at fair value through

profit or loss

439,967

Financial liabilities at fair value

through profit or loss

(55,000)

Debt at fair value through profit or loss

(12,021,866)

384,967

(12,021,866)

(11,636,899)

31 December 2024

Level 1

Level 2

Level 3

Total

USD

Financial assets at fair value through

profit or loss

293,438

Financial liabilities at fair value

through profit or loss

(263,720)

Debt at fair value through profit or loss

(11,940,426)

29,718

(11,940,426)

(11,910,708)

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

22. Financial risk management (continued)

Sensitivity analysis:

Any changes in the values of the future contracts held by the Company would not have any effect on the equity

or profit or loss of the Company as any fair value fluctuations are ultimately borne by the holders of the ETC

Securities issued by the Company. A 10% change in the value of the portfolio of futures contracts held will result

in a change in value of USD 38,497 (2024: USD 2,972). This will be offset by an equal change in the value of

ETC securities issued, resulting in a net zero impact to the equity or profit of the Company. Therefore, the

Company is fully economically hedged against changes in prices of underlying securities.

Foreign exchange risk

Foreign exchange risk is the risk that the fair value or cash flows of a financial instrument will fluctuate because

of changes in foreign currency.

The ETC securities issued by the Company are denominated in US Dollars, however, the underlying futures

contracts and cash held on deposit are denominated in other currencies, including EUR and British Sterling

Pounds. Accordingly the value of any portion of the underlying collateral denominated in another currency may

be affected by changes in the exchange rate between USD and that other currency, which could ultimately result

in returns for investors being less than anticipated.

The closing exchange rates used are as follows:

31/12/2025

EUR

0.8512

GBP

0.7419

Foreign exchange risk sensitivity analysis:

31 December 2025:

Asset class

EUR

GBP

10% movement EUR

10 % movement GBP

Financial assets at fair value

through profit or loss

211,430

48,480

21,143

4,848

Financial liabilities at fair

value through profit or loss

Margin account

1,303,580

346,162

130,358

34,616

Total

1,515,010

394,642

151,501

39,464

Interest rate risk

Interest rate risk is the risk that the fair value of the ETC securities will fluctuate because of changes in market

interest rates. Changes in exchange rates and interest rates may have a positive or negative impact on the

price, demand, production costs and direct investment costs of future contracts and the returns from investments

in future contracts are therefore influenced by and may be correlated to these factors. Although the ETC

securities do not pay periodic interest, they do entitle holders to an amount on redemption that reflects the fair

value movements of the underlying carbon credit-linked futures contracts. The value of the ETC securities is

primarily driven by the performance of carbon credit-linked futures rather than changes in interest rates. As a

result, the Company is not subject to significant interest rate risk.

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

22. Financial risk management (continued)

(b) Market risk (continued)

The Interest Rate Sensitivity Gap

31 December 2025:

Assets

Fixed

Floating

Non-Interest

Bearing

Total

USD

Financial assets at fair value through

profit and loss

439,967

Cash and Cash equivalents

1,748,353

Margin accounts

9,894,214

Other receivables

27,395

Total assets

11,642,567

467,362

12,109,929

Liabilities

Other payables

7,313

Financial liabilities at fair value

through profit and loss

55,000

Debt at fair value through profit and

loss

12,021,866

Total liabilities

12,021,866

62,313

12,084,179

Cumulative gap

(379,299)

405,049

25,750

Interest rate sensitivity analysis:

10% change in the interest rate

(37,930)

40,505

2,575

31 December 2024:

Assets

Fixed

Floating

Non-Interest

Bearing

Total

USD

Financial assets at fair value through

profit and loss

293,438

Cash and Cash equivalents

616,213

Margin accounts

11,302,651

Other receivables

25,000

Total assets

11,918,864

318,438

12,237,302

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

22. Financial risk management (continued)

The Interest Rate Sensitivity Gap

31 December 2024:

Liabilities

Fixed

Floating

Non-Interest

Bearing

Total

USD

Other payables

7,781

Financial liabilities at fair value

through profit and loss

263,720

Debt at fair value through profit and

loss

11,940,426

Total liabilities

11,940,426

271,501

12,211,927

Cumulative gap

(21,562)

46,937

25,375

Interest rate sensitivity analysis:

10% change in the interest rate

(2,156)

(d) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due. The Company

does not have significant exposure to liquidity risk due to the buy-back of ETC securities being settled from

proceeds from the sale of future contracts and the cash held on deposit with Custodian. ETC securities can be

issued and redeemed daily. Final maturity date of ETC securities is 02 October 2084.

The Company manages liquidity risk by maintaining adequate levels of cash and highly liquid investments,

including futures contracts, to meet redemption requests and other short-term obligations. The Company closely

monitors the daily liquidity position and ensures that the proceeds from the sale of futures contracts and cash held

with the Custodian are sufficient to settle any buy-back of ETC securities.

Operational expenses are settled by Arranger, Krane Fund Advisors, LLC, in exchange for the Company paying

TER. The ETC securities are limited recourse obligations of the Company that are payable solely out of amounts

received in respect of the financial assets.

The following table demonstrates the liquidity risk profile for the Company:

31 December 2025

Carrying

Value

Up to 1 year

1 year to

5 years

Over 5

years

USD

Debt at fair value through profit or loss

12,021,866

Financial liabilities designated at fair value

through profit or loss

55,000

Other payables

7,313

12,084,179

KraneShares ETC Plc

Notes to the financial statements (continued)

For the financial year ended 31 December 2025

22. Financial risk management (continued)

31 December 2024

Carrying

Value

Up to 1 year

1 year to

5 years

Over 5

years

USD

Debt at fair value through profit or loss

11,940,426

Financial liabilities designated at fair value

through profit or loss

263,720

260,520

3,200

Other payables

7,781

12,211,927

12,208,727

3,200

23. Capital management

The primary objective of the Company’s capital management is to ensure that it maintains an adequate capital

base to meet its obligations as they fall due and to preserve the going concern status of the Company. The

Company is a Special Purpose Vehicle (SPV) established in Ireland under the Companies Act 2014 as a Public

Limited Company, and its activities are governed by its constitutional documents and the terms of the relevant

transaction documents.

The Company operates under a limited recourse arrangement. Its liabilities are limited to the proceeds of the

financial assets it holds. The capital of the Company is not actively managed for return, but solely to meet legal

and contractual obligations.

24. Subsequent events

On 26 March 2026, subsequent to the reporting date, the Company issued an additional series of the KraneShares

California Carbon Allowance ETC listed on the London Stock Exchange. The newly issued series trade under

the tickers KCCA LN (USD) and KCCP LN (GBP-hedged) and are designed to track the performance of the

S&P Carbon Credit CCA Index, providing exposure to California Carbon Allowance futures.

There have been no other significant events after the financial year end up to the date of signing of these financial

statements that require disclosure and/or adjustment to the financial statements.

25. Commitments and Contingencies

The Company had no commitments or contingencies as at the financial year-end.

26. Charges

All Series assets as specified in note 11, 12 and 15 have charges assigned by way of security in favor of the Trustee for

itself and on behalf of the Noteholders.

27. Approval of financial statements

The Board of Directors approved these financial statements on 29 April 2026.